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United States v. District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners of America

August 8, 2008


The opinion of the court was delivered by: Haight, Senior District Judge


The question presently before the Court is whether an independent investigator the Court appointed to assume certain responsibilities in the governance of a labor organization should be retained in office or replaced.

This Court exercises its authority in the case pursuant to a Consent Decree entered into in 1994 which resolved the government's 1990 civil RICO action against the District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners of America ("the District Council"), certain of its officers, and individuals allegedly associated with the Genovese organized crime family. Since the entry of the Consent Decree, the case has generated numerous opinions in this Court and the Court of Appeals for the Second Circuit. Familiarity with all those opinions is assumed.

In 2002, following a complaint by a union member alleging violation of Job Referral Rules incorporated into the Consent Decree, the government and the District Council conducted further negotiations resulting in a stipulation and order appointing Walter Mack, Esq., a former Assistant United States Attorney now in private practice, as the Independent Investigator (sometimes referred to hereinafter as "II"). The order authorized Mack as II to, inter alia, "investigate allegations of wrongdoing concerning the operation of the job referral system and/or corruption or violations of federal, state, or local law" by representatives of the District Council and its constituent local unions, operate the previously established anti-corruption telephone hotline, assess the competency of the District Council's anti-corruption program, and periodically issue written reports to the Court and the parties. The order also armed Mack with the subpoena power, enabling him to command the presence of individuals before him for interviews and depositions and compel the production of documents by individuals and entities such as local unions, contractors, and banks.

The order appointed Mack for a two-year term as II. He served in that capacity from 2003 to 2005. At the end of that time, the District Council exercised the option granted to it by the 2002 stipulation and terminated Mack's services as II. The government moved to continue Mack in office, but the Court enforced the plain language of the stipulation to which the government had agreed. Mack departed the scene. The District Council expressed its willingness, even desire, to continue the office of Independent Investigator. It issued a number of requests for proposals, and ultimately suggested to the Court three companies to succeed Mack as II. One of those companies was Unitel Intelligence Group, Inc. ("Unitel"), whose president is William P. Callahan, Esq. In its submission to the Court forwarding documents relevant to the three candidates, the District Council said any of them would be acceptable, but expressed its preference for Unitel.

The government conducted its own interviews of the three candidates, and contended that either of the other two companies would be a better choice than Unitel. The government urged the Court to conduct the search process de novo by interviewing the CEOs of all three companies.

In an opinion reported at 2005 WL 1713061 (S.D.N.Y. July 19, 2005), the Court found that all three candidates were well qualified to act as the Independent Investigator, and accepted the District Council's stated preference for Unitel. On the latter point, I said:

Given the fact, as I have found, that all three companies are qualified to serve as the II, I am prepared to defer to the District Council's preference for Unitel. The II's services will, after all, be paid for with the dues of the union carpenters, and their representative organization is in my view presumptively entitled to select the provider of those services. The District Council would not be free to prefer and select an unqualified II or one tainted by a conflict of interest. 2005 WL 1713061, at *5.

The Court appointed Unitel as the II in an Order dated August 18, 2005. The order provided in ¶ 5 that the II would serve "for no less than 24 months from the date of entry of this Order." Unlike the earlier order appointing Walter Mack as II, this order did not give the District Council (or the government) a veto power over Unitel's continuation in office after the two-year term. Instead, the Order provided in ¶ 5:

Not later than thirty (30) days prior to the completion of the 24-month term provided for in this paragraph, the parties are directed to file and serve applications for a further Order (1) continuing the Independent Investigator in office for an additional stated term; or (2) terminating the services of Unitel as Independent Investigator and appointing a successor; or (3) abolishing the office of the Independent Investigator; or (4) such other Order as the parties may be advised to request.

On the present motion, the government invokes ¶ 5(2) of the Order and asks that Unitel be terminated as the II and replaced by a successor. The government does not suggest a successor or what procedures should be followed to select one.

In a separate motion, the District Council (sometimes referred to hereinafter as "the Union") asked the Court to terminate the Consent Decree. That motion, if granted, would put an end to the Court's supervision of the Union's affairs and, of necessity, eliminate the office of Independent Investigator, thereby mooting the present motion. In a separate Opinion filed concurrently herewith, the Court denies the District Court's termination motion and extends the Consent Decree and the office of the Independent Investigator for at least an additional year from the date of these Opinions, subject to further Order of the Court. The question therefore becomes: Should Unitel be continued as II?

It is noteworthy that on the present motion, the District Council does not invoke ¶ 5(3) of the August 2005 Order and ask that the office of Independent Investigator be abolished even if the Consent Decree stays in effect; on the contrary, the District Council expresses its desire to continue the II. The dispute between the government and the District Council is that the government wishes Unitel to be replaced and the District Council wishes Unitel to be retained.

The District Council approaches that dispute by arguing the Court should defer to its wishes, as it did when Unitel was chosen among the three companies bidding for the position. I do not agree. The present context is entirely different. The Court appropriately gave some weight to the Union's subjective preference for Unitel at the time of appointment, particularly since the Union would be paying the II's substantial fees. But the present issue is whether, since its appointment, Unitel's performance has been adequate. That is a question to be answered by an objective assessment. While ...

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