Government Response to Motion for Stay

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT -------------------------------------------------- x UNITED STATES v. DISTRICT COUNCIL OF N.Y.C. & VICINITY OF THE UNITED BROTHERHOOD OF CARPENTERS

Dkt. No. 14-3506

-------------------------------------------------- x

Opposition to Motion for Stay

Plaintiff-appellee the United States submits this opposition to the application

by non-party appellants Patrick Nee and Levy Messinetti for a stay of the entry of a

consent decree agreed to by the parties (and already entered by the district court),

while their appeal of a previous matter is pending. The application should be

denied. First, Nee and Messinetti seek to challenge an order of the district court

from which they never appealed, and accordingly this Court lacks jurisdiction.

Second, their challenge rests on a misconstruction of the district court’s order, and

a misreading of a passing remark by the district judge, and is accordingly meritless.

Procedural History

A. The Government’s Action Against the District Council, from 1994 to 2010

The government’s supplemental complaint in this action alleged that the

defendant, the District Council of New York City and Vicinity of the United

Brotherhood of Carpenters, and its constituent local unions had become infiltrated

by corrupt individuals and organized crime figures who exploited their control over

Case 14-3506, Document 47, 12/11/2014, 1391198, Page1 of 16

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the District Council for personal gain. (R. Doc. 106).1 In 1994, the parties agreed

to a consent decree, which implemented a number of anti-corruption measures

against the District Council and its constituent locals, including oversight by a

court-appointed officer. (R. Doc. 410); see United States v. District Council, No.

90 Civ. 5722, 1999 WL 494121, at *4 n.4 (S.D.N.Y. July 12, 1999).

However, at the end of that officer’s tenure, corruption continued, and the

district court appointed a new investigatory officer. See United States v. District

Council, No. 90 Civ. 5722, 2002 WL 31873460, at *3-5 (S.D.N.Y. Dec. 24, 2002).

The newly appointed officer uncovered extensive evidence of labor racketeering,

United States v. District Council, 571 F. Supp. 2d 571, 577 n.8 (S.D.N.Y. 2008);

United States v. District Council, 571 F. Supp. 2d 555, 562-63, 568-69 (S.D.N.Y.

2008), and several contempt citations and criminal convictions followed, United

States v. District Council, 618 F. Supp. 2d 326, 329-30 (S.D.N.Y. 2009); District

Council, 571 F. Supp. 2d at 568-69; United States v. District Council, No. 90 Civ.

5722, 2007 WL 2697135 (S.D.N.Y. Sept. 17, 2007); United States v. District

Council, 229 F. App’x 14 (2d Cir. 2007).

In 2009, an indictment was unsealed, charging numerous high-ranking union

officials and others connected to the union with criminal RICO violations and

1 Citations to Record Documents refer to the ECF number of the filing in the district court.


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other offenses; all were convicted. See United States v. Forde, No. 08 Cr. 828

(S.D.N.Y.). Immediately after the indictment was unsealed, the international union

placed the District Council into trusteeship. United States v. District Council, No.

90 Civ. 5722, 2010 WL 2287008, at *2 (S.D.N.Y. June 3, 2010).

In June 2010, the parties agreed to a Stipulation and Order, which designated

a new court-appointed officer, known as the Review Officer. Id. The Review

Officer was given authority with the goal of “eradicat[ing] corruption and

racketeering as they affect union carpenters and union employers,” and ensuring

that the interests of the union’s members will be honestly and democratically

represented. (R. Doc. 991, at 3-14). In particular, the Review Officer was

empowered to require compliance with the injunctions set forth in the 1994

Consent Decree; “to investigate the operations of the District Council, including

but not limited to investigating allegations of corruption and wrongdoing by

officers, representatives, agents, employees, members, and trustees”; and “to bring

disciplinary charges against any District Council officers, representatives, agents,

employees, or members.” (R. Doc. 991, at 4 ¶ 5.a). As did the 1994 consent decree,

the 2010 stipulation and order reached both the District Council and its constituent

local unions. (R. Doc. 991, at 2, 3 ¶ 1.b).

Of particular relevance here, the Review Officer was given “review and

oversight authority,” including “the authority to review the persons currently


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holding office or employment” within the District Council or its constituent local

unions. (R. Doc. 991, at 5-6 ¶¶ 5.b.i.1, 5.b.i.3). In his review, the Review Officer

could determine that a matter, among other things, “(c) is contrary to or violates

any law or Court order entered in this case; or (d) is contrary to any fiduciary

responsibility imposed by 29 U.S.C. § 501 . . . ; or (e) is inconsistent with the

objectives of this Stipulation and Order.” (R. Doc. 991, at 6 ¶ 5.b.iii). Should he

make any of those determinations, the Review Officer could “veto or require the

District Council to rescind its action, proposed action, or lack of action.” (R. Doc.

991, at 6 ¶ 5.b.iii). If the Review Officer exercised this power, any “aggrieved

person” could seek review of his decision in the district court, under the deferential

standard that is applied to final agency action under the Administrative Procedure

Act. (R. Doc. 991, at 18 ¶ 11).

B. The Review Officer’s Action Against Nee and Messinetti

As further detailed in the government’s brief to this Court in the prior appeal

(No. 12-4883), the Review Officer exercised his veto authority to remove Nee and

Messinetti from their positions at Local 157, a constituent union of the District

Council, having determined—after giving Nee, Messinetti, and other affected

union personnel notice of the potential action and an opportunity to be heard both

in writing and in person—that their actions were contrary to their fiduciary

obligations, the orders of the district court, and the objectives of the 2010


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stipulation and order. Nee and Messinetti sought review before the district court,

which upheld the Review Officer’s actions. United States v. District Council, No.

90 Civ. 5722, 2012 WL 5236577 (S.D.N.Y. Oct. 23, 2012).

Nee and Messinetti then appealed to this Court, which vacated the district

court’s ruling, and remanded for the district court to determine whether the Review

Officer’s veto authority encompassed the authority to remove Nee and Messinetti

from their positions. United States v. Nee, 573 F. App’x 37 (2d Cir. 2014). On

remand, the district court held that the matter was moot, as Nee’s and Messinetti’s

terms of office had expired during the pendency of their appeal, and they had run

for and been elected to new offices at Local 157 without any action by the Review

Officer to attempt to stop them. (R. Doc. 1569). The district court further held that

even if the action were not moot, extrinsic evidence demonstrated that the parties

intended in the 2010 stipulation to give the Review Officer the authority to remove

officers such as Nee and Messinetti. (R. Doc. 1569).

Nee and Messinetti then filed the instant appeal in September 2014.

C. Entry of the 2014 Stipulation and Order

The June 2010 stipulation was set to expire on June 3, 2014. (R. Docs. 991,

1198). In May 2014, the parties submitted to the district court a proposed

replacement stipulation, naming a new court-appointed officer with somewhat

diminished authority. (R. Docs. 1512-1516, 1522-1528). The district court entered


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an interim order extending the Review Officer’s tenure until it could consider the

proposed stipulation. (R. Doc. 1521). Following a conference and several

exchanges with the district court, the parties submitted a slightly revised

stipulation, which the district court entered on November 18, 2014. (R. Doc. 1595).

Nee and Messinetti objected to the entry of the stipulation, which the district court

overruled without comment. (R. Doc. 1596). Nee and Messinetti now seek to stay

the entry of that 2014 stipulation.

ARGUMENT

A. Standard of Review

In determining whether to issue a stay, this Court considers “(1) whether the

stay applicant has made a strong showing that he is likely to succeed on the merits;

(2) whether the applicant will be irreparably injured absent a stay; (3) whether

issuance of the stay will substantially injure the other parties interested in the

proceeding; and (4) where the public interest lies.” SEC v. Citigroup Global

Markets, Inc., 673 F.3d 158, 162 (2d Cir. 2012) (quotation marks omitted). The

last two factors “merge when the Government is the opposing party.” Nken v.

Holder, 556 U.S. 418, 435 (2009).

As Nee and Messinetti fail on all four factors, their application should be

denied.


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B. This Court Lacks Jurisdiction to Review the 2014 Stipulation and Order

First, Nee and Messinetti cannot show a likelihood of success, because this

Court lacks jurisdiction over their stay application. See Munaf v. Geren, 553 U.S.

674, 690 (2008) (jurisdictional question makes “success more unlikely due to

potential impediments to even reaching the merits”).

Nee and Messinetti’s stay application is effectively a challenge to the 2014

stipulation. But Nee and Messinetti never appealed from the district court’s entry

of that stipulation. Federal Rule of Appellate Procedure 3(c) provides that “the

notice of appeal must . . . designate the judgment, order or part thereof being

appealed.” Fed. R. App. P. 3(c)(1)(B). The Court’s “jurisdiction is limited by the

wording of the notice,” and “depends on whether the intent to appeal [the decision

at issue] is clear on the face of, or can be inferred from, the notice[ ] of appeal.”

New Phone Co. v. City of New York, 498 F.3d 127, 130-31 (2d Cir. 2007).

In this case, Nee and Messinetti’s notice of appeal was filed on September 12,

2014—over two months before the district court’s entry of the stipulation and

order in November 2014. (R. Doc. 1573). The notice of appeal on its face makes

clear that Nee and Messinetti seek review only of the district court’s September 10,

2014, order deeming their grievance moot and alternatively holding that the

Review Officer had the authority to end their tenures in Local 157 office. (R. Doc.

1573 (“hereby jointly appeal to the United States Court of Appeals for the Second


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Circuit from an order of the District Court dismissing our appeal as moot and

denying our application to find the Review Officer had exceeded his authority,

entered in this action on 9/10/2014”)). This Court, therefore, has no jurisdiction to

review or stay the entry of the November 2014 stipulation entered by the district

court.

C. The Stay Application Lacks Merit

Even if this Court had jurisdiction, it should deny the application. Nee and

Messinetti’s argument appears to be that the entry of the 2014 stipulation and order

somehow converts the Review Officer’s action in 2012 from a veto, exercised

pursuant to his authority granted in the 2010 stipulation, into some more onerous

form of disciplinary action. That contention is illogical, founded on a

misunderstanding of the 2014 stipulation and on a distorted reading of a passing

remark by the district judge.

As Nee and Messinetti note in their application, the Review Officer, the

government, and the district court have all stated that the Review Officer’s veto of

their continued officeholding in 2012 was not a form of disciplinary action, in the

sense that term was used in the 2010 stipulation and order. Nee and Messinetti lost

no union rights, including the right to run for elective office, going forward. Cf.

United States v. International Brotherhood of Teamsters (“Carey & Hamilton”),

247 F.3d 370, 374-78 (2d Cir. 2001) (referring to “disciplinary sanctions”


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consisting of permanent bar of union officers from membership or holding office).

And indeed, they have since run for and been elected to offices within Local 157.

To begin with, whether the Review Officer’s action was “disciplinary” is not

central to the appeal now before the Court. Whether the Review Officer’s action

was proper depends on his authority under paragraph 5.b of the 2010

stipulation—which granted him the power to review those persons holding union

office, and further granted him the power to veto certain union actions (in the

government’s and the district court’s view, including the continued officeholding

of local union officers) if they met the criteria spelled out in the stipulation. That

question does not turn on whether or not the Review Officer’s action can be

characterized as “disciplinary.” The Review Officer, the government, and the

district court have stated (and the government continues to maintain) it was not

disciplinary as a means of explaining the consequences and scope of the Review

Officer’s action, and to distinguish it from the separate authority the Review

Officer has to bring union charges under paragraph 5.f of the 2010 stipulation. See

District Council, 2012 WL 5236577, at *6 n.5; Gov’t’s Br., No. 12-4883, at 32 n.9;

see also Nee, 573 F. App’x at 40-41 (suggesting that, on remand, district court may

wish to determine if there are differences between “disciplinary actions” and those

taken against Nee and Messinetti). In short, while the question of whether the

Review Officer’s action was disciplinary may be relevant to interpreting the 2010


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stipulation, it is not dispositive—and the allegations Nee and Messinetti now make

about the district court’s views fall far short of establishing that they are likely to

succeed on the merits.

In any event, Nee and Messinetti’s theory holds no water. They seem to argue

that the district judge, at a September 30, 2014, conference to consider the newly

proposed 2014 stipulation, changed his view, and now believes that the vetoes of

Nee’s and Messinetti’s officeholding was disciplinary. At that conference, as

quoted by Nee and Messinetti, the district judge asked the parties for “metrics” by

which to judge the progress of the anticorruption measures that had been put in

place; the court suggested that the frequency with which the Review Officer

exercises the veto could serve as such a metric, and the fact that the Review

Officer had not utilized that power in the preceding year was encouraging. (R.

Doc. 1583, at 11-12). In doing so, the district judge referred to the vetoes as “at

least some snapshot of some form of discipline.” (Id.).

This comment cannot bear the weight Nee and Messinetti place on it. The

qualified comment—“some snapshot of some form of discipline”—is best, or at

least plausibly, read as referring not to “discipline” in the sense of punitive action,

but in the sense of adherence to rules and authority, see Am. Heritage Dict. of the

English Lang. (5th ed.)—i.e., the district judge was saying that the lack of recent

vetoes showed that the union was in compliance with the law and the court’s


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orders, rather than saying the lack of vetoes showed that no one was being

punished.

In sum, this passing comment by the district judge—made in an entirely

different context, with no direct reference to Nee or Messinetti or anyone similarly

situated—does not demonstrate anything about the character of the particular veto

at issue, which is not dispositive of Nee and Messinetti’s claims in any event. Nee

and Messinetti have therefore showed no likelihood of success on the merits.

Nor can Nee and Messinetti establish likelihood of success based on their

contention that the District Council has no authority over the affairs of local

unions. (Mem. in Support of Injunction or Stay at 9-11). While the local unions are

not parties to this action eo nomine, the local unions have “affiliated [themselves]

into an organization known as the District Council,” and the District Council is

“the central governing body over and shall have legislative and executive powers

on all matters relating to the general interest and welfare of affiliated Local Unions

and their members.” District Council By-Laws at 1, 2 ¶ 4.A;2 see also

Constitution, United Bhd. of Carpenters & Joiners of America, ¶ 26.B

(empowering district councils to make applicable laws). More generally,

intermediate bodies such as the District Council “supervise[ ]” the local unions that 2 Available at http://www.nycdistrictcouncil.com/data/sites/1/pdf/NYC%20DISTRICT%20COUNCIL%20BYLAW%20DRAFT%20AS%20OF%20AUGUST%205%202011-1.pdf.


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constitute them, and the locals are “subordinate” to the councils. Harrington v.

Chao, 372 F.3d 52, 57 (1st Cir. 2004) (describing relationship of council and local

in United Brotherhood of Carpenters); see id. at 61 n.8 (noting commentator’s

view that “ ‘the district councils of the Carpenters are the real governing and

bargaining bodies of the union’ ”). The 2010 and 2014 stipulations, the 1994

consent decree, and the 1990 complaint in this action all make clear that the local

unions that constitute the District Council are subject to the district court’s

authority in this action, and neither the locals nor the District Council has ever

objected to that principle.

D. Nee and Messinetti Will Suffer No Injury Absent a Stay

Nee and Messinetti do not claim that they will suffer any injury if the 2014

stipulation remains in effect. Nor could they. Whether the Review Officer’s 2012

action was proper or improper, that question is unaffected by the entry of the 2014

stipulation, which simply extends and modifies the monitorship that has been in

place since 2010. Whatever consequences flow from the Review Officer’s 2012

action are also unaffected by the 2014 stipulation.

Nee and Messinetti suggest that they will be barred from running for elected

office (Mem. in Support of Injunction or Stay at 8)—despite the undisputed fact

that they were not barred when they ran successfully for office after the Review

Officer’s veto of their continued tenures in their prior positions, and despite the


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lack of any change in the pertinent language between the 2010 and 2014

stipulations. In a prior version of the stipulation—but not in the version entered by

the district court in November 2014—the parties had agreed that a person

previously vetoed by the Review Officer from holding office in a local union

would be presumptively prohibited from running for District Council office (but

not local-union office), but that the court-appointed officer could still permit such a

person to run if he found the person had been rehabilitated. This is not a bar to

running for anything—first of all, because it is not in the stipulation and order the

district court actually entered; second, because even as drafted it was merely a

presumption. In any event, Nee and Messinetti have incurred no injury from any

impediment that may exist to a candidacy for District Council office, as they have

never even alleged that they have any intention of running for District Council

office (as opposed to the local-union offices they have in fact successfully run for).

E. The Government and the Public Interest Will Be Harmed by a Stay

In contrast, the government and the public interest will be badly damaged by a

stay of the 2014 stipulation and order. That order, effectively a consent decree, is

entitled to significant deference from the courts, and should be permitted to remain

in place, as ordered by the district court. See SEC v. Citigroup Global Markets,

Inc., 752 F.3d 285, 293-98 (2d Cir. 2014).


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As described above, the stipulation and order keeps in place a system of

oversight by the district court—oversight that has achieved significant progress in

recent years in rooting out the corruption that has plagued the District Council for

decades. (R. Doc. 1522 (2014 memo of law explaining recent gains)). The parties

have agreed, and the district court has directed by the 2014 stipulation, that that

oversight continue in slightly modified form. There is no question that achieving

the objectives of that consent decree—eradicating the corruption within, and the

corrupt influences upon, the District Council—is a matter of paramount public

importance. To enter the stay requested by Nee and Messinetti would suspend the

operations of the district court’s oversight through its appointed monitor, leaving

uncertainty and the possibility of re-opening the doors to the types of racketeers

who have deprived New York City’s carpenters of honest representation for so

long.


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Conclusion

The application for a stay should be denied.

Respectfully Submitted

PREET BHARARA United States Attorney for the Southern District of New York, Attorney for Plaintiff-Appellee

/s/ Benjamin H. Torrance BENJAMIN H. TORRANCE Assistant United States Attorney Telephone: (212) 637-2703 E-mail: [email protected]


UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT -------------------------------------------------- x UNITED STATES v. DISTRICT COUNCIL OF CARPENTERS

Dkt. No. 14-3506

-------------------------------------------------- x

I, Benjamin H. Torrance, an Assistant United States Attorney for the Southern

District of New York, hereby certify that on December 11, 2014, I caused a copy

of the “Opposition to Motion for Stay” to be served, by mail, upon Appellants

Patrick Nee and Levy Messinetti.

Dated: New York, New York December 11, 2014

/s/ Benjamin H. Torrance Benjamin H. Torrance
