Global Investigations Review - The law and practice of international investigations

The Guide to Monitorships - First Edition

Unions

24 April 2019

Crowell & Moring

For as long as labour unions have served as catalysts for the humane treatment of workers and fair wages, they have also been a target for criminal organisations that seek to harness the power of unified workers for their own corrupt ends. State and federal law enforcement have worked tirelessly to eradicate these influences from unions, and the most powerful tool in this effort has been the Racketeer Influenced and Corrupt Organizations Act (RICO).2 Enacted in 1970, RICO provides for both criminal and civil remedies for racketeering activities connected to an ongoing enterprise or organisation, and it is via civil RICO actions that most union monitorships have arisen.3

The central mandate of union monitors is to provide independent oversight of anti-corruption compliance measures imposed upon unions following such law enforcement actions. Although monitorships have been used by law enforcers to address organised crime in other contexts, union monitorships are in many respects unique. The differences between union monitorships and corporate or government department monitorships arise from the democratic principles unions are designed to embody. While strengthening the democracy of the union is a key objective of any union monitorship, the democratic aspects of a union also create challenges. Any union monitor must navigate the difficulties of monitoring elections, the pitfalls of balancing crucial investigative confidentiality with the members' need for transparency and, finally, the demands of the various union stakeholders.

Monitors in the fight against organised crime and union corruption

The vast majority of union monitorships began within a 20-year period from the 1980s to the early 2000s when prosecution of traditional organised crime was at its height. Organised crime in unions took many forms, ranging from extortion, bribery and other forms of public corruption, to financial crimes such as embezzlement and theft. A civil RICO action was first brought by the United States Department of Justice (DOJ) against a union in 1982, and this strategy has been used numerous times in the decade since as part of DOJ's efforts to vanquish organised crime families, such as Cosa Nostra, from union dominance.4 By targeting the unions these crime syndicates controlled, the DOJ undermined bases of organised crime's economic and political power.5 Although several of these union RICO actions have terminated,6 some form of monitorship arising from many of these actions are still ongoing to this day.7

Monitorships can be imposed on unions by a judge after a civil RICO trial8 or as a condition of probation following a guilty plea or verdict in a criminal RICO case.9 Most frequently, however, they occur as part of a negotiated settlement between the union and the government.10 Union monitors' primary mandate is to investigate and eradicate the influence of organised crime that remains after DOJ's often preceding RICO actions against individual union officials.11 Because of the context in which these monitorships arise, union monitors most often have a background as a criminal prosecutor, frequently with experience investigating and prosecuting organised crime.12 This background is especially pertinent in the early stages of a monitorship when union leadership is typically most hostile to the intrusion of a monitor.13

There is much flexibility in the way a union monitorship can be designed. At one end of the spectrum, a monitor can be an all-powerful administrator, imbued with the powers of all the officers of the union.14 The effectiveness of this type of monitorship – really a trusteeship – has been questioned because in a world of finite resources, a heavy administrative load is bound to detract from the efforts to investigate and eradicate organised crime.15 On the other end of the spectrum, a monitor needs at a minimum investigatory powers, including authority to access information and the ability to pursue removal of officers who committed crimes or associated with organised crime in violation of the consent decree.16 Responsibilities entrusted to monitors generally include 'bringing and adjudicating disciplinary charges against union officers and members believed to be members of or to be knowingly associating with organized crime figures'.17 Additionally, monitors may have a role in administering and reforming the union's business operations, governance and compliance functions or elections.18 Therefore, depending on the scope of the monitorship, the monitor may need to assemble a support team, including labour lawyers, accountants or investigators, to fulfil the mandate of the monitorship.19

Challenges of democratic elections

Election monitoring duties were cemented as an a pillar of the union monitor's role in United States v. International Brotherhood of Teamsters, No. 88 Civ. 4486 (SDNY 28 June 1988), the first civil RICO case the DOJ brought against an entire international union.20 A dissident group of International Brotherhood of Teamsters (IBT) members successfully intervened on appeal and persuaded the government to make election reform part of the settlement,21 and a provision requiring direct elections of leadership by the rank and file was ultimately included in the consent decree.22 The consent decree in that case created the role of an election monitor (the election officer).23 However, the scope of the election officer's duties was not well defined: the election officer's mandate was to 'supervise' the IBT's election.24 When the election officer sought to promulgate guidelines governing the selection of delegates to the convention where nominations for international union office would be made, the IBT contended such action was outside the scope of 'supervision' of the rank-and-file members' direct election of the international officers.25 The court sided with the election officer, finding that the 'spirit and intent of the Consent Decree, requires that the term “supervise” be interpreted in its most expansive and proactive meaning'.26

Since then, election monitors have exercised a broad array of powers in carrying out their duties with respect to monitoring elections. Although most consent decrees establishing monitorships have not gone as far as the IBT in requiring wholesale reform of the union's electoral system,27 courts have imbued monitors with substantial authority to oversee democratic elections. For example, the consent decree in United States v. District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners of America et al., No. 90 civ. 5722 (SDNY 4 March 1994), afforded specific powers to its monitor in connection with election supervision including the supervision of union executive elections; filling of vacancies in previously elected positions; promulgating election rules; and resolving all disputes concerning the conduct of elections.28 In 2017, these powers were put to the test when election rules drafted by the independent monitor and approved by the court were applied in an election for district-wide leadership. The District Council's consent decree and by-laws established a process by which the candidates must undergo proper vetting, nomination procedures, and campaigning, ultimately culminating in an election in which every member has an equal vote in a secret written mail-in ballot. This system differs notably from that utilised by the rest of the United Brotherhood of Carpenters' political divisions, where the rigorous anti-corruption measures imposed by the District Council's consent decree are not in place.

Despite the intensive democracy-promoting election rules in place, some members were dissatisfied with their enforcement during the 2017 election. Granted, most, if not all, of those filing complaints during the election were either candidates on the slate that was ultimately defeated or their supporters, but this provides a good example of how a union monitorship is quite different from a corporate one. In a more traditional monitorship, when a monitor reaches a conclusion about a potential compliance issue it does not give rise to accusations that the monitor is engaging in a political choice or worse, propagating the corrupt system the monitor has been appointed to correct. Here, the slate that found itself on the losing side of both the election and the related election protests complained that the monitor's decision was not on the merits but rather a pre-disposition to support the incumbent slate and ultimately it fell to the United States District Court to adjudicate the losing slate's appeal. Though the monitor's rulings were affirmed by the District Court, these events demonstrate that, in such a democratic setting, the monitor must be extremely sensitive to the political environment of the union that he or she oversees and thoughtful about both the substance and the optics of every decision that is made.29 When overseeing an election, even the most minor decisions or the monitor will be challenged by those who disagree with the outcome, which makes it crucial that all processes and decisions are well reasoned and documented.

Transparency versus confidentiality

Another unique aspect of union monitorships is the issue of confidentiality. The extent of confidentiality applied to a monitor's activities and reports thereof may depend on whether the monitorship was consented to or unilaterally imposed, and the type of activities at issue.30 Union monitors typically publicly file reports on their activities and the union's progress towards the goals embodied in the consent decree.31 Union monitors may also utilise other distribution methods, such as the union's newsletter or website to communicate directly to the membership.32 Being transparent with the membership about the progress of the union under the monitorship is essential to achieving an open and democratic union. Without this level of transparency, members cannot make informed decisions when casting their ballots in union elections and the goal of a developing a democratically maintained union for the sole benefit of its members would be undermined.

However, some confidentiality is necessary for the functioning of the monitorship. Some members may only come forward with information critical to investigating organised crime in the union on the condition their identity is kept confidential. Ongoing investigations may also need to be kept confidential pending a determination, much like the privilege that appends to law enforcement investigations.33 Disclosure of investigations that did not lead to a conclusive finding of misconduct could prompt spurious litigation that drain the union's resources. Even some non-investigatory matters may require confidentiality, such as where it may be in the best interests of the union, as with any organisation, to enter into a contract that contains a nondisclosure clause (e.g., a settlement with an employee totally unrelated to racketeering activity). Striking the right balance between transparency with the membership and confidentiality in their own interest is crucial to maintaining the trust of the membership and therefore the effectiveness of the monitorship.

Demands of disparate stakeholders

The stakeholders in a union monitorship are also unique. The union members are not just passive beneficiaries of the monitorship, as the public or stockholders may be in the monitorship of a corporation. They are active, vocal and physically present participants that need to be engaged and won over to the pursuits of the monitorship. Nor is the union merely a source of employment for its members, as a corporation is for its employees. The union is fundamental to their livelihood throughout their entire career and as well as their identity, especially where union membership has been a multigenerational family tradition. Moreover, the union operates only because of their financial support in the form of dues. The ownership that members have over the union is also reflected in its political structure. The union is fundamental to their livelihood throughout their entire career and as well as their identity, especially where union membership has been a multigenerational family tradition. Moreover, the union operates only because of their financial support in the form of dues. The ownership that members have over the union is also reflected in its political structure. It is important to remember that even though one of the aims of a monitorship is a democratic union, whatever powers are given to the monitor are taken from officers that are ostensibly the members' representatives. With members' sense of ownership comes an expectation of access and transparency that the monitor must be prepared to navigate.

It is not sufficient for a monitor merely to interact with the executive leadership of the union. Although they may enjoy broad support, a true understanding of how the union is serving its members can come only from listening to different perspectives. All unions have 'dissident' groups that invariably challenge the leaderships' – or the monitor's – decisions. While a monitor's time must be spent efficiently, some of the most impactful changes at mobbed-up unions would not have been possible without dissident groups leading the charge.34 Accordingly, it is necessary for a union monitor to have an open mind and door when dealing with every faction within a union. All members must feel that they are able to voice their complaints and concerns and that they have a line of communication directly to the monitor or his or her investigators, whether it be through a hotline, email communications or in-person meetings. Similarly, the monitor or his or her representatives should regularly attend union leadership and delegate meetings to both be informed about the day-to-day activities of the union, but also to be present to address issues and field questions as they arise.

Transition from outside monitorship

The ultimate goal of any monitorship is to make itself obsolete. This is accomplished by developing compliance frameworks and mechanisms and transitioning their management and oversight to the union itself over time. Once the obvious criminal elements have been removed from power, non-corrupt administration of a union can be accomplished through the adoption of rules that serve the rank-and-file membership and that are openly and uniformly enforced. A culture of transparency and compliance with these beneficial rules is supported by the clear delineation of responsibilities, standard operating procedures that can be referred to in carrying out those responsibilities, and documentation of the decisions of officers and employees. The establishment of an organisation-wide culture of compliance is especially vital given that the entire union leadership can change at once with an election. Of course, these efforts require the commitment of appropriate resources, such as the hiring of a compliance officer or operations director. As in any organisation, the technological advancements over the past 20 years have made compliance and financial integrity at unions much easier to track.35

Transitioning a monitor's investigation and enforcement responsibilities back to the union is not as easy as the administration aspects. A prerequisite to this transition is to establish a role with these responsibilities internally. For example, in the District Council case, the Review Officer established the internal union Office of the Inspector General to 'investigate corruption and malfeasance involving the District Council, inform [the Review Officer's] office, law enforcement and union decision makers of the results of investigations and file internal union charges as appropriate'.36 Over time, additional responsibilities were transferred to this office, such as site visits,37 and eventually the initial investigation of United Brotherhood of Carpenters Constitution and District Council by-law violations.38 However, the categorical transfer of certain investigations to the internal inspector can be a challenge, as the full scope and implications of conduct being investigated is often not known at the outset.

Another method of monitor role-reduction is to transition the monitor's power from one of fiat or veto to one of recommendation to an internal union body. This re-involves the union leadership in punishing corruption and allows them to take the ownership over those kinds of decisions that will be necessary after the monitorship has ended. The District Council has made this transition with some success. When transitioning from the review officer to an independent monitor in 2015, the review officer's 'veto' power over a variety of decisions such as expenditures, contracts (excluding collective bargaining agreements), employment, eligibility to hold office and by-law amendments,39 was replaced with the independent monitor's ability to recommend such decisions to the District Council's Executive Committee and the additional ability to appeal any determination the Executive Committee made to the court.40 Although this procedure operated without issue for a number of years, a recent attempt to place more discretion over a shop steward's punishment in the hands of the Shop Steward Review Committee faltered when the committee applied incorrect standards.41

Determining when to terminate a union monitorship completely is a difficult issue. Many union monitorships continue to persist in some form decades after their first incarnation.42 For example, the IBT, which was subject to a consent decree for over 25 years, agreed in a final agreement and order to a permanent external disciplinary enforcement mechanism consisting of an independent investigations officer and an independent review officer.43 Intuitively, remedial actions that are sufficient to stave off a monitorship in the first place should provide insight into what may be sufficient to completely terminate any form external monitorship. When faced with a threat by the DOJ to file a draft RICO complaint, the Laborers' International Union of North America established a disciplinary code, suspended officers, and created four new investigative and enforcement positions that it filled with unaffiliated individuals.44 The government did not file the complaint.45 However, it is possible courts may have more rigorous expectations to terminate a monitorship than the government has to decline bringing a civil RICO suit.

Conclusion

Although some union monitorships that began decades ago are still ongoing today in one form or another, there have been no new monitorships imposed pursuant to civil RICO suits in recent years. Even if a resurgence of organised crime occurs, we are unlikely to see a return to the heyday of the union monitorship. First, unions have lost ground economically and politically in recent decades and are unlikely to be as important for organised crime to capture as in the past. Second, criticism of the cost–benefit proposition of monitorships has risen.46

Where ongoing oversight is still warranted, courts may impose or the parties may agree to less invasive form of monitoring, such as the 'decreeship' implemented in United States v. Local 30, United Slate, Tile and Composition Roofers.47 There the monitor had only the authority to observe contract negotiation meetings and certify the ensuing collective bargaining agreements, but not the broad powers like those of the review officer in the District Council case.48 Additionally, technological developments in areas such as election tools, record digitisation, database software and other systems that limit human intervention (and, therefore, corrupt manipulation) may also allow for less intensive and intrusive union monitorships in the future. That said, even if more efficient and less expensive tools continue to aid in the mission against corruption within unions, it seems likely that there will always be some role for a human monitor. Even if that role is limited or only focused on elections or another specific aspect of union life, having someone with the requisite independence, experience, temperament and, above all else, authority interacting with union officials and members, is essential to the effort to keep the influence of organised crime at bay.


Footnotes

1 Glen G McGorty is a partner and Joanne Oleksyk is an associate at Crowell & Moring LLP.

2 18 U.S.C.A. Section 1961 et seq.

3 James B Jacobs, Eileen M Cunningham and Kimberly Friday, 'The Rico Trusteeships After Twenty Years:
A Progress Report', 19, The Labor Lawyer, 419, 419-20 (2004). This work provides an excellent overview of the history and structure of the RICO union monitorships in the 1980s and 1990s.

4 id., at 419-20 & n.4.

5 See James B Jacobs and Lauryn P Gouldin, 'Cosa Nostra: The Final Chapter?', 25 Crime and Justice, 129, 140-43 (1999).

6 See Jacobs et al., supra note 2, at 427.

7 See, e.g., United States v. Dist. Council of New York City and Vicinity of the United Brotherhood of Carpenters ad Joiners of America et al.,, No. 1;90–cv-05722, 1994 WL 704811 (SDNY 16 December 1994) (hereinafter, 'Dist. Council'); United States v. Int'l Bhd. of Teamsters, No. 88 Civ. 4486 (SDNY 14 March 1989) (IBT).

8 Fed. R. Civ. P. 53(a)(1)(C) (permitting a court to appoint a master to 'address . . . post-trial matters that cannot be effectively and timely addressed by an available district judge or magistrate judge of the district').

9 See U.S. Sentencing Comm'n, Guidelines Manual Section 8D1.4 (November 2018).

10 Jacobs and Gouldin, supra note 4, at 171.

11 id.

12 James B Jacobs and Ronald Goldstock, 'Monitors & IPSIGS: Emergence of a New Criminal Justice Role', 43 Crim. Law Bulletin No. 2, 'Evolution of the IPSIG Role' at pp. 218–222.

13 See, e.g., James B Jacobs and Dimitri D Portnoi, 'Combating Organized Crime with Union Democracy: A Case Study of the Election Reform in United States v. International Brotherhood of Teamsters', 42 Loy. L.A. L. Rev. 335, 344 (2009) ('The relationship between the court-appointed officers and the union in the months following the finalization of the consent order proved so contentious that Judge Edelstein called this period “The Autumn of Discontent”.') (quoting United States v. Int'l Bhd. of Teamsters, 728 F. Supp. 1032, 1040 (SDNY 1990).

14 Jacobs et al., supra note 2, at 427 (listing possible administrative powers, including 'negotiating contracts, handling grievances, and initiating collective action, including strikes').

15 id.

16 id.; see also Stipulation and Order in Dist. Council, No. 1:90-cv-05722, ECF No. 1806 at 6–7 (SDNY filed 1 June 2018) (imbuing the independent monitor with the power to recommend the removal of officers to the Executive Committee, and appeal the Executive Committee's decision to the court).

17 Jacobs et al., supra note 2, at 427.

18 id.

19 Jacobs et al., supra note 2, at 425 (noting that only a few union monitors have had a labour law background).

20 Jacobs and Portnoi, supra note 12, at 421 ('The government broke new ground in United States v. International Brotherhood of Teamsters by seeking electoral reform as an anti-labor racketeering remedy.')

21 id., at 338.

22 id., at 343.

23 Consent Decree in IBT, No. 88 civ. 4486, at 7 (SDNY filed 14 March 1989), available at http://www.irbcases.org/pdfs/ConsentDecree.pdf.

24 id., at 15.

25 Jacobs and Portnoi, supra note 12.

26 United States v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., AFL-CIO, 723 F. Supp. 203, 206 (SDNY 1989), aff'd, 931 F.2d 177 (2d Cir. 1991).

27 Jacobs and Portnoi, supra note 12, at 420-21 (noting that a large number of the other civil RICO labour racketeering cases filed by the DOJ did not include systemic electoral reform).

28 Consent Decree in Dist. Council, No. 1:90-cv-5722-VM, ECF 410 at 10 (SDNY filed 4 March 1994).

29 See District Council, No. 1:90-cv-5733-VM, ECF 1803 (SDNY filed 4 May 2018).

30 Compare Brandon L Garrett, 'The Public Interest in Corporate Settlements', 58 B.C. L. Rev. 1483, 1530 (2017) (stating that corporate monitorships arising out of criminal deferred prosecution agreements are 'almost never' made public) with supra at 1527–28 ('It is standard for reports of policing monitorships established through DOJ consent decrees to be made public.')

31 See, e.g., Stipulation and Order in Dist. Council, No. 1:90-cv-05722, ECF No. 1806 at 12 (SDNY filed 1 June 2018) (requiring semi-annual reports); Consent Decree in IBT, No. 88 civ. 4486, at 17 (SDNY filed 14 March 1989), available at http://www.irbcases.org/pdfs/ConsentDecree.pdf (requiring quarterly filed reports on the activities of the administrator, investigations officer, and elections officer); see also Final Agreement in IBT, No. 88 civ. 4486, ECF No. 4409-1, at 21 (SDNY filed 14 January 2015) ('The Independent Review Officer shall be responsible for preparing and distributing to the membership annual reports of the work of the IBT Disciplinary Officers, which reports shall include detailed descriptions of the disciplinary, trusteeship, compliance, and other actions taken by the IBT Disciplinary Officers during the preceding year, including a summary of the number and types charges referred by the Independent Investigations Officer, the disposition of those charges, and an analysis of those dispositions as compared with the dispositions of similar charges in previous years.')

32 Consent Decree in IBT, No. 88 civ. 4486, at 16 (SDNY filed 14 March 1989), available at http://www.irbcases.org/pdfs/ConsentDecree.pdf (permitting the administrator to reasonably distribute materials to the membership and authorising the administrator to publish a report in each issue of International Teamster).

33 See, e.g., 6th Interim Report of the Independent Monitor in Dist. Council, No. 1:90-cv-05722, ECF No. 1828 at 13 (SDNY filed 31 December 2018) (referencing information regarding ongoing investigations provided to the court under seal).

34 Jacobs and Portnoi, supra note 12, at 422 ('In retrospect, no change could have occurred without Teamsters for a Democratic Union, an entrenched rank-and-file dissident group.')

35 See, e.g., Second Interim Report of the Review Officer in Dist. Council, No. 1:90-cv-05722, ECF No. 1071, at 49–50 (SDNY filed 3 June 2011) (discussing a pilot programme for electronic recording of hours worked).

36 First Interim Report of the Review Officer in Dist. Council, No. 1:90-cv-05722, ECF No. 1020, at 20 (SDNY filed 3 December 2010).

37 Second Interim Report of the Review Officer in Dist. Council, No. 1:90-cv-05722 ECF No. 1071, at 49 (SDNY filed 3 June 2011).

38 Sixth Interim Report of the Independent Monitor in Dist. Council, No. 1:90-cv-05722, ECF No. 1828, at 6 (SDNY filed 31 December 2018).

39 See Stipulation and Order in Dist. Council, No. 1:90-cv-05722, ECF No. 991, at 5–6 (SDNY filed 3 June 2010).

40 See Stipulation and Order in Dist. Council, No. 1:90-cv-05722, ECF No. 1595, at 4–6 (SDNY filed 18 November 2014).

41 Sixth Interim Report of the Independent Monitor in Dist. Council, No. 1:90-cv-05722, ECF No. 1828, at 10 (SDNY filed 31 December 2018).

42 See Jacobs et al., supra note 2, at 427.

43 Final Agreement in IBT, No. 88 civ. 4486, ECF No. 4409-1, at 14 (SDNY filed 14 January 2015).

44 See Serpico v. Laborers' Int'l Union of N. Am., 97 F.3d 995, 997 (7th Cir. 1996).

45 Jacobs and Gouldin, supra note 4, at 173.

46 See Veronica Root, Modern-Day Monitorships, 33 Yale J. on Reg. 109, 113 (2016) ('Controversies have arisen related to monitorship costs.'); see also Daniel J Fetterman and Mark P Goodson, 'Defending Corporations & Individuals in Government Investigations, Section 13:17 Collateral effects of FCPA violations' (2017) ('Following the issuance of the Grindler memorandum and continued criticism of the costs of monitorships, the government in 2011 departed from the general longstanding pattern of requiring external monitors [in settlements of FCPA cases].')

47 686 F. Supp. 1139 (E.D. Pa. 1988).

48 Jacobs and Gouldin, supra note 4, at 174 (internal citation omitted).

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