Global Investigations Review - The law and practice of international investigations

The Guide to Monitorships - Second Edition

16. Unions

Crowell & Moring LLP

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 authorities 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 on unions following such law enforcement actions. Although monitorships have been used by law enforcers to address organised crime in other contexts, union monitorships are unique in many respects. The differences between union monitorships and corporate or government department monitorships arise from the democratic principles that unions are designed to embody. While strengthening the democracy of the union is a key objective of any union monitorship, the democratic aspects of unions 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 between the 1980s and 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 (US DOJ) against a union in 1982, and this strategy has been used numerous times since as part of the US 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 US DOJ undermined bases of organised crime’s grasp on 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 has continued to this day.[7]

Monitorships can be imposed on unions by a judge after a civil RICO trial[8] or as a condition of probation following a guilty plea or a 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 the US 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 backgrounds as criminal prosecutors, frequently with experience in 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] At the other end of the spectrum, a monitor may have far less authority over matters facing the union. However, even in those cases, an independent monitor, at a minimum, must retain investigatory powers, including the 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 a 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 a pillar of the union monitor’s role in United States v. International Brotherhood of Teamsters,[20] the first civil RICO case the US DOJ brought against an entire international union.[21] A dissident group of members of the International Brotherhood of Teamsters (IBT) successfully intervened on appeal and persuaded the government to make election reform part of the settlement,[22] and a provision requiring direct elections of leadership by the rank and file was ultimately included in the consent decree.[23] The consent decree in that case created the role of an election monitor (the election officer).[24] 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.[25] 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 that the action was outside the scope of supervision of the rank-and-file members’ direct election of the international officers.[26] 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’.[27]

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,[28] 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.[29] afforded specific powers to its monitor in connection with election supervision, including the supervision of union executive elections, filling vacancies in previously elected positions, promulgating election rules and resolving all disputes concerning the conduct of elections.[30] 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 are required to undergo proper vetting, follow certain nomination procedures and campaign according to specific guidelines. The process culminates in an election in which every member has an equal vote in a secret written mail-in ballot. This system differs notably from that used by the rest of the United Brotherhood of Carpenters’ political divisions, in which 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 District Council’s 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, a monitor reaching a conclusion about a potential compliance issue does not give rise to accusations that the monitor is engaging in a political choice or worse, propagating the corrupt system that 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 made on the merits but rather pursuant to a predisposition to support the incumbent slate. 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.[31] When overseeing an election, even the most minor decisions of 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. With this in mind, the independent monitor’s finely tuned efforts around the District Council’s 2020 special election for president – including clear communication with members and candidates – enabled the election process to play out in a transparent, unimpeachable and relatively seamless manner.

Transparency versus confidentiality

Another unique aspect of union monitorships is the level of transparency under which monitors operate. 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.[32] Union monitors typically publicly file reports on their activities and the union’s progress towards the goals embodied in the consent decree.[33] Union monitors may also use other distribution methods, such as the union’s newsletter or website, to communicate directly to the membership.[34] 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’ ability to make informed decisions in union elections would be compromised, and the goal of developing and maintaining a democratically run union would be undermined.

However, some level of confidentiality is necessary for the monitorship to function effectively. For example, some members may only come forward with information critical to investigating organised crime in the union on the condition that 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.[35] 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 with respect to certain matters is crucial to maintaining the trust of the membership and therefore the success of the monitorship and the health of the union.

Demands of disparate stakeholders

The stakeholders in a union monitorship are also unique. The union members, whose financial support in the form of dues fuels the operation of the union, are not just passive beneficiaries of the monitorship, as the general public or stockholders may be in the monitorship of a corporation. They are active, vocal and physically present participants who must be engaged and aligned with the pursuits of the monitorship. The union is fundamental to their livelihood and identity throughout their career, especially for people for whom union membership has been a multigenerational family tradition – it is not merely a source of employment. Moreover, 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 to facilitate a democratic union, the powers that are given to the monitor are necessarily taken from officers who are ostensibly the members’ representatives. Thus, 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 to interact only with the executive leadership of the union. Although the leadership may enjoy broad support, a true understanding of how the union is serving its members can come only from taking account of different perspectives. All unions have dissident groups that invariably challenge the leadership’s – or the monitor’s – decisions. While a monitor’s time must be spent efficiently, some of the changes at mobbed-up unions that had the greatest effect would not have been possible without dissident groups leading the charge.[36] Accordingly, it is necessary for a union monitor to have an open mind and door with respect to every faction within a union. All members must feel that they are able to voice their concerns and that they have a line of communication directly to the monitor, or his or her investigators, whether it be through a grievance hotline, email or face-to-face meetings. Similarly, the monitor or his or her representatives should regularly attend union leadership and delegate meetings both to be informed about the day-to-day activities of the union and to be able to address any issues or questions as they arise and in a timely manner.

Transition from external monitorship

The ultimate goal of any monitorship is to make itself obsolete. This is accomplished by developing rigorous compliance frameworks and mechanisms, and transferring 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 during the past 20 years or so have made compliance and financial integrity at unions much easier to track.[37]

Transferring a monitor’s investigative and enforcement responsibilities back to the union is not as easy as the administrative aspects. A prerequisite to this transition is to establish an internal role with these responsibilities. 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’.[38] Over time, additional responsibilities were transferred to this office, such as site visits,[39] and eventually the initial investigation of United Brotherhood of Carpenters Constitution and District Council by-law violations.[40] 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 reducing the monitor’s role is to transfer the monitor’s power from one of fiat or veto to one of recommendation to an internal union body. This reintegrates the union leadership in punishing corruption and allows it to regain ownership over the kinds of decisions that will be necessary to maintain the health of the union after the monitorship has ended.

The District Council has made this transition with some success. When undergoing the transition from the review officer to an independent monitor in 2015, the review officer’s ‘veto’ power over a variety of decisions, such as expenditure, contracts (excluding collective bargaining agreements), employment, eligibility to hold office and by-law amendments,[41] 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.[42]

Although this procedure operated without incident for a number of years, an 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.[43]

Determining when to terminate a union monitorship completely is a difficult matter. Many union monitorships continue to persist in some form decades after their first incarnation.[44] For example, the IBT, which was subject to a consent decree for more than 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.[45]

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 of external monitorship. When faced with a threat by the US 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.[46] The government did not file the complaint.[47] However, it is possible that courts may have more rigorous expectations in connection with terminating a monitorship than the government has to decline to bring a civil RICO suit.

Conclusion

Although some union monitorships that began decades ago still exist in one form or another, no new monitorships have been 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 critical for organised crime to capture as in the past. Second, criticism of the cost–benefit proposition of monitorships has risen.[48]

Where continuing oversight is still warranted, courts may impose, or the parties may agree to, a less invasive form of monitoring, such as the ‘decreeship’ implemented in United States v. Local 30, United Slate, Tile and Composition Roofers.[49] There the monitor had only the authority to observe contract negotiation meetings and certify the ensuing collective bargaining agreements, but did not have broad powers like those of the review officer in the District Council case.[50] 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 Lisa Umans is an associate at Crowell & Moring LLP. This article was co-authored in this publication’s first edition by Joanne Oleksyk, a former Crowell associate, who is presently in-house counsel at Macquarie Group.

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, at 419, 420 (2004). This work provides an excellent overview of the history and structure of the union monitorships under the Racketeer Influenced and Corrupt Organizations Act [RICO] in the 1980s and 1990s.

4 id., at 419, 420 and n.4.

5 See James B Jacobs and Lauryn P Gouldin, ‘Cosa Nostra: The Final Chapter?’, 25 Crime and Justice (1999), 129, 140 to 143.

6 See Jacobs et al. (footnote 3, above), at 427.

7 See, e.g., United States v. District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners of America et al., No. 1:90–cv-05722, 1994 WL 704811 (SDNY, 16 December 1994) [District Council]; United States v. International Brotherhood 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 Commissionn, ‘Guidelines Manual’, Section 8D1.4 (November 2018).

10 Jacobs and Gouldin (footnote 5, above), 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 to 222.

13 See, e.g., James B Jacobs and Dimitri D Portnoi, ‘Combating Organized Crime with Union Democracy: A Case Study of the Electoral Reform in United States v. International Brotherhood of Teamsters’, 42 Loyola of Los Angeles Law Review, 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. International Brotherhood of Teamsters, 728 F. Supp. 1032, 1040 (SDNY, 1990).

14 Jacobs et al. (footnote 3, above) 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 District Council, No. 1:90-cv-05722, ECF No. 1806, at 6 to 7 (SDNY, 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., (footnote 2, above), at 427.

18 id.

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

20 No. 88 Civ. 4486 (SDNY, 28 June 1988).

21 Jacobs and Portnoi (footnote 13, above), 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.’)

22 id., at 338.

23 id., at 343.

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

25 id., at 15.

26 Jacobs and Portnoi (footnote 13, above),

27 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).

28 Jacobs and Portnoi (footnote 13, above), at 420 to 421 (noting that a large number of the other civil RICO labour racketeering cases filed by the Department of Justice did not include systemic electoral reform).

29 No. 90 civ. 5722 (SDNY, 4 March 1994).

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

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

32 Compare Brandon L Garrett, ‘The Public Interest in Corporate Settlements’, 58 Boston College Law Review, at 1483, 1530 (2017) (stating that corporate monitorships arising out of criminal deferred prosecution agreements are ‘almost never’ made public) with same at 1527 to 1528 (‘It is standard for reports of policing monitorships established through DOJ consent decrees to be made public.’)

33 See, e.g., Stipulation and Order in District Council, No. 1:90-cv-05722, ECF No. 1842 at 12-13 (SDNY, 17 October 2019) (requiring annual reports); Consent Decree in IBT, No. 88 civ. 4486, at 17 (SDNY, 14 March 1989), 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, 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.’)

34 See, e.g., Stipulation and Order in District Council, No. 1:90-cv-05722, ECF No. 1842 at 11 (SDNY, 17 October 2019) (requiring access to any ‘District Council publication that concerns the affairs of the union, including The Carpenter or any other newsletter, and any District Council website, email address list, or other means of electronic communication, to communicate with the membership’); Consent Decree in IBT, No. 88 civ. 4486, at 16 (SDNY, 14 March 1989), 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).

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

36 Jacobs and Portnoi (footnote 13), at 422 (‘In retrospect, no change could have occurred without Teamsters for a Democratic Union, an entrenched rank-and-file dissident group.’)

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

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

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

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

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

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

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

44 See Jacobs et al., (footnote 3, above), at 427.

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

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

47 Jacobs and Gouldin (footnote 5, above), at 173.

48 See Veronica Root, ‘Modern-Day Monitorships’, 33 Yale Journal on Regulation, at 109, 113 (2016) (‘Controversies have arisen related to monitorship costs.’); see also Daniel J Fetterman and Mark P Goodson, Defending Corporations and 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 long-standing pattern of requiring external monitors [in settlements of FCPA cases].’)

49 686 F. Supp. 1139 (E.D. Pa., 1988).

50 Jacobs and Gouldin (footnote 5, above), at 174 (internal citation omitted).

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