Wednesday, December 09, 2015

Lawsuit against Forest City, BUILD over "sham" Atlantic Yards jobs program ends in murky settlement for 19 plaintiffs

Daily News exclusive, 11/15/11
The lawsuit over a coveted training program expected to deliver union construction jobs related to Atlantic Yards began four years ago with public drama. "I was robbed," claimed a plaintiff.

(The story made the Daily News, the Times, NY1, the Brooklyn Paper, and others.)

It proceeded with some high-stakes legal arguments and provocative press releases, as plaintiffs' lawyers called the program a "sham" and legal filings illuminated flaws in the highly promoted Atlantic Yards Community Benefits Agreement (CBA).

But the suit against Forest City Ratner and ally Brooklyn United for Innovative Local Development  (BUILD), a key CBA signatory and vigorous Atlantic Yards cheerleader, ended last month in murk, enforced almost completely by the ironclad laws of confidentiality so often required by legal settlements involving Forest City.

Murky numbers

We don't know how much the 19 trainees got for their dashed hopes and inability to enter a coveted pathway to middle-class jobs, one that drew 1,200 people to an information session despite only 36 places in the Pre-Apprenticeship Training Program.

We know a piece of the story: the plaintiffs got $6,525 checks to compensate for  one component of the program, a purportedly hands--site training session in Staten Island, where they were unpaid and learned little. They got $3,262.50 for the wages, plus $3,262.50 in liquidated damages, for a total of $123,975.

That fraction of the settlement was made public, with legal costs and legal fees pushing the total paid out to $317,260.

However, a presumably larger settlement figure, based on highly contested claims regarding the potential value of each worker's foregone union construction career, is confidential. Neither developer Forest City Ratner nor lawyers for the workers would comment in response to my queries.

The plaintiffs' lawyers calculated that four years of work--work the plaintiffs didn't get--was worth $400,000 each, but said they'd settle for less. Forest City's lawyers argued that the sum was very unrealistic.

The larger picture

Along the way, the suit illuminated the dashed hopes some Brooklynites put in Atlantic Yards, the extravagant promises made by BUILD leaders, the difficulties in steering eager workers into coveted union apprenticeship programs, and the dubious but mutually beneficial relationship between Forest City and the now-defunct BUILD.

It also reinforces the widespread view (see the Next City article) that the CBA was a tool of the developer, not a contract aimed to truly help needy Brooklynites. Indeed, the suit showed that a consultant hired by Forest City reported back that CBA signatories were considered "fronts" for the developer.

“We were repeatedly reassured on numerous occasions that all we had to do is to complete the program and we would obtain union books and employment,” declared plaintiff Kathleen Noreiga, who expressed regret for having attended rallies for the project organized by BUILD, speaking in 2011 at a press conference outside the office of then City Council Member James.

The training program

From the Community Benefits Agreement
The program was perhaps the most significant element in the controversial but highly promoted CBA, which was touted as a "legally-binding" way to ensure jobs and other benefits to underprivileged Brooklynites. If Forest City did not fund a 36-person Pre-Apprentice Training Program, according to the CBA, it could be liable to pay $500,000--the only specific required money damages in the document.

Last year, after a preliminary procedural win for the plaintiffs, Public Advocate Letitia James, who as City Council Member championed the case when it was announced, declared, “The company, and those most closely aligned with FCR's agent organization BUILD, should be held fully accountable for the commitments made to members of the larger community."

That didn't happen.

From a public policy perspective, the lack of transparency in a confidential settlement is unfortunate. It's hard not to wonder whether the hundreds of thousands of dollars--millions?--Forest City spent in defending the suit might not better have gone to the needy plaintiffs, rather than high-priced lawyers.

"There's a certain black-heartedness attributed to Forest City Ratner," mused U.S. District Judge John Gleeson at a 2014 hearing. "But there are political sins and there are legal sins." Nonetheless, after that hearing he refused a key defense request to sever Forest City from the case.

Though Forest City's reputation suffered some dings from this case, it got what it needed out of BUILD and Caldwell, whose legal defense it funded. Caldwell's organization regularly provided community credibility for Atlantic Yards, appearing at rallies and in media interviews.

Meanwhile Forest City delayed funding the training program and never funded the Independent Compliance Monitor that was supposed to report back on how the developer fulfilled its CBA commitments.

Looking at the case

Lawyers for the plaintiffs argued, in pre-settlement discussions, that the lost wages for each worker, had they entered the Carpenters Union, were worth nearly $400,000 over four years, though they were willing to settle for less.

Lawyers representing Forest City and BUILD countered that, first off, the plaintiffs had a "reasonable" case only against BUILD and its CEO, James Caldwell, who admitted promising the workers union careers, but BUILD is defunct and Caldwell presumably has few resources.

But the case against deep-pocketed Forest City, they argued, was "exceedingly thin," because witnesses offered contradictory accounts as to whether Forest City and its executives actually made such promises.

(The contract between Forest City and BUILD, according to plaintiffs, did promise to feed the trainees into the limited number of union apprenticeship slots, but the document was never made public, and Forest City contended differently. It was certainly the intention of the CBA to feed those union apprenticeship slots, so it's not surprising BUILD officials believed it.)

Moreover, a judge's decision to exclude a proposed plaintiffs' expert witness surely diminished the ability to claim damages from expected careers. (Two of the plaintiffs later became members of the carpenters union through their own efforts.) Defense lawyers said only one plaintiff could point to a job he gave up to participate in the training program.

Another challenge--for both sides--was the plaintiffs' contention that Forest City Ratner and BUILD were "joint employers." Defense lawyers said that Forest City did not control BUILD, but the plaintiffs contended the nexus was questionable: while Forest City was the nearly exclusive funder of BUILD, it was not a subsidiary.

Gleeson did say that the "joint employer" question could go to a jury. I suspect both sides recognized that going to a trial would pose some risks.

Some numbers

In the one public part of the case, the plaintiffs got more than initially offered but not all they wanted. They sought $3,262.50 (representing 37.5 hours at $7.25 per hour multiplied by 12 weeks) per plaintiff, then added penalty-based damages to reach $7,340.63. Instead, they got $6,525. (One of the 20 plaintiffs apparently could not be found, so 19 were paid, for a total of $123,975.

The defense said that plaintiffs had rejected an offer "to pay the full amount" of such claims at the beginning of the litigation, but the plaintiffs apparently got double, including damages.

The one public part of the case describes compensation for plaintiffs' legal costs of $89,118 and "steeply discounted attorneys’ fees" of $104,167, which go only to the private firm involved in the case, Emery Celli Brinckerhoff & Abady (which represented plaintiffs in the Atlantic Yards eminent domain case) but not the public interest South Brooklyn Legal Services.

Such fees represent "less than 5% of the total lodestar amount of $2,174,000 calculated by Plaintiffs’ counsel," a letter from the plaintiffs said. That sounds like a significant retreat. Then again, surely that fee was based on a full payout, which didn't happen. And it's unclear whether there are other fees associated with the confidential part of the settlement.

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