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A federal lawsuit that accused the Connecticut Laborers' union of wielding influence by controlling dues money has been settled, with union officials agreeing to a new system of collecting and distributing the funds.

The lawsuit took aim at the powerful Connecticut Laborers District Council and its long-standing financial practices. The council traditionally collected dues from members across the state, then funneled funds back to the locals.

The lawsuit, filed by Local 665 in Bridgeport and its business manager, Ronald Nobili, said the control wielded by the officers on the district council allowed them to use funds to reward supporters and punish enemies at the state's 10 Laborers' locals.

Under the settlement, the council will be required to disburse dues money in proportion to each local's working membership. The agreement also requires a secret ballot vote on any proposed increases in dues. The council now collects about $1.2 million in working dues from 5,000 members.

``It's basically a sea change,'' Nobili said. ``They won't be currying favor now.''

Robert Cheverie, who represented the district council, said the interpretation offered by Nobili was an ``outrage.'' He said some of the larger locals in the state did, in fact, subsidize some of the smaller ones. But Cheverie said the goal was simply to keep the smaller locals in business.

``The idea that this was some sort of patronage system is just not the case,'' Cheverie said.

Cheverie said the district council decided to settle the lawsuit to avoid wasting valuable resources in protracted litigation. ``The settlement is in everyone's interest,'' he said. ``I don't think anyone won. I don't think anyone lost.''

But Carl Biers, executive director of the New York-based Association for Union Democracy, said the settlement could have implications throughout the labor movement, where a trend toward consolidation has taken power away from members.

``It's a tremendous victory,'' Biers said. ``It's also a victory that has implications for all union members that are fighting to protect their democratic rights.''

The Laborers' union has long been accused by critics of using pressure and intimidation to prevent dissidents from wresting power from those in control. The international union, threatened with a takeover by the U.S. Justice Department, agreed to a series of internal reforms several years ago.

Leon Rosenblatt, a West Hartford lawyer who represented Nobili and Local 665, said the agreement will force the Laborers in Connecticut to inject a measure of democracy into their organization.

``It's the first time in the history of the the Laborers where rank-and- file members have stood up to statewide leadership, faced them square on and also beat them,'' Rosenblatt said. ``The mere fact that the suit was brought was significant. In the past, most members were afraid to do that.''

Nobili said changing the dues system is a good start, but that additional reforms are needed at the union, including giving members the right to vote on contracts.

``It's only a start,'' Nobili said. ``With this union, it's only the tip of the iceberg, but it's only a start. Some reforms had to occur.''

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