Kosty v. Lewis

• Decision Date: 23 May 1963
• Docket Number: No. 17229.,17229.
• Citation: 319 F.2d 744,115 US App. DC 343
• Parties: John KOSTY, Appellant, v. John L. LEWIS et al., Trustees, United Mine Workers of America Welfare and Retirement Fund of 1950, Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

115 US App. DC 343, 319 F.2d 744 (1963)

John KOSTY, Appellant, v. John L. LEWIS et al., Trustees, United Mine Workers of America Welfare and Retirement Fund of 1950, Appellees.

No. 17229.

United States Court of Appeals District of Columbia Circuit.

Argued April 24, 1963.

Decided May 23, 1963.

Petition for Rehearing Denied July 9, 1963.

Petition for Rehearing Denied July 15, 1963.

Mr. Louis Rabil, Washington, D. C., with whom Mr. Joseph M. Stone, Washington, D. C., was on the brief, for appellant.

Mr. Edward L. Carey, Washington, D. C., with whom Messrs. Val J. Mitch and Charles L. Widman, Washington, D. C., were on the brief, for appellees.

Before BAZELON, Chief Judge, and BURGER and McGOWAN, Circuit Judges.

Petition for Rehearing En Banc Denied En Banc July 9, 1963.

Petition for Rehearing by the Division Denied July 15, 1963.

McGOWAN, Circuit Judge.

A problem arising in the administration of the United Mine Workers of America Welfare and Retirement Fund of 1950 is the subject of this appeal. It is prosecuted by a member of the union who brought suit to compel the payment of a retirement pension which the Trustees of the Fund had denied him. After a trial to the District Court, his action was dismissed. An understanding of the issues to be resolved requires an examination of (1) the nature and origin of the Fund, including the provisions made for its administration, (2) the circumstances of the appellant in relation to his claim of eligibility for a pension, and (3) the function and scope of judicial review in a matter of this kind.

I

The creation of the Fund in the first instance was dependent upon the benevolent regard of Congress, as manifested by the following exempting provision in Section 302(c) of the Labor Management Relations Act of 1947,¹ which authorizes the establishment in the coal industry of welfare funds

"(c) * * * for the sole and exclusive benefit of the employees of such employer, and their families and dependents (or of such employees, families, and dependents jointly with the employees of other employers making similar payments, and their families and dependents): Provided, That (A) such payments are held in trust for the purpose of paying, either from principal or income or both, for the benefit of employees, their families and dependents, for medical or hospital care, pensions on retirement or death of employees, compensation for injuries or illness resulting from occupational activity or insurance to provide any of the foregoing, or unemployment benefits or life insurance, disability and sickness insurance, or accident insurance; (B) the detailed basis on which such payments are to be made is specified in a written agreement with the employer * * *."

Pursuant to this statutory authorization, a subsequent collective bargaining agreement — the National Bituminous Coal Wage Agreement of 1950 — brought the Fund into being, expressly denominating it to be "an irrevocable trust created pursuant to Section 302(c) of the `Labor-Management Relations Act, 1947,'" to endure "as long as the purposes for its creation shall exist." The purposes specified include the payment of pension benefits on retirement of employees. The source of revenues for these purposes was the payment into the Fund by the mine operators of 30¢ in respect of each ton of coal produced. Responsibility for operation of the Fund was placed in a Board of Trustees consisting of one representative of the United Mine Workers of America, one representative of the coal operators, and one neutral selected by the other two. The Trustees were directed to designate a portion of the revenues received for use in providing pensions, but a substantial measure of discretion, with respect to pension as well as other benefits, was lodged in the Trustees in these terms:

"Subject to the stated purposes of this Fund, the Trustees shall have full authority, within the terms and provisions of the `Labor-Management Relations Act, 1947,\' and other applicable law, with respect to questions of coverage and eligibility, priorities among classes of benefits, amounts of benefits, methods of providing or arranging for provisions for benefits, investment of trust funds, and all other related matters."

At their second meeting on April 5, 1950, the Trustees adopted Resolution No. 10, providing a monthly pension for retired employees. Resolution No. 10 promulgated regulations (stated to be "subject to amendment, revocation and revision at the discretion of the Trustees") prescribing eligibility requirements and covering other administrative aspects of the pension system. In order to be eligible, an applicant for a pension was required to have (1) attained the age of 60, (2) retired by permanently ceasing work in the Bituminous Coal Industry after May 28, 1946, (3) been employed for at least one year immediately preceding his retirement, and (4) completed 20 years of service in the Coal Industry.

On January 28, 1953, the Trustees adopted Resolution No. 30, which superseded Resolution No. 10 as the governing regulation with respect to pension eligibility requirements. The new resolution was made effective forthwith, that is to say, January 29, 1953. The significant change which it made, for purposes of this proceeding, was to prescribe that the requisite 20 years of service must have taken place within the 25-year period immediately preceding the filing of a pension application. A few weeks later, on March 13, 1953, the Trustees, by Resolution No. 31, amended Resolution No. 30, retroactively effective as of January 29, 1953, by enlarging from 25 to 30 years the period immediately preceding application within which the 20 years of service must have occurred. This change was perpetuated in a further amending resolution, No. 32, adopted by the Trustees on May 12, 1953.

II

The appellant, at the age of 65 years and five months, retired on June 26, 1953, and promptly thereafter filed his application for a pension on the form provided by the Fund. The application recited a total of over 31 years of service in the coal industry, comprised of two nonconsecutive periods. The first of these was from 1906 to 1924 as an employee of Bethlehem Mines Corporation; the second was from 1940 to 1953 as an employee of Stineman Coal & Coke Company.

The administrative files of the Fund relating to this application, which were put in evidence in the District Court, showed that appellant's application was denied for the reason that it did not appear that appellant had had 20 years of service in the 30-year period immediately preceding the filing of the application, as required by Resolution No. 30, as amended. The record suggests that efforts were made over a long period of time, both by the appellant and by others on his behalf, to persuade the Trustees to alter their decision, but these efforts were unavailing and the suit in the District Court was instituted.

The appellant's second period of employment — from 1941 to 1953 — was conceded by the Trustees, but, in response to interrogatories, the Trustees stated that they had no information as to whether the appellant had or had not been employed as a coal miner from 1906 to 1924. At the trial appellant testified at length with respect to this first period of employment, stating that it had ended because he had received an injury in the course of his employment. This testimony was corroborated by that of another miner who had worked with appellant at the same mine throughout the entire period from 1906 to 1924. The Trustees offered no evidence of any kind contradicting this testimony, and made no effort to impeach the witnesses on this point.

The trial judge found that Resolution No. 10 imposed "no restriction as to the period of time in which those 20 years of service had to be completed." This finding seems fully justified by the language of Resolution No. 10, and the Trustees make no contrary contention. Since appellant was over the age of 60 at the time Resolution No. 10 was adopted, he could have qualified for a pension thereunder at any time by a simple election to stop working. He was not bound to do so, however, because Resolution No. 10 did not impose any requirement that an employee, otherwise qualified for a pension thereunder, was obligated to terminate his employment and take his pension.

The record shows explicitly, from the testimony of the neutral Trustee, that no notice of any kind was given by the Trustees of their purpose to change the eligibility requirements. As has been noted, the amending resolution was effective immediately upon its adoption. Thus, appellant, at the age of 65, found his existing eligibility abruptly terminated, and he was confronted with the necessity of amassing approximately 8½ years additional service in order to qualify under the new rule.² The trial judge concluded that, under these circumstances, there was no evidence of arbitrary or capricious conduct on the part of the Trustees vis-a-vis the appellant, and that his claim for relief had not been established.

III

The trial judge correctly concluded that the issue presented to him was whether the Trustees' action was arbitrary or capricious in relation to the appellant in the light of the facts adduced. This conclusion is fully in accord with the definition of the scope of judicial review articulated by this Court in Danti v. Lewis, 114 U.S.App.D.C. 105, 312 F.2d 345 (1962). Both in that case and in this the Trustees have accepted the appropriateness of this definition, and, accordingly, we need not consider any contention that there is no power whatsoever in a court to interfere in any way with the Trustees in their administration of the Fund. It could not be otherwise. The institutional arrangements creating this Fund and specifying the purposes to which it is to be devoted are cast expressly in fiduciary form;³ and the Trustees, like all fiduciaries, are subject to judicial correction in a proper case upon a...