Costello v. Lipsitz
| Decision Date | 07 March 1977 |
| Docket Number | No. 75-2207,75-2207 |
| Parties | 94 L.R.R.M. (BNA) 3075, 81 Lab.Cas. P 13,094 Michael COSTELLO et al., Plaintiffs-Appellants, v. Barry LIPSITZ et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Joseph H. Kaplain, Joseph C. Segor, Richard A. Sicking, Miami, Fla., for plaintiffs-appellants.
Steadman S. Stahl, Jr., Hollywood, Fla., for defendants-appellees.
Appeal from the United States District Court for the Southern District of Florida.
Before BROWN, Chief Judge, and TUTTLE and GEE, Circuit Judges.
After more than a decade of operating under eight 1 collective bargaining agreements, each of which included a provision with almost identical wording requiring a Joint Apprenticeship and Training Trust Fund Agreement (Trust Fund Agreement) 2 conforming with § 302 of the Labor Management Relations Act of 1947, 29 U.S.C. § 186 (LMRA), a smoldering dispute between Union Trustees 3 and Employer Trustees 4 over one provision, Section 10, 5 of the 27 August 1962 Trust Agreement (Trust Agreement) reached a non-judicial impasse.
The whole thing turns on § 10 which provides that "(m)atters pertaining to any employees of this Fund (Trust Fund) shall be the responsibility of Employers' Trustees only". Although the contents of § 10 may be admirably succinct, it has nonetheless created a protracted conflict. As a result of repeated failures 6 spanning almost a decade to have this section of the Trust Agreement deleted, Union Trustees 7 sought a judicial determination under the Declaratory Judgment Act 8 that § 10 of the Trust Agreement 9 fails to meet the constraints of §§ 302(c)(5)(B) and 302(c)(6) of the LMRA. 10 In response, Employer Trustees argue that a § 302 trust does not exist and therefore equal representation in the administration of the Trust Fund is not required. Compliance with the §§ 302(c)(5)(B) and (c)(6) requirements avoids the § 302 prohibition of payments by an employer to his employees, his employees' representatives, their labor organizations, or officers or employees of such a labor organization.
After a full trial without a jury, the District Court issued its findings of fact and conclusions of law on March 31, 1975. Included among these determinations is the District Court's decision that no written Trust Fund Agreement had been executed or existed for the years 1964, 1966, 1967, 1972, 1973 and 1974. 11 Coupled with this finding is one that the trust fund in existence known as the Gold Coast Electrical Joint Apprenticeship and Training Trust Fund (Trust Fund) has been wholly funded by the employer and consequently the Trust Fund is " . . . not controlled by Section 302 of the Taft-Hartley Act so that the employer must give the union an equal voice in the operation of the Fund."
When the chaff of the arguments and issues presented is winnowed from the seed of this dispute, only a narrow issue remains. Has the executed 27 August 1962 Trust Agreement been ratified so all § 302 requirements must be followed?
On the basis of the uncontroverted facts in this record that a written trust agreement was executed by authorized representatives of both Union and Employers and that a Trust Fund has been created and operated in accordance with the Trust Agreement's terms from 1962 to today, we hold that the Trust Agreement has been ratified and that the Trust Fund is a valid trust within the perimeters of § 302(c)(5)(B)'s and § 302(c)(6)'s application. In view of this, § 10 of the Trust Agreement is illegal, must be eliminated from the Trust Agreement, and equal representation must exist in the administration of the Gold Coast Electrical Joint Apprenticeship and Training Trust Fund.
In pre-1962 negotiations between Union and Employer Association encompassing a period from the early 1950's, 12 the respective collective bargaining agreements have provided for a Local Joint Apprenticeship and Training Committee composed of equal numbers of management and labor representatives and requiring payments by each contractor to the Apprenticeship Program of $2.00 per month per indentured apprentice. 13 The Union was required to match the contractors' payments.
During its negotiations which culminated in the collective bargaining agreement effective on September 1, 1962, Union and Employer Association agreed to create an Apprenticeship and Training Trust Fund (Trust Fund) financed wholly by members of Employer Association. Included in the 1962 collective bargaining agreement was the provision of Article V, § 7 which states:
"The parties to this agreement shall have a joint apprenticeship and training trust fund agreement which shall conform to Section 302 of the Labor Management Relations Act of 1947 as amended."
Each successive collective bargaining agreement has contained the same requirement. On August 27, 1962, five days prior to the actual signing of the September 1, 1962 collective bargaining agreement, the Trust Agreement was executed by Marshall Williams 14 in his representative capacity for Union and Karl Behnke as agent for Employer Association. 15
From September 1962 forward the requisite payments have been made by Employers into the Trust Fund, succeeding collective bargaining agreements have contained the identical provision calling for a Trust Fund Agreement, and, most importantly, the conduct of the parties has demonstrated that each believed the 27 August 1962 Trust Agreement was the one referred to in each of the collective bargaining agreements from 1962 through 1974. 16 Indeed, were it not for one provision of the 1962 Trust Agreement, § 10, this dispute would not be before this Court today.
In 1967, Union's displeasure with § 10 was piqued when its business manager, Marshall Williams, resigned and became both Chapter Manager of NECA and Executive Director of Trust Fund. In his new dual capacity, Williams' salary began at $669.23 per week with a ten percent increase each January 1 during the life of the contract. By the fifth and last year of the contract, Williams' salary would be approximately $50,000. Among the other perquisities provided was reimbursement for business connected automobile expenses at the rate of twenty cents per mile. Since 1967, Union Trustees have repeatedly and unsuccessfully attempted to have § 10 of the Trust Agreement eliminated. Finally, because of the inability to dislodge absolute control by Employer Trustees over hiring, firing, and compensation of Fund employees, 17 Union Trustees seek our resolution of this provision's legality. 18
In resolving this dispute, this Court addresses whether a written Trust Fund Agreement exists, 19 whether the 27 August 1962 Trust Agreement has been ratified, whether a trust fund agreement in this Union Trustee-Employer Trustee dispute must conform to the dictates of § 302(c)(5)(B) and (c)(6) of the LMRA, and whether § 10 of the Trust Agreement violates these LMRA provisions.
Based on these actions, on the wording of these particular writings, and the historical development of the trust fund references which exist in the collective bargaining agreements, the drama between the two groups has unfolded. In simplest terms, this case is another of the perennial replays of labor-management disputes. Although the geographical setting of this disagreement is different from other, similar ones, it is staged with the back drop of concerns which gave rise to § 302.
Because of the abuses that have occurred in the cauldron of labor-management interplay which include misuse of labor organization funds, extortion by labor personnel, and attempts by business personnel to influence or exert pressure on union "personnel" particularly in a financial form, restrictions on conduct between these two bodies and certain of their representatives have been imposed by Congress. 20 One is the § 302(c) prohibition of payments by an employer to labor organizations or to their representatives. 21 However, in certain explicitly, statutorily defined instances exceptions to this general prohibition exist. One permits payments to a trust fund for training and apprenticeship programs. 22 For such a trust fund to come within this exception, the statutory criteria set forth in § 302(c)(5) and (c)(6) must be met. 23
As any "curative" form of legislation designed to eliminate past abuses and prevent future ones, § 302's prohibition combines an elimination of the then existing abuses with its future-looking "prophylactic" purpose. See Local No. 2 of Operative Plasterers and Cement Masons International Association v. Paramount Plastering, Inc., 9 Cir., 1962, 310 F.2d 179, 186; Employing Plasterers' Association of Chicago v. Journeyman Plasterers' Protective & Benevolent Society of Chicago, 7 Cir., 1960, 279 F.2d 92, 97. To retain this preventive effect against the onslaught of creative devices to avoid § 302's application, this Court has recognized that strict compliance with the rigid structure of § 302 is necessary. In determining whether a trust fund satisfied the § 302(c)(5)(B) requirements, we have stated
Judicial adherence to the intention of Congress in enacting Section 302 requires strict enforcement of the purposefully rigid structure provided in this section. Stuart Plastering, supra at 1026.
Likewise, if the Trust Fund under examination in this case comes within § 302's scope, such a strict enforcement of § 302(c)(5)(B)'s requirements must be followed.
Recognizing that, with the exception of § 302(c)(5)(B)'s equality of administration provision, the other requisites are present in the existing documents, Employer Trustees direct their sole attack on appeal at whether the 27 August 1962 Trust Agreement is the agreement contemplated on or after September 1, 1962. In other words, they contend that although the 27 August Trust Agreement may meet § 302's requirements, it is not the Trust Fund...
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...302 is not satisfied simply by equal numbers of employer and employee trustees, as the Fifth Circuit stated in Costello v. Lipsitz, 547 F.2d 1267, 1278 (5th Cir. 1977): . . . Although we wish to emphasize that none of the flagrant, impermissible abuses which gave birth to § 302 have occurre......
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