Ader v. Hughes

• Citation: 570 F.2d 303
• Decision Date: 15 February 1978
• Docket Number: No. 76-1680,76-1680
• Parties: 97 L.R.R.M. (BNA) 2550, 83 Lab.Cas. P 10,314 Larry A. ADER, Bernard T. Robinson, Roy Spellman, Edward Rylands, Theodore C. Sanford, Jr., Matthew Weaver, Wilbur Scheller and Floyd Hitchcock, in their capacity as Union Trustees of Carpenters' and Millwrights' Health Benefit Trust Fund, Plaintiffs-Appellees, v. Bruce HUGHES, H. E. Anderson, Robert Dougan, Carl Smith, Haskell Sloan, James S. Brown and Chris H. Seegmiller, in their capacity as Employer Trustees of Carpenters' and Millwrights' Health Benefit Trust Fund, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 303

570 F.2d 303

97 L.R.R.M. (BNA) 2550, 83 Lab.Cas. P 10,314

Larry A. ADER, Bernard T. Robinson, Roy Spellman, Edward Rylands, Theodore C. Sanford, Jr., Matthew Weaver, Wilbur Scheller and Floyd Hitchcock, in their capacity as Union Trustees of Carpenters' and Millwrights' Health Benefit Trust Fund, Plaintiffs-Appellees, v. Bruce HUGHES, H. E. Anderson, Robert Dougan, Carl Smith Haskell Sloan, James S. Brown and Chris H. Seegmiller, in their capacity as Employer Trustees of Carpenters' and Millwrights' Health Benefit Trust Fund, Defendants-Appellants.

No. 76-1680.

United States Court of Appeals Tenth Circuit.

Submitted Nov. 16, 1977.

Decided Jan. 18, 1978.

Rehearing Denied Feb. 15, 1978.

Clay R. Smith, Denver, Colo. (John W. McKendree, Denver, Colo., on brief), for plaintiffs-appellees.

Robert R. Miller, Denver, Colo. (Robert G. Good, Denver, Colo., on brief), for defendants-appellants.

Before SETH, BARRETT, Circuit Judges, and ROGERS, District Judge. ^*

BARRETT, Circuit Judge.

The terms of Section 302(c)(5)(B) of the Labor-Management Relations Act of 1947 (LMRA) create the sharpest dispute presented on this appeal. The question is whether the amending of a trust established under the LMRA is a matter of trust "administration" that must be allowed to go to an impartial umpire under circumstances whereby the governing trustees are evenly divided for and against the proposed amendments. The parties urge that we also interpret certain language of a particular trust agreement.

The appellants and appellees are, respectively, the employer-appointed and the union-appointed trustees of the Carpenters' and Millwrights' Health Benefit Trust Fund, who serve by equal numerical representation. The union trustees petitioned the district court to appoint an umpire who would decide whether two amendments to the trust agreement should be adopted. The trial court granted the union trustees' motion for summary judgment and ruled that it would appoint an umpire. The employer trustees appeal therefrom.

The Carpenters' and Millwrights' Health Benefit Trust Fund was established in 1965 under Section 302(c)(5) of the LMRA, 29 U.S.C. § 186(c). From time to time, the trustees have amended the original Trust Fund Agreement and Declaration of Trust. Two proposed amendments to the trust agreement are supported by all union trustees, and opposed by all employer trustees. One amendment would require that one employer trustee be appointed by the Rocky Mountain Association of Gypsum Drywall Contractors. Presently that appointment is made by another employer association. The other amendment would require an employer to continue making contributions to the fund after a labor contract expires. The employer trustees resist this amendment on the basis that it would provide the unions sole control over the timing of a strike.

Inasmuch as the two groups of trustees command equal voting power in governing the trust, and because the proposed amendments have failed to pass for want of a majority vote, the district court found that the parties had come to a deadlock on the amendments, requiring an order by the court to provide a fair, impartial means of resolving the impasse.

The district court found that appointment of an umpire was justified on two grounds. First, a 302(c)(5) trust agreement must provide for a court-appointed umpire "in the event the employer and employee groups deadlock on the administration of such (trust) fund." 29 U.S.C. § 186(c)(5)(B). Whether a deadlock is such as to require appointment of an umpire under the LMRA presents a federal question. Bath v. Pixler, 283 F.Supp. 632 (D.Colo.1968); Singleton v. Abramson, 336 F.Supp. 754 (S.D.N.Y.1971); Petition of Feldman, 165 F.Supp. 190 (S.D.N.Y.1958). Moreover, that question is one arising under an "Act of Congress regulating commerce." 28 U.S.C. § 1337; Francis H. Leggett & Co. v. O'Rourke, 237 F.Supp. 561 (S.D.N.Y.1964); Table Talk Pies of Westchester v. Strauss, 237 F.Supp. 514 (S.D.N.Y.1964). The district court ruled that decisions to amend or not to amend the trust agreement were administrative decisions within the meaning of the LMRA.

We note, parenthetically, that although the trust agreement in this case purports to be a 302(c)(5) trust agreement, and the district court found it to be such an agreement, it does not provide, as the LMRA requires, that "an impartial umpire to decide such dispute, shall on petition of either group (of trustees), be appointed by the district court." 29 U.S.C. § 186(c)(5)(B). However, the intent of the parties to create a 302(c)(5) trust is so patent, and the oversight so trivial and obvious, that we will entertain this appeal as though the missing provision were in fact recited in the trust agreement.

The district court found that a second ground existed for the appointment of an umpire, wholly apart from the dictates of the LMRA. The trust agreement states that an umpire may be appointed whenever the trustees come to a deadlock on "any question" save those "in connection with the interpretation or enforcement of any collective bargaining agreement." The trial court reasoned that because the drafters of the trust agreement explicitly excluded some matters from arbitration, they would also have explicitly excluded the arbitration of trust amendments had they so desired. The court found that arbitration of the amendments in deadlock was thus justified by the terms of the trust agreement. The second ground relied upon by the district court is not founded upon any federal statute. It is basically one of contract interpretation under the laws of Colorado, where the trust agreement was executed and accepted.

Although some courts have assumed broad equity jurisdiction over all aspects of 302(c)(5) trusts, most have held that primary federal court jurisdiction is limited by the terms of the LMRA. Associated Contractors of Essex County v. Laborers International Union of North America, 559 F.2d 222 (3d Cir. 1977); Bowers v. Ulpiano Casal, Inc., 393 F.2d 421 (1st Cir. 1968); Blassie v. Kroger Co., 345 F.2d 58 (8th Cir. 1965); Burroughs v. Board of Trustees, 398 F.Supp. 168 (N.D.Cal.1975), aff'd, 542 F.2d 1128 (9th Cir. 1976), cert. denied, 429 U.S. 1096, 97 S.Ct. 1113, 51 L.Ed.2d 543 (1977). We cannot find anything in the LMRA's selective correction of certain abuses in the management of union welfare trust funds that authorizes federal courts to engulf matters of local contract law. We thus adopt the majority view. It then follows that interpretation of a 302(c)(5) trust agreement under state law, apart from the terms of the LMRA, does not furnish an independent basis for federal court jurisdiction. However, in the instant case we will consider the state claim together with the federal claim under the doctrine of pendent jurisdiction, inasmuch as both claims are derived from "a common nucleus of operative fact," the federal issue is a substantial one, and judicial economy and the parties' convenience suggest that the claims be tried in one proceeding. United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966); Hanraty v. Ostertag, 470 F.2d 1096 (10th Cir. 1972). See Snider v. All State Administrators, Inc., 481 F.2d 387 (5th Cir. 1973), cert. denied, 415 U.S. 957, 94 S.Ct. 1484, 39 L.Ed.2d 571 (1974).

I.

The employer trustees argue the LMRA does not require that an umpire be allowed to decide whether a 302(c)(5) trust agreement shall be amended. They contend the amending of a trust agreement is not an act of trust fund "administration" as the word is used in the LMRA; that "administration" refers only to day-to-day trust fund management; and that a 302(c)(5) trust agreement may, therefore, lawfully provide that disputes over proposed amendments to the trust agreement are non-arbitrable. We believe that this is a substantial contention.

The union trustees urge us to confer upon the word "administration" a broad meaning. They argue that under the LMRA, an umpire must be allowed to break a deadlock on any matter which the trustees themselves would have power to decide, including a decision to amend, and that a 302(c)(5) trust agreement which provided otherwise would be unlawful. We observe that by thus arguing, the employee trustees in effect condemn their own acts. In 1965, when the trust agreement before us now was prepared, the union trustees agreed that umpires could not decide matters in connection with the interpretation or enforcement of any collective bargaining agreement. It would seem that the union trustees did not then view these as matters of administration, even though the trustees clearly would have the power to determine an employer's obligations to make contributions to the fund under its collective bargaining agreement, and to enforce those obligations when the need arose. There is nothing in this record indicating that the union trustees have attempted to remove the restrictive provision. It remains a part of the trust agreement.

The union trustees' current position was impliedly rejected by Judge Doyle of this Court, then presiding as a federal district judge, in Bath v. Pixler, supra. There, the trustees agreed to terminate the trust, but disagreed as to which course of action would be lawful under the trust agreement and the the LMRA. But for the deadlock, the trustees likely would have made the decision. The Court, however, refused to appoint an umpire, contrasting "legal controversy" and "the practical administration of the trust." Bath v. Pixler, supra, at 635.

The distinction between ordinary and extraordinary matters made in Bath v. Pixler, supra, and by appellees in the trust agreement before us, is, we believe, valid. We need not attempt to draw the line, but simply recognize that one exists. The danger in allowing an umpire to determine the legal effect of a particular provision in a trust agreement is that the balance of rights and duties struck by union and employer...