Alvares v. Erickson

Decision Date10 March 1975
Docket NumberNo. 73-1765,73-1765
Citation514 F.2d 156
Parties89 L.R.R.M. (BNA) 3001, 76 Lab.Cas. P 10,755, 1 Employee Benefits Ca 1121 William J. ALVARES et al., Individually and as representatives of a class of persons hereinafter described, Plaintiffs-Appellants, and Thomas Albro et al., Trustee of the Seattle Area Plumbing and PipefittingIndustry Health and Welfare Trust, Nominal Plaintiffs-Appellants, v. Haven ERICKSON et al., Trustees of the Washington State Plumbing andPipefitting Industry Health and Welfare Trust, Trustee Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit
OPINION

Before DUNIWAY and KILKENNY, Circuit Judges, and SWEIGERT, * District Judge.

DUNIWAY, Circuit Judge.

The limited issues on this appeal are whether the federal court has jurisdiction of the case under § 301(a) or § 302(e), or both, of the Taft-Hartley Act, 29 U.S.C. §§ 185(a) and 186(e), respectively. The district court found jurisdiction lacking. We reverse.

I. Facts.

In 1946, Local 32 and the other local unions of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, AFL-CIO ("United Association") in the state of Washington began joint bargaining, on a statewide basis, with employers in the plumbing and pipefitting industry. The local unions bargained through the Washington State Association of the United Association ("State Association"), a statewide labor union. The employers bargained through the Washington State Employers Council for the Plumbing and Pipefitting Industry ("State Employers Council"), a statewide employers' association.

The 1951 statewide collective bargaining agreement and each subsequent renewal of it contained language referring to a certain trust agreement creating the Washington State Plumbing and Pipefitting Industry Health and Welfare Trust ("State Welfare Trust"), a joint labor-management trust fund organized under the provisions of § 302(c) of the Taft-Hartley Act, 29 U.S.C. § 186(c). The statewide agreement obligated employers to make contributions to the State Welfare Trust at a specified rate per employee per hour worked. With the contributed funds, the trustees of the State Welfare Trust ("State Trustees") were to and did provide a program of health and welfare benefits, including medical, time-loss, and death benefits, to all employees in the statewide bargaining unit.

In 1967, Local 32, representing union employees in the Seattle area, withdrew from the statewide bargaining unit and created a new and independent bargaining unit limited to the geographical jurisdiction of Local 32. This the Local 32 members were privileged to do under § 7 of the National Labor Relations Act, 29 U.S.C. § 157. Local 32 and the employers in the Seattle area entered a new collective bargaining agreement, effective January 1, 1968, which provided that thereafter the employers would make contributions to a newly-created Seattle Area Plumbing and Pipefitting Industry Health and Welfare Trust ("Seattle Area Welfare Trust").

Shortly after the establishment of the Seattle Area Welfare Trust, its trustees demanded that the State Trustees relinquish to the Seattle Area Welfare Trust a portion of certain uncommitted reserves accumulated in the State Welfare Trust. The demand was refused, and this action followed.

The reserves in question represented (1) employer contributions exceeding the amount of insurance premiums paid by the trust and trust administrative expenses; (2) forfeitures of the credits of union members, including members of Local 32, under the so-called "hour bank" eligibility program; 1 (3) refunds received from the insurance carrier because of favorable claims experience; and (4) interest on investments. According to the plaintiffs in this action, the uncommitted reserves totalled approximately $953,000 at the time when the Local 32 members withdrew from the State Trust. Had the State Trust been dissolved at that point and all liabilities been paid, this sum, less costs of dissolution, would have remained. The plaintiffs maintain that an accounting will show that approximately 40 percent of the reserves, or $371,200, are attributable to contributions made by Seattle area employers on behalf of Local 32 members.

Plaintiffs, appellants here, are 14 individual members of Local 32 claiming to represent the class of all 1400 of such members. 2 The trustees of the Seattle Area Welfare Trust are also nominal plaintiffs, but Local 32 as an entity was not made a party because trust benefits accrue to its members individually and not to the union itself. At the present stage of the litigation the only defendants are the State Trustees. In an amended complaint, the plaintiffs also named as defendants the original parties to the statewide collective bargaining agreement, namely, the State Association and the State Employers Council. However, upon those parties' disclaimer of any interest in the outcome of the lawsuit and upon the plaintiffs' concession that no claim could be established against those parties, the district court dismissed the State Association and the State Employers Council from the case before considering the subject matter jurisdictional issues.

In their amended complaint the plaintiffs assert: (1) that they are entitled to an accounting by the State Trustees, (2) that they are entitled to a declaration of their rights in the reserves, (3) that the State Trustees should be required to apply a portion of the reserves for their benefit, (4) alternatively, that the State Trustees should be required to transfer a portion of the reserves to the Seattle Area Welfare Trust, (5) or that the State Welfare Trust be terminated and a portion of its assets be distributed to them or for their benefit, (6) that the State Trustees should be enjoined from using a portion of the reserves for the benefit of anyone but Local 32 members.

As to jurisdiction, the plaintiffs claim that the State Trustees are violating the statewide collective bargaining agreement, a claim over which the federal courts have jurisdiction under § 301(a) of the Taft-Hartley Act, and that they are violating § 302(c)(5) of the same act, a claim over which the federal courts have jurisdiction under § 302(e).

II. The Trial Court's Decision.

The State Trustees moved for summary judgment on the ground that the court did not have jurisdiction under either § 301(a) or § 302(e). The court granted the motion and entered a judgment reading as follows:

It is hereby ordered, adjudged and decreed that the motions of defendants and each of them to dismiss and for summary judgment of dismissal be, and the same hereby are, granted; that this action be, and hereby is, dismissed for lack of federal jurisdiction in failing to establish a federal cause of action and that defendants have judgment for their costs and disbursements herein to be taxed.

(The language in italics was interlineated by the Judge.)

We construe this as a ruling that the court lacked subject matter jurisdiction, not as a decision that the plaintiffs have no claim even if the court has jurisdiction. This is a case in which the jurisdiction of the federal court depends upon the subject matter of the claim, not the status of the parties, as in diversity cases, or the locus in which the claim arose, as in federal enclave cases. Bell v. Hood, 1946, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939, tells us that in subject matter jurisdiction cases, jurisdiction "is not defeated . . . by the possibility that the averments might fail to state a cause of action (claim) on which (plaintiffs) could actually recover. . . . (T)he failure to state a proper cause of action (claim) calls for a judgment on the merits and not for a dismissal for want of jurisdiction" (327 U.S. at 682, 66 S.Ct. at 776). In the case at bar, the court found that it did not have jurisdiction and dismissed on that ground. It did not take the next step and decide that the claim was bad on the merits. As the Court said in Bell v. Hood, that issue "must be decided after and not before the court has assumed jurisdiction over the controversy." Id.

We conclude that the court did have jurisdiction under both § 301 and § 302(e). Our reluctance to hand down a decision that appears to enlarge the jurisdiction of the federal courts to "fire (a) jurisdictional cannon which will be heard on future battle grounds" (Goldberg, J., in Mumford v. Glover, 5 Cir., 1974, 503 F.2d 878, 880) is somewhat diminished by the action of the Congress in adopting the Employee Retirement Income Security Act of 1974 (Pub.L. 93-406, 88 Stat. 829). That Act imposes very broad jurisdiction upon the federal courts in cases involving welfare trusts such as those involved here, § 502, and broadly supersedes, effective January 1, 1975, otherwise applicable state laws, § 514. If we are firing a cannon, the Congress has blown up a dam.

III. Section 301(a) Jurisdiction.

Section 301(a) of the Taft-Hartley Act provides:

Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties. 29 U.S.C. § 185(a).

Here there is no dispute that the statewide plumbing and pipefitting industry does affect commerce within the statutory meaning. See, e. g., Local 44 and Washington State Association, 195 N.L.R.B. 225 (1972). Our inquiry then is whether the following three jurisdictional requisites are satisfied: (1) a contract; (2) a claim of violation; and (3) a "between" employer and labor organization or "between" labor...

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