Bath v. Pixler

• Decision Date: 26 April 1968
• Docket Number: Civ. A. No. 67-C-482.
• Citation: 283 F. Supp. 632
• Parties: Harry BATH, Charles Schadler and Guy Downing, as union-selected trustees of that trust known as the "Colorado Teamster Health & Welfare Fund," and Locals 17, 146 and 961, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Petitioners, v. N. C. PIXLER, Bennie Goldstein and T. M. Davis, as management-selected trustees of that trust known as the "Colorado Teamster Health & Welfare Fund," and Western Empire Operators Association, a Colorado corporation, Respondents.
• Court: U.S. District Court — District of Colorado

283 F. Supp. 632

Harry BATH, Charles Schadler and Guy Downing, as union-selected trustees of that trust known as the "Colorado Teamster Health & Welfare Fund," and Locals 17, 146 and 961, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Petitioners, v. N. C. PIXLER, Bennie Goldstein and T. M. Davis, as management-selected trustees of that trust known as the "Colorado Teamster Health & Welfare Fund," and Western Empire Operators Association, a Colorado corporation, Respondents.

Civ. A. No. 67-C-482.

United States District Court D. Colorado.

April 26, 1968.

Myrick, Criswell & Branney, John A. Criswell, Englewood, Colo., for petitioners.

Grant, Shafroth, Toll & McHendrie, Peter J. Crouse, Denver, Colo., for respondents.

MEMORANDUM OPINION AND ORDER

WILLIAM E. DOYLE, District Judge.

This case presents the difficult question of whether this Court has jurisdiction over a controversy arising out of attempts to terminate a union welfare trust created pursuant to § 302(c) (5) of the Taft-Hartley Act, 29 U.S.C. § 186 (c) (5).

The trust in question, commonly known as the "Colorado Teamster Health and Welfare Fund," was created in 1953 pursuant to a collective bargaining agreement between Western Empire Operators Association, which is the bargaining agent for various freight transport companies, and several locals of the Teamsters Union, which represent employees of the freight companies. The trust agreement was carefully drawn to bring it within the exceptions provided by § 302(c) (5) of the Taft-Hartley Act, and the fund was intended to provide union employees and their families with hospitalization and medical benefits allowed by the Act. The trust fund is presently administered by six trustees, and in accordance with § 302(c) (5) (B), three of the trustees were chosen by the employers and three were chosen by the local unions.¹

The welfare trust functioned actively until 1964, and during that period benefits were paid to union employees in accordance with the terms of the trust agreement. In 1964, pursuant to a new collective bargaining agreement, the employers ceased making contributions to the existing welfare trust and began contributing to a new welfare trust known as "Western Teamsters Welfare Trust." Since the new trust provided medical and hospitalization benefits in excess of those provided under the old trust, the trustees felt it would be a waste of trust funds to expend money for duplicate medical payments. Thus, no benefits have been paid under the old trust since 1964, and all trustees apparently agree that the trust should be terminated in some manner.²

The relevant termination provisions set forth in the trust agreement are as follows:

"No use of trust funds for the benefit of the employees, their families, beneficiaries, or dependents shall be made except by way of health and welfare benefits and excluding always any direct distribution of cash or property, any funds that amount to less than one complete monthly premium will be distributed at the direction of the trustees to some charitable organization."

In relevant part, the amendment provisions of the trust agreement read as follows:

"This Agreement and Declaration of Trust may be amended in any respect not specifically prohibited in this instrument, from time to time, by written instrument duly executed by all parties at the time and by all Trustees at the time.

* * * * * *

No amendment may be adopted which will alter the basic principles of this Agreement and Declaration of Trust or be in conflict with the then existing bargaining agreements with the Unions to be contrary to any then applicable law or governmental rule or regulation."

The management-selected trustees have proposed that the trust be terminated by using its funds to provide college scholarships for employee dependents, but this plan is opposed by the union-selected trustees on the ground that it would violate the terms of the trust and the requirements of § 302(c) (5) (A). The union-selected trustees favor paying the existing trust funds over to the new welfare trust, but this is opposed by the management trustees also on the ground that it would be unlawful.

The present lawsuit, initiated by the union-selected trustees, seeks an order enjoining the disposition proposed by the management trustees and declaring the disposition proposed by the union trustees to be lawful. While this petition requests both declaratory and injunctive relief, we will treat it as a request for declaratory relief only, because the petitioners have not demonstrated that the respondents are in a position to make a unilateral disposition of the trust funds. As an alternative form of relief, the petitioners ask the Court to appoint an impartial umpire pursuant to § 302 (c) (5) (B) in order to break the deadlock in the board of trustees. The management trustees have filed a motion to dismiss on the grounds that § 302(a) does not grant this Court jurisdiction over the internal administration of union welfare trusts and the appointment of an impartial umpire is improper under the circumstances of this case. Briefs have been filed by the parties and the matter now stands submitted.

Subsections 302(a) and (b) of the Taft-Hartley Act make it a misdemeanor for any employer to pay, and for any employee or employee representative to receive, any money passing from the former to the latter. Subsection (c) provides five exceptions, the last of which allows payments to be made to a welfare trust fund for the exclusive benefit of employees and their families, provided that

"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 * * *."

Section 302 contains two jurisdictional provisions, both of which are relied upon by petitioners in this case. The first, subsection 302(c) (5) (B), provides that in the event of a deadlock between the employer and employee trustees on the administration of a welfare trust, "an impartial umpire to decide such dispute shall, on petition of...