Carlone v. United Mine Workers of America Welfare and Retirement Fund

• Decision Date: 21 March 1978
• Docket Number: No. 13859,13859
• Citation: 242 S.E.2d 454,161 W.Va. 351
• Court: West Virginia Supreme Court
• Parties: , 98 L.R.R.M. (BNA) 2136 Alphonse CARLONE v. UNITED MINE WORKERS OF AMERICA WELFARE AND RETIREMENT FUND et al., etc.

Page 454

242 S.E.2d 454

161 W.Va. 351, 98 L.R.R.M. (BNA) 2136

Alphonse CARLONE v. UNITED MINE WORKERS OF AMERICA WELFARE AND RETIREMENT FUND et al., etc.

No. 13859.

Supreme Court of Appeals of West Virginia.

March 21, 1978.

Syllabus by the Court

1. Eligibility requirements for pension benefits under the United Mine Workers of America Welfare and Retirement Fund may not be arbitrary and capricious.

2. The action of the Trustees of the United Mine Workers of America Welfare and Retirement Fund of 1950, upon assumption of the assets and obligations of the United Mine Workers of America Welfare and Retirement Fund of 1947, in denying pension benefits to a retired miner based on eligibility standards adopted on April 5, 1950, when such miner had filed application for and met the eligibility standards in effect at the time of his retirement, was an arbitrary and capricious action.

3. "The general rule in equity is that mere lapse of time, unaccompanied by circumstances which create a presumption that the right has been abandoned, does not constitute laches." Syllabus Point 4, Stuart v. Lake Washington Realty Corporation, 141 W.Va. 627, 92 S.E.2d 891 (1956).

Spilman, Thomas, Battle & Klostermeyer, John H. Tinney and Cynthia L. Turco, Charleston, for appellants.

Frank V. Sansalone, Brent E. Beveridge, Fairmont, for appellee.

MILLER, Justice:

This appeal involves the right of a retired coal miner to obtain pension benefits from the United Mine Workers of America Welfare and Retirement Fund of 1950. The trial court held in favor of Mr. Carlone, finding that the Trustees of the Fund had acted in an arbitrary and capricious manner in denying his application for pension benefits.

A brief historical background of the Fund is necessary for a resolution of the case. In 1947, the first Welfare and Retirement Fund was created as a part of the National Bituminous Coal Wage Agreement of 1947. Statutory authority for such funds is found in the Labor-Management Relations Act, 1947, commonly called the Taft-Hartley Act, 29 U.S.C.A. § 186(c)(5).

The Fund was administered by three Trustees who were given broad authority with respect to questions of coverage and eligibility. These provisions were stated in the Coal Wage Agreement of 1947, along with the principle that the Fund "is an irrevocable trust created pursuant to Section 302(c) of the 'Labor-Management Relations Act, 1947' and shall endure as long as the purposes for its creation shall exist."

The revenues for the Fund were derived from royalty payments made by the coal operators who were signatories to the National Bituminous Wage Agreement. The royalties were payable on each ton of coal mined.

On April 12, 1948, the Trustees established by Resolution No. 8 the following eligibility requirements for the 1947 Fund:

(1) Be an eligible and qualified member of the United Mine Workers of America, and

(2) Who on or after May 29, 1946, has attained the age of 62, and

(3) Who has served 20 years in the coal industry in the United States, and

(4) Who has retired from service in the bituminous coal industry on a date subsequent to May 28, 1946.

By an amendment to Resolution No. 8, adopted on April 7, 1949, the 62 age requirement was reduced to 60.

There is no dispute between the parties that Alphonse Carlone was born on June 22, 1888, and has thirty-three years' employment in the mining industry. His last segment of such employment was from November, 1948, to June, 1949, and he submitted his application for retirement to the Union District Office in Fairmont on August 4, 1949. The parties also agree that Carlone met the then existing eligibility standards for the 1947 Fund.

The parties diverge at this point because of certain changes that occurred in the 1947 Fund. On September 16, 1949, the Trustees of the 1947 Fund adopted Resolution No. 26 which provided for "a temporary suspension of payments by the Fund." The reason for this action was the diminished revenue being received by the Fund.

A new collective bargaining agreement, the National Bituminous Coal Wage Agreement of 1950, was executed on March 5, 1950. Under this agreement, the Welfare and Retirement Fund of 1950 was created and the Trustees of the 1950 Fund were authorized and directed to accept funds from the 1947 Fund.

Thereafter, on April 5, 1950, the Trustees of the 1947 Fund transferred to the 1950 Fund all of the assets of the 1947 Fund. Two checks, one in the approximate amount of $23.6 Million Dollars and the other in the approximate amount of $867,000 Dollars, were paid from the 1947 Fund to the 1950 Fund. Appropriate legal documents which transferred all of the assets of the 1947 Fund to the 1950 Fund and required the 1950 Fund to assume the obligations against the 1947 Fund were executed.

On the same date, the Trustees of the 1950 Fund established new eligibility requirements for the 1950 Fund by Resolution No. 10. It is acknowledged by all parties that Mr. Carlone did not meet the new eligibility standards in one particular. He did not have one year of continuous employment in the mines immediately preceding his retirement. This was not a requirement at the time he applied for his pension in August of 1949.

Although Mr. Carlone applied at the Union District Office in August, 1949, his application was not received at the offices of the Fund in Washington, D. C., until October, 1949. He received no response from the Fund until August 3, 1950, when he was advised that he was not eligible because he had "not established proof of employment for one year in the Bituminous Coal Industry immediately preceding retirement."

Mr. Carlone wrote a number of letters through the years in an attempt to persuade the Trustees of the Fund to accept his application. Included in his correspondence were personal appeals to both John L. Lewis and Arnold Miller.

Suit was filed on April 22, 1975, in the Circuit Court of Marion County. The trial court rejected the defendant Trustees' contention that laches barred the suit and rendered a judgment for Mr. Carlone for back retirement benefits with interest.

In resolving the Trustees' obligation, we are not forced to navigate across an unchartered sea. A number of similar cases have been decided by the United States Court of Appeals for the District of Columbia.

In Roark v. Lewis, 130 U.S.App.D.C. 360, 401 F.2d 425 (1968), the court characterized the Welfare Fund as a hybrid trust, stating:

"Trusts of the kind here involved, established under a specific exception to the Taft-Hartley Act, are hybrids which do not fit the categories of ordinary trusts. See Restatement (Second) of Trusts § 375, comment g (1959). While the specific beneficiaries are unnamed, characteristic of a charitable trust, the funds which make up the res were not paid to the trust as acts of beneficence. They were paid to the trust to satisfy a contractual duty owed by signatory operators to the signatory union and the employees it represented. Lewis v. Benedict Coal Corp., 361 U.S. 459, 465-466, 80 S.Ct. 489, 4 L.Ed.2d 442 (1960); Lewis v. Owens, 338 F.2d 740, 742 (6th Cir. 1964)." (130 U.S.App.D.C. at 362, 401 F.2d at 427)

Both sides agree that the rule which has evolved in the following federal cases is applicable to the instant case: that the Trustees' standards as to eligibility are to be tested by whether they are arbitrary or capricious. Pete v. United Mine Workers of America Welfare and Retirement Fund of 1950, 171 U.S.App.D.C. 1, 517 F.2d 1275 (1975); Roark v. Boyle, 141 U.S.App.D.C. 390, 439 F.2d 497 (1970); Gaydosh v. Lewis, 133 U.S.App.D.C. 274, 410 F.2d 262 (1969); Roark v. Lewis, 130 U.S.App.D.C. 360, 401 F.2d 425 (1968); Kosty v. Lewis, 115 U.S.App.D.C. 343, 319 F.2d 744 (D.C. Cir. 1963); Danti v. Lewis, 114 U.S.App.D.C. 105, 312 F.2d 345 (1962).

Kosty provides a similar factual setting. Kosty filed for retirement in June, 1953. At that time he had thirty-one years in the mines divided into two periods: 1906-1924 and 1940-1953. In January, 1953, prior to his retirement, the Trustees adopted new eligibility rules which required that a retired miner have 20 years of mining service within the 25 years immediately preceding his retirement. ¹ Kosty could not meet this standard, although he did meet the former standards of eligibility which required 20 years of service with one year continuous service before retirement.

The court held that the Trustees' change of eligibility standards without prior notice or period of grace within which Kosty could elect to take retirement was arbitrary and capricious.

Roark v. Lewis considered an eligibility standard adopted by the Trustees which required a miner to be employed by a signatory operator immediately prior to his retirement. Roark had 39 years of employment with the mining industry, 11 of which were with signatory operators. His last two years of employment were not with a signatory operator. The court concluded that the amendment was prima facie unreasonable, but remanded the case to the District Court to permit the Trustees to introduce evidence as to the reasonableness of the rule.

The District Court after further hearing granted judgment for the Trustees, finding that there was sufficient evidence to support the reasonableness of the eligibility requirement that a miner must have last worked for a period of at least one full year for a signatory employer. The case was again appealed. Roark v. Boyle, 141 U.S.App.D.C. 390, 439 F.2d 497 (1970).

In Roark v. Boyle, the court concluded that the Trustees had failed to offer a reasonable explanation for the last year with a signatory employer eligibility rule. It recognized that while the rule might have had a rational basis in the early days of the Fund to prevent miners from gaining eligibility by returning to work for brief periods of time for...