Fiorelli v. Kelewer
| Decision Date | 09 February 1972 |
| Docket Number | Civ. A. No. 71-785. |
| Citation | 339 F. Supp. 796 |
| Parties | Joseph FIORELLI et al. v. George KELEWER et al. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Martin J. Resnick, Zarwin, Baum, Aranzio & Somerson, Philadelphia, Pa., for plaintiffs.
Joseph B. Meranze, Meranze, Katz, Spear & Bielitsky, and George Gurdon Fay, Philadelphia, Pa., for defendants.
Presently before the Court is the defendants' motion to dismiss the complaint pursuant to F.R.Civ.P. 12(b) on the grounds, among others, that this Court lacks jurisdiction over the subject matter and the complaint fails to state a claim upon which relief can be granted.
As set forth in the complaint, plaintiffs, collectively, constitute the trustees of Drywall Finishers Local No. 1955 Pension Fund (hereinafter, "plaintiffs") and sue in their official capacity. The defendants, collectively, constitute the trustees of the District Council # 21 Painters Pension Plan of Philadelphia, Brotherhood of Painters, Decorators, and Paperhangers of America (hereinafter, "defendants"). The present litigation concerns the allocation of funds between both trusts.
The District Council # 21 Painters Pension Plan (hereinafter, "District Council Trust") was created on December 29, 1961 pursuant to a collective bargaining agreement entered into between District Council # 21 and duly authorized representatives of Associated Master Painters and Decorators of Philadelphia, Inc. and other employers in the painting, paperhanging, and decorating industry. The trust agreement was made retroactive to May 1, 1960.
On July 27, 1967, approximately five and one half years later, ninety-nine members of the various local unions comprising District Council # 21 withdrew from their locals and transferred their membership to Drywall Finishers, Local No. 1955 (hereinafter "Local # 1955") which was created pursuant to a charter issued by the Brotherhood of Painters, Decorators, and Paperhangers of America. Eighteen months later, on January 20, 1969, pursuant to a collective bargaining agreement between Local # 1955 and duly authorized individuals acting on behalf of the Gypsum Drywall Contractors Association and others, the Drywall Finishers Local No. 1955 Pension Fund (hereinafter Local # 1955 Trust") was created. Much like the District Council # 21 Trust after which it was patterned, the newly formed trust was to take effect retroactively — in this case from May 1, 1968.
During the eighteen month interval between the withdrawal of the membership of Local # 1955 and the creation of the Local # 1955 Trust, employers of the ninety-nine employees continued to make pension contributions. For the nine month interval from Local # 1955's withdrawal until the retroactive effective date of its trust, employers continued to make regular contributions to the District Council # 21 Trust pursuant to the original collective bargaining agreement. Thereafter to the present, employers of the ninety-nine have made their contributions to the Local # 1955 Trust.
A considerable period of time having lapsed since the foregoing transpired, plaintiffs instituted the present suit on March 31, 1971 to compel the defendant-trustees to relinquish that portion of District Council Trust's reserves attributable to contributions from employers of Local # 1955's membership. Plaintiffs assert a cause of action arising under sections 301 and 302 of the Taft-Hartley Act (29 U.S.C. §§ 185 and 186) and section 401(a) (7) of the Internal Revenue Code of 1954, 26 U.S.C. § 401 (a) (7). Their claims will be considered in that order.
Inasmuch as a direct violation of a federal statute has been pleaded and since the claim, with the exception of that portion asserted to arise under section 401(a) (7) of the Internal Revenue Code of 1954, does not appear immaterial to the law pleaded or "wholly insubstantial and frivolous", this Court has jurisdiction over the subject matter of the present litigation. Bell v. Hood, 327 U.S. 678, 682-683, 66 S.Ct. 773, 90 L.Ed. 939 (1946). The Court shall, therefore, proceed to consider the question of whether the complaint fails to state a claim upon which relief can be granted.
Section 301 of the Taft-Hartley Act, 29 U.S.C. § 185, provides in pertinent part that:
"(a) 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." (emphasis added).
In their Complaint, plaintiffs simply assert that their cause of action "is brought under the provisions of Section 301 of the Act." From the facts as stated, defendants contend that plaintiffs have failed to state a cause of action within the purview of this section. The Court agrees. Necessary to the applicability of section 301 is the violation of a contract between an employer and a labor organization or between two or more labor organizations. Aside from the question of whether plaintiffs are parties properly cognizable under section 301, they have alleged neither the existence and breach of any collective bargaining agreement between an employer and a labor organization nor the breach of any contract between two labor organizations. In support of their position plaintiffs site Raymond v. Hoffmann, 284 F.Supp. 596 (E.D.Pa.1966). There the court recognized a cause of action based upon the alleged breach of an oral contract between two labor unions. In the present case no such contract and its violation has been alleged.
Section 302 of the Taft-Hartley Act, 29 U.S.C. § 186, is more pertinent to the present controversy. In substance, § 302(a) makes it unlawful for an employer in an industry affecting commerce to make any payment to any "representative" of its employees or to any labor organization, or officer or employee thereof, which represents any of the employees. Likewise, § 302(b) outlaws the demand for or receipt of any such payment.
Section 302(c), however, provides seven specific exceptions to the foregoing prohibition: (1) Payments to employees for services rendered; (2) payments in satisfaction of judgments or awards; (3) payments for the purchase of commodities at the prevailing market price; (4) payments for employees' union dues; (5) payments to pension or welfare trust funds established in compliance with several specific provisions; (6) payments to certain vacation or severance trust funds or payments to defray training costs; and (7) payments to certain trust funds established to provide scholarships or child care centers for the benefit of employees.
Of particular import to the present controversy is the fifth exception. It exempts payments made "to a trust fund established ... for the sole and exclusive benefit of the employees ... and their families and dependents ...." The exception is operative provided (A) the payments are held for the purpose of medical or hospital care, pensions, unemployment compensation, or accident and health benefits; (B) the basis on which the payments are to be made is specified in a written agreement with the employer; the employees and employers are equally represented in the administration of the trust together with such neutral persons as may be agreed upon; and provisions are included for an annual audit, the results of which shall be available for inspection by interested persons; and (C) payments intended for pensions or annuities for employees "are made to a separate trust which provides that the funds held therein cannot be used for any purpose other than paying such pensions or annuities."
By section 302(d), wilful violation of any of the section's provisions is made a misdemeanor.
By section 302(e), district courts are granted jurisdiction, for cause shown:
"... to restrain violations of this section, without regard to the provisions of section 17 of Title 15 and section 52 of this title the Clayton Act, and the provisions of sections 101-115 of this title the Norris-LaGuardia Act."
Although it is ambiguous from the Complaint,1 it is clear from the subsequent briefs and oral argument that plaintiffs consider § 302(c) (5) as the source of their cause of action. Specifically, they assert that, from the facts as stated, employers' contributions could not, at some point, have been used "solely for the purpose of assuring pension benefits to their employees." From this assertion it is argued that a cause of action exists. By way of relief, plaintiffs seek a court order requiring defendant-trustees to file an accounting of the District Council Trust's reserves in order to disclose the amount attributable to "contributions" from employers of Local # 1955's membership. Although the period of time to be covered by the proposed accounting is left unstated, presumably plaintiffs seek to recover all contributions since May 1, 1960 (the effective date of the District Council trust) rather than those made during the interval between the employees' withdrawal from their locals and the effective date of the Local # 1955 Trust (July 27, 1967 through April 30, 1968). The issue raised, therefore, is whether, taken alone, that portion of the language in § 302(c) (5) which requires pension and welfare trusts to be "established ... for the sole and exclusive benefit" of employees was intended by Congress to constitute a standard of qualification for the establishment of trust funds or whether it was intended to constitute an enforceable condition to the continuing operation of such funds. As applied to the facts of the present case this Court is of the opinion that Congress intended only the former.
The interpretation of section 302 has had an unsettled history....
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