LOCAL NO. 2, ETC. v. Paramount Plastering, Inc.

Decision Date07 November 1962
Docket NumberNo. 17572.,17572.
Citation310 F.2d 179
PartiesLOCAL NO. 2 OF the OPERATIVE PLASTERERS AND CEMENT MASONS INTERNATIONAL ASSOCIATION, etc., et al., Appellants, v. PARAMOUNT PLASTERING, INC., et al., Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Brundage, Neyhart, Grodin & Miller, Eugene Miller and Charles Hackler, Los Angeles, Cal., for appellants Local No. 2 etc.

Mantalica, Barclay & Teegarden, and Lewis C. Teegarden, Los Angeles, Cal., for appellants Employers & Southern California Plastering Institute Inc.

Earl Klein, Beverly Hills, Cal., for appellees.

Axel W. Oxholm and Betty J. Southard, Washington, D. C., amicus curiae National Bureau for Lathing & Plastering, Inc Bert E. Kragen, San Francisco, Cal., and Ziskind & Ross, Los Angeles, Cal., amici curiae Painting & Decorating Contractors of California, Inc.

Ziskind & Ross, Los Angeles, Cal., amici curiae Painting & Decorating Contractors Association of Los Angeles, Inc.

Alexander H. Schullman, Los Angeles, Cal., amici curiae District Council No. 36 of the Brotherhood of Painters, Decorators & Paperhangers of America.

Ziskind & Ross, and Alexander H. Schullman, Los Angeles, Cal., amici curiae Los Angeles County Painting & Decorating Joint Committee, Inc.

Before STEPHENS, BARNES and JERTBERG, Circuit Judges.

BARNES, Circuit Judge.

This is an action for declaratory and injunctive relief under the provisions of Section 302 of the Labor Management Relations Act, as amended (hereinafter referred to as the LMRA). Jurisdiction existed below as to the injunctive relief sought (Subdivision (e) of Section 302, 29 U.S.C. § 186(e)); and on appeal lies here (28 U.S.C. § 1291).

The declaratory relief sought rests on the provisions of 28 U.S.C. §§ 2201 and 2202, so long as jurisdiction is conferred by 29 U.S.C. § 186(e). We consider and hold this controversy a real and substantial controversy admitting of specific relief through a decree of conclusive character, and not an opinion advising what the law would be on a hypothetical state of facts. Samuel Goldwyn, Inc. v. United Artists Corp., 3 Cir., 1940, 113 F.2d 703.

The action originally was one for an injunction only, filed by certain employers engaged in the lathing and plastering business in the State of California. These plaintiff employers had signed, in June 1959, identical collective bargaining agreements with defendant unions. Each agreed to abide by the terms of an agreement made on January 2, 1958, between defendant The Contracting Plasterer's Association of Southern California, Inc., and the defendant unions; and any new agreement between said last named parties.

Thereafter The Contracting Plasterer's Association of Southern California, Inc. and the defendant unions signed a new collective bargaining agreement. Some plaintiffs signed the new agreement.

The new agreement contained the following provisions, in pertinent part, in Article VI:

"B. Southern California Plastering Institute Industry Program
"1. The Trust Agreement of the Southern California Plastering Institute Industry Program, as amended and modified, is a part hereof as though fully set forth herein.
"2. The Contractors covered by this Agreement, in addition to compliance with all other provisions contained herein, shall pay to the Southern California Plastering Institute Industry Program, or its order, the sum of Four and Three-Fourths Cents (4¾¢) for each hour a man is to receive pay pursuant to the terms of this Contract.
"3. The Southern California Plastering Institute Industry Program may require payments to be made directly to it or may designate by written order an agent for deposit or collection. In the event no such agent or depository is named, said sums shall be paid to the Southern California Plastering Institute Trust for the benefit of the Southern California Plastering Institute Industry Program.
"C. Southern California Plastering Institute Trust
"1. The Southern California Plastering Institute Trust, herein referred to as the Institute Trust, shall continue in existence for the purpose of collecting such sums as are due the various Trusts which are part of this Agreement, and to pay over to said Trust such sums as are collected. The Trust Agreement of the Southern California Plastering Institute Trust, as amended and modified, is made a part hereof as though fully set forth herein.
* * * * * *
"E. Labor-Management Relations Trust
"1. The Trust Agreement of the Labor-Management Relations Trust is made a part hereof as though fully set forth herein.
"2. The Contractors covered by this Agreement, in addition to compliance with all other provisions contained herein, shall pay to the Labor-Management Relations Trust, or its order, the sum of One-Fourth Cent (¼¢) for each hour a man is to receive pay.
"3. The Labor-Management Relations Trust may require payments to be made directly to it or may designate by written order an agent for deposit or collection. In the event no such agent or depository is named, said sums shall be paid to the Southern California Plastering Institute Trust for the benefit of the Labor-Management Relations Trust."1

Plaintiffs below urged that the three Trust Agreements mentioned (B, C and E, supra) were void, invalid and violative of the terms of the Labor Relations Act of 1947, as amended in 1959, in that: (1) they provided for payments by employers to representatives of employees of plaintiffs; (2) that moneys so paid were used for purposes other than those permitted under subsection (c) of § 302 of the LMRA.

As amended in 1959, 29 U.S.C. § 186(c) (5)2 which proscribed payments, contained an exemption "with respect to money * * * paid to a trust fund established * * * for the sole and exclusive benefit of the employees * * *, and their families and dependents * * *: provided,"

"That (A) such payments are held in trust * * * for medical or hospital care, pensions * * *, workmen\'s compensation * * * or insurance * * * or unemployment benefits or life insurance, disability and sickness insurance, or accident insurance; * * *."

Section 302(c) (6) provides a second exemption —

"* * * with respect to money * * * paid by any employer to a trust fund * * * for the purpose of pooled vacation, holiday, severance or similar benefits, or defraying costs of apprenticeship or other training programs."

As to both exemption (5) and (6), supra, clause (B) of § 302(c) (5) was specifically made applicable, requiring that "written agreements" were essential, as well as "equal" representation between employers and employees in the administration of such fund, with an impartial umpire to be agreed upon in the event of a deadlock; for annual audits, and for open inspection of the accounts.

Subsequent to the filing of the original complaint, a supplemental complaint was filed. It added a second cause of action for declaratory relief seeking to hold invalid the trust which had evolved, since the filing of the original complaint, by reason of the transfer to the trustee (a California non-profit corporation, The Southern California Plastering Institute, Inc.) of all the functions of the three trusts hereinbefore described.

According to the allegations of the supplemental complaint, the articles of incorporation did not designate the members of the corporation but the By-laws, adopted on February 13, 1961, designated eight locals of various unions and two corporations representing employers as members. The voting rights of the members are divided as follows: Local 2 of the Operative Plasterers & Cement Masons International Association, A. F. L., 3 directors; Local 194 of the same union, 1 director; Local 400, 1 director; Local 489, 2 directors; Local 343, 1 director; Local 739, 2 directors; Local 838, 1 director; Local 42 of Wood, Wire and Metal Lathers International Union, A. F. L., 1 director; Contracting Plasterers Association of Southern California, 11 directors; Lathing and Metal Furring Contractors Association of California, Inc., 1 director.

The answers of the defendants to the complaint and the supplemental complaint admitted the main facts, the existence of the original trust agreements and the assumption of its functions by the corporation in the collective bargaining agreement between the employers and the unions. The denials related merely to the validity and legality of the transaction. The answers to the supplemental complaint asserted that "the Southern California Plastering Institute, Inc. was incorporated for the purposes set forth in said Articles of Incorporation and for the purpose of creating an entity whose acts, conduct and operations would not lie within the proscriptions of any of the sections of the Labor-Management Relations Act." Also that the original defendants: "are not now collecting monies from plaintiffs or other contractors; that the defendant Southern California Plastering, Inc. is the only defendant now authorized to collect money from plaintiffs or other contractors."

Union appellants state three questions are here involved:

1. Did Congress intend, by the exceptions in subdivision (c) of § 302 of the LMRA to limit the type of funds which could be jointly administered by labor and management?

2. Does a trust or corporation become a "representative" of employees, within the meaning of § 302 merely because one-half of the trustees of the trust and one-half of the directors of the corporation are appointed by a labor organization where the purposes of said trusts or corporation are limited to promoting the use of lath and plaster in the construction industry?

3. Are payments by employers to such trusts and corporations within the prohibition of (a) and (b) of § 302?

Appellants Employers and Southern California Plastering Institute agree that the first two questions hereinabove mentioned are those here involved. (An affirmative answer to the third question raised above necessarily follows if questions one and two are answered affirmatively.)

Amicus Curiae...

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