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

• Decision Date: 05 June 1961
• Docket Number: No. 463-60.,463-60.
• Citation: 195 F. Supp. 287
• Court: U.S. District Court — Southern District of California
• Parties: PARAMOUNT PLASTERING, INC., a corporation, et al., Plaintiffs, v. LOCAL NO. 2 OF THE OPERATIVE PLASTERERS AND CEMENT MASONS INTERNATIONAL ASSOCIATION, an unincorporated voluntary association, et al., Defendants.

195 F. Supp. 287

PARAMOUNT PLASTERING, INC., a corporation, et al., Plaintiffs, v. LOCAL NO. 2 OF THE OPERATIVE PLASTERERS AND CEMENT MASONS INTERNATIONAL ASSOCIATION, an unincorporated voluntary association, et al., Defendants.

No. 463-60.

United States District Court S. D. California, Central Division.

June 5, 1961.

McLaughlin & Casey, by James A. McLaughlin and Earl Klein, Los Angeles, Cal., for plaintiff.

Mantalica, Barclay & Teegarden, by Lewis C. Teegarden, Los Angeles, Cal., for defendant unions.

Brundage, Neyhart, Grodin & Miller, by Eugene Miller, Los Angeles, Cal., for contractors.

YANKWICH, District Judge.

A complaint was filed on April 19, 1960 seeking an injunction under the provisions of § 302 of the Labor Management Relations Act, 29 U.S.C.A. § 186.

I The Pleadings, Issues and Proof

The plaintiffs are employers who have signed collective bargaining agreements with the defendant unions. In the complaint reference is made to the specific provisions of the collective bargaining agreements under which three trusts were to be created. Each of the trust agreements and the collective bargaining agreements require the employers to contribute a certain sum per hour for each hour worked by an employee. Each trust specifies that there shall be an equal number of employer-designated trustees and an equal number of employee-designated trustees who shall be appointed by the union.

Under one provision of the Plastering Institute Trust, the trustees, after making provision for the administration of the trust, are to pay the monies over "to the proper Trust or program as provided for in the labor agreement".

There is no requirement in either the collective bargaining agreement or the trust agreement which specifies that the monies are to be spent in connection with medical and surgical benefits or for pensions within the requirements of § 302 (c) (5) of the Labor Management Relations Act. 29 U.S.C.A. § 186(c) (5).

The Southern California Plastering Institute Industry Program Trust is not a medical and surgical benefit trust or a trust for providing pensions. The purpose of the trust is to carry on

"a program of public relations for the general welfare and advancement of the plastering industry, * * *"

and

"for the purpose of improvement of business conditions of the lathing and plastering industry, * * *".

The purpose of the Labor Management Relations Trust is not that of a pension or a medical and surgical benefit trust. Its purpose is

"for the common interest of labor-management relations of the the parties * * *".

The complaint alleges that all the trust agreements are invalid and in violation of the terms of § 302 of the Labor Management Relations Act in that they provide for payments by employers. It is also alleged that none of these monies are used or applied for any of the purposes which are permitted under Subsection (c) of § 302.

On March 13, 1961, the plaintiffs were granted leave to file a supplemental complaint, the chief object of which was to bring before the court the fact that since the institution of the action the functions of the three trusts had been transferred to the trustee of a California non-profit corporation, the Southern California Plastering Institute, Inc., organized on February 10, 1961. By the supplemental complaint a second cause of action for declaratory relief was added seeking a declaration that the new trust was invalid (28 U.S.C.A. §§ 2201-2202), and

"that the creation of such defendant non-profit corporation, and the substitution of it in place of the three above mentioned Trusts, does not entitle such non-profit corporation to collect monies from employers, but that such defendant is as fully a representative of employees within the meaning of said Section 302 as were the three Trusts hereinabove mentioned, in that such nonprofit defendant corporation is managed, dominated and controlled by directors, not less than half of whom are representatives and agents of the defendant unions who represent the employees of plaintiffs, and the other plastering contractors in the geographical jurisdiction of the defendant unions."

The supplemental complaint also alleged, upon information and belief,

"that it is the intent and purpose of the defendants herein to have the said non-profit defendant corporation to act as trustee in the collection and disbursement of monies from employers in lieu and in place of the three trusts last hereinabove mentioned, without qualifying to act as a trust company under the laws of the State of California to do business as a trustee or as a trust company."

According to the allegations of the supplemental complaint, and as appears clearly from their wording, the articles of incorporation did not designate the members of the corporation but the Bylaws, adopted on February 13, 1961, designated eight locals of 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.

This fact is made the subject of an allegation in the complaint that

"under Section 7 of Article III of the By-laws of the number of votes which each member has for the election of directors are set forth, and the defendant unions are given sufficient votes to elect at least half of the directors of such corporation."

The allegations showing the existence of a controversy are in these words:

"That there is a dispute and controversy existing between plaintiffs, on the one hand, and the defendants, on the other hand, in that plaintiffs are claiming that defendant Southern California Plastering Institute, Inc. is an employee representative within the meaning of Section 302 of the Labor-Management Relations Act, and is prohibited from collecting or receiving monies from employers by the provisions of that section, and further, in that such defendant is acting as a trustee and trust company without being qualified or authorized under the laws of the State of California to be a trustee or to act as such trustee. That the defendants herein dispute all of the said contentions of plaintiff as described herein.

"That unless the defendants are restrained and enjoined from collecting monies from plaintiffs for the purposes described in the said collective bargaining agreement and the said three trust agreements, said defendants will continue to collect such monies from plaintiffs and other employers engaged in the plastering industry within the geographical jurisdiction of the defendants unions for such purposes and trusts."

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 their 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 further 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."

No oral testimony was received except some testimony relating to the fact that plaintiff contractors bought plasterboard which was manufactured in Nevada and hardwall plaster containing gypsum which originated in interstate commerce in quantities sufficient to satisfy the minimal requirement of the statute that the employees were "employed in an industry affecting commerce". 29 U.S.C.A. § 186(a) (1) and (2).

While the summaries of the books of the plaintiff contractors relating to work and materials were carefully scrutinized by the defendants, no argument is advanced that the minimal requirement has not been met. None could very well be made. For, the undisputed testimony, as to one company, was that it purchased, from sources outside the State, plasterboard and hardwall plaster of the total value of $158,589.28 during the calendar year 1960-61. During 1959-60 the same concern performed a lathing and plastering contract at Nellis Air Force Base, Nevada, at a total contract price of $255,280.00, all materials for the job being purchased from sources outside California.

One of the other plaintiffs purchased, in 1960, sacks of hardwall plaster of the value of $50,828.93, and from January 1, 1961 to April 30, 1961, $6,795.07. The same plaintiff purchased, for 1960, plasterboard in the amount of $16,393.85 and for the corresponding four months in 1961, $2,249.09.

Other plaintiffs purchased out of state materials for the past twelve months in the sum of $175,000.00.

In some instances the orders were placed through local material houses, in others, directly through the supplier. In many instances the shipment was made direct from the outside supplier, and delivery being made in carload lots on a spur track on the job, or small quantities at the job or at the plastering contractor's warehouse. As the equipment and material and, perhaps, the employees also moved in interstate commerce, it cannot be seriously contended that interstate commerce...