Reinforcing Iron Workers v. Bechtel Power Corp.

• Decision Date: 29 December 1978
• Docket Number: Civ. No. 77-72093.
• Citation: 463 F. Supp. 643
• Parties: REINFORCING IRON WORKERS LOCAL UNION 426, International Association of Bridge, Structural and Ornamental Iron Workers, AFL-CIO, v. BECHTEL POWER CORPORATION.
• Court: U.S. District Court — Western District of Michigan

463 F. Supp. 643

REINFORCING IRON WORKERS LOCAL UNION 426, International Association of Bridge, Structural and Ornamental Iron Workers, AFL-CIO, v. BECHTEL POWER CORPORATION.

Civ. No. 77-72093.

United States District Court, E. D. Michigan, S. D.

December 29, 1978.

Barbara B. Armstrong, Klein, Bloom & Gale, Southfield, Mich., for plaintiff.

Peter J. Kok, Miller, Johnson, Snell & Cummiskey, Grand Rapids, Mich., for defendant.

OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

CORNELIA G. KENNEDY, Chief Judge.

Plaintiff union filed this action against Bechtel Power Corporation alleging that it had failed to arbitrate a grievance, in violation of the collective bargaining agreement. That grievance charged that the defendant had failed to make payments into an industry steward fund. On August 16, 1978, this Court granted summary judgment in favor of the defendant on the grounds that the union had acquiesced in the corporation's position by its failure to make a timely request for arbitration and also by express statements of the General Secretary of the International that he concurred in the company's position. On November 9, 1978, the parties stipulated that the defendant waived its defense arising out of timeliness. The defendant in that stipulation expressly did not waive its defense that the grievance had been settled by the Secretary's concurrence. On December 4, 1978, the Court granted the plaintiff's motion for relief from judgment on the grounds that the defense of untimeliness had been waived.

The action is now before the Court with each party having moved for summary judgment in its favor. The defendant corporation makes essentially two arguments in support of its motion. The defendant contends that the International's General Secretary, Juel D. Drake, had authority to settle the grievance and did in fact settle it. The defendant further contends that any requirement that it make payments to the industry steward fund would be in violation of law, specifically 29 U.S.C. § 186. The plaintiff, on the other hand, states that the collective bargaining agreement expressly provides that only the International President has the power to settle a grievance. It also urges that the industry steward fund, created in this collective bargaining agreement, complies with the law and that Bechtel is therefore required to make payments into the fund. The plaintiff further states that the Court does not have jurisdiction to hear the merits of this case but should refer the dispute to arbitration.

This Court has jurisdiction to consider cases brought pursuant to 29 U.S.C. § 186 "for cause shown . . . to restrain violations of this section." 29 U.S.C. § 186(e); Arroyo v. United States, 359 U.S. 419, 426-27, 79 S.Ct. 864, 3 L.Ed.2d 915 (1959); Local Union No. 5 of Sheet Metal Workers International Assn. v. Trumbull County Building Trades Welfare Fund, 541 F.2d 636, 638 (6th Cir. 1976); Haley v. Palatnik, 509 F.2d 1038, 1040 (2d Cir. 1975). In § 186 Congress provided, in part:

(a) It shall be unlawful for any employer or association of employers or any person who acts as a labor relations expert, advisor, or consultant to an employer or who acts in the interest of an employer to pay, lend, or deliver, or agree to pay, lend, or deliver, any money or other thing of value—

(1) to any representative of any of his employees who are employed in an industry affecting commerce; or

(2) to any labor organization, or any officer or employee thereof, which represents, seeks to represent, or would admit to membership, any of the employees of such employer who are employed in an industry affecting commerce . . ..

That section further provides that prohibitions of the section are not applicable under certain specific circumstances. They do not forbid payments to employees who have as established duties the representation of the employer in labor relations or personnel administration. They also do not apply to any representative of employees who is also an employee or former employee, when the payments are made as compensation for present or past service in that capacity. 29 U.S.C. § 186(c)(1), (2). That section also provides that trust funds which are established according to certain procedures and for certain purposes are not illegal. 29 U.S.C. § 186(c)(5)-(8).

The Reinforcing Iron Workers Industry Steward Fund is a trust fund established by an agreement and declaration of trust entered into by the Resteel Contractors Association, the Associated General Contractors of America, Detroit Chapter, Incorporated, and the Associated General Contractors of America, Michigan Chapter, Incorporated. It does not appear that defendant is a member of any of these associations. The fund was established pursuant to the "1972-1974 Labor Agreement," which found that it was necessary to have a stewardship system in the reinforcing iron industry in order to ensure compliance with the terms of the collective bargaining agreement. The fund is administered by trustees who are appointed by the three employer associations. The trust agreement states that it is necessary in that industry to have a steward who is not employed by any member of the associations, since such an employee would be unable to supervise working conditions adequately. Evidently the nature of the industry requires that workers be employed at scattered worksites for relatively short periods of time. The establishment of an industry steward system was an attempt to provide effective supervision of contract compliance under such circumstances.

At least one court has held that in the case of a trust fund, there need not be as strict compliance with the requirements of § 186, unless employer contributions would be in violation of § 186(a). Independent Association of Mutuel Employees v. New York Racing Assn., 398 F.2d 587 (2d Cir. 1968). (In the case of an employer established welfare trust fund.) However, other courts considering this question, including the United States Court of Appeals for the Sixth Circuit, have first focused on the important problems Congress attempted to reach through the prohibitions in § 186.

Because of the abuses that have occurred in the cauldron of labor-management interplay which include misuse of labor organization funds, extortion by labor personnel, and attempts by business personnel to influence or exert pressure on union "personnel"—particularly in financial form, restrictions on conduct between these two bodies and certain of their representatives have been imposed by Congress.

Costello v. Lipsitz, 547 F.2d 1267, 1272 (5th Cir.), cert. denied, 434 U.S. 829, 98 S.Ct. 109, 54 L.Ed.2d 88 (1977); Walsh v. Schlecht, 429 U.S. 401, 410-11, 99 S.Ct. 679, 50 L.Ed.2d 641 (1977); Local Union No. 5 of Sheet Metal Workers International Assn. v. Mahoning & Trumbull Bldg. Trades Welfare Fund, 541 F.2d 636, 639 (6th Cir. 1976); 1959 U.S.Code Cong. & Admin.News, p. 2318. It is generally held that the gravity of these problems mandates strict and literal compliance with all requirements of § 186. See, e. g., Arroyo v. United States, 359 U.S. 419, 424-25, 79 S.Ct. 864, 3 L.Ed.2d 915 (1959); Costello v. Lipsitz, 547 F.2d 1267, 1273 (5th Cir.), cert. denied, 434 U.S. 829, 98 S.Ct. 109, 54 L.Ed.2d 88 (1977). This Court is of the opinion that in order to uphold the validity of the industry steward fund, it must be found to be in strict compliance with the requirements set forth in 29 U.S.C. § 186.

A potential for violating § 186 exists in that the industry steward fund involves the payment of money by employers. It is therefore necessary to determine whether that money is paid to a representative of that employer's employees, who is not also an employee, or to an officer or employee of a labor organization which represents those employees, both prohibited by § 186. The National Labor Relations Act includes in its definition of an employer "any person acting as an agent of an employer, directly or indirectly, but shall not include . . . anyone acting in the capacity of officer or agent of such labor organization." 29 U.S.C. § 152(2). That definition is broad enough to include a multi-employer group as an employer. Thus it would not of itself prohibit employment of an industry steward merely because the employer was a multi-employer group. See N.L.R.B. v. Mountain Pacific Chapter of Associated General Contractors, Inc., 270 F.2d 425, 428 (9th...