Trailways Lines, Inc. v. Trailways, Inc. Joint Council of Amalgameted Transit Union, AFL-CIO, CLC
| Citation | 785 F.2d 101 |
| Decision Date | 14 April 1986 |
| Docket Number | AFL-CI,CL,No. 85-1156,A,85-1156 |
| Parties | 121 L.R.R.M. (BNA) 3167, 104 Lab.Cas. P 11,860, 7 Employee Benefits Ca 1188 TRAILWAYS LINES, INC., Appellee, v. TRAILWAYS, INC. JOINT COUNCIL OF the AMALGAMATED TRANSIT UNION,ppellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
John H. Leddy (argued), Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for appellee.
Jeffrey Freund (argued), Robert M. Weinberg, Bredhoff & Kaiser, Washington, D.C., for appellant.
Before GARTH, BECKER, and VAN DUSEN, Circuit Judges.
I.
Plaintiff-appellee, Trailways Lines, Inc. ("Trailways") brought this action against defendant-appellant Trailways, Inc., Joint Council of the Amalgamated Transit Union, AFL-CIO, CLC ("Union"), seeking a declaratory judgment that section 120(i) of the parties' collective bargaining agreement was in violation of the Labor Management Relations Act. Section 120(i) required Trailways to make contributions to a joint union-management pension trust fund on behalf of employees who take leaves of absence to accept full-time positions with the Union or its parent International. Trailways contends that provision violates Sec. 302(a) of the Labor Management Relations Act, 29 U.S.C. Sec. 186(a), and relieves Trailways of the obligation imposed by the collective bargaining agreement.
The Union filed a counterclaim seeking declaratory and injunctive relief requiring Trailways to make pension fund contributions pursuant to section 120(i) of the agreement and directing Trailways to pay all past due contributions plus interest. Both parties filed cross motions for summary judgment and, on February 13, 1985, the district court granted Trailways' motion and denied the Union's motion. For the reasons set forth below, we affirm.
II.
In 1983, Trailways and the Union entered into a nationwide collective bargaining agreement. Pursuant to that agreement, Trailways employees were permitted to take leaves of absence to accept full-time positions with the Union while at the same time accumulating seniority and retaining the right to return to active employment with Trailways following Union service. That agreement further required Trailways to make insurance and pension trust fund contributions on behalf of those employees during their leaves of absence to enter full-time Union service. 1 The Pension Trust Fund, administered jointly by Union and Trailways trustees, was designed to provide pensions for Trailways' employees and their families.
Five Trailways' employees took indefinite leaves of absence to hold full-time union positions during the period relevant to this action. Accordingly, their seniority and return rights and pension trust fund payments were governed by section 120 of the Collective Bargaining Agreement. From April 1983 until January 1984, Trailways made the required pension trust fund payments on behalf of these five employees. However, in January 1984, Trailways unilaterally stopped making such payments, and, as of the date of the filing of this action, owed the following sums to the Trust Fund pursuant to the Agreement:
Frank DeWolfe $1,002.00
Burl B. Scarborough 1,076.00
George R. Olson 968.00
R.B.Patterson 818.00
Edward W. Erkel 1,188.00
III.
Section 302(a) of the Labor Management Relations Act, 29 U.S.C. Sec. 186(a) provides in pertinent part:
It shall be unlawful for any 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 any 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 ...
There is no dispute that Trailways' payments to the Pension Trust Fund would be prohibited by Sec. 302(a) unless they fall within one of the express statutory exemptions provided by Sec. 302(c), which is set out below. Payments to trustees administering a pension trust are payments to an "employee representative," and payments on behalf of the five union officials constitute "a thing of value" made to union officers.
The Union argues, however, that such payments are permitted by the exceptions established by Secs. 302(c)(1) and 302(c)(5). 2 Section 302(c)(1) exempts the payment of:
money or other thing of value by an employer to any officer or employee of a labor organization, who is also an employee or former employee of such employer, as compensation for, or by reason of, his service as an employee of such employer.
Section 302(c)(5) exempts the payment of:
money ... to a [pension] trust fund established by such representative, for the sole and exclusive benefit of the employees of such employer ...
The district court held that the issue of whether Trailways' payments to the Pension Fund were excepted by Sec. 302(c)(5) () depends solely on "whether these union officials retain their status as Trailways' employees while on their leaves." Trailways Lines, Inc. v. Trailways, Inc. Joint Council of the Amalgamated Transit Union, AFL-CIO, No. 84-4703, slip op. at 3 (E.D.Pa. Feb. 13, 1985). The district court concluded that the five union officials on indefinite leave were solely employees of the Union and thus fell without the Sec. 302(c) exceptions. The Union, on the other hand, argues that the district court's analysis was faulty for three reasons: (1) the five union officials retained their status as Trailways' employees or former employees while on leave; (2) even if the employees were not Trailways' employees while on leave, the issue of whether the Sec. 302(c)(1) or (c)(5) exemptions applies does not depend on whether the union officials are or are not present employees of Trailways; and, (3) the legislative history and policy behind Sec. 302 support the Union's contention that such payments were not intended to be proscribed by Sec. 302.
For the reasons discussed below, we hold that the payments required by the collective bargaining agreement do not fall within any of the Sec. 302(c) exceptions, and thus are prohibited by Sec. 302(a) of the LMRA.
Dealing first with the Union's second argument, the plain language of the Act, as construed by the courts, supports the district court's finding that the status of the five individuals while on leave as either employees of Trailways or the Union is dispositive of this case. The cases clearly hold that the Act permits payments to trust funds by employers only if they are made on behalf of present employees of the employer. As then Judge Blackmun stated in Blassie v. Kroger Co., 345 F.2d 58, 68-69 (8th Cir.1965):
The section [302(c)(5) ] also requires that there be payment [to a trust fund] effected during an employee's active employment.... An employee ordinarily is a person presently engaged in employment. He is "One employed by another; one who works for wages or salary in the service of an employer...."
However, the presence of these two requirements--payment by the employer and current employment--does not mean that benefits which flow from these contributions of the employer (and from any other receipts of the Trust) are to be confined in their enjoyment to the period of the employee's active employment. (Emphasis added) (Citations omitted)
From the above, it is plain that employer's payments to a pension trust fund must be on behalf of "current" and "active" employees of the employer. 3
The Union argues that payments on behalf of individuals "who are at some time employees of the employer" are permissible under the Sec. 302(c) exceptions. Decisional law does not support this contention. In Walsh v. Schlecht, 429 U.S. 401, 97 S.Ct. 679, 50 L.Ed.2d 641 (1977), in holding that payments by an employer on behalf, or for the benefit, of employees of a subcontractor who was not a signatory to the collective bargaining agreement would violate Sec. 302(a)(1), the Supreme Court stated that only payments made solely for the benefit of actual employees of the signatory employers are permissible under Sec. 302(c)(5). 429 U.S. at 407, 409, 97 S.Ct. at 684, 685. 4
Similarly, the Sixth Circuit in Reinforcing Iron Workers Local Union 426 v. Bechtel Power Corp., 634 F.2d 258, 261 (6th Cir.1981), held that payments made by an employer to a fund established by a collective bargaining agreement to compensate a full-time steward hired by the union to investigate the employer's compliance with that agreement violated Sec. 302(a) since the "steward cannot be characterized as an employee of Bechtel."
The Union contends that Reinforcing Iron Workers and Walsh are distinguishable from the case at bar since in those cases the individuals for whom the disputed payments were made were never employees of the employer, whereas here the individuals on leave are former and possible future employees of Trailways. This distinction, however, is not relevant. In both Reinforcing Iron Workers and Walsh, it is clear that the determinative factor was that the employees involved--the union steward in Iron Workers and the subcontractor's employees in Walsh--were not, nor could they be considered--current employees of the employer. Neither court stated that had the disputed individuals been either former or future employees of the employer the outcome would have been different. Neither case dispels the Blassie requirement of current employment to qualify for the Sec. 302(c)(5) exemption. See also Todd v. Benal Concrete Construction Co., 710 F.2d 581 (9th Cir.1983) ()....
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