Trust Fund Services v. Heyman

• Decision Date: 16 June 1977
• Docket Number: No. 44335,44335
• Citation: 565 P.2d 805,88 Wn.2d 698
• Parties: , 95 L.R.R.M. (BNA) 3040, 82 Lab.Cas. P 10,038 TRUST FUND SERVICES, a Washington nonprofit Corporation, Respondent, v. Walter HEYMAN, d/b/a Thriftmart, Petitioner.
• Court: Washington Supreme Court

Page 698

88 Wn.2d 698

565 P.2d 805, 95 L.R.R.M. (BNA) 3040,

82 Lab.Cas. P 10,038

TRUST FUND SERVICES, a Washington nonprofit Corporation, Respondent, v. Walter HEYMAN, d/b/a Thriftmart, Petitioner.

No. 44335.

Supreme Court of Washington, En Banc.

June 16, 1977.

Lane, Powell, Moss, Miller,

Eugene R. Nielson, Seattle, for petitioner.

Donaldson & Kiel, P. S., Duane D. Kiel, Seattle, for respondent.

ROSELLINI, Associate Justice.

This action was brought in Snohomish County Superior Court to recover payments allegedly due the respondent, Trust Fund Services, as assignee of a union trust fund. The court gave judgment against the employer, Walter Heyman, petitioner here, for sums found to be due under an agreement with the union which he signed in 1971. The respondent was unable to establish to the court's satisfaction a contention that payments were also due under an alleged 1969 agreement.

The petitioner had tendered as a defense to the action a contention that the union did not represent a majority of the employees at the time the contract was signed. It was the petitioner's theory that for this reason, the contract involved an unfair labor practice under 29 U.S.C. § 158(a) and (b) and was consequently invalid. The Superior Court refused to consider this defense.

While the Superior Court action was pending, the petitioner instituted a suit against the union in the Federal District Court for the Western District of Washington at Seattle. In that action, it sought to rescind the contract upon the ground that it involved an unfair labor practice, under the same federal statute relied upon in its proposed defense to the state action. The Superior Court denied the petitioner's motion, made thereafter, to continue the state court action until the federal court rendered its decision on the legality of the underlying contract.

After the Superior Court had entered its judgment, the case in federal court was decided (Walter Heyman, d/b/a Thriftmart v. Teamsters Local 38, No. 506-73C2). It is not clear from the record before us whether the union, the defendant in that action, challenged the jurisdiction of the court. The order of that court dated October 24, 1974, does reveal, however, that the union urged that the federal statute of limitations contained in 29 U.S.C. § 160(b) barred the consideration of an unfair labor practice. ¹ The court held that this provision applies only in proceedings before the National Labor Relations Board (NLRB). It adopted the Superior Court's finding that there had been no union contract signed in 1969 and further found that the union did not in fact represent a majority of the employees when the 1971 contract was signed. The court granted rescission of the contract.

No appeal was taken from this judgment. However, while the case was pending in federal court, the union filed a charge against the employer (petitioner here) before the NLRB, based upon his repudiation of the 1971 collective bargaining agreement. The NLRB determined that the agreement was fair on its face and that the statutory period of limitations precluded any showing that the union did not represent a majority of employees. It found that the petitioner had engaged in an unfair practice in repudiating the contract and petitioned the Ninth Circuit Court of Appeals to enforce its remedial order, issued pursuant to 29 U.S.C. § 160(e). A 3-judge panel of that court held that the district court's judgment upon the question of the validity of the contract was res judicata and binding upon the NLRB. Enforcement of the order was denied. N. L. R. B. v. Heyman, 541 F.2d 796 (9th Cir. 1976).

In the meantime, both parties to this action had appealed from the Superior Court judgment, and the Court of Appeals had affirmed the judgment with respect to the 1971 agreement and reversed it with respect to the 1969 agreement, holding that the petitioner by his conduct was estopped to deny the existence of such an agreement. The court also reversed a lower court holding that the parties had orally agreed to exclude one employee from the coverage of union contract benefits. Trust Fund Services v. Heyman, 15 Wash.App. 452, 550 P.2d 547 (1976).

We granted the employer's petition for review. It is his contention here that the Court of Appeals was bound to follow the decision of the federal district court and to hold the 1971 contract invalid. He does not suggest that the judgment was res judicata as between the parties to this suit, but rather that it is controlling precedent in this action. The Ninth Circuit panel decided the case of N. L. R. B. v. Heyman, supra, after the Court of Appeals had rendered its decision in this case; and it is urged that that case is also controlling precedent in this court.

We approach the question before us with the following consideration in mind: the law, both federal and state, is concerned with the stabilization of industrial relations, and numerous legislative enactments have dealt with the relations of employers and employees and have sought to forestall and adjust differences between them by the encouragement of collective bargaining, and the settlement of labor disputes through conciliation, mediation, and arbitration. The National Labor Relations Act (NLRA) of 1935, popularly known as the Wagner Act, was amended by the Labor-Management Relations Act of 1947, also known as the Taft-Hartley Act, which was designed to adjust and minimize differences in the rights granted unions, employees, and employers. N. L. R. B. v. Brooks, 204 F.2d 899 (9th Cir. 1953), aff'd, 348 U.S. 96, 75 S.Ct. 176, 99 L.Ed. 125 (1954).

These labor relations laws are contained in chapter 7 of 29 U.S.C. which is referred to as the Labor-Management Relations Act of 1947.

This law governs the relations of employers and employees in industries and businesses affecting interstate commerce. The petitioner here conducts a retail grocery business. It appears to be agreed by the parties that his business affects interstate commerce and that the NLRA governs the relations between the parties, no challenge having been made to the Court of Appeals' statement to that effect.

The suit before us is one which was brought by a beneficiary to enforce a labor contract. Section 301(a) of the Labor-Management Relations Act of 1947 (29 U.S.C. § 185(a)) gives federal courts jurisdiction over such suits, a jurisdiction which they did not enjoy prior to its enactment. The established jurisdiction of state courts over such actions was not destroyed by § 301(a) but became concurrent with that of the federal courts. Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483 (1962). The United States Supreme Court said in that case at page 508, 82 S.Ct. at page 523:

The legislative history makes clear that the basic purpose of § 301(a) was not to limit, but to expand, the availability of forums for the enforcement of contracts made by labor organizations. . . .

The Labor Management Relations Act of 1947 represented a far-reaching and many-faceted legislative effort to promote the achievement of industrial peace through encouragement and refinement of the collective bargaining process. It was recognized from the outset that such an effort would be purposeless unless both parties to a collective bargaining agreement could have reasonable assurance that the contract they had negotiated would be honored. Section 301(a) reflects congressional recognition of the vital importance of assuring the enforceability of such agreements.

State courts must follow the federal law, as fashioned by the federal courts, to effectuate the statutory policy of enforcement of collective bargaining agreements. Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962); Charles Dowd Box Co. v. Courtney,supra ; Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 923, 1 L.Ed.2d 972 (1957).

Consistent with this policy of enforcement, the United States Supreme Court has held that the parties to a collective bargaining agreement must express their meaning in unequivocal words before they can be said to have agreed that the union's breaches of its promises should give rise to a defense against the duty assumed by an employer to contribute to a welfare fund meeting the requirements of 29 U.S.C. § 186(c)(5). ² Lewis v. Benedict Coal Corp., 361 U.S. 459, 80 S.Ct. 489, 4 L.Ed.2d 442 (1960). And the Third Circuit Court of Appeals has held that the invalidity of one provision of a collective bargaining agreement will not preclude a trustee from collecting the amount due a welfare and retirement fund with respect to work already performed. Lewis v. Seanor Coal Co., 256 F.Supp. 456 (W.D.Pa.1966), aff'd, 382 F.2d 437 (3rd Cir. 1967), cert. denied, 390 U.S. 947, 88 S.Ct. 1035, 19 L.Ed.2d 1137 (1968). Both of these opinions tacitly, if not explicitly, recognize the principle that such contributions with respect to past labor are in the nature of compensation, the right to which accrues when the work is performed.

The petitioner insists, however, that the respondent is but a third-party beneficiary; that its rights depend on the validity of the underlying contract, and that this contract has been conclusively declared invalid. With respect to the third-party beneficiary concept, the United States Supreme Court in Lewis v. Benedict Coal Corp., supra, pointed out that it has little relevance in the labor relations context. Common-law principles relating to the rights of third-party beneficiaries are usually inadequate to settle the complex rights and duties embodied in a collective bargaining contract. We need not decide whether this concept is applicable here, however, for we are convinced, under the established federal law, the underlying contract has not been shown to be invalid as between these parties. While the petitioner contends that the union contract in this case has been conclusively declared invalid by the ...