# Petition — Burroughs v. Board of Trustees of the Pension Trust Fund

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1977
- **Citation:** 429 U.S. 1096

## Text

Supreme Court, U. &
FILED

Iu the Supreme Conte.

DEC 27 1976

HAEL RODAK, JR., CLER

United States

76-872

Peary fr) Oo]
preparing TONGINEFERS, «

Lie ‘ ropcle nis
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PETITION FOR A WRIT OF CERTIORARI
to the United States Court of Appeals
for the Ninth Circuit

\. \ ABLONSKE,

ct. born é

Wioiam H.C

James AM. AMotnrss,

DReWer, PATRIDGE &

Attorne “Us TO) P hiliowe)

CA 941068

SAN FRANCISCO

Subject Index

Page
Se EEE 0.5 ceeewe duly bd ee eee ba sate eek eneeenee 1
EE itn cue Cesena deed aeed ene tee $eee ee eereL mae 2
PD MINI. ono oc bere06456snccecdbedceuscaewecbeces 2
ee: SE: neue ckyees cécaen¥aGunneceenaeeranac 2
ee Or ee cnc i occesceweden dese ceudunebese 2
Beeeems for eromtionn the WE .....505 w cc peccccessccceem 7
Pn Glowecgces talaccedseeayact odes entacebeeuteat 16
Table of Authorities Cited
Cases Pages
Alyeska Pipeline Service Co. v. Wilderness Society, 421
FS BF ere ern, Aeere eer 6,7
Arroyo v. United States, 359 U.S. 419 (1959) ........... 10
Hall v. Cole, 412 U.S. 1 (1973) ........... 7, 9, 10, 11, 12, 14, 15
Kiser v. Huge, 517 F.2d 12387 (1974) .......cccceccccsees 13, 14
Kiser v. Miller, 364 F.Supp. 1311 (D.C.D.C., 1973) ...... 13
Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970) .....
LUeediidedetsd ee adds den eenesawenaaanred 7, 8, 9, 10, 11, 13
Sprague v. Ticonic National Bank, 307 U.S. 161 (1939)..7, 8,12
Trustees v. Greenough, 105 U.S. 527 (1881) ............ 7
United States v. Ryan, 350 U.S. 299 (1956) ............. 10
Yablonski v. United Mine Workers of America, 466 F.2d 424
Dt .ceve euehivaneraueeedatnebanerterekren cake 11,12
Statutes
Labor-Management Relations Act of 1947:
Section 302 (29 U.S.C. §186) .......cececees 2, 3, 5, 6, 13, 15
Section 302(¢)(5) (29 U.S.C. §186(¢) (5) ...... 3, 4, 9, 10, 11
Labor-Management Reporting and Disclosure Act of 1959:
aeteams. WEE CEP UG. SEER) ccc ccccsccdsvvcccsvess y

2B U.G.C. § 1254(1) ........cccccccsesccccevscccceccecs 2

Iu the Supreme Court

OF THE

United States

OcToBEer TERM, 1976

No.

BENJAMIN R. BuRROovUGHS,
Petitioner,
VS.
Boarp or TRUSTEES OF THE PENSION TRUST FUND
FOR OPERATING IONGINEERS, et al.,
Respondents.

PETITION FOR A WRIT OF CERTIORARI
to the United States Court of Appeals
for the Ninth Circuit

Petitioner Benjamin R. Burroughs respectfully
prays that a writ of certiorari issue to review the
judgment and opinion of the United States Court
of Appeals entered in the above-entitled proceeding
on October 4, 1976,

OPINIONS BELOW

The opinion of the Court of Appeals, not yet re-
ported, appears in Appendix A hereto, infra at pp.

2

vill, The opinion of the United States District
Court for the Northern District of California is re-
ported at 398 F.Supp. 168, and appears in Appen-
dix 13 hereto, infra at pp. ix-xxvi.

JURISDICTION
The judgment of the Court of Appeals was entered
on October 4, 1976. The jurisdiction of this Court is
invoked under 28 U.S.C, §1254(1),

QUESTION PRESENTED

Whether the United States District Courts have the
power to award attorneys’ fees, in actions under See-
tion 302 of the Labor-Management Relations Act of
IN47 (29 U.S.C. 9186), where an employee-beneficiary
of a union welfare fund has been successful in obtain:
ing injunctive relief against a “structural” violation
of that section by the trustees of the fund.

STATUTE INVOLVED
Section 302 of the Labor-Management Relations Act
of 1947 (29 ULS.C, S186) is set forth in Appendix C
hereto, infra at pp. xxvii-xxx.

STATEMENT OF THE CASE
Petitioner commenced an action for damages, in-
Junctive and declaratory relief, under Section 302 of

“s 3

the Labor-Management Relations Act of 1947 (29
U.S.C. §186), in the United States District Court for
the Northern District of California on November 23,
1973 (C.R. 1).' His complaint alleged that the de-
fendants, trustees of a jointly-administered employee
pension fund established pursuant to Section
302(¢) (5) (29 U.S.C. §186(¢)(5)), had violated that
section by wrongfully denying his application for a
disability pension filed on October 31, 1972 (C.R.
1-14). Specifically, petitioner alleged that the de-
fendant trustees had acted arbitrarily in denying his
pension application pursuant to their “break-in-em-
ployment” rule, which operated to divest employee-
beneficiaries of their accrued pension credits in the
event that they failed to earn at least one quarter of
such credit during a period of three years, and their
“Social Security Disability Benefit” rule, which re-
quired that employee-beneficiaries establish their en-
titlement to a Social Security Disability Benefit as a
prerequisite to receiving a disability pension from the
Fund (See C.R. 116, 187).

Petitioner’s action was tried by the District Court
commencing on February 10, 1975, and on April 14,
1975, the District Court issued its Findings of Fact
and Conclusions of Law (Appendix B, pp. 1x-xxvi).
The District Court found that the defendant trustees
had acted on petitioner’s pension application in a
manner which was “arbitrary and capricious” and,

“CR.” references are to the Clerk’s Record on Appeal which
is on file in the Court of Appeals below, “R.T.” references are to
the Reporter’s Transcript on Appeal, also on file in the Court of

Appeals below.

4

therefore, in violation of their duty under Section
302(¢)(5) (Appendix B, p. xxii).

The District Court’s judgment was based upon its
finding that the “break-in-employment” rule, as ap-
plied to petitioner, was “arbitrary and capricious
under the circumstances, in that [petitioner] was not
notified of the Rule until over two years after the
Rule began operating to cut off his acerued pension
rights.” (Appendix B, p. xxii). Specifically, the
District Court found that while the Rule was not
formulated until the official execution of the trust
agreement on December 30, 1959 (Appendix B, p.
xi), and participants in the plan were not noti-
fied of its existence until on or about April 27, 1960
(Appendix B, p. xix), it had been applied retro-
actively, from January 1, 1958, the beginning date
for employer contributions to the plan, to eut off the
pension rights of those who earned — insufficient
amounts of pension credit in 1958, 1959, and 1960
(Appendix b, p. xviii). The Distriet Court con-
cluded that this application of the Rule was arbitrary
and capricious, and thus in violation of Section
302(¢)(5) of the Act, as well as the principles of
law and equity, because:

“... since the Break-in-Employment rule by its
terms allows a participant three years in Which
to accumulate the required minimum hours of
contributory employment to remain a pension
plan participant, plaintiff should have been al-
lowed three years in which to aceumulate said
minimum hours from the date plaintiff was put
on notice of the rules Failure of the Board of

Hy)

Trustees to allow plaintiff said three years from
the date of notice was arbitrary and capricious
in light of all of the circumstances .. .”

(Appendix B, p. xxii). It further concluded that
the action of the defendant trustees in administering
the trust “in a manner lacking in fundamental due
process” was, within the meaning of Section 302,
“tantamount to a basic structural defect in the trust”
(Appendix B, pp. xxv-xxvi). The District Court rea-
soned that:
“As a practical matter, whether the unjust ex-
clusion of a pensioner is obtained from the
exclusive provision of the trust fund itself or
from the arbitrary and exclusionary implemen-
tation procedures of trustees, the ultimate effect
is that the trust is not operated for the ‘sole and
exclusive benefit of the employees.’ ”

(Appendix B, p. xxvi).

With respect to the “Social Security Disability
Benefit” requirement, the District Court found that
“although an applicant for a social security benefit
must meet the test of being disabled and also must
meet an earnings requirement, when the Board of
Trustees adopted the social security disability test,
its sole focus was on the disability aspect, not on the
earnings requirement.” (Appendix B, p. xiv. See also
R.T. 98). Thus, it concluded that:

“To the extent the definition of total disability
within the Pension Plan requires a participant
to receive a social security disability award, or its
equivalent, said requirement is unreasonable on
its face and as applied to plaintiff in that the

.°
earnings aspect of such an award was not in-
tended to ne a focus for determining eligibility
for disability benefits under the Pension Plan.”

(Appendix B, p. xxii).

Accordingly, the Distriet Court upheld petitioner's
claim and granted him a permanent injunction com-
pelling the defendant trustees to pay him disability
pension benefits for so long as he remained eligible
under the terms of the plan (Appendix 1B, pp. xxiii-
xxiv). The Distriet Court refused, however, to grant
petitioner an award reimbursing him for the attor-
neys’ fees he had expended in securing his pension
(Appendix B, pp. xxiv-xxv. See also R.T. 177-178).
Petitioner noticed a timely appeal from that portion
of the District Court’s judgment which denied him
an award of attorneys’ fees, and the defendant trus-
tees then cross-appealed on the merits of the judg-
ment (CLR. 230, 233).

On October 4, 1976, the United States Court of
Appeals for the Ninth Cireuit affirmed the judgment
of the Distriet Court in all respects, holding that the
action of the defendant trustees in denying petitioner
a pension pursuant to its “break-in-employment” rule
Was “arbitrary and capricious” in the cirenmastances
and therefore in violation of Section 302. (see Preah
dix A, pp. v-vil), but that petitioner was not
entitled to attorneys’ fees under the “common fund
or common benefit” doctrine reaffirmed by this Court
in Alyeska Pipeline Service Co, v. Wilderness Soci-
ely, 421 US, 240 (1975). Thus, the Court of Appeals
noted that “in this case, no records have been main-

——

7

tained [by defendant trustees] which would have
revealed the number or identity of persons benefitted
by Burroughs’ action [and] the class of beneficiaries
is thus of indeterminable size and not easily identifi-
abie” (Appendix A, p. viii). In such circumstances,
the Court of Appeals concluded, petitioner had failed
to establish ‘ta factor common to all... common bene-
fit decisions” of this Court (Appendix A, p. vill).

REASONS FOR GRANTING THE WRIT

1. The decision of the Court of Appeals in this
case collides squarely with the decisions of this Court
in a long line of cases culminating with Alyeska Ptpe-
line Service Co. v. Wilderness Society, 421 U.S, 240
(1975). Although the Court in Alyeska reaffirmed the
long-established rule that “in the United States, the
prevailing litigant is ordinarily not entitled to collect
a reasonable attorneys’ fee from the loser” (421 U.S.
at 247); it also reaffirmed an equally well-established
exception to the rule permitting an equity court to
award attorneys’ fees where the prevailing litigant
has conferred a substantial benefit on an ascertain-
ble class of persons, and the granting of fees from
a common fund will operate to spread the costs of
the litigation among such persons. (/d, at 257-2958,
citing Trustecs v. Greenough, 105 USS. 527 (1881);
Sprague v. Ticonie National Bank, 30% U.S. 16]
(1939); Mills v. Electric Auto-Lite Co., 396 US, 375
(1970); and Hall v, Cole, 412 U.S. 1 (1973)).

8

A review of the above-cited decisions of this Court
shows that this “substantial benefit” exception has
been considerably broadened over the years. In
Sprague v, Ticonic National Bank, supra, the Court
held that an award of attorneys’ fees was proper
even where the plaintiff had not sued on behalf of
a class, so long as the stare decisis effect of the plain-
tiffs suecessful litigation operated as a practical mat-
ter to benefit others who were similarly situated (See
OOT US. at 167). Mills uv. Electric Auto-Lite Co.,
supra, further broadencd the “substantial benefit”
exception by holding that the benefit conferred need
not be a monetary one, There, the plaintiffs were
corporate sharcholders who brought suit under the
securities laws to set aside a corporate merger aecom-
plished through the use of a false and misleading
proxy statement (See 396 U.S. at 377). The Court
concluded that their action had benefitted both the
corporation and the other shareholders, justifying an
award of attorneys’ fees from the corporate treasury,
even though the suit had not produced “a monetary
recovery from which the fees could be paid .. 2”
(Id. at 392), Rejecting the contention that creation
of a “common fund” was a prerequisite to the lower
court's power to award fees, the Court held that “the
expenses incurred by one shareholder in the vindiea-
tion of a corporate right of action can be spread
among all shareholders through an award against the
corporation, regardless of whether an aetual Honey
recovery has been obtained in’ the corporation's
favor” (Id. at 394). The rationale for sueh an award

9

is that the litigation “corrects or prevents an abuse
which would be prejudicial to the rights and interests
of the corporation” and that such “corporate thera-
peuties” justify the payment of fees fiom the cor-
porate treasury (/d. at 396).

Similarly, Hall v, Cole, supra, approved an award
of fees to a union member who had brough! suit,
under the “free speech” provisions of Seeton 102
of the Labor-Management Reporting and D:-losure
Act of 1959 (29 U.S.C. $412), to vindicate his own
right to criticize union policies, Although his action
had conferred no financial benefit on the union or
any of its members, an award of fees from the union
treasury was held appropriate because the plaintiff,
by vindicating his own statutory rights, “necessarily
rendered a substantial service to his union and to all
of its members” (412 U.S. at 8). Speeificaliy, the

‘ourt found that such litigation operates to dispel
the “chill” east upon the free speech rights of other
members, and thus “contribute[s] to the preservation
of union democracy.” (1bid.). An award of fees from
the union treasury in such circumstances “simply
shifts the costs of the litigation to the class that has
henefitted from them” (/d, at 8-9, citing Mills, supra).

Under the standards set forth in the above-cited
decisions of this Court, an award of attorneys’ fees
was clearly appropriate in the circumstances of this
ease. Section BO2(¢)(5) of the Labor-Management
Relations Act of 1947, under which petitioner brought
suit, requires that the trustees of union welfare and
pension funds administer such funds “for the sole

10

and exclusive benefit of the employees” (See 29
U.S.C. §186(¢)(5)). This provision reflects a clear
congressional intent to prevent misuse or mismanage-
ment of fund assets, and to that end Congress has
established “specific standards . . . to assure that
welfare funds would be established only for pur-
poses which Congress considered proper and ex-
pended only for purposes for which they were
established ..." Arroyo v. United States, 359 U.S.
419, 426-427 (1959). See also United States v. Ryan,
390 U.S, 299 (1956). Moreover, Congress has assured
“continuing compliance with these standards in the
administration of welfare funds” by making the pro-
Visions of Seetion 2302(¢) (5) “explicitly enforceable
in Federal Distriet Courts by civil proceedings under
§302(¢).” Arroyo v. United States, supra (359 U.S,
at 427).

An employee-heneficiary of a union welfare fund
who is suecessful in obtaining judicial relief against
a so-called “structural” violation of Section 302(¢) (5),
thus restoring the fund to its original, lawful purpose
as intended hy Congress, must by definition confer
a substantial benefit on both the fund as an entity
and on its employee-beneficiaries as a ¢lass. This
benefit is directly analogous to the “corporate thera-
peuties” referred to in Mills v. Electric Auto-Lite
Co., supra, and to the “preservation of union demoec-
racy” referred to in Hall v, Cole, supra. In each Case,
the litigation in question serves to implement an im-
portant congressional poliey by correcting an institu-
tional abuse, and in each case an award of fees from

cee ens a.

11

the funds of the institution itself serves to spread
the costs of the litigation among the benefitted class,
whether they be corporate shareholders, union mem-
bers, or pension fund beneficiaries. See Mills, supra,
396 U.S. at 396; and Hall v. Cole, supra, 412 U.S.
at 9-10.2 Nor is it determinative that the plaintiff’s
action does not increase or preserve the total assets
of the entity involved, or bestow a direct financial
benefit on each and every one of the persons with an
interest therein, Mills holds unequivocally that a mon-
etary benefit is not a prerequisite to an award of fees,
and the holding in Hall v, Cole clearly confirms this
point.

In this case, the courts below found that the pen-
sion fund in question had been administered by the
defendant trustees in a manner which was “arbitrary
and capricious” (Appendix A, p. v), and therefore
in violation of the “sole and exclusive benefit” re-
quirement of Section 302(¢)(5), but concluded that
petitioner was not entitled to an award reimbursing
him for the attorneys’ fees he had incurred in obtain-
ing judicial relief against such violation, In so hold-
ing, the Court of Appeals below totally ignored the

2In Mall v. Cole, the Court cited with approval the decision of
the Court of Appeals for the Distriet of Columbia Circuit in
Yablonski v.\United Mine Workers of America, 466 F.2d. 424
(1972). There, the Court of Appeals expressly rejected the con-
clusion of the district court below that fees were inappropriate in
a serics of individual actions for injunctive relief under the
LMRDA because “the Yablonski lawsuits did not benefit anyone
except Yablonski.” (/d. at 430). Noting that Congress’ concern
in passing the LMRDA had been focused on ‘‘the overriding im-
portance to union democracy of free and fair elections”, the court
found that the litigation before it “contributed, both in the short
and the long run, to the achievement of this objective” (Ibid.).

12

important non-economic benefit which petitioner’s ac-
tion conferred upon the fund as an entity and its
beneficiaries as a class. Concerning itself exclusively
with the financial benefit bestowed by petitioner’s
action upon other beneficiaries of the fund who were
similarly situated with respect to the “break-in-em-
ployment” rule, the Court of Appeals based its deci-
sion on the fact that such persons could not be
identified from the records of the fund. In such eir-
cumstances, it concluded, “no definite class of bene-
ficiaries has been ascertained” and an award of fees
was therefore impermissible. (See Appendix <A, p.
viii).

This decision is, we submit, totally irreconcilable
with the decisions of this Court in Sprague v. Ticonic
National Bank, Mills v. Electric Auto-Lite Co., and
Hall v. Cole, supra, all of which reject the rationale
that fees can be awarded only where the plaintiff
brings suit as the representative of a class. See also
Yablonski v. United Mine Workers, supra, cited with
approval by this Court in Hall v. Cole. It is similarly
in conflict with this Court’s decisions in Mills and
Hall v, Cole, which hold unequivocally that a mone-
tary benefit is not a prerequisite to an award of fees,
and that litigation which corrects an institutional
abuse, thus implementing an important congressional
policy, by definition confers a “substantial benefit”
on both the institution in question and all of the
persons who have an interest in it. Certiorari should
accordingly be granted to insure compliance by the
lower courts with the decisions of this Court.

13

2. The decision below is in conflict with the deci-
sion of the Court of Appeals for the District of
Columbia in Kiser v. Huge, 517 F.2d 1237 (1974),
a case involving substantially the same question pre-
sented here, There, the plaintiffs were coal miners
who had been denied pensions pursuant to the so-
called “signatory-last-employment” rule of the United
Mine Workers pension fund, They sued under Sec-
tion 302, were successful in invalidating the rule and
obtaining their pensions, and were ultimately granted
a substantial award of attorneys’ fees. Kiser v. Miller,
364 F.Supp. 1311 (D.C.D.C., 1973). Although their
action neither increased nor preserved the assets of
the fund as a whole, and the granting of pensions to
them and to other beneficiaries who were similarly
situated did not benefit the beneficiaries of the fund
as a class, the district court justified the award of
fees as follows:

“The Court realizes that in taxing the fund, the
Fund beneficiaries are the onés who will actually
bear the burden, In this instance the Court finds
the imposition would neither be burdensome nor
unjustified. The Court bases its findings on the
facts that the award is a reasonable and modest
one, and that the entire fund benefitted from this
suit with the prevention of general fiduciary
abuse and improvement of the institutional fune-
tioning of the fund as an entity.”

On appeal, the Court of Appeals in Kiser v. Huge,
supra, affirmed this award of fees as a proper appli-
cation of the “substantial benefit” doctrine of Mills,
supra. In so holding, it relied expressly upon “the

14

[district] court’s finding that it is appropriate for
the fund to bear the costs of plaintiffs’ legal fees
since ‘the entire fund benefitted from this suit with
the prevention of general fiduciary abuse and im-
provement of the institutional functioning of the fund
as an entity.’ (517 F.2d at 1256-1257).

This decision is in clear conflict with that of the
Court of Appeals below, and this Court should ae-
cordingly grant a writ of certiorari to resolve this
conflict in authority on an important question of
federal law.

3. The decision of the Court of Appeals presents
an important question of federal labor policy which
should be resolved by this Court. In Hall v. Cole,

supra, an action under the LMRDA, this Court noted
that:

“ ,. not to award counsel fees in cases such as

this would be tantamount to repealing the Act
itself by frustrating its basie purpose. It is diffi-
cult for individual members of labor unions to
stand up and fight those who are in charge.
The latter have the treasiry of the union at their
command and the paid union counsel at their
heck and call while the member is on his own...
An individual union member could not carry
such a heavy financial burden. Without counsel
fees the grant of federal jurisdiction is but a
gesture for few union members could avail them-
selves of it.”

(412 U.S. at 13, quoting from 462 F.2d 780-781).
Thus, the Court concluded that it was “simply un-
tenable to assert that in establishing the bill of rights

oem wey om ——

15

under the act’ Congress intended to have those rights
diminished by the uneseapable fact that an aggrieved
union member would be unable to finance litigation.”
(Tbid.).

This reasoning applies with equal or greater force
in the context of Section 302. The typical plaintiff
in litigation under that section will be a union mem-
ber who is either disabled—as is the petitioner in this
case—or Whose earning capacity has been reduced
by age. Such persons are even less able to bear the
financial burdens of litigation than the active union
members in Hall v. Cole, and, as in Hall v, Cole, the
defendants in Section 302 litigation will have the
virtually unlimited financial resources vf the fund
available to pay their own attorneys. The inevitable
result of denying attorneys’ fees to employee-benefi-
ciaries who bring suit under Section 302 will be to
discourage all such litigation, and thus permit the
abuses prohibited by Congress to go uncorrected. The
petitioner in this case, who was forced to expend
several thousand dollars in attorneys’ fees to obtain
a pension he had been unlawfully denied, well illus-
trates this point, Congress could hardly have intended
such a result.

16

CONCLUSION
Kor the above reasons, a writ of certiorar’ should
issue to review the judgment and opinion of the
United States Court of Appeals for the Ninth
Circuit,
Respectfully submitted,
Josern A, YABLONSKI,
Danie. B. pe uMAN,
YABLONSKI, Boru & EpeLMAN,
WinntamM HH, Carper,

JAMES M. Mornis,
Brewer, Parrivcge & Morris,
Attorneys for Petitioner,

December 23, 1976,

(Appendices Follow)

APPENDICES

Appendix A

United States Court of Appeals
for the Ninth Cireuit

Benjamin R. Burroughs, :
Plaintiff-A ppeliant,
vs.

“rer . ° mn No. 75-2897
board of Trustees of the Pension Trust

Fund for Operating Engineers, et al.,
Defendants-A ppellees,

Benjamin R. Burroughs,
Plaintiff-Cross- Appellee,
vs.

No. 75-3289
Board of Trustees of the Pension Trust

Fund for Operating Engineers, et al.,

Defendants-Cross-4 ppeliants, |

| October 4, 1976 |

Appeal from the United States District Court
for the Northern District of California

OPINION
Before: Wricur and Trask, Circuit Judges,
and Waters,” District Judge.
Wriaut, Cirenit Judge:
This case involves two appeals. One is brought by
the Board of Trustees of the Pension Trust Fund

*Honorable Laughlin E. Waters, United States District Judge of
the Central District of California, sitting by designation.

ll

for Operating Engineers [hereinafter Trustees] from
a judgment of the district court holding that the
Trustees acted arbitrarily and capriciously in apply-
ing retroactively a break-in-employment rule to plain-
tiff Burroughs so as to deny him pension benefits.
Burroughs appeals from the district court’s failure
to award him attorneys’ fees.

I.

FACTS
The Pension Trust Fund for Operating engineers
was established pursuant to a collective bargaining
agreement, dated May 20, 1957, between Local 3 of
the International Union of Operating Engineers and
the Associated General Contractors of California. Ine.
The agreement provided that, commencing January 1.
Mo8, the employers covered thereby were to make
contributions to the pension fund for each hour

worked by covered employees.

Under the terms of the pension plan, “pension
credit” was defined as the number of years of service
to the industry accumulated and maintained for each
covered employee. “Past service credit” was defined
as periods of employment prior to an employee’s con-
tribution date, and “future service credit” referred
to periods of employment on and after the employee's
contribution date. The contribution date for a uheun
employee was defined as either January 1, 1958, or
such later date as the Trustees might fix for a par-
ticular bargaining group.

ll

Burroughs had accumulated 1514 years of past ser-
vice credit before 1958. From 1958 to 1972 he acquired
11% years of future service credit. He suffered a to-
tally disabling heart attack in 1972 and applied for a
disability pension.

His application was rejected because, by failing to
work at least 350 hours for a contributing employer
during any of the years 1958-60, Burroughs had suf-
fered a “break-in-employment” under the terms of the
trust agreement. That cancelled all his past service
credit and rendered him ineligible for a disability
pension.

Alleging that he had not received notification of the
break-in-employment rule until 1960, at which time
it was retroactively applicable to January 1, 1955,
Burroughs sued the Trustees for wrongful denial of
pension rights in violation of §302(¢)(5) of the
Labor Management Relations Act of 1947 [LMRA],
29 U.S.C. § 18606) (5).

II.
THE DISTRICT COURT'S DECISION

The district court indicated that the break-in-
employment rule, when taken together with the pro-
visions of the plan for the vesting of pension credits,
was reasonable on its face and that its adoption by
the Trustees was not arbitrary and capricious. It
held, however, that the application of the rule to
Burroughs at the end of 1960 was arbitrary and
capricious because Burroughs was not notified of the

iv

")! : .
rule until more than two years after the rule was in
effect, cutting off his accrued pension rights.

III.
SECTION 302(ce) JURISDICTION
Section 302 of the LMRA in general forbids an

employer to make monetary payments to any rep-
resentative of its employees and forbids such repre-
sentative to accept such payments. Section 302(¢)(5)
creates an exception for payments to an employee
pension fund by stating that the general prohibitions
of Ȥ 502 do not apply:

with respect to money or other thing of value

paid to a trust fund established by such repre-

sentative, for the sole and exclusive be nefit of the

employees of such employer, and their families

and dependents... .
29 U.S.C. § 186(¢)(5) (emphasis added).

Section 302(e) grants district courts jurisdiction to
determine whether the provisions of a given retire-
ment fund constitute a structural defect in violation
of § 302(¢)(5). Section 32U2(e) does not, however,
confer general power to interfere with provisions of
agreements freely entered into between unions and
employers which regulate day-to-day administrative
matters of pension coverage and eligibility. Lugo v.
Employees Retirement Fund, 388 F., Supp. 1001
(D.C.N.Y. 1975).

A structural defect is present when a pension plan
excludes a sizeable number of union members with

no reasonable purpose behind their exclusion, thus

v

failing to satisfy the requirement that the fund shall
be for the “sole and exclusive benefit” of all em-
ployees. See Insley v. Joyce, 330 F. Supp. 1228, 1233
(D.C, Ul, 1971).

In its conclusions of law the district court found
that the failure of the Trustees to administer the trust
in a manner consistent with fundamental due process
was in substance tantamount to a basic structural
defect and said:

[W]|hether the unjust exclusion of a pensioner
is obtained from the exclusive provisions of the
trust fund itself or from the arbitrary and ex-
clusionary implementation procedures of the
trustees, the ultimate effect is that the trust 1s
not operated for the “sole and exclusive benefit
of the employees.”

This finding is consistent with the law of this circuit.
See Alvarez v. Erickson, 514 F.2d 156 (9th Cir.), cert.
denied 423 U.S..874 (1975).
IV.

ARBITRARY AND CAPRICIOUS ACTION

A break-in-employment rule is not by itself arbi-
trary and capricious, as the district court implicitly
held. This court, as was the court in Kosty v, Lewis,
219 F.2d 744 (D.C. Cir. 1963), is not concerned with
what the elegibility requirements for the pension are,
but rather with how the changes in qualifications are
made.

In Kosty, the plaintiff miner was already eligible
for retirement and pension rights at the time the

vl

pension eligibility requirement was changed without
notice or grace period. As that court stated, the
bounds of fundamental fairness were over-reached be-
‘cause of “the failure of the Trustees to accord any
notice or period of grace which would have afforded
some reasonable possibility for an employee like ap-
pellant to have elected to retire and take the pension
available immediately prior to the change.” Jd. at
749.

Burroughs’ pension had not vested when the nego-
tiated pension plan went into effect, although it would
have vested in 1966 had the break-in-employment not
occurred, Pension rights need not be vested, however,
prior to a change in qualification requirements before
the change can be deemed arbitrary and capricious.
In Lee v. Nesbitt, 453 F.2d 1309 (9th Cir. 1971),
plaintiff seaman had been denied a retirement pension
hecause at the time the break-in-employment rule was
implemented he had not reached retirement age, al-
though he had completed his minimal employment
requirement. This court found such action to be arbi-
trary and capricious.

As the teachings of Kosty and Lee thus indicate,
it was fundamentally unfair for the Trustees to apply
the break-in-employment rule to employees such as
Burroughs who had no notice of its existence and
hence no reasonable opportunity to protect themselves
from its impact during the years to which it was
retroactively applied. As the district court stated in
its conclusions of law:

vu

[S]Jinee the Break-in-Emplovment Rule by its
terms allows a participant three vears in which
to accumulate the required minimum hours of
contributory employment . . . plaintiff should
have been allowed three years in which to accum-
ulate said required minimum hours from the date
plaintiff was put on notice of the Rule.

V.
ATTORNEYS’ FEES

As emphasized in Alyeska Pipeline Service Co. v.
Vilderness Society, 421 U.S. 240 (1975), attorneys’
fees are not ordinarily recoverable by the prevailing
litigant in the absence of statutory authorization.
Section 302 of the LMRA gives no such authorization.
Under the historic equity jurisdiction of federal
courts, however, some exceptions to the general rule
have arisen: where a common fund or common bene-
fit has been created by the prevailing litigant, Mil/s v.
Electric Auto-Lite Co., 396 U.S. 375 (1970); Hall v.
Cole, 412 U.S. 1 (1973); where there has been bad
faith by the losing party, Vaughan v. Atkinson, 369
U.S. 527 (1962); or where there has been willful vio-
lation of a court order, Toledo Scale Co. v. Comput-
ing Scale Co., 261 U.S. 399 (1923).

Under the common fund exception, courts orig-
inally permitted a plaintiff to recover attorneys’ fees
when his action in bringing suit resulted in the re-
covery or establishment of a fund in which others
had the right to share. In Mills v. Electric Auto-Lite
Co., supra, the Court expanded this doctrine hold-

ing that there was no need for the creation of an
actual fund, as long as a “substantial benefit” of some
kind had acerued to the enriched class and the court
had “jurisdiction over an entity through which the
contribution ean be effected.” Alyeska, supra at 276
(Marshall, J. dissenting). It is argued by appellant
Burroughs that the common benefit rationale should
apply here.

In this case, however, no definite class of bene-
ficiaries has been ascertained. It is argued that any
other beneficiary of the pension plan who incurred a
break-in-employment prior to December 31, 1963, the
end of the third full year after notification to the
members of the existence of the break-in-employment
rule, will be in a position to take advantage of the
ruling here. The Supreme Court, however, has identi-
fied a factor common to all its common-benefit decis-
ions which is not present. It stated:

In this Court’s common-fund and common-benefit
decisions, the class of beneficiaries was small in
number and easily identifiable. The benefits could
be traced with some accuracy, and there was
reason for confidence that the costs could indeed
be shifted with some exactitude to those henefit-
ing.
421 U.S. at 265, n.39.

In this case, no records have been maintained which
would have revealed the number or identity of per-
sons benefitted by Burroughs’ action. The class of
beneficiaries is thus of indeterminable size and not
easily identifiable. The decision of the district court
is therefore affirmed.

Appendix B

United States District Court
Northern District of California

No. C-73-2080 WHO

Benjamin R. Burroughs, )
Plaintiff,

Vs.
Board of Trustees of the Pension Trust (
Fund for Operating Engineers, et al.,
Defendants. !

[Filed Apr. 14, 1975]

FINDINGS OF FACT AND CONCLUSIONS
OF LAW

This case was tried to the Court sitting without a
jury on February 10 and 20, 1975. The Court having
received oral and documentary evidence introduced
by the parties at trial, and having duly considered
said evidence and the points of law and authorities
cited in, the trial briefs of the parties, and having
heard all the arguments of counsel, and being fully
advised in the premises, now makes the following
Findings of Fact and Conclusions of Law pursuant
to Rule 52 of the Federal Rules of Civil Procedure.

- Findings of Fact

1. This is a civil action under the Labor Manage-
ment+Relations Act of 1947 for injunctive, declara-

tory and monetary relief. Jurisdiction is conferred
by 29 U.S.C. §186(e) and 28 U.S.C. §§1331, 2201.

2. Plaintiff was born on August 30, 1911; he
joined Local 3A of the International Union of Oper-
ating Engineers on August 7, 1943; he transferred to
Local 3 of the International Union of Operating En-
gineers (“Local 3”) on January 4, 1947; he main-
tained his membership in Local 3 from and after
August 7, 1945.

3. On December 30, 1959, Local 3 and the prede-
cessor in interest to the Associated General Contrac-
tors of California, Inc., executed the Trust Agree-
ment, Pension Trust Fund for Operating Engineers.

4. By its terms the Trust Agreement, Appendix A
thereto (together with all amendments and modifica-
tions to the Trust Agreement and Appendix A) and
the applicable provisions of collective bargaining and
other labor agreements with the Associated General
Contractors of California, Ine. and other employers,
form the Pension Plan of Local 3 (“the Pension
Plan”).

5. Under the terms of the Pension Plan, employ-
ers having collective bargaining agreements with
Local 3 are referred to as “Individual Employers” or
“Contributing Employers”. Said Individual Employ-
ers are required to make payments to the Pension
Trust Fund for Operating Engineers (“the Pension
Fund”) of sums of money measuured by the number
of hours worked by each employee of such Individual
Employer for the purpose of providing retirement
benefits and pensions for their employees and their
beneficiaries.

ee

x1

6. As executed on December 30, 1959, the Trust
Agreement (Article 1, Section 4) defined “Covered
Kmployee” as any employee of a Contributing Em-
ployer whose work or work classification is covered
by a Collective Bargaining Agreement. Subsequently
that definition was modified by an undated First
Amendment to the Trust Agreement, so as to include
all full time paid officers, and all employees classified
as representatives (regardless of grade), administra-
tive staff specialists, dispatchers and accountants on
which Local 3 paid into the Pension Fund on the
same basis that Individual Employers covered by the
Master Agreement between the predecessor of the
Associated General Contractors of California, Ine.,
and Local 3 paid on their employees who were Cov-
ered Employees, Thereafter, on March 7, 1966, that
definition was again modified (by the Third Amend-
ment to the Trust Agreement), so as to include all
employees of a Joint Apprenticeship Committee or
Committee on which Local 3 is represented, and all
employees of the Local 3 Credit Union on which the
appropriate Joint Apprenticeship Committee or
‘redit Union or both pay into the Pension Fund on
the same basis as Local 3 pays into the Pension Fund,
excluding in the case of a Joint Apprenticeship Com-
mittee and the Credit Union those employees covered
by a Labor Agreement with a Labor Organization.

7. The Pension Plan (Article A, Seetion 2, See-
ond Revised Appendix A) defines “Pension Credit”
as the vears of service which are accumulated and
maintained for Covered Employees in aecordance
with the Pension Plan. “Past Service Credit” is de-

xii

fined as periods of employment prior to an em-
ployee’s Contribution Date to the extent credited in
accordance with the Pension Plan, while “Future
Service Credit” means periods of employment on and
after the employee’s Contribution Date to the extent
credited in accordance with the Pension Plan. The
“Contribution Date” is defined as January 1, 1958,
or such later date as may be fixed by the Board of
Trustees for a particular Bargaining Group and is
the date applicable to the Bargaining Group in which
the Covered Employee was employed when the first
contribution to the Pension Fund was made on his
behalf.

8. Local 3 has, at all times relevant, negotiated
and executed Labor Agreements with employers in
the construction industry, in part with associations
of contractor employers and in part with individual
contractor employers (including joint ventures).
Throughout this period, the number of Individual
Employers or Contributing Employers defined in the
Trust Agreement has expanded and the industries
covered by labor agreements with Local 3 have like-
wise expanded. The assets of the Pension Fund have
grown considerably and as of the date of trial total
over $100 million. Individual Employers having or
covered by agreements with Local 3 inelude the mem-
bers of the Associated General Contractors; General
Contractors Association of Hawaii; Construction
Equipment Dealers of Northern California; Steel
Fabricators and Erectors Council of Northern Cali-
fornia, Northern Nevada and Utah; California Con-

oes. ar

em ee

eee

tractors Council; Utah Chapter of the Associated
General Contractors; Pile Driving Contracting Asso-
ciation of Northern California, Northern Nevada
and Utah; Nevada Chapter of the Associated General
Contractors; Pacific Shipbuilding and Ship Repair
Firms; Rock, Sand and Gravel Producers Association
of Northern California; Dredging and Contractors
Association of California, Nevada, Utah and Hawaii;
Engineering and Grading Contractors Association;
and other employer associations. These agreements
establish, in pertinent part, a Covered Employee’s
bargaining group, rate of contribution to the Pension
Fund (“Contribution Rate”), the effective date of
contributions to the Pension Fund (“Contribution
Date”), and a recognition clause, recognizing Local 3
as the exclusive collective bargaining agent of all
employees covered by labor agreements and as out-
lined in the extensive job classifications listed
therein.

®. At the time plaintiff applied for his pension,
Article C, Section 7, Second Revised Appendix A,
provided as follows:

“A Covered Employee shall be entitled to retire
on a Disability Pension if he was or becomes to-
tally disabled at a time when:

a. He has attained at least age 50 but has not
attained age 65 and has at least 10 vears of

Pension Credit without a break in employ-
ment as defined in Article ID, Section 5; or

b. he has not attained age 65 and has at least
15 years of Pension Credit, without a break
in employment as defined in Article D, See-
tion 5; and

xiv

c. if he meets the requirements in Subsections
a. or b. above, he has also received two
quarters of Future Service Credit, unless
he is totally disabled on or before the Con-
tribution Date for the Bargaining Group in
which he was employed at the time he be-
came disabled.

10. At the time plaintiff applied for his pension,
Article C, Section 9, Second Revised Appendix A,
provided as follows:

“A Covered Employee shall be deemed totally
disabled upon determination by the Social Secu-
rity Administration or its equivalent that he is
entitled to a Social Security Disability Benefit or
its equivalent in connection with his Old Age
Survivors and Disability Insurance Coverage or
its equivalent. The Loard may at any time, or
from time to time, require evidence of continued
entitlement to such Social Security Disability
benefits or equivalent benefits.”

11. Although an applicant for a social security
benefit must meet the test of being disabled and also
must meet an earnings requirement, when the Board
of Trustees adopted the social security disability test,
its sole focus was on the disability aspect, not on the
earnings requirement.

12. On or about March 14, 1972, plaintiff suffered
a myocardial infarction which rendered him totally
disabled to perform his occupation as an employee of
the construction industry.

13. The Social Security Administration deemed
plaintiff totally disabled, but denied him a Social Se-

He ee ae ene etn ae

xv

curity Disability Benefit for the sole reason that he
had not met the Social Security earnings require-
ment,

14. The Pension Plan, in Article D, Section 5.a.
provides as follows:

“a. General Rule. It shall be considered a
break in employment and a Covered Employee's
previously accumulated Pension Credit shall be
cancelled if after the January 1 coinciding with
or next following his Contribution Date he fails
to earn one quarter of Future Service Credit in a
period of three consecutive calendar years, unless
such Covered Employee was permanently and
totally disabled on or before January 1 of the
year in which contributions commenced for the
Bargaining Group in which he was employed at
the time he became disabled.”

This rule is known as the Break-in-Employment
Rule.

15. At the time plaintiff applied for his pension,
Article D, Section 6.a. read as follows:
“Under the circumstances described below, an
Employee shall have his Pension Credits vested
and the break rule set forth in Section 5 of this
Article D shall not operate to deprive him of his
previously accumulated Pension Credit.

(1) Beginning January 1, 1972, an Em-
ployee’s Pension Credit is vested if he (a) has
accumulated 25 years of Pension Credit or (b)
is at least age 45 and has accumulated at least 10
years of Pension Credit.

(2) Between January 1, 1965 and January 1,
1972, an Employee’s Pension Credit was vested if

he (a) had accumulated 25 years of Pension
Credit or (b) was at least age 55 and had accu-
mulated at least 10 years of Pension Credit.

(3) Before January 1, 1965, an Employee’s
Pension Credit was vested if he was at least age
55 and had accumulated at least 10 years of Pen-
sion Credit.”

16. Under the terms of the Pension Plan, once a
Covered Employee’s pension credit vests, the Break-
in-Employment Rule does not operate to deprive him
of his previously accumulated pension credit.

17. Local 3 has maintained, and at all times perti-
nent to this litigation maintained, employment dis-
patch procedures for the dispatch of Local 3 members
and others to jobs throughout Local 3’s multi-stage
territory and jurisdiction. The employment received
by those dispatched from the hiring halls is subject, to
economic fluctuations, weather and other factors pe-
culiar to the construction industry. An operating
engineer may work for numerous employers during
his working life. The duration of the jobs available
may and does significantly fluctuate.

18. Between April 1, 1942, and December 31, 1957,
plaintiff worked in the geographical jurisdiction of
Local 3 on work of the type covered by labor agree-
ments with Local 3. During this period he aceumu-
lated fifteen and one-fourth years of pension credit,
all of which was past service credit,

19. Between January 1, 1958, and March 14, 1972,
according to the records of the Pension Fund, plain-
tiff earned an additional one and one-half years of

6 ne ee ott»

oo nh ln ae

**

pension credit so that at the time of his retirement
he had accumulated a total of sixteen and three-
fourths years of pension credit.

20. Between January 1, 1958, and March 14, 1972,
plaintiff, with few exceptions, maintained himself
available for employment by registering in the em-
ployment offices maintained by Local 3 and contacting
said offices regularly. During said period of time he
worked for numerous employers. He received dis-
patches to most of these and, when dispatches from
Local 3 were not forthcoming, he sought employment
on his own, Even im those instances when plaintiff
was working for employers to whom he had not been
dispatched, he generally maintained his registration
for employment. His wife, during these periods,
would remain at home so that she could notify plain-
tiff in the event telephone calls from Local 3 employ-
ment offices were forthcoming. They were not.

21. In order to improve his chances of being dis-
patched to employment, plaintiff at various times reg-
istered in employment offices outside the area of his
residence, as well as within, and, in 1969, enrolled at
Rancho Murictta, a training facility for operating
engineers, in order to improve his skills and thus his
chances of being dispatched to employment,

22. On October 31, 1972, plaintiff applied for a
disability pension based upon his total disability
within the construction industry; his application was
received by the Board of Trustees on November 6,
1972; plaintiff was informed on May 3, 1973, that,
although he did not appear to qualify for a pension,

xviii

his application would be presented to the Pension
Approvals Committee for consideration; on May 17,
1973, the Pension Approvals Committee met and de-
termined that plaintiff did not qualify for a pension
on the grounds that he had incurred a break in em-
ployment at the end of calendar year 1960 and again
at the end of calendar year 1968; on July 12, 1973,
plaintiff appealed the decision of the Pension Ap-
provals Committee to the Secretary of the Pension
Trust Fund; plaintiff's appeal was heard before an
Appeals Committee on August 13, 1973; thereafter,
the Appeals Committee upheld the action of the Pen-
sion Approvals Committee,

23. As a result of the first break in employment,
at the end of calendar year 1960, all of plaintiff's
previously accumulated past service pension credits
were cancelled pursuant to the terms of the Pension
Plan.

24. Plaintiff’s first break in employment was based
on a finding that he had worked fewer than 350 hours
for Contributing Employers in each year during the
three-year period from January 1, 1958, to December
31, 1960, During 1958 plaintiff worked well over 350
hours, performing his normal funetion as an equip-
ment operator, but his employer was not a Contrib-
uting Employer. During 1959 and 1960 plaintiff had
brief jobs with Contributing Employers, received
through the union dispatch office, but the number of
hours worked on such jobs totaled less than 350 in
each year. During this period plaintiff regularly re-
ported to the union hall to seek work, and never re-

<a eo

ee ee ee ee re me =

ves

WR we .

xix

fused any job he received from the union dispateh
office.

all

25. The first notification to the participants in
the Pension Plan, ineluding plaintiff, of the Break-in-
Employment Rule was on or about April 27, 1960.

26. Had the Board of Trustees not applied the
Break-in-Employment Rule to plaintiff at the end of
1960, plaintiff would have had his pension rights
vested upon his attaining age 55 years on August 30,
1966, Having had his rights then vested, the Break-
in-Employment Rule could not have cancelled plain-
tiff’s previously accumulated pension credit.

27. As a result of the application of the Break-
in-Employment Rule to plaintiff by the Board of
Trustees, plaintiff has been denied a monthly pension
benefit since November 1, 1972, the time he was first
eligible for same.

28. Had plaintiff been granted a pension upon his
application for same, he would have been able to
enjoy the benefits conferred by the Pensioned Oper-
ating Engineers Health & Welfare Trust Fund.

29. As a result of plaintiff’s being denied a dis-
ability pension, he was required to expend his own
funds for medical care, a portion of which would
have been covered by the Pensioned Operating En-
gineers Health & Welfare Trust Fund,

30. Asa further result of plaintiff’s being denied
a pension, piaintiff was required to expend and did
expend sums of money to purchase medical insurance
to cover injuries and illnesses that would have been

xx

covered by the Pensioned Operating Engineers Health
& Welfare Trust Fund.

31. Asa further result of plaintiff's being denied
a pension, plaintiff was required to expend and did
expend sums of money to hire attorneys to prosecute
this action on his behalf.

32. Since the beginning of the Pension Fund,
plaintiff has been a union member and worked as an
operating engineer in the construction industry. He
has worked over 3,000 hours for Contributing Em-
ployers, and contributions to the Pension Fund have
heen made by such employers on his behalf.

33. The Break-in-Employment Rule was included
in the Pension Plan upon the recommendation of the
actuaries for the Pension Plan. One of the actuarial
assumptions upon which the Pension Plan was then
based, and continues to be based, was the rate at
which employees would withdraw from employment
as operating engineers in the area covered by the
Pension Plan. Among the persons who are actuarily
assumed to have withdrawn from such employment
are those who incur a break in employment under
the Rule. Similar rules are included in many other
comparable pension plans within the industry.

Conclusions of Law

1. This Court has jurisdiction under 29 U.S.C,
§186 and 28 U.S.C. §81331 and 2201 to review allega-
tions relating to violations of the statutory require-
ments of Section 302(¢)(5) of the Labor Management
Relations Act (29 U.S.C. §186(¢)(5)) under which

Pe Oe ne tn ent lt Os Cnt eT A lain

ee

xxl

the Pension Fund was created. The scope of judicial
review in this action is restricted te determining
whether the action of the Board of Trustees of the
Pension Fund was arbitrary or capricious. Kosty v.
Lewis, 319 F.2d 744, 747 (D.C. Cir. 1963), eert. den.
875 US, 964 (1964); Roark v. Lewis, 401 F.2d 425,
427 (D.C. Cir, 1968).

2. The Board of Trustees of the Pension Fund is
required by the Trust Agreement, by Seetion
302(¢)(5) of the Labor Management Relations Aet,
and by principles of law and equity, to administer
the trust and manage the funds and assets of the
trust for the exclusive benefit of its participants and
their beneficiaries.

3. The Board of Trustees of the Pension Fund
is required by the Trust Agreement, by Section
302(¢)(5) of the Labor Management Relations Act,
and by principles of law and equity, to establish eri-
teria for eligibility for benefits that are just and
reasonable, and not arbitrary, restrictive, or which
have as their purpose and effect the unnecessary
exclusion of participants from eligibility for benefits.

4. Under the requirements of Seetion 302(¢) (5)
of the Labor Management Relations Act, the Break-
in-Employment Rule, when taken together with the
provisions for vesting of pension credits, is reason-
able on its face, and its adoption by the Board of
Trustees was not arbitrary or capricious.

5. Under the requirements of Section 302(¢)(5)

of the Labor Management Relations Act, and under
principles of law and equity, application of the

Xxil

Break-in-Employment Rule to plaintiff at the end of
1960 was arbitrary and capricious under the circum-
stances, in that plaintiff was not notified of the Rule
until over two years after the Rule began operating
to cut off his accrued pension rights. Kosty v. Lewts,
supra.

6. Under the requirements of Section 302(¢) (5)
of the Labor Management Relations Act, and under
principles of law and equity, since the Break-in-
Employment Rule by its terms allows a participant
three years in which to accumulate the required mini-
mum hours of contributory employment to remain a
Pension Plan participant, plaintiff should have been
allowed three years in which to accumulate said re-
quired minimum hours from the date plaintiff was
put on notice of the Rule. Failure of the Board of
Trustees to allow plaintiff said three years from the
date of notice was arbitrary and capricious in light
of all of the circumstances of plaintiff’s employment
history, both before and after adoption of the Pension
Plan. Lavella v. Boyle, 444 F.2d 910 (D.C. Cir. 1971),
cert, den. 404 U.S. 850 (1971).

7. To the extent the definition of total disability
within the Pension Plan requires a participant to re-
ceive a social security disability award, or its equiva-
lent, said requirement is unreasonable on its face and
as applied to plaintiff in that the earnings aspect of
such an award was not intended to be a focus for de-
termining eligibility for disability benefits under the
Pension Plan.

OS Meee ee Ae ORR Pe o

xxl

8. As a direct and proximate result of the viola-
tions of Section 302 of the Labor Management Rela-
tions Act set forth hereinabove, plaintiff has been
damaged in being denied a monthly pension benefit
from November 1, 1972, to date, and is thus entitled
to the sum of the monthly pension benefits denied
him, together with interest on each said monthly pen-
sion benefit at the legal rate, from the due date of
each payment to the date of judgment herein.

9. Asa further direct and proximate result of the
Violations of Section 302 of the Labor Management
Relations Act as set forth hereinabove, plaintiff is
entitled to damages, plus interest, for those medical
expenses that would have been covered by the Pen-
sioned Operating Enginecrs Health & Welfare Trust
Fund had plaintiffs pension not been unlawfully
denied him, in an amount consistent with the terms of
said Pensioned Operating Engineers Health & Wel-
fare Trust Fund.

10. As a further direct and proximate result of
the violations of Section 302 of the Labor Manage-
ment Relations Act as set forth hereinabove, plaintiff
is entitled to recover from defendant Board of Trus-
tees the amount of money expended by plaintiff in
purchasing medical insurance for himself and his
wife, plus interest at the legal rate from date of each
premium payment to the date of judgment herein,

Il. As a further direct and proximate result of
the violations of Section 302 of the Labor Manage-
ment Relations Act as set forth hereinabove, plaintiff

Xxiv

is entitled to a permanent injunction requiring the
Board of Trustees of the Pension Fund to pay to
plaintiff each month a pension benefit consistent with
the terms of the Pension Fund and for so long as
plaintiff remains eligible for same under the terms of
the Pension Plan.

It Is Hereby Ordered that plaintiff will prepare,
serve and file a certificate of counsel regarding attor-
neys’ fees and a judgment in accordance with the
foregoing findings of fact and conclusions of law, in
form approved by defendants, on or before April 25,
1975.

Dated: April 11, 1975.

/s/ William H. Orrick, Jr.
William H. Orrick, Jr.
United States District Judge

Ne ee ne Co ee i eo le” oli ~

United States District Court
Northern District of California

No. C-73-2080 WHO

Benjamin R. Burroughs, )
Plaintiff, |

Vs.
Board of Trustees of the Pension Trust f
Fund for Operating Engineers, et al.,
Defendants. J

{ Filed Jul. 25, 1975]

AMENDMENTS TO FINDINGS OF FACT AND
CONCLUSIONS OF LAW
Good cause appearing,

It is Hereby Ordered that:
1. Finding of Fact No. 31 is deleted from the
Court’s findings.

2. The Court makes the following additional Con-
clusions of Law:

“1A. The Court has jurisdiction to review the
Board of Trustee’s administration of the trust
fund as well as the specific terms of the trust
plan. Lugo v. Employees Retirement Fund of the
Illum, Prod, Indus., 366 F.Supp. 99 (E.D. N.Y.
1973).

JA. A failure of the Board of Trustees to
administer the trust in a manner lacking in fun-
damental due process is in substance tantamount

to a basic structural defect in the trust. As a prae-
tical matter, whether the unjust exclusion of a
pensioner is obtained from the exclusive provi-
sions of the trust fund itself or from the arbi-
trary and exclusionary implementation procedures
of the trustees, the ultimate effect is that the
trust is not operated for the ‘sole and exclusive
benefit of the employees’. Lugo v. Employees
Retirement Fund of the Illum. Prod. Indus.,
supra.”

Dated: July 24, 1975.
/s/ William H. Orrick, Jr.

William H. Orrick, Jr.
United States District Judge

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Appendix C

LABOR-MANAGEMENT RELATIONS ACT OF 1947, SECTION 302
(29 U.S.C. § 186)

§ 186. Restrictions on payments and loans to employee
representatives, labor organizations, officers and
employees of labor organizations, and to employ-
ees or groups or committees of employees; excep-
tions; penalties; jurisdiction; effective date; ex-
ception of certain trust funds,

* * +

(c) The provisions of this section shall not be
applicable (1) in respect to ay money or other thing
of value payable by an employer to any of his em-
ployees whose established duties include acting openly
for such employer in matters of labor relations or
personnel administration or to any representative of
his employees, or to any officer or employee of a labor
organization, who is also an employee or former em-
ployee of such employer, as compensation for, or by
reason of, his service as an employee of such em-
ployer; (2) with respect to the payment or delivery
of any money or other thing of value in satisfaction
of a judgment of any court or a decision er award
of an arbitrator or impartial chairman or in com-
promise, adjustment, settlement, or release of any
claim, complaint, grievance, or dispute in the absence
of fraud or duress; (3) with respect to the sale or
purchase of an article or commodity at the prevailing
market price in the regular course of business; (4)
with respect to money deducted from the wages of

XXxVili

employees in payment of membership dues in a labor
organization: Provided, That the employer has re-
ceived from each employee, on whose account such
deductions are made, a written assignment which shall
not be irrevocable for a period of more than one
year, or beyond the termination date of the applicable
collective agreement, whichever occurs sooner; (5)
with respect to money or other thing of value paid
to a trust fund established by such representative, for
the sole and exclusive benefit of the employees of
such employer, and their families and dependents (or
of such employees, families, and dependents jointly
with the employees of other employers making similar
payments, and their families and dependents) ; Pro-
vided, That (A) such payments are held in trust for
the purpose of paying, either from principal or in-
come or both, for the benefit of employee, their fam-
ilies and dependents, for medical or hospital care,
pensions on retirement or death of employees, com-
pensation for injuries or illness resulting from occu-
pational activity or insurance to provide any of the
foregoing, or unemployment benefits or life insugance,
disability and sickness insurance, or accident insur-
ance; (B) the detailed basis on which such payments
are to be made is specified in a written agreement
with the employer, and employees and employers are
equally represented in the administration of such
fund, together with such neutral persons as the repre-
sentatives of the employers and the representatives
of employees may agree upon and in the event the
employer and employee group deadlock on the ad-

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xxix

ministration of such fund and there are no neutral
persons empowered to break such deadlock, such
agreement provides that the two groups shall agree
on an impartial umpire to decide such dispute, or in_
event of their failure to agree within a reasonable
length of time, an impartial umpire to decide such
dispute shall, on petition of either group, be appointed
by the district court of the United States for the
district where the trust fund has its principal office,
and shall also contain provisions for an annual audit
of the trust fund, a statement of the results of which
shall be available for inspection by interested persons
at the principal office of the trust fund and at such
other places as may be designated in such written
agreement; and (C) such payments as are intended
to be used for the purpose of providing pensions or
annuities for employees are made to a separate trust
which provides that the funds held therein cannot be
used for any purpose other than paying such pensions
or annuities (6) with respect to money or other thing
of value paid by any employer to a trust fund estab-
lished by such representative for the purpose of
pooled vacation, holiday, severance or similar benefits,
or defraying costs of apprenticeship or other training
programs: Provided, That the requirements of clause
(B) of the proviso to clause (5) of this subsection
shall apply to such trust funds; (7) with respect to
money or other thing of value paid by any employer
to a pooled or individual trust fund established by
such representative for the purpose of (A) scholar-
ships for the benefit of employees, their families, ard

xxx

dependents for study at educational institutions, or
(B) child eare centers for preschool and school age
dependents of employees: Provided, That no labor
organization or employer shall be required to bargain
on the establishment of any such trust fund, and re-
fusal to do so shall not constitute an unfair labor
practice: Provided further, That the requirements of
clause (B) of the proviso to clause (5) of this sub-
section shall apply to such trust funds; or (8) with
respect to money or any other thing of value paid
by any employer to a trust fund established by such
representative for the purpose of defraying the costs
of legal services for employees, their families, and
dependents for counsel or plan of their choice: Pro-
vided, That the requirements of clause (B) of the
proviso to clause (5) of this subsection shall. apply
to such trust funds: Provided further, That no such
legal services shall be furnished: (A) to initiate any
proceeding directed (1) against any such emplover
or its officers or agents except in workman’s compen-
sation eases, or (11) against such labor organization,
or its parent or subordinate bodies, or their officers
or agents, or (iil) against any other employer or
labor organization, or their officers or agents, in any
matter arising under subchapter II of this chapter
or this chapter; and (B) in any proceeding where
a labor organization would be prohibited from defray-
ing the costs of legal services by the provisions of the
Labor-Management Reporting and Disclosure Act of
1959.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1061%3A1. Public record. Not legal advice.