# Petition — United Mine Workers v. Nedd > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2738%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1978 - **Citation:** 434 U.S. 1013 ## Text re | FILED OCT 27 1977 AK, JR., CLERK IN THE : Supreme Court of the Gnited States October Term, 1977 No -@@-612'¢ UNITED MINE WORKERS OF AMERICA, Petitioner, Vv. CHARLES NEDD, DOMINIC IERO, MAX DYNOSKI and AN- THONY GANLY, Members of the Pensioned Anthra- cite Coal Miners Protest Executive Committee, su- ing on behalf of Themselves and All Other Members of the CLASS OF PENSIONED ANTHRACITE COAL MIN- ERS AND WIDOWS OF DECEASED PENSIONED ANTHRA- CITE COALS MINERS, Respondents, and EMMETT THOMAS, MART F. BRENNAN, AND JOHN JILLSON, Trustees of the Anthracite Health and Welfare Fund. Petition for a Writ of Certiorari to the United States Court of Appeals for the Third Circuit HARRISON COMBS JOSEPH A. YABLONSKI 900—15th Street, N.W. DANIEL B. EDELMAN Washington, D.C. 20005 Yablonski, Both & Edelman 1150 Connecticut Ave., N.W. Washington, D.C. 20036 THOMAS N. O’NEILL, JR. CAROL A. MAGER Montgomery, McCracken Walker & Rhoads Three Parkway Philadelphia, PA 19102 ————— OOOO TABLE OF CONTENTS Page PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EE «05s 0 cs Gabo ow 'ke ENOTES OND CoC Rb EON 1 ee a co ines na We neaseeaascuseees 2 oe ge ceeds (ake oe eaee Ne aw 2 QUESTIONS PRESENTED ............cceecccccccces 2 or rey, yg oy) | Se er Pr rrr 3 ye ves | sy it dies | fot | | amRIat RRSP rere 3 ih, I, hn cin a be aria U CIOS mab E.s 0089” 3 i See CN Sk cack occ C68: cat pene eo ees 8 C. The District Court’s Memorandum and Order .... 10 D. The Court of Appeals’ Opinion ...........655:. 12 REASONS FOR GRANTING THE WRIT ............. 13 I. IN OPENING THE WAY FOR ESTABLISHMENT OF A FEDERAL COMMON LAW OF PENSION AND WELFARE TRUST FUND ADMINISTRA- TION, THE COURT OF APPEALS’ DECISION CONTRADICTS A LONG-STANDING PATTERN OF INTERPRETATION BY THIS COURT AND THE COURTS OF APPEALS ON SECTIONS 801 AND 302 OF THE LABOR-MANAGEMENT RE- 8, EE PP ert e ey Lt RT eee 13 A. The Court of Appeals’ Finding of Federal Juris- diction Under 302(e) And Its Declaration Of An Impied Damage Remedy Thereunder Conflict With Arroyo v. United States, 359 U.S. 419 (1959) And The Decisions Of Other Courts of SE as «saan deniees a ribdiaineel adie ghee eae 6 20 1. Absent Any Existing or Threatened Struc- tural Violation of Section 302 at The Time Section 302(e) is Invoked, There Can Be No Jurisdiction Thereunder .............+5. 23 2. Section 302(e) By Its Terms Authorizes Only An Injunctive Remedy “To Restrain Violations” of Section 302 and Does Not Au- thorize Judicial Declaration Of An Implied Cause Of Action for Damages ............ 26 ii 3. As a Matter of Substantive Law, Section 302(e) is Concerned With “Structural Vio- lations” And Not Fiduciary Breaches in the Administration of Collectively-Bargained oe edn cd al Wane eEEne ee nets 30 B. The Holding That Section 301 of LMRA Confers Jurisdiction To Adjudicate Claims of Negligence and Breaches of Trust In The Administration of a Coilectively-Bargained Pension Fund is Contrary To The Plain Words of The Statute and is Incon- sistent With Thirty Years of Interpretation of Section 301 By This Court and The Courts of Appeals .... ccc cece cece eee eeeceeneeees 32 Il. THE HOLDING THAT PETITIONER OWED A DUTY OF FAIR REPRESENTATION TO RE- TIREES—PERSONS INDISPUTABLY OUTSIDE THE BARGAINING UNIT—IS DIRECTLY CON- TRARY TO THIS COURT’S DECISION IN PITTS- BURGH PLATE GLASS AND THE ENTIRE LINE OF FAIR-REPRESENTATION DECISIONS WHICH LIMIT THE DUTY ONLY TO BARGAIN- ING DNIT EMPLOYEES ........+-+++++++0+055 38 A. The Court of Appeals Decision is Inconsistent With the Entire Line of This Court’s Fair Rep- resentation Decisions ...............--+++++: 39 B. The Decision Below is Contrary to this Court’s Decision in Pittsburgh Plate Glass ............ 42 III. THE COURT OF APPEALS’ DISPOSITION OF THRESHOLD ISSUES BEARING ON THE UN- ION’S LIABILITY UNDER RESPONDENTS’ FEDERAL CLAIMS AND ITS ENTITLEMENT TO CREDIT FOR LOANS TO THE FUND DE- PARTS FROM ESTABLISHED DOCTRINES OF FEDERAL LAW AS ARTICULATED IN DECISI- SIONS OF THIS COURT AND OTHER COURTS OP APPTIBALS 2... .vccccccccrccvccesccssvccess 46 CRT ccc ccc ccc ccc esate toascccsecevecsseess 50 iii TABLE OF AUTHORITIES Cases Page Adams v. Budd Co., 349 F.2d 268 (C.A. 3, 1965)...... 37 Alexander v. Pacific Maritime Ass’n., 314 F.2d. 690 Sees ee Pee oad oon Ae h cede ebro ecken 36 Allied Chemical Workers v. Pittsburgh Plate Glass Co., Se ee ee ED. odo 0c hws cea xs 8, 10, 38, 39, 41, 42, 43, 44, 45, 46 Arroyo v. United States, 359 U.S. 419 (1959) .... 14, 20, 27 Blankenship v. Boyle, 329 F.Supp. 1089 (D.D.C. 1971). 49 Blassie v. Kroger Co., 345 F.2d 58 (C.A. 8, 1965) .... 14 Boys Markets, Inc. v. Retail Clerks Union, 398 U.S. 235 SEE Troe Fed oe Sea Oa wc Cha eGTKS thes ieiseus 34 Bowers v. Moreno, 520 F.2d 843 (C.A. 1, 1975) .... 14, 15, 28, 31 Bowers v. Ulpiano Casal, Inc., 393 F.2d 421 (C.A. 1, SE ddduditddvesckeacunnea 14, 15, 21, 28, 31, 32, 35, 36 Bricklayers Local 15 v. Stuart Plaster Co., 512 F.2d 1017 i EE 5 wdc olloelde ed ve clea hs lead dees * “ ..{[t}here is no instance reflected in the record of this case of the two Union trustees casting disparate votes during their management of the fund, and the record refers to at least one occasion on which the two Union trustees expressed con- cern about whether actions taken on behalf of the Fund could be taken by two of the three trustees in order to avoid having the Fund, in effect, ruled by the Operator trustee. 35a The most significant Union involvement in the affairs of the Fund, aside from participation of Union officials as trustees, has been its attempts to enforce the operators’ duty to make royalty payments and its efforts to collect delinquencies.” * + * * * “In view of the numerous instances of Union at- tempts to collect delinquencies reflected in the rec- ord, as wei! as the scant evidence of direct com- munication between the trustees and the opera- tors concerning delinquencies, it is fair to conclude that the trustees looked to the Union to furnish most of the effort with respect to enforcement of the operators’ agreement to contribute to the Fund and collection of delinquencies, and that the Union unhesitatingly accepted this responsibil- ity.” Joint Appendix at 53a-54a (footnote omitted ). + * * * x “Besides the above-described instances of sig- nificant Union involvement with the Fund, there have been numerous occasions of less significant Union participation in the Fund’s affairs. One of these was the transfer of $205,000 of the Fund’s monies to the National Bank of Washington, D.C., a union controlled bank, in December of 1962.” Joint Appendix at 57a. * * * * * “Another instance of Union involvement in the Fund’s affairs was the transfer, in May of 1963, of the Fund’s offices from the Markle Banking and Trust Company Building in Hazleton, Penn- sylvania, to the United Mine Workers Building in the same city. * * * * * “On seven occasions, the trustees held their regu- 36a larly scheduled Fund meetings in the UM W offices in Washington, D.C. rather than at the Fund headquarters. To be eligible to receive a pension from the Fund, a retired miner had to remain a member in good standing of the Union during the period he received a pension, which included pay- ing dues of $1 per month to the Union.” Joint Appendix at 58a-59a. (22, 23] The foregoing findings of fact, which are amply supported by the evidence, establish beyond dis- pute that the Union by virtue of the \ 302(c) (5) equal representation violation, placed itself in the position of the Trustees for all practical purposes with respect to the enforcement of the royalty obligations of the mine operators. Whether one looks to the Pennsylvania law of trusts or to an appropriate federal standard created under any of the three federal legal theories asserted by the plaintiffs the Union must, in the cir- cumstances of this case, be held to the same standard of conduct in discharging its assumed obligations to- ward the Fund as that of the Fund’s nominal Trustees. The Union argues that the concept of “de facto” trustee is one unknown to Pennsylvania law. But we decline to turn the result on labels. ihe concept of lia- bility for knowing participation in a breach of trust is well recognized.“* Moreover, the district court found “ B.g., Hammonds Vv. Aetna Casualty & Surety Co., 243 F. Supp. 793, 803 (N.D. Ohio 1965); In Re Van Sweringen Co., 119 F.2d 231, 234 (6th Cir. 1941); Food Fair Stores, Inc. Vv. Greeley, 264 Md. 105, 285 A.2d 632 (1972) ; Shuster v. North American Mortgage Loan Co., 139 Ohio St. 315, 40 N.E.2d 130 (1942); Proctor v. Norris, 285 Mass. 161, 188 N.E. 625 (1934) ; Anderson Vv. Daley, 38 App. Div. 505, 56 N.Y. Supp. 511 (1899), appeal dismissed, 159 N.Y. 146, 53 N.E. 753 (1899); IV Scott on Trusts § 326.5, p. 2570 (3d ed. 1967) ; American Law Institute, Restatement (Second) of Trusts § 326 (1959) ; Annotation, Employer’s Liability for Action of Trus- tee or Similar Body Administering Employer’s Pension Plan, 37a that the Union undertook the task that the trustees should have been performing. Clearly it had full knowl- edge of their inactivity since at all times two of the three trustees were its high officers. Because it never freed the Fund from its domination, despite the clear command of § 302(c) (5), it was in the position of con- trolling the extent of the Fund’s efforts to collect the _ royalty payments. In that position, as the district court found, it undertook the task. It cannot now say that its efforts should be measured by less than a fiduciary standard. And in examining the evidence of those ef- forts we may not lose sight of the fact that the Union, by continuing to dominate the Fund in violation of § 302(c) (5), placed itself in a position of inherent con- flict between its fiduciary obligation to the Fund bene- ficiaries and its duties toward the working miners whose jobs might be imperiled by vigorous enforce- ment. [24] The pensioners point out that the Trustees persisted in a policy of inadequate enforcement. In par- ticular, they failed to vigorously prosecute lawsuits against delinquent operators, all to the benefit of work- ing Union members. They also point to record evidence indicating that the trustees were less active in pursu- ing the delinquencies of some operators than of others. As to the first contention, the District Court, acknowl- edging that public statements by the trustees estab- 54 A.L.R.3d 189, 191 (1973); Scott, Participation in Breach of Trust, 38 Trust Bull. 41 (Dec. 1958). Cf. Carroll v. Brother- hood of Railroad Trainmen, 417 F.2d 1025, 1028 (1st Cir. 1969) (recognizing rule of § 326 of Restatement 2d) ; Chester- Cambridge Bank & Trust Co. v. Rhodes, 346 Pa. 427, 433-34, 31 A.2d 128, 1382 (1943) (acknowledging rule as stated by Scott and Restatement, but declining to find liability against third parties who lacked knowledge of breach of fiduciary duty). 38a lished their interest in keeping working mines open, concluded : “« . . the statements themselves do not support plaintiffs’ position that the policy of avoiding the closing down of delinquent operators for the pur- pose of promoting the Union’s interest in not harming working miners.” Joint Appendix at 104a (emphasis supplied). As to selective non-enforcement, the district court, acknowledging that failure to pursue three major pro- ducers evidenced a lack of due diligence, reasoned : “...no explanation for this apparently disparate treatment is suggested by the evidence in this case. For example, there is no evidence of any arrangements, sweetheart deals or kickbacks be- tween the trustees and any operators. There is not even an indication that the trustees deliber- ately decided to treat some operators differently than others. Jn the absence of any such evidence, I am unwilling to find that the discrepancies in the trustees’ treatment of delinquent operators were either intentional, motivated by some im- proper purpose, or beneficial to the Union. Id. at 104a-105a (emphasis supplied). The italicized portions of the two quotations disclose the critical error in the district court’s approach to the ease. The pensioners established that the Union Trustees, in illegal domination of the Fund, were in a position of conflicting loyalties, and that in that posi- tion they pursued a policy which prima facie benefitted one group to the detriment of another.” At that point the burden of explanation or justification should properly have shifted to the fiduciaries.“ Instead the "’ See Joint Appendix at 104a-105a. * Although this is a federal common law rule of union pen- sion fund trustees’ fiduciary duty, we think it is consistent 39a court charged the pensioners with the failure to prove an evil intention. [25] The District Court justified its approach of requiring the pensioners to prove evil motive by rely- ing on the Pennsylvania rule that those who seek to surcharge a fiduciary for a breach of trust must bear the burden of proving the particulars of his wrongful conduct. Entirely apart from the question whether that is the appropriate standard to apply to fiduciaries in control of a union pension fund in violation of federal law, we think the Pennsylvania authorities relied on do not support the court’s result. Jn re Flagg’s Estate, 365 Pa. 82, 88-89, 73 A.2d 411, 416 (1950) holds no more than that a testator can appoint a trustee of a testamentary trust who by virtue of another position may have divided loyalties. It merely reversed a ruling of automatic disqualification. Landis Trust, 382 Pa. 486, 115 A.2d 167 (1955) indicates that the beneficiar- ies may consent to a trustee, who is also a creditor of some beneficiaries, making loans on collateral from the trust. It holds that if they consent, they must show that the trustee acted with respect to the collateral in bad faith, if they are to surcharge the trustee. The more appropriate authority is Estate of Stetson, supra n.36, 345 A.2d 679 at 690 (1975): In general, one who seeks to surcharge a trustee bears the burden of proving that the trustee breached an applicable fiduciary duty. Killey Trust, 457 Pa. 474, 478, 326 A.2d 372, 375 (1974) ; Linn Estate, 435 Pa. 598, 607, 258 A.2d 645, 650 (1969). However, when a beneficiary has with state law as well. See, e.g., Estate of Stetson, 463 Pa. 64, 84, 345 A.2d 679, 690 (1975); Branch v. White, 99 N.J. Super. 295, 313, 239 A.2d 665, 674, cert. denied, 51 N.J. 464, 242 A.2d 13 (1968). Cf. American Law Institute, Restatement (Second) of Trusts § 212(4) (1959). 40a succeeded in proving that the trustee has com- mitted a breach of duty and that a related loss has occurred, we believe that the burden of per- suasion ought to shift to the trustee to prove, as a matter of defense, that the loss would have oc- curred in the absence of a breach of duty. Accord, Branch v. White, 99 N.J.Super. 295, 313, 239 A.2d 665, 674, cert. denied, 51 N.J. 464, 242 A.2d 13 (1968;" cf. Restatement (Second) of '°“(T)he burden of proof should be on the defaulting trustee clearly to disestablish causal connection between default and loss to the benefiiciary, rather than the con- trary. Trusts § 212(4) (1959). We believe that, as be- tween innocent beneficiaries and a defaulting fidu- ciary, the latter should bear the risk of uncer- tainty as to the consequences of its breach of duty. This is an appropriate federal rule of fiduciary obli- gation as well. The district court, having found that the Union was in an illegal conflict of interest position in its domination of the trust, nevertheless placed the burden of proof on the pensioner beneficiaries, and ruled: “... I conclude that the plaintiffs have not met their burden of establishing that the trustees breached their § 302 and common law duties of individual loyalty by purposefully failing to col- lect delinquent operator royalties in order to bene- fit the union.” Joint Appendix at 111la. [26-28] Placing the burden on the pensioners in- stead of on the Union and trustees who were in a posi- tion of divided loyalty and domination due to their vio- lation of \ 302(c)(5) was legal error which requires a reversal.” But in addition, the court expressly found that ’ See also, In Re Estate of Maurice, 433 Pa. 103, 198, 249 4la “. . . the trustees failed to pursue the delinquin- cies, even within the framework which they adopted, with sufficient diligence to achieve that degree of common skill, common prudence and common caution which reasonable men would be expected to exercise with respect to their own property. Moreover, I find that under the circum- stances it was unreasonable for the trustees to persist in their tulerant approach for as long as they did.” Joint Appendix at 126a. Appellees challenge this finding, but it is supported by detailed findings of fact amply supported by the evi- dence. This finding of trustee negligence applies to the period prior to 1964. Joint Appendix at 133a. The trustees who served during that period are deceased and their estates have not been joined as parties. One trustee defendant, Thomas, began his tenure in 1963, but the court found that he had not been personaily guilty of negligence. The district court concluded: “(tjhus, although it is the finding of this Court that past trustees violated their fiduciary duty to the Fund’s beneficiaries to make reasonable ef- forts to enforce the operators’ obligations to the Fund, none of the trustee defendants in this law- suit may be held liable for the violation by their predecessors.” Joint Appendix at 134a. We cannot quarrel with that conclusion. [29] We do, however, differ with the conclusion that the breach of fiduciary duties which occurred during the time when the enormous losses occurred should not be attributable to the Union, which throughout that A.2d 334, 336 (1969) ; Brown’s Estate, 287 Pa. 499, 501-02, 135 A. 112, 113 (1926) ; Societa Operaia Di Mutuo Soccorso Villalba v. DiMaria, 40 N.J.Super. 344, 349, 122 A.2d 897, 898-99 (1956). 42a period was in actual control of the collection efforts as a result of the § 302(c)(5) equal representation violation. That conclusion is set out as follows: “The argument that the Union caused the trustees to fail to collect royalty payments in order to protect working miners is a corollary to the contention that the trustees purposefully failed to collect royalties in order to benefit the Union. As has already been discussed, supra, the record in this case does not disclose that the trust- ees purposefully failed to collect royalties, nor does it support the conclusion that they failed to collect royalties in order to benefit the Union by protecting the interests of working miners. It es- tablishes no more than the trustees were negli- gent in not pursuing their collection policies more diligently and in persisting in their tolerant ap- proach to the problem for as long as they did. Thus, the short answer to plaintiffs’ argument concerning the Union’s participation in the trust- ees’ purposeful breach of their fiduciary duties is that because the underlying theorem is not true, the corollary is also untrue, that is, the Union could not have caused the trustees to fail to collect royalties in order to protect working miners because the record does not establish that the trustees acted unlawfully in order to protect working miners.” Joint Appendix at 136a-137a. This reasoning suffers from the same defect we noted above with respect to the burden of proof. But more fundamentally, it is inconsistent with the court’s find- ing that the trustees delegated to the Union the col- lection responsibility and that the Union willingly un- dertook it. Since the Union undertook the task and controlled the fiduciaries, it became a fiduciary, and its duty toward the fund beneficiaries should have been 48a measured by the same standard of care as the court applied to the trustees. In rejecting this contention the district court dis- tinguished Blankenship v. Boyle, 329 F.Supp. 1089 (D.D.C.1971) which held the Union liable when union trustees, dominating the Fund in violation of § 302 (c) (5), allowed large sums of the bituminous coal indus- try fund to remain in interest-free accounts at a union-owned and controlled bank. The district court reasoned that while the relationship between the Union and the fund in that case and this were the same, “(tjhe trustees in Blankenship were guilty of a breach of their duty of loyalty; the trustees here are not.” That distinction will not wash. A majority of the trustees in this case were union officers illegally con- trolling the fund, and it was that very illegality which permitted them to delegate to the Union, which had divided loyalties, the responsibility for dealing with the mine operators. This was a breach of their duty of loyalty. The Union participated in it. The measure of its responsibility for that participation is a fiduciary measure, and the burden of establishing that the losses would have occurred despite its participation was on the Union, not on the pensioners. [30] The district court refused to attribute to the Union the negligence of the Union officer trustees, reasoning : “If the Union trustees acted as agents of the Union in their capacity as trustees, then they would have vioiated their duty of loyalty to the beneficiaries. As has already been held, supra, there is no breach of the duty of loyalty in this case.” Joint Appendix at 144a-145a. This reasoning disregards the facts, as well as the Congressional command of the equal representation 44a provision of § 302(c) (5). The Union was in control of the Fund, in a manner forbidden by the statute. The Union officer trustees did in fact turn over to the Un- ion in the relevant period, responsibility for dealing with the mine operators. Such meager enforcement efforts as were made were those of the Union, not the Trustees. Those efforts did not meet the standards of care of common skill, common prudence and common caution which reasonable men would be expected to exercise with respect to their own property. If they had, the court could not have found the trustees to be negligent. Since the Union put itself in the position of dominating the Fund in a manner forbidden by § 302 (c)(5) it cannot escape liability for its negligent handling of delinquent royalty payments. The Union urges that in the event it is held liable it should be permitted to reduce its damages by the total amount it loaned the fund since 1951. Over the years, loans totaling $9,247,334 were made by the Union, at times when the precarious condition of the Fund might have forced suspension of pension payments. Of the $9,247,334 some $1,945,000, loaned since January 1974 remains due. In the years from 1951 to 1953 the Union loaned the Fund $4,403,334. These loans were unilaterally forgiven by action of the Union’s Inter- national Executive Board on July 14, 1959, by the res- olution quoted in the margin.” In the years 1960-1961 * “Resolved, that the International Executive Board in ses- sion this day, in consideration of a loan of long standing made from time to time by the International Union to the Anthracite Health and Welfare Fund, designed to make possible the con- tinued payment of $50 per month pension now in effect, be forgiven, canceled as obligations, and the promissory notes bearing on same be nullified; that the Secretary-Treasurer of the International Union be authorized and instructed to advise the Anthracite Health and Welfare Fund of this action, and attend to all necessary details incident to the implementation 45a the Union loaned the Fund $2,885,000. On January 21, 1970, five years after the instant lawsuit was started, the Executive Board voted to its treasurer ‘“‘the au- thority to write that $2,885,000 off as an asset of the Mine Workers Union and wipe it off our books, the same as we did before.” Joint Appendix at 263a-264a. The Union urges that either the rule prohibiting double recovery or the doctrine of equitable recoup- ment should result in a reduction of its liability by the amount forgiven. The district court, without distin- guishing between the two separate transactions, con- cluded that the rule against double recovery was ap- plicable. The record contains no evidence as to the purpose of the forgiveness of indebtedness other than the quoted resolutions of the executive board. There is, however, evidence that the Fund’s financial difficulties arose not only from the failure to collect delinquent royalties, but also, and in much larger degree, from the decline in anthracite production. There is no evidence in the record from which it could be found that the 1959 forgiveness of indebtedness was intended to be in re- paration for the failure to collect royalties. There is at least a scintilla of evidence that the January 21, 1970 forgiveness of indebtedness was so intended, since the motion was made in the context of a discus- sion of delinquencies and pensioner dissatisfaction. The district court made no distinction between the two transactions, concluding that “. . the forgiveness of the loans, rather than in- dicating an intent to make a gift, was more likely of this declaration, all in the interests of the members of the United Mine Workers of America in Districts 1, 7 and 9, as represented by this International Executive Board.” Joint Appendix at 233a. 46a a recognition that the loans could never be repaid by the Fund.” It held, therefore, that if the Union were to be held liable, it should be permitted to set off the forgiven loan balance against the proven damages. [31-34] We express no opinion on whether the in- tent behind the loan forgiveness should be dispositive on the question whether a set-off is allowable. The issue has not been raised before this court, and should be presented to the district court on remand. But clearly if the sums forgiven were gifts, no set-off should be allowed. Certainly a donor to an irrevocable trust could not set off his liability for participation in a breach of trust by the amount of his gift. Set-offs of trust funds are unavailable to trustees against their liability in another capacity.” The district court’s con- clusion that no gift was intended is highly speculative in the absence of any real evidence of the Executive Board’s intention. If the pensioners had the burden of proof on that issue we could affirm that part of the decision. But although the court did not specifically address the burden of proof question in that part of its opinion, it would appear to have addressed the gift problem making the same assumptions as to burden which we earlier held to be error. When one in a fiduci- ary relationship asserts a set-off to a liability for par- ticipating in a breach of trust, the burden, it seems to us, should be on him to establish that the transaction on which he relies properly qualifies for that set-off. Since we do not believe the district court considered the %® See Annotation, “Right of trustee to withhold trust pay- ments from beneficiary to obtain payment of personal debt of latter to him, or to set off such debt against payment to benefi- ciary,” 8 A.L.R.2d 209 (1949); 76 Am.Jur. 2d, Trusts § 599, p. 805 n. 38 (1975), and cases there cited. 47a set-off issue in that light, a remand for reconsideration is appropriate. The judgment of the district court will be vacated and the case remanded for further proceedings in which the liability of the Union shall be redetermined by the application of the fiduciary standards of conduct and burden of proof set forth in this opinion. 48a APPENDIX B UNITED STATES DISTRICT COURT FoR THE MIDDLE DISTRICT OF PENNSYLVANIA No. 8796 Civil CHARLES NEDD, DOMINIC IERO, MAX DYNOSKI and ANTHONY GANLY, Members of the Pensioned An- thracite Coal Miners Protest Executive Commit- tee, suing on behalf of Themselves and All Other Members of the CLASS OF PENSIONED ANTHRACITE CoAL MINERS AND WIDOWS OF DECEASED PENSIONED ANTHRACITE COAL MINERS Vv EMMETT THOMAS, JOSEPH FAUZIO, FRANK J. GALGAY and WILLIAM SAVITSKY, Trustees of the Anthracite Health and Welfare Fund and UNITED MINE WORKERS OF AMERICA, an Unincorpo- rated Trade Union Association MEMORANDUM AND ORDER This is a derivative class action brought on behalf of pensioned anthracite miners and the widows of such miners who are beneficiaries of the Anthracite Health and Welfare Fund (the Fund), a pension and welfare trust fund created by the Anthracite Wage Agreement of June 7, 1946 (the Agreement) between the United Mine Workers of America (the Union) and the signa- tory anthracite operators, and funded solely by opera- tor contributions on the basis of a fixed royalty per ton of coal produced. Defendants are the trustees of the Fund and the United Mine Workers of America. In essence, plaintiffs claim that there is presently out- standing a total in excess of $9,000,000 in delinquent 49a operator royalty payments, a total which has accumu- lated over the years since the inception of the Fund, and that the trustees are liable to the Fund for that amount, together with interest and costs, because they permitted the delinquencies to accumulate and made insufficient attempts to collect them once they accumu- lated. The complaint predicates liability on the trustees’ actions during the period June 7, 1946 to January 23, 1969. In addition, plaintiffs maintain that the Union is equally liable with the trustees because the Union, in order to further the interests of working miners, to the detriment of the pensioned miners, caused the trustees to refrain from taking any action to collect the delinquencies. The alleged Union motive was that strike action or litigation against many of the opera- tors would result in the collapse of these operators be- cause they were marginally financed and the end result would be that active miners would be put out of work. Federal jurisdiction is predicated under Section 301 of the Labor Management Relations Act of 1947, 28 U.S.C. § 185(a) (hereinafter Section 301), for breach of a collective bargaining agreement; Section 302 of the Labor Management Relations Act of 1947, 29 U.S.C. §186(e) (hereinafter Section 302), for viola- tions of 29 U.S.C. § 186(c)(5), which specifies the structure of pension and welfare trust funds; 28 U.S.C. § i337 for breach of the duty of fair represen- tation; and the doctrine of pendent jurisdiction for vio- lations of the common law of trusts. Defendants con- test the jurisdiction of this Court, and, in addition, of- fer several defenses on the merits. After extensive dis- covery, the case was tried to the Court without a jury, and following the trial, detailed and voluminous briefs and proposed findings of fact were submitted and the case was fully argued. This opinion constitutes the Court’s findings of fact and conclusions of law. 50a I. Procedural History The procedural history of this case is long and com- plex, and much of it is relevant to the discussion which follows. It begins on March 11, 1963, when the plain- tiffs filed a complaint against the Union in the Eastern District of Pennsylvania claiming that the Union had failed to carry out the terms of the Agreement in that it had failed to collect the delinquencies that were out- standing at that time. Jurisdiction was based on di- versity of citizenship, and on December 11, 1963, the District Court granted the Union’s motion to dismiss for lack of diversity. Nedd v. United Mine Workers of America, 225 F. Supp. 750 (E.D. Pa. 1963). On May 29, 1964, the Court of Appeals affirmed the decision of the District Court. 332 F. 2d 373 (3d Cir. 1964). Thereafter, the instant suit was filed in this Court on January 21, 1965, naming the Union as the sole de- fendant, and predicating jurisdiction on Section 301 for breach of a collective bargaining agreement. On September 30, 1966, this Court denied the Union’s mo- tion for summary judgment, an order which was subse- quently vacated by the Court of Appeals on interlocu- tory appeal perfected under 28 U.S.C. § 1292(b). Nedd v. United Mine Workers of America, 400 F. 2d 103 (3rd Cir. 1968). The Court of Appeals held that, inas- much as the Union had no duty under the Agreement to enforce the operators’ responsibility to contribute to the Fund, the Union’s failure to act was not a breach of a contract between an employer and a labor organiza- tion, and, hence, there was no jurisdiction under Sec- tion 301. The Court indicated, however, that the Un- ion’s conduct, as alleged in the complaint and proposed amplifying amendments which had been submitted during the appeal, may have amounted to a breach of its duty of fair representation, and remanded the case to permit the plaintiffs to amend their complaint. — 5la In addition, the Court stated that, inasmuch as the Agreement made explicit the normal obligation of the trustees to use due diligence and all reasonable means to collect and prevent delinquent obligations to the Fund, on remand the trustees should be joined as neces- sary parties to the lawsuit. On January 23, 1969, the amended complaint was filed, adding the trustees as defendants, and asserting the four grounds of jurisdiction described supra in the introduction to this opinion. Thence followed a long period of discovery and several discovery-related mo- tions not relevant here. Finally, on June 19, 1974, the Court denied without opinion the defendants’ motions to dismiss for iack of subject-matter jurisdiction, and, on July 15, 1974, a two-day nonjury trial commenced. The trial consisted primarily of submissions of docu- ments, and only three witnesses testified, all for the defendants. Thereafter, the parties submitted vol- uminous detailed briefs and proposed findings of fact, and, on June 16, 1975, the case was fully argued before the Court. The record was finally closed on August 8, 1975 with the filing of a reply brief by the 'Jnion. II. Factual Background This portion of the opinion will outline the general factual background of the case. A more detailed narra- tion of the facts relevant to each stage of the applicable law and the asserted grounds for relief will be made in the context of the discussion of each such stage. A. Organization and History of the Fund As mentioned supra, the Fund was created by the Agreement of June 7, 1946. Its primary purpose was to pay pensions to retired miners and death benefits to their widows. It was to be funded solely by operator contributions on a per tonnage basis, and the initial 52a Agreement provided that the rate of payment was to be 5¢ per ton of coal produced. This rate of royalty payments was thereafter increased to 10¢ on July 10, 1947; 30¢ on March 16, 1950; 50¢ on October 1, 1952; and 70¢ on February 1, 1959. The initial Agreement also provided that the Fund was to be managed by three trustees, two appointed by the president of the Union and one appointed by the Operators. Following the passage of Section 302 of the Labor Management Relations Act of 1947, 29 U.S.C. § 186, which provided that employees and employers be equally represented in the administration of pension and welfare trust funds, together with such neutral persons as may be agreed upon, one of the Union trustees was designated by the Anthracite Wage Agreement of 1948 as the “neutral” trustee. In 1966, the provisions of the Anthracite Wage Agreement with respect to the selection and designation of the trustees were again amended, this time to provide that of the three trustees, one would be appointed by the Union, one by the Operators, and the third would be a “neutral person selected by the other two trustees.” See Agree- ment of September 1, 1966, p. 3. The Agreement of 1966 also provided, however, that the prior ‘‘neutral” trustee would remain as the “neutral” trustee under the new agreement. Thus, during the years 1948-1967, two of the three trustees of the Fund were Union ap- pointees. The trustees who have served from the inception of the Fund through the period covered by this suit, and the dates of their service, are as follows: The Union- appointed trustees were Thomas Kennedy, who served from 1946 until 1963; John O’Leary, who served from 1946 until 1947; and Emmett Thomas, who served from 1963 through 1969. The Operator-appointed trustees were Robert Birtley, who served from 1946 ee 53a until 1953; Harry J. Connolly, who served from 1953 until 1964; and John D. Jillson, who served from 1964 through 1969. The “neutral” trustees were Mart F. Brennan, 1947-1967; and Nicholas J. Haydock, 1967- 1969. On plaintiffs’ motion, the present trustees of the Fund, William Savitsky, Joseph Fauzio and Frank J. Galgay were joined as parties to this suit on July 3, 1974, in order to receive on the Fund’s behalf any judgment which might be recovered from the Union as a result of this lawsuit. On the same date, also on plaintiffs’ motion, the suit was dismissed as to trustees Haydock and Jillson, thereby leaving Emmett Thomas as the only past trustee who is still a party. With respect to the duties of the trustees, the ini- tial Agreement provided: “Subject to the stated pur- poses of the Fund, the Trustees shall have full author- ity with respect to questions of coverage and eligibility, priorities among classes of benefits, amounts of bene- fits, methods of providing or arranging for provisions of benefits and all related matters.” An Interim Agree- ment of September 17, 1952 provided that the “Trustees of the Fund shall use due diligence and all reasonable means to collect and prevent delinquent ob- ligations to the Fund.” Other provisions with respect to the administration of the Fund were added by Anth- racite Wage Agreements subsequent to the Agreement of 1946. The Agreement of 1948 provided that “Title to all monies paid into said Fund shall be vested in and remain exclusively in the Trustees of the Fund. . .” and that an annual audit of the Fund be performed by competent auditors. A 1964 amendment expressly pro- vided that title to monies owed the Fund would also be vested in the trustees. Furthermore, relative to the operators’ obligation to report tonnage production on which the royalty was to be assessed, while each opera- tor was required under the original Agreement to 54a submit a statement to the Fund reporting its monthly coal production, the Agreement was amended in 1959 to require that the monthly reports be submitted under oath, and to grant the trustees the right to station checkers on the operators’ premises and to audit the operators’ books to verify tonnage figures. The history of the Fund has been characterized pri- marily by financial precariousness, which, from the in- evitably better vantage of hindsight, is not surprising in light of the fact that revenues for the unendowed Fund have always been pegged to production in an In- dustry which declined rapidly following the creation of the Fund in 1946. The most notable statistic con- cerning the financial status of the Fund, from the standpoint of its beneficiaries, has been the steady de- cline in benefit payments. The amount initially paid by the Fund to each pensioner was $100 per month, and the death benefit payable to widows and orphans was $1,000. In 1954, these amounts were reduced to $50 and $500 respectively, and, in 1958, the pension was further reduced to $30 per month. After the pen- sion had been temporarily increased to $50 per month, it was again reduced to $30 in 1961. No death benefits were paid during the years 1959-61, and none have been paid since 1964. It was following the 1961 reduc- tion that the Panther Valley Protest Committee, a group of pensioned anthracite miners, was formed, and Charles Nedd, one of the plaintiffs in this case, was selected as Chairman of that committee. Paralleling the reduction in benefit payments from the Fund was the drastic decline of the Anthracite Industry as a whole, caused primarily by the steadily decreasing demand for coal for domestic uses, as nat- ural gas and heating oil replaced coal for those uses in the years following World War II. The years 1946 through 1968 brought dramatic drops in the tonnage 55a of coal produced, the amount of revenue earned, and the number of persons employed by the coal industry. For example, the figures for 1947 show approximately 58,000,000 tons of coal produced, $413,000,000 in gross revenues, and 80,000 persons employed. The corres- ponding approximate figures for 1955 were 26,000,000, $206,000,000, and 37,000, while those for 1965 were 14,000,000, $97,000,000, and 12,000. Compounding the problems visited upon the Fund by the decline of the anthracite industry during these years was the in- crease in the number of pensioners during the same years. In 1949, for example, there were approximately 7,000 pensioners; by 1969, the number of retired miners entitled to pensions had increased to 13,000. Theoretically, of course, the negotiated increases in the rate of royalty payments by the operators, see supra, should have helped to alleviate some of the Fund’s financial problems caused by the decline of the industry.’ The fact is, however, that substantial de- linquencies in operator payments to the Fund occurred and accumulated over the years. For example, as of December 1, 1954, the first year for which such figures are available, 46 companies were delinquent in a total amount of almost $2,500,000; and by 1962, 120 com- panies were delinquent in an amount close to $12,000,- 000. See the chart at Appendix A to this opinion.’ It is ‘It seems clear, however, that even if all of the operators had remained current in their royalty payments, the Fund still would have incurred severe financial problems. This is evidenced by the fact that, periodically over the years since 1951, the Fund has obtained from the Union sufficient amounts to permit it to make benefit payments. See infra. The total amount received from the Union, none of which has been repaid by the Fund, is in excess of $9,000,000, a sum which approximates the total amount of delinquencies which are the subject of this suit. * These figures include companies which had ceased to op- erate as of the time the figures were tabulated. For example, 56a the bulk of these delinquencies that forms the basis of this law suit. B. The Actions of the Trustees The actions of the trustees with respect to the de- linquencies can be divided into three periods, each one representing a substantially different approach to the problem: the years prior to 1954; 1954-1962; and the period after 1962. The record reflects little activity on the part of the trustees during the years prior to 1954." It does indi- as of January J, 1962, there were 79 nonoperating companies that were delinquent by approximately $6,400,000. The steady annual increase in nonoperating companies, incidentally, is yet another indication of the precipitous decline of the in- dustry during the 1950s. Decreased demand for Anthracite, increased costs and intense competition among the operators, combined to force large numbers of companies out of bus- iness each year. It should also be pointed out that, while plaintiffs claim most of the total delinquencies as damages, together with interest, they confine their claim to 89 of the more than 100 companies with outstanding delinquencies as of January, 1969. Plaintiffs maintain that the trustees’ con- duct has been deficient with respect to these 89 companies. *A basic problem concerning this period, as well as the period 1954-1962, is that none of the trustees who served during those years are living. John O’Leary died in 1947; Robert Birtley in 1953; Thomas Kennedy in 1963; Harry Connolly in 1964; and Mart Brennan in 1968. Thus, written records, principally minutes of the trustees’ meetings, must be resorted to in an effort to determine what was done during those years. In addition, there is no one to explain the reasons for the trustees’ actions, or lack of particular actions, during those years. Nevertheless, while such a limitation may de- prive the factfinder of knowledge of some incidental actions taken by the trustees during those early years with respect to the delinquencies, it is undisputed that no formal action, either in the form of lawsuits or written agreements with the delinquent operators, was taken during the time prior to 1954. A more basic problem with respect to this period is that there are no records of how many delinquencies there 57a cate that the trustees were concerned with the problem of delinquent operators at least as early as February, 1949; the minutes of the trustees’ meeting for that month, and for almost every month thereafter, indicate that the problem was discussed during the meeting. In addition, on several occasions the trustees sent letters to delinquent operators urging them to become current in their payments. On one occasion, the trustees re- solved to take legal action against two delinquent oper- ators; apparently, however, no such action was ever taken.‘ The trustees also established an enforcement program that made use of the Union on local levels to attempt to collect outstanding delinquencies.’ For a more detailed description of this program, see the dis- cussion of the Union’s actions, infra. There was an increase in trustee activity during the years 1954-1962. Nevertheless, during this time, the number of delinquent companies increased from 46 to 120, and the total amount of overdue payments rose were in the years prior to 1954, and thus it is difficult to evaluate the sufficiency of the actions taken by the trustees during those years. Still, the record does show that by the end of 1954, 46 operators were delinquent in a total amount of almost $2,500,000, and thus it is safe to assume that there were substantial delinquencies in the years prior to 1954, even if the precise amount of those delinquencies cannot be calculated. ‘See minutes of the meeting of July 19, 1949, which report that the trustees resolved to have the Fund’s attorney at the time, Martin B. Gormley, “take whatever legal action neces- sary ... against Jermyn-Green Company and also the Had- dock Mining Company, both companies which are delinquent in their payment to the Fund.” The record does not indicate whether any legal action ever was taken against those com- panies, and, presumably, no such action ever was taken. * This is merely an early example of the close relationship between the Union and the trustees in managing the affairs of the Fund. The relationship of the Union to the Fund is discussed in greater detail infra. 58a from approximately $2,500,000 to almost $12,000,000. The problem of delinquencies continued to be discussed at almost every meeting of the trustees, as the minutes reflect discussions concerning the efforts to collect the overdue amounts. Beginning in 1954, the trustees en- tered into a series of written agreements with several of the non-paying operators in an attempt to insure payments on current production from these companies and to collect as much of the past due amounts as pos- sible. Ten such agreements were made during this pe- riod, and they typically provided that the operator agreed to pay on current production, to make a down payment on his overdue amount, and to make install- ment payments on the delinquent balance. Eight of the agreements represented a settlement of a Jawsuit in state court brought against the operator by the trustees for the overdue payments, and the rest followed nego- tiations between the trustees and the operator. While occasionally these agreements resulted in the collection of the delinquencies owed by an operator,’ far more often the result was a failure of the operator to abide by the agreement with respect to the payment of past due amounts, and a continuing failure to make full payments on current production, with a resulting in- crease in the total amount overdue. The record with respect to the St. Clair Coal Company is illustrative. On November 22, 1954, an action was commenced by the trustees in Schuylkill County against St. Clair for $880,864.62 in delinquencies for the period July 1, * For example, at the trustees’ meeting of August 10, 1956, an agreement with Valley View Coal Company was approved, and by May 24, 1957, that company’s debt of over $14,000 had been paid in full. It should be noted, however, that the agreement did not fully solve the Fund’s problems with the Valley View Company. When Valley View went out of bus- iness in June of 1958, it had accumulated a new delinquency of over $19,000. 59a 1948 through September 30, 1954. On September 22, 1955, this suit was settled by written agreement be- tween the trustees and St. Clair whereby St. Clair promised to pay $5,000 per month on its arrearages in addition to making payments on its current produc- tion. At the trustees’ meeting of April 5, 1957, how- ever, it was noted that the company had not kept its agreement to make payments on the delinquency, but that it had agreed to pay $10,000 a month on arrear- ages in the future. A little over a month later, the com- pany reported to the trustees that they were unable to pay the $10,000 per month, but that they would pay $5,000 per month on their delinquency as originally agreed. Finally, St. Clair ceased operations in October, 1957, still owing an amount which plaintiffs claim to be in excess of $1,000,000. The trustees also filed lawsuits in state court against some of the delinquent operators during the period 1954-1962. On the whole, these suits were not pursued vigorously and were largely ineffectual in collecting overdue amounts. Most of these actions were never pursued beyond the complaint stage and only a small fractional amount was ever recovered. The record shows that from 1954 through 1962, the trustees in- stituted 30 lawsuits against 26 delinquent operators and obtained judgment in eight, on which a total of $79,455.07 was collected. Eight of the lawsuits were settled by the written agreements described supra. The record is unclear as to the disposition of the remaining suits. Besides the written agreements and the lawsuits, the other significant action taken by the trustees during the period 1954-1962 was in connection with verifying the tonnage of coal reported by the operators on which royalty payments were supposed to be made. In 1959 60a they retained the accounting firm of Lybrand, Ross Brothers and Montgomery to audit the records of con- tributing companies to determine whether the com- panies were reporting accurately. It will be recalled that, under the 1959 Agreement, the Fund first ac- quired a contractual right to audit the companies’ ton- nages. Prior to that time, the trustees had used as a source of information in determining tonnages a monthly statement prepared and submitted by each company to the Fund, reporting its production for that month. Beginning in 1960, the trustees learned as a result of the Lybrand audits that some of the com- panies were not reporting proper tonnage, that is, that they were underreporting the tonnage of coal produced for use or for sale, and in this manner were accumulat- ing delinquencies at the same time that it appeared that they were making proper payments. No action, however, was taken concerning this false reporting prior to 1964 when the trustees began a series of fed- eral suits against several of the operators. See infra. In addition, Lybrand reported to the trustees that sev- eral companies refused to give them access to their books in order to conduct an audit. The minutes of the trustees meeting of January 25, 1960 also report that the cases of some such companies were placed in the hands of counsel for immediate action. The record re- veals no further action with respect to those companies, however. Besides the Lybrand audits, the other action taken by the trustees regarding verification of the operators’ reports was to station checkers on the opera- tors’ premises, as initially authorized by the contract of 1959. Two checkers were employed by the Fund in the years 1959-1963, and thereafter the number of check- ers varied, viz, 3 in 1964, 9 in 1965, 3 in 1966, 23 in 1967, 65 in 1968, and 45 in 1969. The period after 1962 brought additional changes in 6la the trustees’ approach to the problem of delinquencies.’ In January, 1962, Charles A. Shea, Esquire, was re- tained as Special Counsel to the Fund. After reviewing the Fund files, Mr. Shea became concerned (a) that the Welfare provisions of the Agreement did not com- ply with Section 302(c) (5) of the Labor Management Relations Act of 1947 (noting that illegality of the Fund had been asserted as a defense in prior litigation brought by the Fund against the operators) ,* and (b) that the trustees might not have the right to institute suit to collect delinquencies inasmuch as the agreement vested title in the trustees of monies actually paid in- to the Fund did not vest in them title to claims for monies owing to the Fund. Mr. Shea, consequently, rec- ommended to the trustees that, prior to the institution of legal actions against delinquent operators, an effort be made to secure amendment to the Agreement so that its language would conform to the Act and the possible disability of the trustees to sue would be removed. How- ever, the record indicates no action with respect to either of these recommendations until April, 1964, when the Agreement was amended to vest title in the trustees to monies owed the Fund, and the trustees adopted a resolution incorporating new rules and regu- ’ A substantial contributing factor in the increase in trustee activity during this time was the formation of the Panther Valley Protest Committee in June, 1961, and the retention of counsel by the Committee in August, 1962. For a description of the activities of the Committee and its counsel, and an analysis of their effect on the actions taken by the trustees during the years following 1962, see Thomas v. Honeybrook Mines, Civil No. 8499 (M.D.Pa., filed April 13, 1973), pp. 11-17. * Specifically, Shea noted that there was no provision that the funds were to be set aside in an irrevocable trust to be used solely for the payment of benefits; that there was no provision for breaking a tie; and that trustee Brennan, though jointly appointed by the Union and the Operators, might not satisfy the neutrality requirement inasmuch as he was a Union official. 62a lations regarding the operation of the Fund in an effort to bring it into peo rot with Section 302. Brennan, however, refused to resign as trustee until February, 1967. The agreement itself was not amended to insure conformity with Section 302 until 1966. On May 18, 1964, shortly after the actions in April, 1964 to re- move the disability to sue and conform the operation of the Fund to Section 302, the first of several federal suits against the operators was instituted. See infra. The record reveals little direct activity by the trust- ees with respect to delinquencies during the years 1962 and 1963. This was probably because most of the ac- tivity on behalf of the Fund during those years was conducted by the Union. In the summer and early au- tumn of 1962, various delinquent operators were struck by the Union and, as a consequence, letter agree- ments for the payment of delinquencies were executed between, on the one hand, 17 of the forty-three delin- quent companies then operating, and, on the other, four Union officials: W. A. Boyle, at the time the Vice President of the International Union; August J. Lippi, the President of District #1 of the Union; Mart F. Brennan, the President of District #7;° and Joseph Kershetsky, the President of District #9, Although it was primarily at the Union’s initiative that the letter agreements were executed, the threat of Union strikes being the main cause of the delinquent operators com- ing to the conference table in the first place, and non- trustee Union officials played the major role on behalf of the Fund during the negotiations, see infra, never- theless, the trustees also played a part in securing the * Although Brennan was also a trustee of the Fund at this time, and cesthdinahed in the negotiating of the letter agree- ments in his capacity as a trustee as well as in his capacity as a Union official, he signed the agreements as President of Dis- trict +7 and not as trustee of the Fund. 63a agreements. Trustee Brennan participated in all of the negotiations leading to the agreements, and At- torney Shea drew up all of the agreements in his capac- ity as Special Counsel for the Fund. These 1962-63 agreements were similar to the earlier agreements between the trustees and delinquent oper- ators that had been reached during the fifties, in that they provided for a down payment on the total amount past due and an installment payment plan on the bal- ance. In contrast to the earlier agreements, however, the later ones were successful in bringing substantial payments of overdue amounts into the Fund. The let- ter agreements negotiated between August, 1962 and March, 1963, arranged for the payment of $4,648,- 880.42 in delinquencies. At least three of the operators who signed letter agreements had paid their delin- quencies in full by the end of 1964. In addition, a num- ber of other signatory companies had significantly re- duced their outstanding delinquencies by that time. At the same time, however, some of the agreements were not even minimally successful; at least four signatory companies not only failed to make the agreed-upon pay- ments on their delinquencies, but also failed to pay on current production, thereby increasing their overall delinquency. In addition, in spite of the early adher- ence to the agreements by most of the signatory com- panies, the majority of them eventually fell behind again in their payments; ten such companies were sued in federal court by the trustees in the mid-sixties. Thus, while the 1962-63 agreements were an improve- ment on the agreements of the fifties, like the earlier agreements, they did not represent a final solution of the Fund’s financial problems. On May 18, 1964, suit was filed in this Court by the trustees against Honeybrook Mines, Inc. seeking its total overdue payments that were outstanding at that 64a time. Jurisdiction was predicated under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185(a), for breach of a collective bargaining agree- ment. This was the first of 37 federal suits that were brought by the trustees in the years 1964-1968 ayainst delinquent operating companies. Only Honeybrook was sued initially because, on the advice of counsel, the trustees wanted to bring a test case in order to deter- mine whether jurisdiction for such a suit would be sustained under Section 301. In addition, the decision was made to sue Honeybrook because that company had been particularly flagrant in permitting delinquen- cies to accumulate and in refusing to permit its records to be examined to determine precisely how much it owed. 'n December, 1964, before a decision on the jur- isdictional issue was made, the trustees also sued North- west Mining Company in federal court because that company became similarly flagrant in not paying roy- alties and in refusing to permit investigation of its records." Following the decision of this Court in March, 1965, sustaining jurisdiction under Section 301, the trust- ees commenced a large number of federal actions against delinquent operators. Eleven were begun in 1965, 18 in 1966, four in 1967, and two in 1968. The trustees were advised by counsel to confine the suits to operating companies in order to limit legal expenses to lawsuits against companies from which there was a reasonable prospect of collecting any money once A significant factor in the decision to file the federal suits of the 1960s was the desire to utilize discovery in order to as- certain the exact amount of delinquencies. In light of this factor, the decision to sue Honeybrook Mines, Inc. and North- west Coal Co. first, rather than suing all the delinquent com- panies simultaneously, is understandable. Both companies were particularly defiant in refusing access to their records. 7 well ~ ae ee. ee ee ee ee ee we 65a judgments were entered. Thus, with the exception of suits against two large publicly owned companies, viz, Hanna Company and Hudson Coal Company, the suits were limited to operating companies. These federal actions contrast sharply with the state suits brought by the trustees in the fifties. To begin with, the total amount of damages claimed in the suits was close to the total amount of delinquencies owed by all operating companies at the time the suits were brought. In ad- dition, the suits were vigorously pursued once they had been commenced. Most of them reached the judgment stage, and several resulted in executions which brought money into the Fund. In all the actions commenced since 1964, the trustees recovered cash, as of July, 1970, in the amount of $1,535,160.22 and settlements and judgments totaling $7,335,257.18. C. The Actions of the Union . As mentioned, supra, the Union has been intimately involved with the affairs of the Fund since its incep- tion in 1946. It was due to the bargaining efforts of the Union that the Fund was created in the first in- stance. And, because of the Union’s efforts, the royalty rate was increased regularly, from $.05 per ton in 1946 to $.70 per ton by 1959. On one occasion, in 1952, the Union conditioned the continuation without a work stoppage of the then-existing Anthracite Wage Agree- ment on the agreement of the Operators to increase their payments to the Fund from $.30 to $.50 per ton. On another occasion, in 1959, the Union negotiated a wage package which gave working miners one dollar a day less than they otherwise would have obtained in order to negotiate an increase in the amount per ton to be paid to the Fund by the Operators. In addition, Operator delinquencies in payments to the Fund have been a constant subject of collective bargaining be- 66a tween the Union and the Operators. In retrospect, the Union’s close involvement with the Fund is not at all surprising, inasmuch as the Union supplied both the ini- tiative which created the Fund, as well as the negotiat- ing muscle in bargaining with the Operators concern- ing the terms and conditions of their contributions to the Fund. Furthermore, a close relationship between the Union and the Fund was perhaps inevitable because of the manner in which the Fund has been organized. At most times relevant to this suit, two of the Fund’s three trustees were Union officers."' As described, supra, this was initially in accordance with the express terms of the agreement itself, and later as a result of a designa- tion of another Union officer as a “neutral” trustee by the Union and Operator trustees. While the record in this case does not contain a complete catalogue of all of the actions taken by the trustees during the lifetime of the Fund, there is no instance reflected in the record of this case of the two Union trustees casting disparate votes during their management of the Fund, and the record refers to at least one occasion on which the two 't At the time of his appointment as a trustee, Thomas Ken- nedy was Secretary-Treasurer of the Union. He continued to serve as a trustee of the Fund until his death in 1963, at which time he was President of the Union. John O’Leary was Vice President of the Union at the time he was made a trustee. and Mart F. Brennan was President of District 7, UMW at the time of his appointment. In addition, Brennan later became a mem- ber of the International Executive Board of the Union, and served in that capacity during almost 10 of the years he was a trustee. During his years as a trustee, Emmett Thomas was Special Representative for Anthracite Affairs for the Inter- national Union, UMW, and from 1948 through 1962, he was Executive Assistant to the President of the Union. He also was a member of the International Executive Board of the Union during some of the years that he was a trustee. Nicholas Haydock was not a Union official and had no prior association with the industry. oe 67a Union trustees expressed concern about whether ac- tions on behalf of the Fund could he taken by two of the three trustees in order to avoid having the Fund, in effect, ruled by the Operator trustee." The most significant Union involvement in the af- fairs of the Fund, aside from the participation of Un- ion officials as trustees, has been its attempts to en- force the Operators’ duty to make royalty payments and its efforts to collect delinquencies. This involve- ment began at least as early as 1951, when the trustees resolved to set up an enforcement program that made use of the Union on local levels to attempt to collect outstanding delinquencies. This program provided that each district president would be a contract enforce- ment officer for his district, responsible for attempting to secure delinquency payments from companies in that district. Among other duties in this regard, the district presidents were to investigate the reason for delinquencies, evaluate the prospects for collection, and report the results of these efforts, as well as any fur- ther action planned for their districts, to the Executive Secretary of the Union. In addition, they were in- structed to make all efforts to enforce collection, short of instituting legal proceedings, the responsibility for which expressly remained with the trustees. The only evidence of the success of this program refiected in '* That occasion was in 1946 when Mr. Kennedy asked the Fund’s attorney, Martin Gormley, whether the Fund could be operated on the signature of two of the three trustees. The question arose when, in the process of opening the Fund’s bank account, Mr. Kennedy was told by one of the bankers that all three of the trustees would have to sign the Fund’s checks. With that, Mr. Kennedy “saw that the Fund would be ruled by Mr. Birtley,” who was the trustee appointed by the Operators. Mr. Gormley informed him that, since the Fund was a charit- able trust, action in its behalf could be taken by a majority of the trustees. See Vol. B of plaintiff’s exhibits, p. 50. 68a the record of this case are letters written by the three district presidents in the latter part of 1953 to Thomas Kennedy, who at the time was both an officer of the Union and a trustee of the Fund, detailing the collec- tion efforts that were being made in their districts at that time. Besides the enforcement program, the record contains numerous letters written by the President and other officers of the Union to delinquent operators, urg- ing them to take care of their delinquencies and warn- ing them that, if they did not, more formal action would have to be taken. In view of the numerous in- stances of Union attempts to collect delinquencies re- flected in the record, as well as the scant evidence of direct communication between the trustees and the operators concerning delinquencies, it is fair to con- clude that the trustees looked to the Union to furnish most of the effort with respect to enforcement of the operators’ agreements to contribute to the Fund and collection of delinquencies, and that the Union unhesi- tatingly accepted this responsibility. By far the most significant and successful actions of the Union with respect to collection of delinquencies were the letter agreements entered into by various de- linquent operators and certain Union officials in 1962 and 1963. See supra for a more detailed description of these agreements and their results. The agreements themselves were precipitated by substantial Union ac- tivity on behalf of the Fund in the form of extended negotiations with delinquent operators, and strikes against such operators during 1962. The negotiations occurred in the months of August, September, and Oc- tober, 1962, subsequent to strikes against some delin- quent operators and attempted strikes against others, and consisted of 23 meetings with 17 operators. The meetings were attended by former UMW President John L. Lewis, the then current President, W. A. 69a Boyle, and various district officials on behalf of the Union, and Mart F. Brennan and Charles A. Shea, ©:- quire, on behalf of the Fund. They were held in Wilkes- Barre, Pennsylvania, and at International Headquar- ters, UMW, in Washington, D.C. At these meetings, the Union officials, particularly Mr. Boyle and Mr. Lewis, warned the operators of the potential legal con- sequences of their continuing breach of the collective bargaining agreement and of the possibility of shut- downs, and insisted that the operators begin making immediate and full payment of delinquencies owed to the Fund. As a direct result of these meetings, letter agreements were reached with 14 of the 17 operators. The strikes which preceded the 1962 negotiations resulted in the shutdown of five operators during that year, and it was primarily as a result of those strikes and the threat of others that the delinquent operators came to the bargaining table during the latter half of 1962. The Union conducted several other strikes against delinquent operators during the history of the Fund; specifically, on 31 occasions during the years 1953-1962, the Union shut down operators for non- payment to the Fund. Most of these strikes, however, were ineffectual in securing any satisfaction from the operators. This was primarily because most of the shut- downs lasted only one or two days, the Union being unable to convince the miners to stay out of work any longer than that on behalf of the Fund. Indeed, on sev- eral occasions, the Union tried unsuccessfully to strike delinquent operators; the miners were simply more concerned with maintaining their present income than with securing payments to the Fund which would be distributed to other, retired miners."’ '’ The record with respect to District 9 is illustrative. That district had more companies with large delinquencies than the other two districts, and the Union made several efforts in the 70a The other significant Union involvement with the Fund has been in the form of loans to the Fund for the purpose of enabling the Fund to pay pensions. These loans were made by each of the three districts as well as by the International Union, and total $9,- 247,334.00 since 1952. Of this total amount, all but $1,954,000.00 has been forgiven by the Union, the bal- ance representing loans by the International Union to the Fund since January, 1974. Besides the above-described instances of significant Union involvement with the Fund, there have been numerous occasions of less significant Union partici- pation in the Fund’s affairs. One of these was the transfer of $205,000.00 of the Fund’s monies to the National Bank of Washington, D.C., a Union-control- led bank, in December of 1962. This transfer was ef- fected by Mr. Brennan alone, and was later, in March of 1963, ratified by the trustees. On two occasions prior to that ratification, when only Mr. Brennan and Mr. Connolly, the operator trustee, were present at trustee meetings, the resolution to transfer funds to the Na- tional Bank (thereby ratifying what had already been done by Mr. Brennan), failed to pass. All three trus- tees were present when the transfer was ratified in March of 1963.* No definite motive for this transfer early fifties to shut down delinquent District 9 operators. For the most part they were unsuccessful, failing to convince the men to stop work on at least five occasions, and only obtaining shutdowns of short duration in the few instances when the men agreed to stop work. Moreover, when the Union attempted to close down Hammond Coal Company, the Union representa- tives were “pretty nearly stoned off the property” by the work- ing miners. Defendant’s Exhibit 3, Deposition of John Egan, pp. 33-34. '* The record is ambiguous as to whether the resolution to transfer the funds to the Washington bank was carried unan- imously. On the one hand, the minutes of the March 6, 1963 meeting of the trustees indicate that, on “motion by Brennan, 2. Pe Tla can be gleaned from the record in this case. On the one hand, plaintiffs maintain that the funds were trans- ferred at the instance of the Union President, Mr. Boyle, solely to benefit the Union. However, the record fails to reflect that the National Bank paid anything other than the going rate of interest on the deposited funds, and, thus, it is impossible to conclude that the Fund was harmed by the transfer in question, and it is difficult to conclude that the Union benefited in any significant way from the transfer of such a relatively small amount of funds to a normal interest-bearing account in its bank. On the other hand, the Union in- sists that the reason for the transfer was that the Na- tional Bank was paying a higher rate of interest on such an account than could otherwise be obtained at that time. However, the basis for this requested find- ing is the deposition of*John Jillson, who did not become a trustee until the latter part of 1964, more than one and one-half years after the transfer in question took place, and, therefore, he was actually in no position to know why the funds were transferred. Another instance of Union involvement in the Fund’s affairs was the transfer, in Mav, 1963, of the Fund’s offices from the Markle Banking and Trust Company Building in Hazleton, Pennsylvania, to the United Mine Workers Building in the same city. While the new lease provided for a substantial increase in rent over what the Fund had previously been paying for its space in the Markle building, the new offices were much more spacious. The record contains no evi- seconded by Thomas, it was agreed to accept the Resolu- tion .. .” that the funds be transferred. Vol. B of Plaintiffs’ Exhibits, p. 309. The minutes do not indicate how trustee Con- nolly voted on the matter. On the other hand, the same minutes reflect that a later motion to pay all the Fund’s checks through the account in the Washington bank “was carried by a vote of 2 to 1, with Trustee Connolly voting no.” Jd. 72a dence that the Union attempted to force the Fund to lease space in its building, and there is no evidence that the transfer of offices in any way harmed the Fund. The most that can be concluded from the move is that it was emblematic of the Union’s intimate in- volvement with the affairs of the Fund and of the Fund’s identification with the union. A few additional facts concerning the Union’s close relationship with the Fund should be mentioned. On seven occasions, the trustees held their regularly scheduled Fund meetings in the UMW offices in Wash- ington, D.C. rather than at the Fund headquarters. To be eligible to receive a pension from the Fund, a re- tired miner had to remain a member in good standing of the Union during the period he received a pension, which included paying dues of $1 per month to the Union. In addition, all employees of the Fund belonged to District 50 of the UMWA until District 50 split from the UMWA, at which time the Fund employees became members of UMWA Local 13998. III. Jurisdiction Jurisdiction over the claim against the trustees is asserted under the following provisions: (1) Section 302 of the Labor Management Relations Act of 1947, for violations of the federal statute which specifies the manner in which pension and welfare trust funds are to be structured; (2) Section 301 of the Labor Man- agement Relations Act of 1947, for breach of a collec- tive bargaining agreement; and (3) the doctrine of pendent jurisdiction for violations of the common law of trusts. Jurisdiction over the claim against the Union is sought under the above three provisions, and is also asserted under 28 U.S.C. ‘ 1337 for breach of the duty of fair representation. Inasmuch as defend- ants contest all the bases on which plaintiffs seek to 73a predicate jurisdiction, a discussion of the applicable law is necessary. A. The Claim Against the Trustees 1. Section 302 Plaintiffs initially assert jurisdiction under Section 302(e), which gives the district courts jurisdiction “to restrain violations” of Section 302. Section 302 in turn prohibits payments by employers to employee repre- sentatives, labor organizations, employees or groups of employees (Section 302(a)), and, correspondingly, the request or receipt of such payments by any person (Section 302(b)). Section 302(c) enumerates certain exceptions to the blanket prohibition of Sections 302 (a) and (b). One of the exceptions permits payments to jointly administered employee pension and welfare trust funds (Section 302(c)(5)).'* Defendants contend that plaintiffs’ claim is not the type of case for which '*“(c) The provisions of this section shall not be applicable ... (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) : Provided, That (A) such payments are held in trust for the purpose of paying, either from principal or income «* both, for the benefit of employees, their families and dependents, for medical or hospital care, pensions on retirement or death of employees, compensation for injuries or illness resulting from occupational activity or insurance to provide any of the fore- going, or unemployment benefits or life insurance, disability and sickness insurance, or accident insurance; (B) the detailed basis on which such payments are to be made is specified in a written agreement with the employer, and employees and em- ployers ure equally represented in the administration of such fund, together with such neutral persons as the representatives of the employers and the representatives of the employees may 74a the jurisdictional grant of Section 302(e) was in- tended. At the outset, a literal reading of Section 392(e) would seem to preclude jurisdiction of this case, inas- much as plaintiffs do not claim that any payments have been made or received in violation of Sections 302(a) and (b). Indeed, the gist of plaintiffs’ claim is for payments that employers did not make. Neverthe- less, no court has restricted Section 302(e) solely to injunctions against payments allegedly being made or received in violation of Sections 302(a) or (b), see, e.g. Giordani v. Hoffman, 295 F. Supp. 463, 470 (E.D. Pa. 1969), and defendants do not argue here that the statute should be so limited. At the same time, while the courts have not confined Section 302(e) to its lit- eral wording, neither have they, in spite of dicta in an early case, Copra v. Suro, 236 F. 2d 107, 115 (1st Cir. 1956), permitted the statute to furnish federal juris- diction to inquire into mere “violations of fiduciary obligations or standards of prudence in the adminis- agree upon and in the event the employer and employee groups deadlock on the administration of such fund and there are no neutral persons empowered to break such deadlock, such agree- ment 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 ap- pointed by the district court of the United States for the dis- trict 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 shali be available for inspec- tion 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; .. .” 29 U.S.C. $ 186(c) (5).) 75a tration of the trust fund .. .,”’ Bowers v. Ulpiano Casal, Inc., 393 F. 2d 421, 424 (1st Cir. 1968). The reasoning behind this restriction has been that pension and wel- fare trust funds are established under the laws of the respective states, and Congress did not intend Section 302(e) to usurp the normal state function of deter- mining the legality with which trust funds are ad- ministered. See Snider v. All State Administrators, Inc., 481 F. 2d 387, 390 (5th Cir. 1973). See also Moyer v. Kirkpatrick, 265 F. Supp. 348, 351 (E.D. Pa. 1967), aff'd per curiam, 387 F. 2d 955 (3d Cir. 1968) ; and Porter v. Teamsters Health, Welfare and Life Insurance Funds of Philadelphia and Vicinity, 321 F. Supp. 101, 103 (E.D. Pa 1970). The type of suit that has been permitted to be main- tained under Section 302(e) is a claim that a particu- lar trust fund has not been established in accordance with the provisions of Section 302(c) (5), i.e., that it contains so-called “structural violations.” See, e.g., Giordani v. Hoffman, 295 F. Supp. 463, 470 (E.D. Pa. 1969). The theory underlying the allowance of such suits is that if a trust fund has not been established in accordance with the specifications of Section 302(c) (5), any employer payments to that fund violate Sec- tions 302(a) and (b). Jd." A suit to enjoin a struc- tural violation is, in effect, a suit to restrain violations '* “Such structural violations would consist of contributions to a trust fund which was not established for the sole and ex- clusive benefit of employees and dependents; which did not hold payments in trust to pay, from principal or income, for such employees’ medical care, pensions, illness, etc.; which did not set forth in writing the detailed basis of payments; which did not have equal representation of employees and employers with provision for a neutral person or umpire; which did not contain provisions for an annual audit; or which did not have a separate trust for pension and annuity funds.’”’ Bowers v. Ulpiano Casal, Inc., 393 F. 2d 421, 424, fn. 4 (1st Cir. 1968). 76a of Section 302, and therefore falls within the jurisdic- tional grant of Section 302(e). Plaintiffs maintain that they have successfully al- leged two structural violations in this case: (1) that the employees and employers were not “equally repre- sented in the administration” of the Fund, in that, during the years 1948 through 1967, two of the three trustees were Union officers; and (2) that the Fund was not established for “the sole and exclusive benefit of the employees” in that the trustees were motivated by the Union’s interests in their administration of the Fund, and not by the interests of the Fund’s benefici- aries. Compare Giordani v. Hoffman, supra, at 471. Defendants do not dispute that allegations stating that employees and employers are not, at the time the alle- gations are made, equally represented in the adminis- tration of a fund, or that a fund was not established for the sole and exclusive benefit of the employees, would establish jurisdiction under Section 302(e) ; in- stead they maintain that plaintiffs have not made such allegations in this case. With respect to the claim that employees and em- ployers were not equally represented in the adminis- tration of the Fund during the years 1948-1967, in that, during those years, two of the three trustees of the Fund were Union members and officers, it seems clear that the composition of the trustees during those years violated Section 302’s equal representation re- quirement. This is so in spite of the facts that, during the years 1948-1966, one of the Union trustees was designated by each annual Anthracite Wage Agree- ment as the “neutral” trustee, and, during the years 1966-1967, one of the Union trustees was the “neutral person selected by the other two trustees” in accord- ance with the terms of the Agreement. The fact re- mains that, in spite of these superficial efforts to com- 77a ply with the equal representation requirement, two of the three trustees were Union members and offi- cers, thereby subjecting the Fund to possible Union domination and control, which Congress particularly intended Section 302 to prevent. See Arroyo v. United States, 359 U.S. 419, 425-426 (1959). (“Those members of Congress who supported the amendment were con- cerned with ... the possible abuse by union officers of the power which they might achieve if welfare funds were left to their sole control.”)*’ See also Quad City ‘7 It should be noted at this point that, although the unequal representation of which plaintiffs complain here was a concern of Congress when it passed Section 302, the alleged abuse which plaintiffs maintain occurred as a result of Union dom- ination of the Fund in this case contrasts sharply with the kinds of abuses that Congress had in mind when it passed Sec- tion 302. The essence of plaintiffs’ complaint here is that the Union caused the Fund to avoid taking actions which were necessary to enforce the operators’ obligation to contribute to the Fund and to collect delinquencies, particularly the filing of lawsuits against the operators, whenever such actions might have forced the operators out of business and thereby have jeopardized the jobs of working miners. While such action by the Union and the trustees, if proven, may amount to violations of the plaintiffs’ rights under the common law of trusts, see infra, it is not the kind of abuse at which Section 302 was directed. When it passed Section 302, Congress was con- cerned with the wrongful uses to which a fund might be put once employer contributions to a fund have been made, not with the failure to enforce those contributions in the first place. As the Supreme Court has stated in a discussion of the legislative history of Section 302: “Congress believed that if welfare funds were established which did not define with spec- ificity the benefits payable thereunder, a substantial danger existed that such funds might be employed to perpetuate con- trol of union officers, for political purposes, or even for per- sonal gain. . .. To remove these dangers, specific standards were established to assure that welfare funds would be estab- lished only for the purposes which Congress considered proper and expended only for the purposes for which they were estab- lished.” Arroyo v. United States, supra, at 426. 78a Builders Association v. Tri-City Bricklayers Union No. 7, 481 F. 2d 999 (8th Cir. 1970), where the court held that a pension and welfare fund with six trustees, three appointed by the union and three by the employ- er, violated the equal representation requirement be- cause one of the three trustees appointed by the em- ployers happened to be a union member. The court found that under the circunistances union domination of the trust fund was a very real possibility, and en- joined the union member from serving as a trustee as long as he remained a union mem er. Nevertheless, the fact that the Fund violated the equal representation requirement during the years 1948-1967 is not in itself sufficient to confer jurisdic- tion under Section 302(e). “[D]istrict court jurisdic- tion under Sec. 302(e) is limited to restraining future violations of the statute and does not include granting relief by way of accounting, receivership, or removal of defaleating trustees or administrators.” Snider v. All State Administrators, Inc. 481 F. 2d 387 (5th Cir. 1973). See also Moyer v. Kirkpatrick, 265 F. Supp. 348 (E.D. Pa. 1967), aff'd per curiam, 387 F. 2d 955 (3d Cir. 1968). Inasmuch as plaintiffs seek no future injunctive relief with respect to the composition of the Fund’s trustees, but claim instead what is in effect an accounting of the damages allegedly caused the Fund by an imbalance in the makeup of the trustees at a time almost ten years ago, Section 302(e) confers no juris- diction in this Court over plaintiffs’ claim to the extent that it is based on a violation of the equal representa- tion requirement. Such a result is consistent with the wording, legisla- tive history and purpose of Section 302(e). The statute itself expressly vests jurisdiction in the district courts “to restrain violations of this section[.]” That lan- guage offers no support for plaintiffs’ argument that ; 4 79a jurisdiction under the statute is not limited to restrain- ing future violations. With respect to the legislative history, the Supreme Court has conclusively stated that “The legislative history is devoid of any sugges- tion that defaleating trustees were to be held account- able under federal law, except by way of the injunctive remedy provided in that subsection.” Arroyo v. United States, 359 U.S. 419, 427 (1959). Finally, the limited purpose of the jurisdictional grant in Section 302(e) was the prevention of potential abuse, not the provision of a remedy for past abuses. Congress intended state law, under which Section 302(c)(5) trusts were to be established in the first place, to be the means of redressing wrongs which might occur in the operation or administration of a fund. See Snider v. All State Administrators, 481 F. 2d 387, 390 (5th Cir. 1973). As the Court of Appeals for the Seventh Circuit has stated, “Section 302 is aimed primarily at the pre- vention of possible abuse and not at providing a rem- edy for abuse actually perpetrated.” Employing Plas- terers’ Association v. Journeymen Plasterers’ Protec- tive and Benevolent Society of Chicago, Local No. 5, 279 ¥. 2d 92, 97 (7th Cir. 1960)."* '* Plaintiffs’ arguments to the contrary are not persuasive. They argue first that several cases have granted relief under Section 302(e) other than an injunction against future viola- tions of the statute. For the most part the case authority cited by plaintiffs is either dictum (see, e.g., Lewis v. Mill Ridge Coals, Inc., 298 F. 2d 552 (6th Cir. 1962)), or inapposite be- cause it deals with the granting of relief not inconsistent with the limited jurisdictional grant of Section 302(e) (see, e.g., Pidgeon v. Brunswick Port Authority, 324 F. Supp. 140 (S.D. Ga. 1971) (declaratory judgment) and Raymond v. Hoffmann, 284 F. Supp. 596 (E.D.Pa. 1966) (court may order transfer of funds from old fund to new fund in order to prevent old fund from structurally violating Section 302(c) (5)). To the extent that plaintiffs cite cases inconsistent with the position taken in this case, see, e.g., Giordani v. Hoffman, 295 F. Supp. 463 80a With respect to the argument that the allegation that the Fund was not established “for the sole and exclusive benefit of the employees’ vests Section 302(e) jurisdiction in this Court to grant the relief sought in this case, the short answer is that plain- tiffs do not request any injunction as toe future ac- tivity, but simply an award of damages on the basis of past actions and, thus, for the reasons discussed above, Section 302(e) confers no jurisdiction here. Furthermore, even if this Court had jurisdiction on the basis of the allegation that the Fund was not established for the sole and exclusive benefit of the employees, the suit would have to be dismissed for failure to state a claim, inasmuch as plaintiffs’ alle- gations do not amount to an averment that the Fund was not established for the sole and exclusive benefit of the employees. The cases that have upheld juris- diction on the basis of such an allegation have in- volved claims of improper self-dealings between a fund and a union, and active use of the trust funds for the benefit of persons other than the fund’s bene- (E.D.Pa. 1969), those cases represent the minority view, and, in any event, are not binding on this Court Plaintiffs also argue that a broad interpretation of Section 302(e) is necessary to effectuate the policy of the National Labor Relations Act to protect the rights of individual employees in their relationships with labor organizations. Plaintiffs’ rights do not remain un- protected by the position taken here, however. They simply must seek to protect those rights in another forum. Finally, plaintiffs argue that a damage remedy should be implied by reading Section 302 in conjunction with 28 U.S.C. § 1337, which provides in pertinent part: “The district courts shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress relating to Congress. .. .” This argument is similarly unpersuasive because it overlooks the fact that Congress has expressly limited federal jurisdic- tion under Section 302(e) to the granting of future injunctive relief. IL les 0008 Oh. WORE OAT OL ae ell tae 8la ficiaries. See, e.g., Giordani v. Hoffman, 295 F. Supp. 463 (E.D. Pa. 1969).** Here, the plaintiffs do not com- plain of the use of the Fund’s moneys for the benefit of anyone other than the Fund’s beneficiaries, but instead argue that the trustees wrongfully failed to collect moneys due the Fund. Such a claim does not amount to an allegation that the Fund was not estab- lished for the sole and exclusive benefit of the em- ployees. Plaintiffs’ claim is factually similar to the claim in Moyer v. Kirkpatrick, 265 F. Supp. 348 (E.D. Pa. 1967), aff'd per curiam, 387 F. 2d 955 (3d Cir. 1968), where plaintiffs sued for a declaratory judg- ment that the trustees of a Section 302(c) (5) fund had acted improperly in refusing to accept payments from some employers. Jurisdiction on the basis of Section 302(e) was found lacking in that case, and a similar conclusion is appropriate here as well. 2. Section 301 and Pendent Jurisdiction The attempts to assert jurisdiction over the trustees on the basis of Section 301 and the doctrine of pendent jurisdiction can be disposed of summarily. The Section 301 * claim is based on the following portion of the '® It should be noted here that if this Court had been con- fronted with the complaint in the Giordani case, I would not have found jurisdiction on the basis of the claim that the fund had not been established for the sole and exclusive benefit of the employees. To‘ the extent that Giordani based jurisdiction on that claim, it seems to me, it permitted questions of viola- tion of fiduciary obligations or standards of prudence to be litigated in a federal forum, something which Congress did not intend when it enacted Section 302. See supra. *°“(a) Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court 82a Interim Agreement of September 17, 1952 between the Union and the operators: “The Trustees of the Fund shall use due diligence and all reasonable means to collect and prevent delinquent obligations to the Fund.” See Volume A, p. 67 of Plaintiffs’ Exhibits. This provision was incorporated by reference in all subsequent Anthracite Wage Agreements. Plaintiffs maintain that it imposed on the trustees a contractual duty to make “realistic efforts to collect delinquent royalty payments due and owing to the Fund[,]” Vol- ume J, Plaintiffs’ Trial Brief of the Law, p. 30, and that, accordingly, this Court has jurisdiction under Section 301 over the claim that the trustees failed to make such realistic efforts. Crawford v. Cianciulli, 357 F. Supp. 357 (E.D. Pa. 1973). Plaintiffs’ argument misperceives the import of the contractual provision on which it relies. In the first place, the trustees were not parties to the contract be- tween the Union and the Operators, and therefore un- dertook no duties under the contract. It follows that they connot be sued for breach of contract, which is the only kind of suit that can be brought under Section 301. Moreover, the contractual language with respect to the trustees’ duties is merely a statement of the trustees’ existing fiduciary duties, and does not render those duties contractual in nature. This was implicitly recognized by the Court of Appeals in its earlier opin- ion in this ease, Nedd v. Thomas, 400 F. 2d 103, 105 (3d Cir. 1968), in which the Court stated “the con- tract makes explicit the normal obligation of the trust- ees to ‘use due diligence and all reasonable means to of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.” 29 U.S.C. § 185 (a). 83a collect and prevent delinquent obligations of the Fund.’” A suit for breach of those fiduciary duties may not be brought under Section 301. Bowers v. Ulpiano, 393 F. 2d 421 (1st Cir. 1968). The case relied on by plaintiffs in this regard, Crawford v. Cianiulli, 357 F. Supp. 357 (E.D. Pa. 1973) is not authority to the contrary. There the union trustees of a pension fund brought suit in federal court against the employ- er trustees of the same fund for, inter alia, an injunc- tion restraining the defendants from refusing to ap- prove pension applications and payments pursuant to already approved pension applications for former em- ployees of two employers who were no longer con- tributing to the fund, and the value of whose past con- tributions to the fund had been exhausted. Plaintiffs in that case argued that the refusal to pay pensions to those employees violated the terms of the pension fund agreement, in that, according to those terms, the employees were eligible to receive pensions regardless of whether the value of their employers’ past contribu- tions to the fund had been exhausted. In finding jur- isdiction under Section 301 insofar as the plaintiffs asserted a violation of the terms of the agreement, the court was careful to “disaffirm . .. any intention to assert jurisdiction over matters involving the fidu- ciary duties of the Pension Fund Committee mem- bers.” Id., at 367. It stated that “[t]hese are not mat- ters concerning violations of a contract.” Id. In the instant case, plaintiffs assert what is in essence a breach of fiduciary duties by the trustees, and not a violation of the terms of the Anthracite Wage Agree- — There is no Section 301 jurisdiction over such a claim. With respect to the question of pendent jurisdiction over the claim against the trustees for violations of the common law of trusts, it is axiomatic that in order 84a for a federal court to have the power to consider state law claims under the doctrine of pendent jurisdiction, the federal claim to which the state claim is to be ap- pended “must have substance sufficient to confer sub- ject matter jurisdiction on the court.” United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1966). Inasmuch as there is no federal jurisdiction over either of the claims to which plaintiffs seek to append the common law claim against the trustees, it is clear that this Court does not have the power to hear the common law claim against the trustees in this case. B. The Claim Against the Union 1. Sections 301 and 302 Plaintiffs maintain that the Union has a contractual obligation, under the Anthracite Wage Agreement, to ensure that the operators remained current in their payments to the Fund and that delinquencies were col- lected once they accumulated. Accordingly, they con- tend, there is jurisdiction under Section 301 to hear their claim that the Union has breached this con- tractual obligation. At the outset, it would seem that plaintiffs’ con- tention with respect to Section 301 jurisdiction over the Union is foreclosed by the earlier ovinion of the Court of Appeals in this case, Nedd v. Thomas, 400 F. 2d 103 (3d Cir. 1968), which held that, inasmuch as the Union had no duty under the Anthracite Wage Agreement to enforce the operators’ responsibility to contribute to the Fund, its alleged actions in this case could not be a breach of a contract between an em- ployer and a labor organization. /d., at 105. Plaintiffs, nevertheless, argue that the opinion of the Court of Appeals is not dispositive of this issue because there is additional matter, not considered by the Court of ee SE at: ee ee ee a en 85a Appeals, which makes it clear that the Union had a contractual duty to enforce the operators’ responsi- bility to contribute to the Fund. Specifically, plaintiffs point to a provision of the May 7, 1936 Anthracite Wage Agreement, which provides as follows: “VIOLATIONS OF AGREEMENT “(7) It is understood and agreed that the Dis- trict and International Officers of the United Mine Workers of America assume full vesponsi- bility for carrying out the provisions of this Agreement. To that end they shall use every power vested in them to require that grievances be taken up in the manner provided in the Agree- ment and to prevent illegal strikes in violation thereof; and for non-compliance with the instruc- tions of said officers in this regard, upon the part of any member or members of the United Mine Workers of America, said officers shall impose such discipline as may be necessary to prevent violations and to secure compliance with the pro- visions of this Agreement.” Focusing on the first sentence of the quoted provision and on the language of subsequent Anthracite Wage Agreements incorporating prior agreements, plain- tiffs argue that the Union did indeed undertake an obligation under the contract to enforce the operators’ responsibility to contribute to the Fund. Without deciding the factual issue of whether the Court of Appeals had before it the portion of the 1936 agreement on which plaintiffs rely here,” or the legal *' With respect to what was considered on appeal, the Court ot Appeals stated, “In determining the essential character of the suit and whether the defendant was entitled to summary judgment we consider the original complaint, proposed ampli- fying amendments which the plaintiffs have submitted during 86a issue of whether, if the Court of Appeals did not have that portion of the agreement before it on appeal, plaintiffs should be permitted to rely on it now with no explanation of why it was not introduced prior to this stage of the proceedings, I nevertheless conclude that the relevant portion of the 1936 agreement does not impose a contractual duty upon the Union to en- force the operators’ responsibility to contribute to the Fund, and that, therefore, the Court of Appeals hold- ing that there is no Section 301 jurisdiction over the claim against the Union is dispositive. The clause ap- pears to be a standard provision emphasizing the re- sponsibility of the Union to see to it that its member- ship abides by the terms of the contract. As the second sentence of the above-quoted portion of the 1936 agree- ment reveals, the undertaking of the Union was one made to the employers to prevent illegal work stop- pages by seeing to it that grievances were processed pursuant to the agreement and by agreeing to impose discipline on its members if necessary to prevent a violation of the agreement. Accordingly, the language incorporating the provisions of prior agreements ™ this appeal, and the pertinent language of a collective bargain- ing contract between an association of anthracite coal oper- ators ...and the defendant United Mine Workers. . . .” Nedd v. Thomas, supra, at 104. It cannot be determined from this language whether the relevant portion of the 1936 agreement was considered by the Court of Appeals. = The 1946 collective bargaining agreement, in which the Fund was first established, contains language incorporating the provisions of previous agreements. This language appears in the preface to the entire agreement, however, and not in the section creating the Fund. Thus the possibility seems re- mote that the parties intended the general provision of the 1936 agreement concerning the Union’s responsibility for carrying out the provision of the agreement to apply to the obligation to contribute to the Fund. Moreover, a close reading of the 1946 agreement suggests that the parties did not even incor- 87a cannot reasonably be interpreted as having been in- tended to impose upon the Union the responsibility for collecting debts owing to the Fund. In addition, the language which first appeared in the September 17, 1952 Interim Agreement iterating the trustees’ duty to “use due diligence and all reasonable means to collect and prevent delinquent obligations to the Fund[,]” indicates that the parties understood that it porate the 1936 provision regarding enforcement of the agree- ment into the 1946 version. The general incorporating language of the 1946 agreement provides that previous agreements are incorporated “except as hereinafter modified, supplemented and amended.” Plaintiffs’ Exhibit N, Pages 124-125. A sub- sequent provision of the 1946 agreement provides: “7. Miscellaneous (a) In lieu of existing contractual obligations affecting the same subject matter, the United Mine Workers of America reaffirm their intention to maintain the integrity of this contract and to exercise their best efforts through available disciplinary measures to prevent stoppages of work by strike or lockout pending adjustment or adjudica- tion of disputes and grievances in the manner provided in this Agreement.” Plaintiffs’ Exhibit N, p. 132. This latter provision suggests two conclusions. The first is that the broad language of the 1936 agreement by which the Union “assume[d] full responsibility for carrying out the provisions of this Agreement[,]” was replaced in the 1946 agreement by the above more circumscribed language. Thus, the major premise of plaintiffs’ argument here, that the broad language of the 1936 agreement was incorporated into the 1946 and subsequent agreements, does not seem to exist. Sec- ond, the fact that the 1946 agreement clearly only obligates the Union to do its best to prevent stoppages of work pending adjudication of disputes indicates that the undertaking of the 1936 agreement, in spite of the breadth of the language, had the same limited intention behind it with respect to the Union’s obligations as the 1946 agreement had. The purpose of the 1946 amendment of that obligation seems to have been to bring the language of the agreement in line with the lim- ited intent of the parties. 88a was the responsibility of the trustees, and not the Union, to enforce the operators’ obligations regarding the Fund. In sum, the parties did not intend, by virtue of the language in the 1936 agreement concerning the responsibility for carrying out the provisions of the agreement. and the general incorporating language of subsequent agreements, to impose upon the Union any obligations with respect to the Fund. Accordingly, the holding of the Court of Appeals that there is no Section 301 jurisdiction over the claim against the Union is binding here as the law of the case. Plaintiffs’ attempt to assert jurisdiction over the claim against the Union under Section 302 must be rejected for the reasons articulated, supra, in the dis- cussion concerning jurisdiction over the claim against the trustees. 2. Duty of Fair Representation and Pendent Jurisdiction In its earlier opinion in this case, the Court of Ap- peals stated: “This does not mean that the conduct attributed to the Union is not wrongful. It may well consti- tute a breach of the union’s equitable duty as a fiduciary representative of employees to act in their interest, fairly and in good faith, and with- out unreasonable discrimination throughout the area in which it has been empowered to function. Cf. Vaca v. Sipes, 1967, 386 U.S. 171...” Nedd v. Thomas, 400 F. 2d 103, 105-106 (3d Cir. 1968). “ .. [Here it is alleged that the union entered into published contracts that undertake to pro- tect the interests of retired workers, while the union secretly acted to the contrary. Such facts, if proven, would raise a serious question as to poe te a re 89a whether the union had breached its duty of fair representation.” Jd., at 105-106, fn. 5. Seizing upon this language, plaintiffs maintain that this Court has jurisdiction insofar as the complaint alleges a violation by the Union of its duty of fair representation. Defendants counter that the Supreme Court has subsequently established conclusively that the statutory duty of fair representation does not ex- tend to retirees, Allied Chemical and Alkalai Workers of America v. Pittsburgh Plate Glass Co., 404 U.S. 157 (1971), and that, accordingly, federal jurisdiction of this case cannot be based on the duty of fair repre- sentation. An analysis of the duty and the cases which apply it discloses that the defendants’ position is cor- rect. The duty of fair representation is a court-created correlative to Section 9(a) of the National Labor Re- lations Act, and the corresponding provision of the Railway Labor Act, which provide that the collective bargaining representative selected by the majority of the employees in a collective bargaining unit “shall be the exclusive representative of all the employees in such unit .. .” 29 U.S.C. § 159(a) (emphasis sup- plied). The duty of fair representation counterbal- ances the power vested in a union by the exclusivity of its representation, and, in essence, acts to safeguard the right of minority groups of employees represented by a union by providing that the union shall not dis- criminate against any of the employees whom it repre- sents. See Cox, The Duty of Fair Representation, 2 Vill. L. Rev. 151, 151-152 (1957). It “imposes on the union an obligation to serve the interests of all mem- bers without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct.” Brady v. Trans World Airlines, Inc., 401 F. 2d 87, 94 (3d Cir. 90a 1968), cert. denied, 393 U.S. 1048, reh. denied, 394 U.S. 955 (1969). Although the duty was initially articulated by the courts in cases dealing with the negotiation by unions of collective bargaining agreements that discriminated on the basis of race against some of the employees represented by the unions, see e.g., Steele v. Louisville & Nashville R.R., 323 U.S. 192 (1944), and Syres v. Local 23, Oil Workers International Union, 350 U.S. 982, reversing 223 F. 2d 739 (5th Cir. 1955), it is now rec- ognized that the duty “encompasses all forms of hostile discrimination[,]” Brady v. Trans World Airlines, Inc., supra, at 94, and extends not only to the negotia- tion of collective bargaining agreements, but also to the administration and enforcement of such agree- - ments. See, e.g., Humphrey v. Moore, 375 U.S. 335 (1963). It is “well established” that the federal courts have subject matter jurisdiction to enforce the duty. Brady v. Trans World Airlines, supra, at 94. At the time that the Court of Appeals indicated that the complaint in this case night state a federal cause of action for breach of tae duty of fair repre- sentation, it was still an open question whether the duty extended to retirees. That question has appar- ently been answered by the Supreme Court in Allied Chemical & Alkalai Workers of America v. Pittsburgh Plate Glass Co., 404 U.S. 157 (1971). That case in- volved a union which upon the enactment of Medicare sought midterm bargaining to renegotiate the insur- ance benefits for retired employees. When the com- pany refused to bargain about the matter, the union brought unfair labor practice charges against the company with the National Labor Relations Board (NLRB). The NLRB concluded that the company had violated Section 8(a)(5) of the NLRA, 29 U.S.C. § 158 (a)(5), which, together with other sections of the ee a ee —— eo ~~ 9la NLRA, establishes the obligation of the employer to bargain collectively, “with respect to wages, hours, and other terms and conditions of employment,” with “the representatives of his employees” designated or selected by the majority “in a unit appropriate for such purposes.” The Supreme Court reversed, hold- ing, inter alia, that retirees’ benefits were not manda- tory subjects of collective bargaining. Jd., at 182. In the course of its opinion, the Supreme Court held that retirees are not “employees” included within the col- lective bargaining unit described in Section 9(a) of the NLRA, 29 U.S.C. § 159(a), because active and re- tired employees “plainly do not share a community of interests broad enough to justify inclusion of the re- tirees in the bargaining unit[,]” Jd., at 173, and held that the subject of retirees benefits does not sufficient- ly affect the “terms and conditions” of the employment of active workers to render it a mandatory topic of collective bargaining. 7d., at 182. In the context of these latter two holdings, the Court specifically ad- dressed the effect of its decision on the duty of fair representation : “Since retirees are not members of the bar- gaining unit, the bargaining agent is under no statutory duty to represent them in negotiations with the employer. Nothing in Railroad Trainmen Vv. Howard, 343 U.S. 768 (1952), is to the con- trary. In Howard we held that a union may not use the powers accorded it under law for the purposés of racial discrimination even against workers who are not members of the bargaining unit represented by the union. The reach and rationale of Howard are a matter of some conjec- ture. See Cox, The Duty of Fair Representation, 2 Vill. L. Rev. 151, 157-159 (1957). But whatever its theory, the case obviously does not require a jek 92a union affirmatively to represent nonbargaining unit members or to take into account their inter- ests in making bona fide economic decisions in behalf of those whom it does represent.” Allied Chemical & Alkalai Workers of America v. Pitts- burgh Plate Glass Co., 404 U.S. 157, 181, fn. 20 (1971). Plaintiffs in this case being retirees, and thus, under the Pittsburgh Plate Glass case, not members of the bargaining unit to whom the Union’s duty of fair representation extends, and plaintiffs’ claim being concerned exclusively with pension benefits, the ccn- clusion seems inevitable that there can be no federal jurisdiction of this case for breach of the duty of fair representation. Plaintiffs, however, seek to avoid the conclusion seemingly compelled by Pittsburgh Plate Glass. They argue first that because the Union has in fact acted as the pensioners’ exclusive bargaining agent with the operators and has been recognized as such by both the Union and the pensioners, the Union should be held to the duty of fair representation. “To hold a union acting as an exclusive bargaining agent for any group to any duty less than fair representation would destroy the very basis of federal labor policy.” Volume J, Plaintiffs’ Trial Brief of the Law, p. 52. The abrupt answer to this contention is one given to a similar ar- gument which was made in the Pittsburgh Plate Glass case: “. .. [I]ndustrial practice cannot alter the con- clusion . . . that retirees are neither ‘employees’ nor bargaining unit members. . .. Common practice cannot change the law and make into bargaining unit ‘em- ployees’ those who are not.” Allied Chemical & Alkalai Workers of America v. Pittsburgh Plate Glass Co., supra, at 176. More to the point, federal labor policy does not necessarily require that a union which acts as ee eee oe 4 detain me ~— 98a the exclusive bargaining agent for retirees be held to the statutory duty of fair representation. The power which an exclusive bargaining representative pos- sessed by such a representative with respect to the in- less comprehensive and extensive than the power pos- sessed by such a representative with respect to the in- terests of active workers. The only significant function which a union may perform for a retiree is negotiation concerning such retirement benefits as pension and welfare payments.” The extent to which a union acts on behalf of active employees, by contrast, is far greater. The union bargains and presents grievances with respect to all significant terms and conditions of employment, and, generally, the employer may not unilaterally change any terms or conditions of employ- ment without the assent of the union. The employer is also forbidden to negotiate terms of employment with individual employees—even a numerical majority—as long as they have a bargaining representative. See * This in fact occurred on several occasions in the history of this case, when the Union negotiated the creation of the Fund in the first place, and when it bargained for increases in the rate of royalty payments. It should also be noted in connection with this point that, under the federal statutory scheme, a bargaining representative as such plays no direct role in the administration of pension and welfare trusts for retirees. Although the union is to be equally represented with the employer in the administration of such a trust, Section 302(c) (5) (B), it is the trustees, acting independently of the union and the employer and subject to the standards of fidu- ciary responsibility imposed by the law of the state in which the trust is located, and not the union, who administer the trust. Furthermore, the possibility that a union may unlaw- fully control the administration of a trust, as is alleged in this case, does not call for holding the union to the statutory duty of fair representation as a remedy. Congress has pro- vided an injunctive remedy to prevent such possible abuse (Section 302(e)), and has determined that state law should remedy any damage actually caused by such control. See dis- cussion supra. 94a generally, Cox, The Duty of Fair Representation, 2 Vill. L. Rev. 151, 152 (1957). In short, employees place in the hands of their bargaining representative all their rights, interests and concerns with respect to the terms and conditions of their employment. It was to guard against the abuse of such power in the hands of unions that the duty of fair representation was created. The lesser power that a union possesses with respect to the rights and interests of retirees does not necessarily call for the imposition of a federal duty of fair representation, and the Supreme Court’s opin- ion in the Pittsburgh Plate Glass case is a recognition of that fact. Plaintiffs next seek to distinguish Pittsburgh Plate Glass by pointing out that the Supreme Court in that case noted that a union may bargain for its retirees if the employer is willing to do so. From this plaintiffs would conclude that a union which does in fact bar- gain for its retirees should be held to the duty of fair representation. This argument is similar to the first one, and must be rejected for the same reasons. Fif’t, while the Court in Pittsburgh Plate Glass did note that a union may permissibly bargain for retirees if the employer agrees, it did not indicate that under such circumstances the union would be held to the duty of fair representation in order to protect the retirees. Indeed, the Court addressed itself to the issue of what protection the retirees would have under those circum- stances, and did not mention the duty of fair repre- sentation. The Court stated: “This does not mean that when a union bar- gains for retirees—which nothing in this opinion precludes if the employer agrees—the retirees are without protection. Under established con- tract principles, vested retirement rights may not be altered without the pensioner’s consent. See 95a generally Note, Col. L. Rev. 909, 916-920 (1970). The retiree, moreover, would have a federal rem- edy under § 301 of the Labor Management Rela- tions Act for breach of contract if his benefits were uni [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2738%3A1. Public record. Not legal advice.