Petition — Brauer v. Sheet Metal Workers Pension Plan of Southern California, Arizona & Nevada

NOV 20

IN THE 1978

Supreme Court of the Uni DAK, JR, CLERK

October Term, 1978

Ds assis V8 -824

HAROLD BRAUER,

Petitioner,

vs.

SHEET METAL WORKERS PENSION PLAN OF SOUTHERN

CALIFORNIA, ARIZONA AND NEVADA,

Respondents.

Petition for Writ of Certiorari to the Court of Appeal of

the State of California, Second Appellate District.

LAW OFFICES OF ROBERT S. MICHAELS,

ROBERT S. MICHAELS,

Counsel for Petitioner

Harold Brauer.

Marc J. BRAUER,

400 South Beverly Drive,

Penthouse Suite,

Beverly Hills, Calif. 90212,

(213) 277-3456,

Of Counsel.

Parker & Son, Inc., Law Printers, Los Angeles. Phone 724-6622

RNG ne wn --

SUBJECT INDEX

Page

Nee oo sc baicecqvecccesenccees 1

RE: IEE AES ee l

FREE LN a 2

ee 2

Reasons for Granting the ER 4

The Court of Appeal’s Holding That Petitioner

Was an Employer for Purposes of Section 302

(c)(5) of the Labor Management Relations

Act, 1947, 29 U.S.C. §186(c)(5) Is Erro-

neous and Contrary to Principles Enunciated in

the Decisions of This Court as Well as Recent

Appellate Rulings Decided After Petitioner’s

Case Was Heard, the Issue of Whether or Not

a Fifty Percent (50% ) Shareholder of a Small,

Closely Held Corporation Is an Employer or

Employee Is of Substantial Importance Be-

cause There Are Many Taft-Hartley Plans,

Quite a Number of Which Allow Participa-

tion by Persons Such as Petitioner .................... 4

I

The Holding by the California Court of Appeal

Is in Conflict With the Recent Decisions of

the Other Appellate Courts ..............0.0......... 4

II

The California Court of Appeal Failed to Con-

sider the Purpose of Section 302(c)(5)

Which Calls for the Inclusion of Petitioner in

- > SE 7

ii.

Il Page

The California Court of Appeal’s Reliance on

Cerni vs. Ford Motor Company Is Totally

Erroneous

IV

The Trustees’ Decision Was Arbitrary and Ca-

pricious Because Their Decision Was Based

on an Erroneous Interpretation of Case Law

Public Policy Dictates That Petitioner Be

10

Granted His Pension Pursuant to Section -

302(c)(5) of the Labor Management Re-

lations Act

Conclusion

iii.

TABLE OF AUTHORITIES CITED

Cases Page

Allied Chemical and Alkali Workers of America

v. Pittsburg Plate Glass Co., 404 U.S. 157, 30

mf a gf | Seen 9

Blassie v. Kroger Company, 345 F.2d 58 (8th Cir.

IE | Wiciicstein Gielhassikd scbstcnasuneninthidetaniniledraehaniaeinains 8

Cerni Motor Sales Inc. (1973) 201 N.L.R.B. 918 .. 5

Cerni Motor Sales, Inc: v. Ford Motors (1973)

I Sa 8 het 8, 9

Cuff v. Gleason (E.D. N.Y. 1974) 382 F.Supp.

1144, Rev'd on other grounds, 515 F.2d 128 .. 10

James J. Reiherzer v. Daniel J. Shannon, and Cen-

tral States, Southeast and Southwest Areas Pen-

eG re E ptcscstibtitcatescctstatndsscntiene 5

N.L.R.B. v. Caravelle W.D. Prod., Inc., 466 So.2d

GPS Cr Ge BIT eich ceacicicesncdicsececlicen 8, 9

Rehmar v. Smith (C.A. 9th, 1976) 55 F.2d 1362.. 10

Sanchez v. Trustees of Pension Plan, 359 So.2d

RONEN is ibibilessthcchinlislensdiksshibidlesnindivinnniinsessaiininsenaanivia 6, 7

Miscellaneous

Revenue Ruling 69-421(j) (1) -..........ccceeeeeeeeeeeeee ees 5

Revenue Ruling 69-421(j) (2) ...........ceeceeeeeeeeeeeeees 6

Revenue Ruling 69-421(j) (3) ........cccccceeeeteeeeeeeeeee 5

Statutes

Labor Management Relations Act of 1947, Sec. 2

‘eee hk Td |) ) 8, 9

Labor Management Relations Act of 1947, Sec. 8

ESN ce FECTS SSG SR 9

iv.

Page

Labor Management Relations Act of 1947, Sec. 302

anampbusisnuastuindibaisaduiial sapasddddiaaeadmalanalas is anata 6

Labor Management Relations Act of 1947, Sec.

302(c)(5), (29 U.S.C. §186(c)(5)) ........ 4, 5,

caniospeniitcouiediiamaelnetteacoiaaiphaaiaa tated tail 8, 9, 10, 11

Labor Management Relations Act of 1947, 29

Loins GOR: SOPRA ook cdceciedcecnieeaceentaatlacnin 4

Labor Management Relations Act of 1947, 29

USA. Dak SRS ccc ae 4

Labor Management Relations Act of 1947, 29

CR. TN, BADD is crintccindinactiiechnaplicgaieelad ee 2S 2

United States Code, Title 28, Sec. 1254(1) 2.0.0.0... 2

Textbooks

2 U.S. Code Congressional and Administrative

News (86th Cong. 1959), p. 2469 ooo. 7

1 Witkin, Summary of California Law, Sec. 22, p.

GS .xcscnsaitrnnciansvcsihicabinindiilaaemataiae aan 10

IN THE

Supreme Court of the United States

October Term, 1978

EG Silinebiosece

HAROLD BRAUER,

Petitioner,

vs.

SHEET METAL WORKERS PENSION PLAN OF SOUTHERN

CALIFORNIA, ARIZONA AND NEVADA,

Respondents.

Petition for Writ of Certiorari to the Court of Appeal of

the State of California, Second Appellate District.

The Petitioner, HAROLD BRAUER, respectfully

prays that a Writ of Certiorari issue to review the deci-

sion and opinion of the Court of Appeal of the State

of California, Second Appellate District, entered on

June 27, 1978. |

Opinion Below.

The opinion of the Court of Appeal of the State

of California, Second Appellate District, was certified

for publication and is cited as 2nd Civil No. 52726;

Superior Court No. C 92128.

Jurisdiction.

Petitioner petitioned for a rehearing in the Court

of Appeal which was denied on July 19, 1978. and

his Petition for Hearing in the Supreme Court was de-

a

nied on August 24, 1978. Jurisdiction is invoked under

28 U.S.C. §1254(1). Jurisdiction is further invoked

by the fact that there is a conflict between a decision

of the United States Court of Appeals for the Seventh

Circuit and the Court of Appeal of the State of Cali-

fornia, Second Appellate District, regarding the inter-

pretation of 29 U.S.C. Section 186.

Petitioner dismisses Local 108 of Sheet Metal Work-

ers International Association, C. Ringwood; R. Pic’l; R.

Mosula from this petition.

Question Presented.

Whether the Labor Management Relations Act of

1947, 29 U.S.C. Section 186, precludes a Fifty Percent

(50% ) shareholder of a small, closely held corporation

from participating in a pension established under this

section.

Statement of the Case.

From 1948 until July of 1973, Petitioner was a

dues-paying member in good standing of Local 108

of the Sheet Metal Workers International Association

(hereinafter referred to as “LOCAL 108”). From 1951

to 1957, Petitioner was a partner in the business firm

of Crenshaw Sheet Metal and Heating Company with

one other individual, Irv Rudley. In 1957, Petitioner

and his partner formed a corporation titled Crenshaw

Sheet Metal & Heating, Inc. (hereinafter referred to

as “CRENSHAW” ). In 1965, Petitioner acquired Fifty

Percent (50%) of Crenshaw and became Vice-Presi-

dent. (App. D., p. 2.) In 1958, a pension plan was

ro

created and pursuant to the collective bargaining agree-

ment, Crenshaw became a participant. (App. D., ‘p.

2.) From 1957 to 1973, Petitioner remained a dues-

paying member of Local 108. In 1973, Petitioner re-

ceived a letter advising him that he had 25 years

of vested pension credits which would entitle Petitioner

to $500.00/per month, for the rest of his life. (App.

D., p. 3.)

Subsequently, Petitioner was notified by Sheet Metal

Workers Pension Plan of Southern California (herein-

after referred to as “PENSION PLAN”), that he could

not participate in the pension plan because he was

a co-owner of Crenshaw.

Additionally, Local 108 requires that as a condition

of continued employment, all “employees . . . within

eight (8) days following the beginning of such employ-

ment, become a member of Local 108”. Thus, by

virtue of the Local 108 Constitution, Petitioner was

required to be a Union member, and was so for 25

years.

Lastly, the term “employee”, as defined in the pension

plan, provides for inclusion of said employees if not

in violation of existing law or regulation.

The Court of Appeal denied Petitioner his pension

on the sole ground that he was an employer because

he owned Fifty Percent (50% ) of Crenshaw, a small,

closely held corporation.

Ree a

REASONS FOR GRANTING THE WRIT.

THE COURT OF APPEAL’S HOLDING THAT PETITIONER

WAS AN EMPLOYER FOR PURPOSES OF SECTION

302(c)(5) OF THE LABOR MANAGEMENT RELA-

TIONS ACT, 1947, 29 U.S.C. §186(c)(5) IS ERRO-

NEOUS AND CONTRARY TO PRINCIPLES ENUN-

CIATED IN THE DECISIONS OF THIS COURT AS

WELL AS RECENT APPELLATE RULINGS DECIDED

AFTER PETITIONER’S CASE WAS HEARD. THE IS-

SUE OF WHETHER OR NOT A FIFTY PERCENT

(50%) SHAREHOLDER OF A SMALL, CLOSELY

HELD CORPORATION IS AN EMPLOYER OR EM-

PLOYEE IS OF SUBSTANTIAL IMPORTANCE BE-

CAUSE THERE ARE MANY TAFT-HARTLEY PLANS,

QUITE A NUMBER OF WHICH ALLOW PARTICIPA-

TION BY PERSONS SUCH AS PETITIONER.

I

The Holding by the California Court of Appeal Is in

Conflict With the Recent Decisions of the Other

Appellate Courts.

Prior to the Court of Appeal’s ruling, there has

been no Court, State, Federal or otherwise, that has

held that a Fifty Percent (50%) shareholder of a

corporation cannot participate in a Taft-Hartley Trust

Fund.

29 U.S.C. Section 152(3) defining the term employee

was erroneously applied by the Court of Appeal to

29 U.S.C. Section 186(c)(5). All the N.L.R.B. cases

cited by the parties and the Court below relate to

the use of the term “employee” as it is used in Sub-

chapter II, Chapter 7, Title 29 (29 U.S.C. §§151-

168). These sections relate to the collective bargaining

process, not to the administration of trust funds. In

particular, the Court of Appeal relied in their opinion

po

on the case of Cerni Motor Sales, Inc. (1973) 201

N.L.R.B. 918, which concerned the issue of who would

be an employee for purposes of collective bargaining

purposes.

On August 11, 1978, the United States Court of

Appeals, for the Seventh Circuit, rendered a decision

in the case of James J. Reiherzer v. Daniel J. Shannon,

and Central States, Southeast and Southwest Areas

Pension Fund, No. 77-1911 which encompasses the

identical issues, and this holding is completely opposite

to the California Court of Appeal’s decision involving

Petitioner. |

In the Reiherzer case, the Court found that Reiherzer,

who was a Ninety Percent (90%) shareholder in a

corporation, could participate in a Taft-Hartley Trust

Fund. The Court held that Defendant’s contention that

they would be in violation of the L.M.R.A. Section

302(c)(5) because of the definition of the term

“employee” found in the act which states:

“The term employee shall include any employee

. . . but shall not include any individual employee

as a supervisor.”

was completely without merit. Thus, this decision is

completely opposite to the ruling by Second Appellate

District of the Court of Appeal in the State of California

and, therefore, certiorari should be granted to resolve

this conflict.

Furthermore, the Court, in Reiherzer, found that

Revenue Ruling 69-421(j)(3) permits shareholders

who are bona fide employees of a corporation to partici-

pate in the corporation’s plan to the same extent as

other employees. The Court further states that Revenue

Ruling 69-421(j)(1) may exclude sole proprietors and

partners from participating in a qualified plan and

ro Ye

does not exclude corporate officers who may be em-

ployees of a valid corporation from participating in a

qualified plan. Since the trust fund was established after

Petitioner was an owner of Fifty Percent (50%) of

the corporate stock and an officer of the corporation,

then Revenue Ruling 69-421(j)(2) does not preclude

Petitioner from participating in the trust fund.

In the recent case of Sanchez v. Trustees of Pension

Plan, 359 So.2d 1279, decided June 19, 1978 in the

Louisiana Supreme Court, the Court held that two

individuals, who had paid Union dues for many years

and all other sums required of Union members and

who contributed to Union pension, health and welfare

plans pursuant to prevailing collective bargaining con-

tracts, are employees within the meaning of their plans,

even though the Court found that these two individuals

were top officers, in covered corporations in which

each holds at least Fifty Percent (50%) of the stock.

The Court noted that officers and supervisory employees

are not excluded by Section 302 of the L.M.R.A.

from participation in contractually-established employee

benefit trust funds. The Court noted that the right

of participation depends upon the specific language

of the trust instruments themselves. In Sanchez, the

Court cited the trust language which says that trust

funds provide that benefits may be received by “any

employee of a contributing employer covered by a

collective bargaining contract and by such other em-

ployees whom the trustees shall determine to be em-

ployees.”

In the present case, the trust fund says that covered

employment under the plan means “any employee of

an individual employer who performs one or more

hours of work covered by any of the collective bar-

gaining agreements.” Thus, this provision is almost

=

identical to the provision in the Sanchez case and

~thus, because of the similarity between the two, and

the opposite opinions reached by two different Courts,

it is this Petitioner’s contention that because of the

conflicts among the Courts, that this Court grant a writ

of certiorari to establish uniformity in the decisions

of the Courts across the nation.

II

The California Court of Appeal Failed to Consider the

Purpose of Section 302(c)(5) Which Calls for the

Inclusion of Petitioner in These Pension Plans.

The Court of Appeal erred in failing to consider

the purpose for which Section 302(c)(5) of the Labor

Management Relations Act was enacted. A review of the

purpose of this Section was important because of the

trustees’ reliance on the language of the trust agreement

which provides for inclusion as long as not in violation

of any existing law or regulation. The legislative his-

tory of the statute simply states:

“The purpose of these amendments to Section

302 is to forbid any payment, loan or bribe by

any employer, employer association, or anyone

acting on an employer’s behalf...” 2 US.

Code Cong. and Admin. News 2469 (86th Cong.

1959).

Justice Blackman explained the Court’s general ap-

proach to interpreting Section 302(c) (5):

“We would approach our present task with a

construction policy, favoring inclusion and bene-

fits where there is no positive statutory language

or inference of exclusion, rather than one favoring

exclusion and a denial of benefits where there

ssilbaiin

is no positive language of inclusion.” (Emphasis

added). Blassie v. Kroger Company, 345 F.2d

58, 68 (8th Cir. 1965).

Thus, the Courts have favored inclusion where there

is no statutory language or inference of exclusion.

II

The California Court of Appeal’s Reliance on Cerni ys.

Ford Motor Company Is Totally Erroneous.

Additionally, the Court of Appeal failed to look

at the specific language in the Petitioner’s pension

plan and relied solely on case law that decided who

was an employee for purpose of collective bargaining,

only. In particular, the Court of Appeals erroneously

relied on Cerni Motor Sales, Inc. v. Ford Motors (1973)

201 N.L.R.B. 918. The Court of Appeal stated that

“where an individual owns 50% or more of a closely

held corporation, as in the case of a co-partner, that

individual is, for purpose of Section 152(3), the actual

employer of the employees.” (App. D., p. 9.)

The reliance on this case is totally erroneous because

this was decided in a collective bargaining context,

i.e., who would be an employee for collective bargaining

purposes only, not who would be eligible for pension

established under 302(c)(5) of the Labor Management

Relations Act, 1947, 29 U.S.C. 186.

Furthermore, in the case of N.L.R.B. v. Caravelle

W.D. Prod., Inc., 466 So.2d 675 (7th Circuit, 1972),

the Court held that:

“The N.L.R.B. had acted arbitrarily in exclud-

ing a relative of a controlling shareholder/officer

of a corporation from being considered an em-

ployee of the corporation pursuant to the Labor

we ar

Management Relations Act Section 2(3), 29

U.S.C. Section 152(3) which provides ‘the term

“employee” shall include any employee .. . but

shall not include . . . any individual employed

by his parent or spouse.’ ”

Thus, the relative had to be considered an “em-

ployee” of the corporation unless the business was,

in fact, a sole proprietorship. The Court was stating

that the shareholder/officer was not the employer of

his or her relative.

Thus, the Petitioner herein could not be considered

an employer because he was a shareholder and/or officer

of a small, closely held corporation, Of utmost im-

portance is the fact that Caravelle was decided prior

to Cerni and the Cerni case failed to distinguish the

Caravelle case. Thus, the 7th Circuit has rejected the

rationale for Cerni in the Caravelle case cited above.

In the case of Allied Chemical and Alkali Workers

of America v. Pittsburg Plate Glass Co., 404 US.

157, 30 L.Ed.2d 341, 92 S.Ct. 383, the Court held that

“contrary to the Board’s assertion, the Union’s

role in administration of the funds is of a far

different order from its duties as collective-bar-

gaining agent. To accept the Board’s reasoning

that the Union’s §302 (c)(5) responsibilities dic-

tate the scope of the §8(a)(5) collective bargain-

ing obligation would be to allow the tail to wag the

dog.”

What the Court was saying is that there are complete-

ly different standards in determining who can participate

in a collective bargaining agreement as compared to

who can participate in a pension plan established there-

under,

a es

IV

The Trustees’ Decision Was Arbitrary and Capricious

Because Their Decision Was Based on an Erro-

neous Interpretation of Case Law.

The Court of Appeal’s decision can also be reversed

on the grounds that the trustees’ decision was arbitrary

and capricious.

Where the trustees’ decision is erroneous on a ques-

tion of law, it should be reversed. In the present

case, it was stipulated that Petitioner was a Fifty Percent

(50% ) owner of a small, closely held corporation,

and thus, where the facts are stipulated, it becomes

a question of law. (1 Witkin, Summary of California

Law, “Agency and Employment” Sec. 22, page 658.) In

Rehmar v. Smith (C.A. 9th, 1976) 55 F.2d 1362,

the Court held at page 1371:

“Those decisions may be reversed only where

they are arbitrary, capricious or made in bad faith,

not supported by substantial evidence, or erroneous

on a question of law.” (Emphasis added. )

To the extent that the trustees “interpret” the provi-

sion by adding an unwritten proviso that Fifty Percent

(50%) or greater shareholders are not employees,

is itself a violation of 186(c)(5). This Section also

requires that the requirements be “in writing” and

the proviso regarding stockholders certainly is not in

writing. Cuff v. Gleason (E.D. N.Y. 1974) 382 F.

Supp. 1144, 1146, Rev'd on other grounds, 515 F.2d

128.

a

Vv

Public Policy Dictates That Petitioner Be Granted His

Pension Pursuant to Section 302(c)(5) of the

Labor Management Relations Act.

Public policy dictates that Petitioner be granted his

pension pursuant to Section 302(c)(5) of the Labor

Management Relations Act.

First, the Petitioner was a corporate officer in a

small, closely held corporation and, thus, is much closer

to an employee than would be a corporate officer

in a rather large corporation such as Ford Motor

Company. Big corporations do not want to be in

the plans established for the benefit of Petitioner be-

cause they can make more money under their own

internal pension plans than would be available for

them under the pension plans created pursuant to collec-

tive bargaining agreements by a Union.

Secondly, if we do not allow people such as Petitioner

to participate in these Taft-Hartley pension funds, these

individuals will lose their right to accumulate pension

credits because their pension credits will not be trans-

ferable from one company to another because of their

ownership of a percentage of corporate stock. In other

words, this would prohibit people such as Petitioner

from leaving a particular company and taking their

pension rights with them. Thus, a great detriment will

occur to people such as Petitioner by the inability

to accumulate pension credit and transferability thereof

from job to job.

4

=,

Thirdly, by not allowing Petitioner to become a

participant in a Taft-Hartley pension fund, creates a

problem of diversification of assets established in a pen-

sion for Petitioner. If Petitioner were part of a larger

trust fund, then the assets could be diversified among

varying assets, securing the amount contributed to the

pension by the greater ability of diversification.

Fourthly and lastly, many plans across the nation

allow workers such as Petitioner to participate in these

pension plans set up under the Taft-Hartley Act. It

is extremely important that this Court grant the Writ

of Certiorari because the plans which allow for the

participation of people such as Petitioner are now placed

in a very unstable position.

Conclusion.

The Petition for a Writ of Certiorari should be

granted.

Dated: November 15, 1978.

Respectfully submitted,

Law OFFICES OF ROBERT S. MICHAELS,

ROBERT S. MICHAELS,

Counsel for Petitioner

Harold Brauer.

Marc J. BRAUER,

Of Counsel.

a ot * esse

APPENDIX.

Opinion of the Court of Appeal.

In the Court of Appeal of the State of California,

Second Appellate District, Division Two.

Harold Brauer, Plaintiff and Appellant, vs. Sheet

Metal Workers Pension Plan of Southern California,

Arizona and Nevada; Local 108 of Sheet Metal Work-

ers International Association; C. Ringwood, Defendants

and Respondents. 2d Civ. No. 52726, (Sup. Ct. No.

C-92128). |

Filed: June 27, 1978.

APPEAL from a judgment of the Superior Court

of Los Angeles County. Steven S. Weisman, Judge.

Affirmed.

Marc Jay Brauer, Michaels and Sobel, for Plaintiff

and Appellant.

Robert W. Gilbert; Pesses, Golden and Chapman,

By: William S. H. Chapman; for Defendants and Re-

spondents.

At the time of this appeal, appellant was and had

been since 1948 a member of Sheet Metal Workers

International Association, Local 108 (Local 108), one

of the respondents herein. In 1951, appellant became

a partner in the business firm of Crenshaw Sheet Metal

and Heating Company (Crenshaw). In 1958, the Sheet

Metal Workers Pension Plan of Southern California,

Arizona and Nevada (the Pension Plan), also a re-

spondent, came into existence. The Pension Plan con-

cededly is one governed by the provisions of the Labor

Management Relations Act of 1947 as amended (the

Act)’ in section 302 thereof (29 U.S.C. § 186).

1U.8.C. § 151 et seq. All code section references hereinafter

are to the United States Code, Title 29.

caidas

At about the same time, Crenshaw was incorporated

as Crenshaw Sheet Metal and Heating, Inc. (Crenshaw

Inc.) though appellant did not then become a share-

holder of the company. In 1965, appellant acquired

as registered owner 50 percent of the outstanding stock

of Crenshaw Inc. and presently continues to own one-

half of that business. Throughout his involvement with

Crenshaw and Crenshaw, Inc., appellant contributed

to success of the business by his efforts in the field

as a sheet metal worker and occupied the managerial

position of Vice President of Crenshaw Inc. for the

most part in name only. From its inception, Crenshaw

Inc. made contributions to the Pension Plan for appel-

lant’s benefit; at no time did appellant or Crenshaw

Inc. disclose to the Pension Plan appellant’s 50 percent

stock ownership.

On July 11, 1973, the Pension Plan notified appel-

lant by letter he had acquired a vested pension benefit

whereby he was entitled to receive the sum of $500

monthly at retirement. Upon discovery of appellant’s

ownership interest in Crenshaw Inc. and on September

25, 1973, the Pension Plan advised appellant he was

ineligible for the pension benefit and thereafter, on

November 25, 1973, tendered its refund of contributions

made in his behalf in the amount of approximately

$8400. The tender was not accepted and appellant

on June 21, 1974, brought the within action for declara-

tory relief, breach of contract and deceit. Following

special demurrers sustained and respondents’ answers

to appellant’s first amended complaint, the matter was

set for trial on October 18, 1976, at which time

the trial court granted respondents’ motion for judgment

on the pleadings. A subsequent motion for reconsidera-

tion and for leave to file a second amended complaint

—3—

was considered by the trial court and on April 18,

1977, in the judgment appealed from was denied.”

In substance, the trial court found: (a) appellant’s

eligibility for benefits from the Pension Plan was de-

terminable from the provisions of section 186(c)(5)°

as interpreted by federal law; (b) under the Act,

any payments by or on behalf of an employer to

the Pension Plan for the benefit of such employer

are illegal, violative of criminal sanctions contained

in the Act and cannot provide a basis for any claim

of estoppel which would require awarding a pension

to such employer; (c) under the circumstances present

*The judgment contains in recital form the statement that

“having granted Plaintiff leave to file a Second Amended Com-

plaint, which does not materially differ from Plaintiff's First

Amended Complaint, the Court finds as follows: * * *.” No

second amended complaint was filed except as a proposal made

part of the motion to reconsider and it is sufficiently clear

the judgment did not intend to provide permission for its

filing, since the motion for judgment on the pleadings in fact

was granted and the motion for reconsideration denied.

®Section 186 provides in pertinent part:

Ҥ 186. Restrictions on payments and loans to employee

representatives, labor organizations, officers and employees

of labor organizations, and to employees or groups or

committees of employees; exceptions; penalties; jurisdiction;

effective date; exception of certain trust funds

(a) It shall be unlawful for any employer or association

of employers or any person who acts as a labor relations

expert, adviser, or consultant to an employer or who acts

in the interest of an employer to pay, lend, or deliver,

or agree to pay, lend, or deliver, any money or other

thing of value—

(1) to any representative of any of his employees

who are employed in an industry affecting commerce;

or

(2) to any labor organization, or any officer or em-

ployee thereof, which represents, seeks to represent, or

would admit to membership, any of the employees of

such employer who are employed in an industry affect-

ing commerce; or

(This footnote is continued on next page)

pa ae

and in accordance with prior decisions of the National

Labor Relations Board (the NLRB), recognized by

the United States Supreme Court as definitive in any

instance where made within the NLRB’s authority,

appellant was not an employee as required by the

Act; and therefore, (d) no cause of action had been

or could validly be asserted by appellant.

We concur in the trial court’s reasoning and in the

result reached. In our view, the matter turns upon

the questions whether one is an employee so as to

satisfy the Act's requirements and whether that de-

termination is solely ascertained by reference to federal

(3) to any employee or group or committee of em-

loyees of such employers employed in an industry affect-

ing commerce in excess of their normal compensation

for the purpose of causing such employee or group

or committee directly or indirectly to influence any other

employees in the exercise of the right to organize and

bargain collectively through representatives of their own

choosing; or

“(4) to any officer or employee of a labor organiza-

tion engaged in an industry affecting commerce with

intent to influence him in respect to any of his actions,

decisions, or duties as a representative of employee or

as such officer or employee of such labor organization.

(b) (1) It shall be unlawful for any person to request

demand, receive, or accept, or agree to receive or accept,

any payment, loan, or delivery of any ‘wer or other

thing of value prohibited by subsection (a) of this section,

*_* *

(c) The provisions of this section shall not be applicable

** ©

(5) with respect to money or other thing of value

aid to a trust fund established by such representative,

or the sole and exclusive benefit of the employees

of such employer, and their families and dependents

(d) Any person who willfully violates any of the pro-

visions of this section shall, upon conviction thereof, be

guilty of a misdemeanor and be subject to a fine of

not more than $10,000 or to imprisonment for not more

than one year, or both, [Emph added)"

Pa

jlien

rather than state law.‘ The latter question is answered

clearly in the affirmative. (See O’Malley v. Wilshire

Oil Co. (1963) 59 Cal.2d 482; Lehto v. Underground

Constr. Co. (1977) 69 Cal.App.3d 933.)

“By its terms, section 301 of the Labor Relations

Act permits suit for violation of a collective bar-

gaining agreement to be brought in federal court.

* * ™ However, in enacting section 301(a),

Congress promulgated more than a mere jurisdic-

tional statute; it authorized the federal courts to

create a body of federal law for the enforcement

of collective bargaining agreements within the am-

bit of congressional power. (Textile Workers

Union v, Lincoln Milis (1957) 353 U.S, 448,

456-457 [1 L.Ed.2d 972, 980-981, 77 S.Ct.

912].) In accord with the holding of Lincoln

Mills, the California Supreme Court has declared

that when state courts exercise concurrent jurisdic-

tion with federal courts, they must, in adjudicat-

ing an action which could have been brought in

the federal courts under section 301, apply federal

substantive law. (Butchers’ Union Local 229 vy.

Cudahy Packing Co. (1967) 66 Cal.2d 925, 930-

931 [59 Cal.Rptr. 713, 428 P.2d 849]; O'Malley

v. Wilshire Oil Co. (1963) 59 Cal.2d 482, 486

[30 Cal.Rptr. 452, 381 P.2d 188].)” (Lehto,

supra, 942-43.)

‘An additional question relating to jurisdiction of the trial

court is raised by respondent Local 108. In brief terms, it

concerns whether appellant could state a cause of action com-

menced under section 186(c)(5) in view of the contents of

section 186(e) thereof (see Mobile Mechanical Contractors

Assn. v. Carleugh (1977) 566 F.2d 1213) or under section

185, to enforce the terms of a collective bargaining agreement.

While ordinarily such an issue would be viewed as a threshold

matter, we do not so address it, since under the circumstances

here involved, the question essentially would be disposed of

upon the rationale we adopt in our opinion,

pa ee

That being the case, it is likewise clear appellant

in no wise was an employee for purposes of the Act

and accordingly could not enjoy the benefits claimed.

So far as section 186 is concerned, the definition of

employee is that found in section 152(3), viz:

“The term employee shall include any employee,

and shall not be limited to employees of a particu-

lar employer, unless this sub-chapter explicitly

states otherwise, and shall include any individual

whose work has ceased as a consequence of, or

in connection with, any current labor dispute or

because of any unfair labor practice, and who

has not obtained any other regular or substantially

equivalent employment, shall not include any indi-

vidual employed as an agricultural laborer, or

in the domestic service of any family or person

at his home, or any individual employed by his

parent or spouse, or any individual having the

status of an independent contractor, or any individ-

ual employed as a supervisor, or any individual

employed by an employer subject to the Railway

Labor Act, as amended from time to time, or

by any other person who is not an employer

as herein defined.”

While it is not true that the NLRB is immunized

from judicial review in providing parameters within

which definitions are to be correctly understood, it

is the case that:

“* ™* * the task of determining the contouts

of the term ‘employee’ ‘has been assigned primarily

to the agency created by Congress to administer

the Act.’ NLRB v. Hearst Publications, 322 US

111, 130, 88 L Ed 1170, 1184, 64 § Ct 851

_

(1944). See also Iron Workers v. Perko, 373

US 701, 706, 10 L Ed 2d 646, 649, 83 S Ct

1429 (1963); NLRB v Atkins & Co. 331 US

398, 91 L Ed 1563, 67 § Ct 1265 (1947).”

and that:

“(T]he Board’s determination that specified per-

sons are ‘employees’ under this Act is to be ac-

cepted if it has ‘warrant in the record’ and a

reasonable basis in law.”

(Allied Chemical & Alkali Workers v. P.P.G.

Co, (1971) 404 U.S, 157, 166; see also

Associated Gen, Contractors, Etc. v. N.L.R.B.

(1977) 564 F.2d 271.)

In turn the NLRB has determined: “Where an individ-

ual owns 50 percent or more of a closely held corpora-

tion, as in the case of a co-partner, that individual

is, for the purpose of Section 152(3), the actual em-

ployer of the employees.” (Cerni Motor Sales, Inc.

(1973) 201 NLRB 918. See also Toyota Midtown,

Inc, (1977) 233 NLRB 106; Foam Rubber City No.

2 of Florida (1967) 167 NLRB 623.) Accordingly,

appellant was not an employee within the scope of

section 186 and was not properly a recipient of any

pension benefit thereunder.

Nor is this result altered by considerations of estoppel

since the constraints of section 186 are criminal in

nature and “Only employees and former employees

of employers who are lawfully contributing to a union

pension trust fund may qualify as beneficiaries of a

Section 302 trust. Rittenberry v. Lewis, 238 F.Supp.

506 (E.D.Tenn, 1965); Bolgar v. Lewis, 238 F.Supp.

595 (W.D.Pa. 1960).” (Moglia v. Geoghegan (1968)

403 F.2d 110, 116.)

Finally, as set out in the Agreement and Declaration

of Trust Establishing Sheet Metal Workers’ Pension

Plan of Southern California, Arizona and Nevada,

dated August 11, 1972, the powers of the Pension

Plans’ trustees includes the power “To construe the

provisions of this Trust Agreement and the Pension

Plan and any such construction adopted by the Board

in good faith shall be binding upon any and all parties

or persons affected thereby.”

Here, the trustees determined appellant was not eli-

gible for benefits based upon their acceptance of the

definition of the term employee as outlined above.

Under such circumstances, where there is no showing

nor any sufficient allegations in the complaint that

the trustees acted arbitrarily, capriciously or in bad

faith, their actions are final and not subject to judicial

review. (French v. Construction Laborers Pension Trust

(1975) 44 Cal.App.3d 479; Park v. Board of Trustees

(1971) 21 Cal.App.3d 630.)

The judgment is affirmed.

CERTIFIED FOR PUBLICATION.

ROTH, P.J.

We concur:

FLEMING, J.

COMPTON, J.

SS

a i

Modification of Opinion.

In the Court of Appeal of the State of California,

Second Appellate District, Division Two.

Harold Brauer, Plaintiff and Appellant, vs. Sheet

Metal Workers Pension Plan of Southern California,

Arizona and Nevada; Local 108 of Sheet Metal Work-

ers International Association; C. Ringwood, Defendants

and Respondents. 2d Civ, No. 52726, (Sup. Ct. No.

C-92128).

Filed: July 11, 1978.

THE COURT:

It is hereby ordered that the opinion filed herein

on June 27, 1978 be, and it is hereby modified and

corrected as follows:

The last two lines on page 1 thereof are stricken

and the following is substituted in lieu thereof:

“Robert W. Gilbert, A Law Corporation, By: James

B. Goodman for Defendant and Respon“ent Sheet

Metal Workers Pension Plan of Southern California,

Arizona and Nevada;

“Pesses, Golden and Chapman, By: William S. H.

Chapman for Defendant and Respondent Local 108

of Sheet Metal Workers International Association and

Clyde Ringwood.”

Service of the within and receipt of a copy

thereof is hereby admitted this .................... day

of November, A.D. 1978.