Petition — Carpenters District Council of Detroit v. Morse

Supreme Court, U.& >

FILED

79-480

SEP 20 1979

MC gel W095\, JR., @LEF

IN THE

Supreme Court of the Anited States

October Term, 1979

No. 79-

CARPENTERS DISTRICT COUNCIL OF DETROIT, WAYNE,

OAKLAND AND MACOMB COUNTIES AND VICINITY,

UNITED BROTHERHOOD OF CARPENTERS AND JOINERS

OF AMERICA, AFL-CIO, a voluntary unincorporated labor

organization, and the THE DETROIT CARPENTERS FRINGE

BENEFIT FUNDS, a trust fund established under, and adminis-

tered pursuant to, federal law,

Petitioners,

Vv.

GEORGE E. MORSE, individually and d/b/a RESIDENTIAL

FRAMERS COMPANY, BRIGHTON MALL APARTMENTS,

a Michigan limited partnership, and LAWRENCE PROPER-

TIES, INC., a corporation incorporated under the laws of the

State of Michigan,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

SHELDON M. MEIZLISH

2437 First National Building

Detroit, Michigan 48226

ROLLAND R. O'HARE

1000 Farmer Street

Detroit, Michigan 48226

Counsel for Petitioners

OF COUNSEL:

MARSTON, SACHS, NUNN, KATES,

KADUSHIN, & O’HARE, P.C.

1000 Farmer Street

Detroit, Michigan 48226

THE INLAND PRESS, DETROIT, MICHIGAN

0°

INDEX

Citations

Page

Opinions Below

Jurisdiction

Questions Presented

Statutes and Rule Involved

Statement of the Case

Reasons for Granting the Writ

aI ao wp ww Ww WwW CE:

Conclusion

19

Appendix:

1. Memorandum Opinion of District Court

(September 27, 1976)

la

2. District Court’s Order of Dismissal

(October 18, 1976)

3. District Court’s Order for Rule 54(b)

.. l4a

16a

Certificate (October 20, 1976)

4. Order of Court of Appeals

(June 13, 1979)

5. Order of Court of Appeals

(July 23, 1979)

17a

18a

ii

CITATIONS

Statutes Page

Builders Trust Fund Act (Michigan), M.C.L.A.

§$§570.151, et seq. (M.S.A. §§26.331, et seq.) ........... ... 4,6

Employee Retirement Income Security Act of

1974, 29 U.S.C. §§1001, et seq. -.......... 7-8, 10, 11-12, 14, 15

Mechanics’ Lien Law (Michigan), M.C.L.A.

$§570.1, et seq. (M.S.A. §§26.281, et seq.) -............. 3-4, 6, 8

Labor-Management Relations Act of 1947,

as amended, 29 U.S.C. §§141, et seq. 5, 10, 14

Miller Act, 30 U.S.C. §§270a, et seq. 8

Regulations

Department of Labor Prohibited Transaction

Exemption 75-1 (1976 P-H Inc., Pension $110,083) .... 12

Rules |

Federal Rule of Civil Procedure 64 2-3, 15-16

Cases

Aldinger v Howard, Treasurer of Spokane County,

427 U.S. 1, 96 S. Ct. 2413, 49 L.9d2d 276 (1976) ....6, 7, 14-15

Ayala v United States, 550 F.2d 1196

(C. A. 9, 1977) 15

Bricklayers Fringe Benefit Funds v North Perry

Baptist Church, 590 F.2d 207 (C.A. 6, 1979).

Pet. for cert. filed May 24, 1979 (No. 78-1758) ......... 7

iil

Page

Central States, Southeast and Southwest Areas

Pension Fund, et al. v Hitchings Trucking, Inc.,

of et F.. Supp. ....... 251 BNA Pension Law

Reporter D-1 (E.D. Mich., July 20, 1979) ............. 14, 17-18

Dick Meyers Towing Service, Inc. v United States,

577 F.2d 1023 (C.A. 5, 1978) ............................. 15

General Insurance Company of America v

Lamar Corporation, 482 F.2d 856 (C. A. 6, 1973) ...... 8

International Union, United Automobile, Aerospace

and Agricultural Implement Workers of America

v Hoosier Cardinal Corporation, 383 U.S. 696, 86

S. Ct. 1107, 16 L.Ed 2d 192 (1966) 12-13

Ortiz v United States Government,

595 F.2d 65 (C.A. 1, 1979) ...... 15

Pearce v United States,

450 F. Supp. 613 (D. Kan., 1978) ; 15

Rosadio v Wyman, 397 U.S. 397,

90 S. Ct. 1207, 25 L.Ed.2d 442 (1970) 9

Selby v Ford Motor Company,

590 F.2d 642 (C.A. 6, 1979) .... 8

Textile Workers Union of America v Lincoln

Mills of Alabama, 353 U.S. 448, 77 S. Ct. 912,

1 L.Ed.2d 972 (1957) 10-14, 15

Transok Pipeline Co v Darks,

565 F.2d 1150 (C.A. 10, 1977) 15

United Mime Workers v Gibbs, 383 U.S. 715, 86 S. Ct.

1130, 16 L.Ed.2d 218 (1966)

iv

Miscellaneous

Abrams, ‘‘The Residential Construction Industry,’’

In Adams (ed.), The Structure of American

Industry, 114 (The Macmillan Company, New

York, N.Y., 2d ed. 1954) 8

Lefkoe, The Crises in Construction (The Bureau of

National Affairs, Inc., Washington, D.C. 1970) ......... 8

IN THE

Supreme Court of the Huited States

October Term, 1979

No. 79-

CARPENTERS DISTRICT COUNCIL OF DETROIT, WAYNE,

OAKLAND AND MACOMB COUNTIES AND VICINITY,

UNITED BROTHERHOOD OF CARPENTERS AND JOINERS

OF AMERICA, AFL-CIO, a voluntary unincorporated labor

organization, and the THE DETROIT CARPENTERS FRINGE

BENEFIT FUNDS, a trust fund established under, and adminis-

tered pursuant to, federal law,

Petitioners,

v.

GEORGE E. MORSE, individually and d/b/a RESIDENTIAL

FRAMERS COMPANY, BRIGHTON MALL APARTMENTS,

a Michigan limited partnership, and LAWRENCE PROPER-

TIES, INC., a corporation incorporated under the laws of the

State of Michigan,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Petitioners, the Carpenters District Council of Detroit,

Wayne, Oakland and Macomb Counties and Vicinity, United

Brotherhood of Carpenters and Joiners of America, AF'L-

CIO' and the Detroit Carpenters Fringe Benefit Funds,

pray that a writ of certiorari issue to review the judgment

of the United States Court of Appeals for the Sixth Circuit

entered in this cause on the 13th day of June, 1979, as

amended by the Court of Appeals, on July 23, 1979, in its

Order which denied the petition for rehearing.

1 Hereinafter, “Carpenters’ Union”.

2

Citations to Opinions Below

The Orders of the Court of Appeals of June 13, 1979,

and July 23; 1979, both of which are unreported, appear in

the appendix to this petition. The District Court’s Memo-

randum Opinion (of September 27, 1976), Order [of Dis-

missal] (of October 18, 1976) and Order for Rule 54(b)

Certificate (of October 20, 1976), all of which are unre-

ported, also appear in the appendix to this petition.

Jurisdiction

The judgment of the Court of Appeals was entered on

June 13, 1979. An application for rehearing was filed on

June 22, 1979. On July 23, 1979, the Court of Appeals en-

tered an order denying rehearing. The jurisdiction of this

Court is invoked under 28 U.S.C. §1254(1). 2

Questions Presented

1. Where a pendent claim (although involving defend-

ants not subject to the federal claim) was an integral part

of the federal claim, did the District Court abuse its dis-

cretion in refusing to decide the pendent claim?

2. Where a remedy established by state law was used

for the purpose of securing satisfaction (in whole or in

part) of a federal labor claim, was the District Court

required by Federal Rule of Civil Procedure 64 to de-

cide the pendent claim?

Statutes and Rule Involved

1. Federal Rule of Civil Procedure 64 provides:

‘‘At the commencement of and during the course

of an action, all remedies providing for seizure of

person or property for the purpose of securing

satisfaction of the judgment ultimately to be entered

3

in the action are available under the circumstances

and in the manner provided by the law of the state

in which the district court is held, existing at the

time the remedy is sought, * * * * The remedies thus

available include arrest, attachment, garnishment,

replevin, sequestration, and other corresponding or

equivalent remedies, however designated and regard-

less of whether by state procedure the remedy is an-

cillary to an action or must be obtained by an inde-

pendent action’’ (emphasis added).

2. The Michigan mechanics’ lien law, PA. 1891, No. 179,

as amended, M.C.L.A. §§570.1, et seq. (M.S.A. §§26.281,

et seq.), provides, in relevant parts, as follows:

(i) Section 1: ‘‘Every person who shall, in pur-

suance of any contract, express or implied, written or

unwritten, existing between himself as contractor,

and the owner, part owner or lessee of any interest

in real estate, . . . furnish any labor or materials in

or for building, altering, improving, repairing, erect-

ing, ornamenting or putting in any... building...

and every person who shall be... laborer... perform

any labor or furnish materials . . . to such original

or principal contractor, or any subcontractor, in

carrying forward or completing any such contract,

shall have a lien therefor upon such ... building...

to the extent of the right, title and interest of

such owner, part owner or lessee at the time work

was commenced ... and also to the extent of any

subsequent acquired interest of any such owner,

part owner or lessee. . . .’’ M.C.L.A. $570.1 (M.S.A.

§26.281)

(ii) Section 5: ‘‘Every person, or his agent or

attorney, whether contractor, subcontractor, mate-

rialman or laborer, who wishes to avail himself of the

provisions of this statute, shall make and record in

the office of the register of deeds . . . a just and true

4

statement or account of the demand due him over

and above all legal setoffs, setting forth the time

when such materials were furnished or labor per-

formed, and for whom, and containing a_ correct

description of the property to be charged’ with the

lien, and the name of the owner, part owner or lessee,

if known, which statement shall be verified by affi-

davit. ° * * *’? M.C.L.A. $570.5 (M.S.A. §26.285),

emphasis added.

(iii) Section 10: ‘‘Proceedings to enforce such

lien shall be by bill in chancery, under oath, and no-

tice of lis pendens recorded in the office of the register

of deeds, shall have the effect to continue such lien

pending such proceedings. * * * *’’ M.C.L.A. §570.10

(M.S.A. §26.290).

(iv) Section 25: ‘All liens or claims for liens

which may arise or accrue under the terms of this

act shall be assignable, and proceedings to enforce

such liens may be maintained by and in the name of

the assignees, who shall have as full and ample

power to enforce the same as if such proceedings

were taken under the provisions of this act by and

in the name of the lien claimant [claimants] them-

selves. * * *’’? M.C.L.A. $570.25 (M.S.A. §26.305).

3. Section 1 of the Michigan Builders Trust Fund Act,

P.A. 1931, No. 259, as amended, provides:

‘In the building construction industry, the build-

ing contract fund paid by any person to a contractor,

or by such person or contractor to a subcontractor,

shall be considered by this act to be a trust fund, for

the benefit of the person making the payment, con-

tractors, laborers, subcontractors or materialmen,

and the contractor or subcontractor shall be con-

sidered the trustee of all funds so paid to him for

building construction purposes.’’ M.C.L.A. §570.151

(M.S.A. §26.331).

5

Statement of the Case?

Pursuant to a collective bargaining agreement which

George Morse,® a contractor in the construction industry,

had entered into with the Carpenters’ Union, a labor or-

ganization representing employees in an industry affecting

commerce, Morse was required to make contributions to

provide pension, holiday and health and welfare benefit

coverage for those of his employees who were represented

by the Carpenters’ Union. Under the contract, payment of

such contributions should have been made to the Detroit

Carpenters Fringe Benefit Funds, a trust fund established

under, and administered pursuant to, Section 302 of the

Labor-Management Relations Act of 1947, as amended,

hereinafter ‘‘LMRA’’, 29 U.S.C. §186, and the Employee

Retirement Income Security Act of 1974, hereinafter

‘‘ERISA’’, 29 U.S.C. §§1001, et seq. The contractor failed

to make the contributions for fringe benefits* and the Car-

penters’ Union and the Detroit Carpenters Fringe Benefit

Funds instituted suit against him under LMRA 4301,

29 U.S.C. §185 (R5-R7; R32-R34).

Counts I and II of the Complaint (R5-R8) sought relief

against Morse. He did not defend and, on June 30, 1975,

his default was entered (R14-R17). Subsequently, as pre-

2 Unless the context indicates otherwise, Pog eet references

preceded by “R” refer to the pages of the Plaintiffs-Appellants’

Appendix filed with the Court of Appeals.

8 Morse, who did business as Residential Framers Company, was

a defendant in the District Court. While the lawsuit was pending

there, he was adjudicated a bankrupt and the proceedings were

stayed as to him (R32). That stay has never been lifted.

* Contributions are payable for each hour worked by each carpen-

ter. The right of the carpenter and his family to coverage for

medical, hospital, pension, optical, dental, pooled holiday and other

benefits are entirely dependent upon per ent of con-

tributions by employers. Participation in plaintiffs’ programs is

a significant part of the bargained-for compensation of carpenters

and an important aspect of their families’ economic security.

6

viously mentioned,® he was adjudicated a bankrupt and aii

proceedings against him were stayed.

All of the contractor’s indebtedness accrued during the

course of a construction project that he had performed for

Lawrence Properties, Inc., a Michigan corporation, the

general contractor, on land owned by Brighton Mall Apart-

ments, a Michigan limited partnership. To protect the

interests of Morse’s carpenter-employees with respect to

their fringe benefits, the Carpenters’ Union, pursuant to

Section 5 of Michigan’s mechanics’ lien law, M.C.L.A.

§570.5 (M.S.A. §26.285), recorded a mechanics’ lien on the

aforementioned realty. Count IV of the Complaint sought

to foreclose that lien (R10-R12).

Count III of the Complaint (R8-R10) sought to recover

against Brighton Mall Apartments and Lawrence Prop-

erties, Inc., under the Michigan Builders Contract Fund

Act, M.C.L.A. §§570.151, et seq. (M.S.A,. §§26.331, et seq.).

(Subsequently, upon stipulation of the parties, Count ITI

was dismissed solely as to Brighton Mall Apartments

[R28].)

In Counts III and IV, the counts against Brighton Mall

Apartments and Lawrence Properties, Inc., Petitioners

sought to invoke the pendent jurisdiction of the District

Court (R6-R7; R32). Subsequently, the two pendent de-

fendants (who are the Respondents in this proceeding)

moved for summary judgment (R18 and R23). After those

motions were filed, this Court decided Aldinger v Howard,

427 U.S. 1, 96 S. Ct. 2413, 49 L.Ed.2d 276 (1976). Based

upon that decision, Magistrate Paul Komives, in a Mem-

orandum Opinion (R31-R40), recommended that ‘‘this

[District] Court cannot exercise its pendent jurisdiction

5See note 3, supra.

7

over the defendants Lawrence and Brighton and, therefore,

they should be dismissed from the lawsuit’’ (R38). District

Judge Lawrence Gubow adopted the Magistrate’s Mem-

orandum Opinion and dismissed the lawsuit as to the Re-

spondents (R41-R42). Following entry of a Rule 54(b)

Certificate (R43), the Petitioners took an appeal to the

Sixth Circuit from the Order of Dismissal (R44).

On June 13, 1979, the Sixth Circuit issued an Order

affirming the District Court. In its Order, that Court

stated:

“‘The court is of the opinion that the district court

had no power to exercise jurisdiction over appellees.

Pendent jurisdiction cannot be used, except in possi-

ble limited circumstances not present here, to obtain

jurisdiction over a party not otherwise subject to

federal court jurisdiction. Aldinger v Howard, 427

U.S. 1 (1976). Nor can Federal Rule of Civil Proce-

dure 64 provide an independent basis for jurisdic-

tion.’’ (Emphasis added.)

Subsequently, the Court of Appeals donied a petition for

rehearing. However, its Order denying the petition for

rehearing amended the original Order by deleting the sen-

tence in its »riginal Order which stated that ‘‘the court

is of the opinion that the district court had no power to

exercise jurisdiction over appellees.’’ The Sixth Circuit

made this amendment ‘‘in order to remove any potential

conflict between the decision in this cause and the decision

in Bricklayers Fringe Benefit Funds v North Perry Bap-

tist Church, 590 F.2d 207 (6th Cir. 1979).’”*

REASONS FOR GRANTING THE WRIT

The holding below, as it applied to an industry as frag-

mented and interdependent as the construction industry,

® Petition for Writ of Certiorari filed May 24, 1979. No. 78-1758.

8

represents a serious diminution of the protection of work-

ers’ rights by the federal judiciary and, as it involves

collection of amounts employerg have been found to owe

to fringe benefit programs, deprives fiduciaries of those

programs of a needed device to do that which ERISA, 29

U.S.C. §$§1001, et seq., commands to protect workers and

their families.

1. The problems inherent in the construction industry

are well known. See, e.g. Judge (now Solicitor General)

McCree’s opinion for the Sixth Circuit in General Insur-

ance Company of America v Lamar Corporation, 482 F.2d

856, 860 (1973). Many construction firms have little cap-

ital. Small firms which handle only one job at a time (a

not untypical situation) cover all of their overhead with

revenues from that job (or out of profits from earlier jobs).

Indeed, one of the things peculiar to the construction indus-

try is that financing is outside the control of contractors.

Financing is obtained from, or“through, the owner. See

Abrams, ‘The Residential Construction Industry,’’ in

Adams (ed.), The Structure of American Industry, pp. 114,

117, 123-24 (The Macmillan Company, New York, N.Y., 2d

ed. 1954), and Lefkoe, The Crises in Construction, pp. 30-

43 (The Bureau of National Affairs, Inc., Washington,

D.C., 1970).

It is because of this situation that the Federal govern-

ment and all states including Michigan have enacted sta-

tutes, such as the Miller Act, 40 U.S.C. §§270a, et seq., and

the mechanics lien statute, imposing derivative liability for

labor and iabor related claims in the construction industry.

The purpose of each is to impose responsibility for pay-

™The Sixth Circuit was recently faced construction ind

problems in Selby v Ford Motor 590 F.2d 642 (Jan. 11,

ae at some length pp.

9

ment of such claims on the person who actually controls

the purse strings. If an employer for any reason does not

pay all of his labor obligations, the party who benefited

from the labor is derivatively liable.

It is obvious that the claim against the Respondents (the

pendent defendants) and the claim against the employer

are related. Absent the claim against the employer, there

would be no claim against the Respondents. If the em-

ployer had satisfied that portion of the claim which accrued

on the Respondents’ project, then Petitioners claim against

the Respondents would also be satisfied.

The ‘‘commonsense policy of pendent jurisdiction’’ is,

this Court has stated, ‘‘the conservation of judicial energy

and the avoidance of multiplicity of litigation.’’ Rosadio v

Wyman, 397 U.S. 397, 405, 90 S. Ct. 1207, 25 L.Ed.2d 442

(1970). For the doctrine to be applicable, the ‘‘state and

federal claims must arise from a common nucleus of oper-

ative fact. But if considered without regard to their federal

or state character, a plaintiff’s claims are such that he

would ordinarily be expected to try them all in one judicial

proceedings, then assuming substantiality of the federal

issues, there is power in federal court to hear the whole.’’

United Mine Workers v Gibbs, 383 U.S. 715, 725, 86 S. Ct.

1130, 16 L.Ed.2d 218 (1966) (footnote omitted).

As has been indicated, there is such a relationship be-

tween the federal and pendent claims here. The federal

claim arose pursuant to a collective bargaining agreement

the employer had entered into with the Carpenters’ Union.

Absent that agreement, the employer would not have been

liable to Petitioners. Absent such liability, the Respondents

would have no derivative liability to Petitioners.

Petitioners in this case are a group of trust funds estab-

lished under federal law for the sole and exclusive purpose

10

of providing pension, medical, dental, hospital, optical,

pooled holiday pay, disability and other forms of union-

negotiated security programs for carpenters and their

families and the union which represents those carpenters.

Each trust fund is controlled by a Board of Trustees,

half of whom are selected by the union and half by the

employers. The programs they administer are the results

of collective bargaining. They have been subject to the

relevant strictures of the Labor-Management Relations Act

of 1947, as amended, 29 U.S.C. §§141, et seq.,* since their

inception.

The assets of the funds are composed entirely of employer

contributions and the income generated from investment of

those contributions. The ability of the Funds to provide

the types of benefits bargained for rests upon collection

of the sums due as contributions. The rate of contribution

is set by collective bargaining and the agreements setting

out the rates are enforceable under Section 301 of LMRA,

29 U.S.C. §185. This lawsuit was instituted pursuant there-

to.°

As in all 301 litigation, the applicable law is federal law

‘‘which the courts must fashion from the policy of our

national labor laws.’’ Textile Workers Union of America v

Lincoln Mills of Alabama, 353 U.S. 448, 456-57, 77 S. Ct.

912, 1 L.Ed.2d 972 (1957).

‘‘The Labor Management Relations Act expressly

furnishes some substantive law. It points out what

8 Particularly Section 302(c) (5) of LMRA, as amended, 29 U.S.C.

§186(c) (5), added to the statute 30 years ago as part of the Taft-

Hartley amendments.

® By virtue of Section 502(e) (1) of the Employee Retirement In-

come Security Act of 1974, 29 U.S.C. §1132(e) (1), the Federal

District Courts have exclusive jurisdiction of civil actions brought

against ers under that act, including those to recover fringe

benefit contributions.

11

parties may or may not do in certain situations.

Other problems will lie in the penumbra of express

statutory mandates. Some will lack express statu-

tory sanction but will be solved by looking at the

policy of the legislation and fashioning a remedy

that will effectuate that policy. The range of judicial

inventiveness will be determined by the nature of the

problem.’’ Textile Workers v Lincoln Mills, supra,

353 U.S., at 457, citation omitted.

The fashioning, after more than 20 years, continues.

The national labor policy in respect to employee benefit

plans has evolved over the years through legislation, ad-

ministrative regulation and judicial decision. The most

recent Congressional expression of policy is the Employee

Retirement Income Security Act of 1974 (ERISA), 29

U.S.C. §§1001, et seq. ERISA regulates virtually every

aspect of the operation and structure of funds such as

those involved here.”® Its principal purpose is to set stand-

ards and a system of regulation which will safeguard the

accrued benefits of participant employees and their fam-

ilies.

10 ERISA specifically preempts all state laws dealing with fiduciary

responsibility, te ge | and disclosure, vesting, funding and re-

lated matters to the full extent such laws mig t otherwise affect

sion and welfare benefit plans. ERISA §514(a), 29 U.S.C.

$1144 (a). It forbids any state to classify these plans as insurers,

banks, trust companies or investment companies in order to bring

them ‘within state statutes regulating such institutions. ERISA

§514(b) (2) (B), 29 U. ogee Jaue (b) (2) (B). ERISA enforcement

is the responsibility h the Department of Labor and the In-

ternal Revenue Bercien, pec have supplemented the statute with

an impressive array of regulations and other interpretative mate-

pe ot (e.g., see footnote 11, infra). In fact, new sections were

to the Internal Revenue Code by ERISA which relate only

ren eal the sort involved in this litigation, E.g., ERISA $1014,

26 U.S.C. §418; ERISA $1015, 26 U.S.C. $414; ERISA §2003(a),

26 U.S.C. 84975. The federal concern with, involvement in and

regulation of such funds may fairly be characterized as pervasive.

12

‘It is hereby declared to be the policy of this Act

to protect interstate commerce and the interests of

participants in employees benefit plans and their

beneficiaries, by requiring the disclosure and report-

ing to participants and beneficiaries of financial and

other information with respect thereto, by establish-

ing standards of conduct, responsibility and obliga-

tion for fiduciaries of employee benefit plans, and

by providing for appropriate remedies, sanctions

and ready access to the Federal courts’’ (emphasis

added). ERISA §2(b), 29 U.S.C. §1001(b).

Multi-employer plans, such as those involved in the in-

stant case are specifically included in ERISA’s coverage

(29 U.S.C. §1002(37) (A)). The Trustees are fiduciaries

whose duties and liabilities are defined, for the first time,

by federal law. It is part of that duty to use every means

available to them (which means the courts—no other means

being available) to collect delinquent contributions and,

except for limited situations specifically covered by regula-

tion, they risk personal liability for deviation from that

duty.™

It is part of national labor policy to allow enforcement

of collective bargaining agreements in federal courts. That

is what 301’s minimum meaning is.

The teaching of Lincoln Mills is that Section 301 is more

than a simple grant of jurisdiction. It carries with it fed-

eral substantive law fashioned to effectuate national labor

policy, beginning (but not ending) with the texts of the

relevant statutes. This is because, as this Court has stated,

11 See Prohibited Transaction Exemption 76-1 (1976 P-H Inc. Pen-

seralutor; authority under ERISA, interprets Section 406 (a) (1)

un on a

(B) of the Act, 29 U.S.C. §1106 (a) (1() B), to require collectively

bargained multi-employer funds, as a matter of federal law, to

make “systematic, reasonable and diligent efforts to collect de-

linquent contributions.”

13

the section ‘‘implements no more than the established doc-

trine that the union’s role in the collective bargaining

agreement does not end with the making of the contract’’

and that ‘‘one of the widely recognized purposes of Con-

gress in enacting Section 301 [was to eliminate] common-

law procedural obstacles to suits for breach of collective

bargaining agreements. [Citations omitted.]’’ International

Union, United Automobile, Aerospace and Agricultural

Implement Workers of America v Hoosier Cardinal Cor-

poration, 383 U.S. 696, 699-700, 86 S. Ct. 1107, 16 L.Ed.2d

192 (1966).

The protection of employee rights in pension and welfare

benefit programs and collection of the money contracted

for (and needed) to finance properly those programs is a

part of that national labor policy. A remedy must be fash-

ioned to ‘‘effectuate that policy’’. This Court has suggested

sources:

‘“‘The range of judicial inventiveness will be de-

termined by the nature of the problem. Federal in-

terpretation of federal law will govern, not state

law. But state law, if compatible with the purpose

of §301, may be resorted to in order to find the rule

that will best effectuate the federal policy. Any state

law applied, however, will be absorbed as federal

law and will not be an independent source of private

rights.’’ Textile Workers v Lincoln Mills, supra, 353

U.S., at 457, citations omitted.

Collection of amounts due to employee pension and wel-

fare programs such as those involved here will not be ef-

fectuated, it will be impeded, if the District Court’s order

of dismissal is allowed to stand. Contrary to Lincoln Mills,

the remedies required to effectuate the national labor policy

in this regard will not be ‘‘absorbed as federal law’’, but

14

will be sliced off and relegated to the exclusive jurisdiction

of the state court.

One of the primary Congressional purposes in enacting

LMRA $§301 and 302 and the Employee Retirement In-

come Security Act of 1974, was to protect the wages and

fringe benefits of employees.’*? To sanction the District

Court’s refusal to exercise its jurisdiction ignores the

realities of the construction industry and flies in the face

of that expressed Congressional purpose. When a construc-

tion employer is found to have failed to pay the promised

contributions to provide pension and welfare benefits, the

remedy must include the right to levy upon and collect

from those who actually hold the money, the customers, the

financing agencies and the general contractors. It is neither

beyond the power of the federal courts nor ‘‘the range of

judicial inventiveness’’ required by Lincoln Mills to fashion

an effective, not an illustory or partial, remedy. In dis-

missing the pendent claim, the District Court abused its

discretion.

2. Aldinger v Howard, supra, contrary to the panel’s de-

cision, is neither dispositive of the issue involved in this

appeal nor does it lend any support for the panel’s con-

clusion that pendent jurisdiction could not be used in this

case to obtain jurisdiction over Respondents.

In Aldinger, the federal count was predicated on the Fed-

eral Civil Rights Act. In that case, unlike the situation in-

volved herein, the Court’s reading of Section 1983 of Title

42 showed that Congress intended to exclude the particular

type of pendent defendant (a county) as a party defendant

12 See Judge Joiner’s decision in Central States Southeast and South-

west Areas Pension Fund, et al. v Hitchings Trucking, Inc., et al.,

.... F. Supp. ...., 251 BNA Pension Law Reporter D-1 (E.D.

Mich., July 20, 1979).

15

in a Section 1983 lawsuit. In this case, not only is there no

such Congressional intent but, it appears to us at least,

Federal Rule of Civil Procedure 64, which has been san-

ctioned by the Congress, leads one to the conclusion that

pendent parties should be left in the lawsuit so that the

plaintiffs herein will have an effective remedy. Indeed,

Textile Workers of America v Lincoln Mills of Alabama,

supra, mandates that the District Courts effectuate the

statutory policy which led to the enactment of LMRA §301

and ERISA and insure, where possible, that plaintiffs are

given an effective remedy. While it is true that federal law

is the governing law, as the Court pointed out in the Lin-

coln Mulls case, state law, if compatible with the purpose

of the federal statute, may be resorted to in order to find

the rule that will best effectuate federal policy.

Additionally, unlike the situation in the Aldinger case,

the grant of jurisdiction in this matter to the District

Court over the federal claim was exclusive by virtue of

ERISA §502(e) (1), 29 U.S.C. §$1132(e)(1).% And, as we

have previously stated, the fact that the grant of juris-

diction is exclusive is not a mere happenstance.*

3. Petitioners, both in the District Court and the Court

of Appeals, also argued that the mechanics’ lien foreclosure

claim fell within the remedies contemplated by Rule 64 of

18 For examples of port-Aldinger exercise of pendent party jurisdic-

tion in situations where federal courts had exclusive jurisdiction

over the federal counts, see Ortiz v United States Government 595

F.2d 65 (C.A. 1, 1979), Dick Meyers Towing Service, Inc. v United

States, 577 F.2d 1023 (C.A. 5, 1978), Transok Pipeline Co v Darks,

565 F.2d 1150 (C.A. 10, 1977), and Pearce-v United States, 450

F. Supp. 613 (D. Kan., 1978). The federal counts in Pearce and

Ortiz involved the Federal Tort Claims Act. The Ninth Circuit

has, of course, reached the contrary result and has refused to allow

exercise of pendent party jurisdiction under any circumstances.

See, e.g., Ayala v United States, 550 F.2d 1196 (1977).

14 See note 10, supra.

16

the Federal Rules of Civil Procedure. Rule 64 provides in

relevant parts that:

‘At the commencement of and during the course

of an action, all remedies providing for seizure of

... property for the purpose of securing satisfac-

tion of the judgment ultimately to be entered in the

action are available under the circumstances and in

the manner provided by the law of the state in which

the district court is held, existing at the time the

remedy is sought, .... The remedies thus available

include arrest, attachment, garnishment, replevin,

sequestration, and other corresponding or equivalent

remedies, however designated and regardless of

whether by state procedure the remedy is ancillary

to an action or must be obtained by an independent

action.’’ (Emphasis added)

The Court of Appeals rejected this contention, stating

that the rule does not ‘‘provide an independent basis for

jurisdiction.’’ While this may very well be true, the rule

was riot used for that purpose. It was used to proceed

against the persons who were derivatively liable for the

employer’s indebtedness, such derivative liability having

been statutorily imposed because these persons (the pend-

ent defendants) were the ones who controlled the money.

4. The actions of the District Court and the Court of

Appeals serve no policy consideration. The sole result will

be to place one more hurdle in the already difficult path

of enforcing the claims of laborers in the construction in-

dustry for bargained-for wages and fringe benefits. The

actions of the court below benefit the Respondents not one

iota. If sustained by this Court, the inevitable result will

he refiling in a state court. As a general policy considera-

tion, the inevitable consequence of the decision of both

courts below will be that a multiplicity of lawsuits (with

17

their attendant large costs) in different courts will be re-

quired to collect the varying portions of the identical con-

struction industry labor claim. This will hardly assure

the stability and protection which Congress sought when

it enacted ERISA. As one District Court said:

‘‘KRISA was intended to stabilize the rights and

liabilities involved in pensions established by collec-

tive bargaining. Congress in its findings and declara-

tion of policy provided:

“<«The Congress finds that the growth in size,

scope, and numbers of employee benefit plans in re-

cent years has been rapid and substantial . . . that

the continued well-being and security of millions of

employees and their dependents are directly affected

by these plans; that they are affected with a national

public interest; that they have become an important

factor affecting the stability of employment and the

successful development of industrial relations; that

they have become an important factor in commerce

because of the interstate character of their activities,

and of the activities of their participants, and the

employers, employee organizations, and other enti-

ties by which they are established or maintained . . .

that owing to the lack of employee information and

adequate safeguards concerning their operation, it

is desirable in the interests of employees and their

beneficiaries, and to provide for the general welfare

and the free flow of commerce, that disclosure be

made and safeguards be provided with respect to

the establishment, operation and administration of

such plans... that owing to the termination of plans

before requisite funds have been accumulated, em-

ployees and their beneficiaries have been deprived of

anticipated benefits; and that it is therefore desir-

able in the interests of employees and their bene-

ficiaries . . . that minimum standards be provided

18

assuring the equitable character of such plans and

their financial soundness.’ 29 U.S.C. §1001(a).

‘*Stability and protection requires assurance of

adequate funding and the prevention of arbitrary ter-

mination rights. ERISA protects employees’ rights

to pension funds under pension trusts if the em-

ployees qualify. 29 U.S.C. §§1052, 1053 and 1054.

Whether payments to the trust have or have not

been made by the employer is not relevant in the de-

termination as to whether or not an employee quali-

fies. See Labor Department Advisory Opinion Letter

on Delinquent Contributions dated August 31, 1976,

Opinion 76-89, 221 BNA Pension Reporter R-24.

‘*A ruling by this court in an action between the

employer and the fund could not adversely affect

the rights of the employees to make claims against

the fund when they became due, regardless of

whether the employer has made payments or whether

this court would have ordered the employer to make

payments. It is not unlikely that they might prevail

on the same theory that is being asserted in this case

by the plaintiff.

‘‘A ruling adverse to the plaintiff in this court

would place the plaintiff in an anomalous position.

It would have no defense whatsoever to the claims be-

ing made by the employees. As a result of this deci-

sion, it would be required to meet the financial burden

of ERISA’s guarantees in the form of penson pay-

ments without corresponding contributions to the

defendant’s employees and similarly situated em-

ployees. As the plan covers several hundred thousand

participants, with over 1400 contributing employers,

the actuarial soundness of the fund would be com-

promised.’’ Central States Southeast and Southwest

Areas Pension Fund, et al. v Hitchings Trucking,

Inc., et al., supra.

19

Conclusion

For the foregoing reasons, this petition for writ of cer-

tiorari should be granted.

Respectfully submitted,

: SHELDON M. MEIZLISH

2437 First National Building

Detroit, Michigan 48226

eo

ROLLAND R. O’HARE

1000 Farmer Street

Detroit, Michigan 48226

Counsel for Petitioners

OF COUNSEL:

MARSTON, SACHS, NUNN, KATES,

KADUSHIN & O’HARE, P. C.

1000 Farmer Street

Detroit, Michigan 48226

Dated: September 10, 1979.

—

APPENDIX

Memorandum Opinion la

* UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN.

SOUTHERN DIVISION

CARPENTERS DISTRICT COUNCIL OF

DETROIT, WAYNE, OAKLAND AND

MACOMB COUNTIES AND VICINITY,

UNITED BROTHERHOOD OF CARPENTERS

AND JOINERS OF AMERICA, AFL-CIO,

a voluntary unincorporated labor

association, et al.,

Plaintiffs, Civil No. 5-70007

vs.

GEORGE E. MORSE, individually and

d/b/a RESIDENTIAL FRAMERS

COMPANY, et al.,

Defendants.

MEMORANDUM OPINION

The Court has before it defendant Brighton Mall Apart-

ments’ (hereinafter ‘‘Brighton’’) amended Motion for

Summary Judgment; defendant Lawrence Properties, Inc.’s

(hereinafter ‘‘Lawrence’’), Motion for Summary Judg-

ment; and plaintiffs’, Carpenters District Council and

United Brotherhood of Carpenters and Joiners of America,

Motion to Dismiss and/or Strike certain parts of defend-

ant Lawrence’s pleadings. The parties have stipulated to

my hearing and deciding these matters.

After oral argument on these motions was held, but

before the Court could issue a Memorandum Opinion and

Order it had partially prepared which treated them, the

Supreme Court issued its opinion in Aldinger v Howard,

2a Memorandum Opinion

44 U.S:L.W. 4988 (U.S. June 22, 1976). The Court was con-

fronted with the possibility, that on the basis of Aldinger

and, possibly, the recent decision by the Sixth Circuit in

Saalfrank v O’Daniel, 533 F.2d 325 (6th Cir. 1976), the

plaintiffs’ cause of action against all the defendants ex-

cept George E. Morse, and defendant Lawrence’s counter-

claim and crossclaim should be dismissed on the ground

that this Court lacked any pendent jurisdiction over them.

Accordingly, the Court ordered the parties to show cause

as to why these pleadings and counts should not be dis-

missed and provided an opportunity for further briefs

and oral argument. The parties waived oral argument, but

submitted supplemental briefs. This Memorandum Opinion

is my report and recommendation in this case. It is being

submitted to Judge Gubow so that the District Judge after

consideration of the entire record in this case, including

this Memorandum Opinion, may make a dispositive ruling

on the Motions.

I. BACKGROUND

This action arises out of plaintiffs’ attempts to recover

monies allegedly owing to its fringe benefit fund. Plaintiffs

are a union and that union’s fringe benefit fund; defend-

ants are Brighton, the owner ofthe property upon which

plaintiffs’ members performed their work, Lawrence, the

project’s general contractor, and George E. Morse, doing

business as Residential Framers Co. (hereinafter ‘‘ Morse’’).

Plaintiffs filed their complaint in January, 1975, basing

jurisdiction of this Court on 29 U.S.C. See. 185 for count

one, and the doctrine of pendent jurisdiction for counts

two, three, and four. On August 14, 1975, Morse was ad-

judicated a bankrupt and all proceedings against him were

stayed under rule 401(a) of the Bankruptcy Rules and 11

Memorandum Opinion 3a

U.S.C. See. 29(a). Morse had not answered plaintiffs’ com-

plaint or a cross-claim by Lawrence so, on June 30, 1975,

plaintiffs sought and the clerk entered a default against

him. Lawrence also sought an entry of default, but because

of an ‘‘erroneous affidavit’’ the clerk refused its request.

Count one of plaintiffs’ complaint alleges that Morse,

pursuant to the collective bargaining contract between

Morse and plaintiffs, was obligated to make payments into

plaintiffs’ fringe benefit fund; that Morse failed to make

the payments; and Morse now owes plaintiffs a sum of

$10,521.32. Count Two alleges that the Michigan Builders

Contract Fund Act (MBCFA), M.C.L.A. Sec. 570.151 et

seq., created a ‘‘trust fund, for the benefit of . . . laborers’’

in the monies received by Morse to build the project; that

Morse was the trustee ‘‘of all funds so paid to him for

building construction purposes’’, and, therefore, that

Morse’s refusal to pay the indebtedness is conversion to

the extent of $10,521.32. Count there alleges that Lawrence

violated the MBCF'A by its neglect or refusal to pay ‘‘the

‘building contract fund’... when it either knew, or should

have known,’’ that Morse had not done so. Brighton was

similarly included in count three, but a stipulation by the

parties has since dismissed Brighton from this count.

Finally, count four, naming Brighton, Lawrence, and

Morse, alleges that plaintiffs have properly followed the

procedures of M.C.L.A. Sec. 570.1 et seq., and now have

on file a valid mechanic’s lien which they intend to enforce.

Plaintiffs seek the sale of the property and use of the

proceeds to satisfy the debt.

Brighton answered plaintiffs’ complaint, specifically

count four, by admitting that plaintiffs had a mechanio’s

lien on file, but alleging that improper procedures used in

filing made it invalid. Lawrence answered by asserting that

4a Memorandum Opinion

no pendent jurisdiction existed, and that, as to count three,

it entered into an accord and satisfaction with plaintiffs

for any liabilities or obligations that it would owe through

Morse. Lawrence also raised a number of affirmative

defenses.

On June 16, 1975, Lawrence filed a counterclaim against

the plaintiffs. Count one alleges that on September 10,

1974, plaintiffs and Lawrence entered into an agreement

whereby Lawrence would pay $8,000 to plaintiffs and

plaintiffs would release Lawrence from ‘‘any and all li-

ability [resulting from] any relationship’’ between Law-

rence and Morse. Lawrence, therefore, seeks an order

rescinding the accord and satisfaction and forcing plain-

tiffs to repay the $8,000, because plaintiffs have failed to

cease efforts to collect against Lawrence. Count two seeks

$75,000 in damages resulting from plaintiffs’ efforts to

collect against Lawrence (e.g., loss of business reputation

and business relationships). Finally, count three seeks $25,-

000 actual damages and $50,000 punitive damages for

wrongful interference with Lawrence’s business when plain-

tiffs allegedly violated 29 U.S.C. Sees. 185, 187 by second-

arily boycotting Lawrence, a neutral employer.

Lawrence has also filed a crossclaim against Morse.

Count one alleges that Lawrence has two contracts with

Morse such that Morse would supply labor and materials

to Lawrence. Morse allegedly breached both agreements

by failing to properly complete work pursuant to the con-

tract, failing to do certain portions of work, failing to

progress with work according to the contract, and failing

to pay employees certain wages and benefits. Lawrence

seeks $19,894.27 in damages to cover the increased costs

it incurred to complete the work. Count two seeks a judg-

ment against Morse to indemnify Lawrence for any amount

Memorandum Opinion 5a

it may end up paying to plaintiffs because of Morse’s in-

debtedness.

In January, 1976, plaintiffs answered Lawrence’s counter-

claim and alleged that it accepted $8,000 from Lawrence,

but that it was understood that the $8,000 would be ap-

plied toward amounts owed by Morse.

Il. PENDENT JURISDICTION

The plaintiff in Aldinger brought an action based on

section 1983 and certain state laws against the county, its

treasurer, and various county officials, alleging that her

discharge without a hearing from her county job deprived

her of constitutional rights. The district court dismissed

the county from the action because it was not a ‘‘person’’

within the meaning of section 1983 and, therefore, no in-

dependent basis of jurisdiction existed over it. The Court of

Appeals affirmed the dismissal; on appeal, the Supreme

Court upheld the Court of Appeals. The Court in Aldinger

squarely addressed the question ‘‘whether the doctrine of

pendent jurisdiction extends to confer jurisdiction over a

party as to whom no independent basis of federal juris-

diction exists.’’ 44 U.S.L.W. at 4989. In holding that juris-

diction does not attach to such a party, the Supreme Court

stated, and this Court quotes at length, that:

The situation with respect to the impleading of

a new party ... strikes us as being both factually

and legally different from the situation facing the

Court in [United Mine Workers v Gibbs, 383 U.S.

715, 726-27 (1966] and its predecessors. From a

purely factual point of view, it is one thing to au-

thorize two parties already present in federal court

by virtue of a case over which the court has juris-

diction, te litigate in addition to their federal claim

Memorandum Opinion

a state law claim over which there is no independent

basis of federal jurisdiction. But it is quite another

thing to permit a plaintiff who has asserted a claim

against one defendant with respect to which there

is federal jurisdiction, to implead an entirely dif-

ferent defendant on the basis of a state law claim

over which there is no independent basis of federal

jurisdiction, simply because his claim against the

first defendant and his claim against the second de-

fendant ‘‘derive from a common nucleus of opera-

tive fact.’’ Ibid. True the same considerations of

judicial economy would be served insofar as plain-

tiff’s claims ‘‘are such that he would ordinarily be

expected to try them all in one judicial proceeding.

. . Ibid. But the addition of a completely new

party would run counter to the well-established

principle that federal courts, as opposed to state trial

courts of general jurisdiction, are courts of limited

jurisdiction marked out by Congress. We think there

is much sense in the observation of Judge Sobeloff,

writing for the Court of Appeals in Kenrose .Afg.

Co., Inc. v Fred Whitaker Co., 512 F.2d 890, 894 (CA

41972):

‘‘The value of efficiency in the disposition of

lawsuits by avoiding multiplicity may be readily

* conceded, but that is not the only consideration a

federal court should take into account in assessing

the presence or absence of jurisdiction. Especially

is this true where, as here, the efficiency plaintiff

seeks so avidly is available without question in

the state courts.’’

There is also a significant legal difference. In Os-

born v Bk. of the United States, 22 U.S. (9 Wheat.)

Memorandum Opinion 7a

738 (1824)] and Gibbs Congress was sielnt on the

extent to which the defendant, already properly in

federal court under a statute, might be called upon

to answer non-federal questions or claims; the way

was thus left open for the Court to fashion its own

rules under the general language of Art. III. But

the extension of Gibbs to this kind of ‘‘pendent

party’’ jurisdiction—bringing in an additional de-

fendant at the behest of the plaintiff—presents

rather different statutory jurisdictional considera-

tions. Petitioner’s contention that she should be

entitled to sue Spokane County as a new third party,

and then to try a wholly state law claim against the

county, all of which would be ‘‘pendent’’ to her fed-

eral claim against respondent county treasurer,

must be decided not in the context of congressional

silence or tacit encouragement, but in quite the op-

posite context. The question here, which was not

necessary to address in Gibbs or Osborn, is whether

by virtue of the statutory grant of subject-matter

jurisdiction, upon which petitioner’s principal claim

against the treasurer rests, Congress has addressed

itself to the party as to whom jurisdiction pendent

to the principal claim is sought. And it undoubtedly

has done so.

But the question whether jurisdiction over the

instnat lawsuit extends not only to a related state

law claim, but to the defendant against whom that

claim is made, turns initially not on the general con-

tours of the language in Art. III, i.e., ‘‘Cases ...

arising under,’’ but upon the deductions which may

be drawn from congressional statutes as to whether |

Congress wanted to grant this sort of jurisdiction to

8a Memorandum Opinion

federal courts. . . . In short, as against a plaintiff’s

claim of additional power over a ‘‘pendent party,”’

the reach of the statute conferring jurisdiction should

be construed in light of the scope of the cause of

action as to which federal judicial power has been

extended by Congress.

Resolution of a claim of pendent party jurisdic-

tion, therefore, calls for careful attention to the

relevant statutory language... .

44 U.S.L.W. at 4992-93 (emphasis in original).

In the case now before the Court, the plaintiffs have

brought claims based only on state law against two defend-

ants, Brighton and Lawrence, and have brought claims

against defendant Morse based on 29 U.S.C. Sec. 185 (count

one), and the Michigan mechanic’s lien law (count four).

Thus, as in Aldinger, no independent basis for federal

jurisdiction exists over two of the defendants, Lawrence

and Brighton. Although plaintiffs argue that their claims

arise from ‘‘a common nucleus of operative fact,’’ this is

not the sole consideration of a district court in assessing

the presence or absence of its jurisdiction. As noted by

Judge Sobeloff, and quoted by the Court in Aldinger, this

is especially true when, as in this matter, all the claims

could have been brought in a state court. The mechanic’s

lien law claims, the MBCFA claims, and the claims con-

tained in the counter and crossclaims of defendant Law-

rence could certainly have been filed in a Michigan court,

as could the action against Morse under section 185, 29

U.8.C., for breach of the collective bargaining contract.

See, e.g., Thomas v Consolidated Coal Co., 380 F.2d 69, 76 &

n. 7 (4th Cir.), cert. denied, 389 U.S. 1004 (1967) (holding

that an action cognizable under section 185 could be brought

in either state or federal court).

Memorandum Opinion 9a

Therefore, as noted by the Court in Aldinger, the ‘‘sig-

nificant legal question’’ that must be considered in this

case is whether or not the statutory grant of subject matter

jurisdiction in section 185 addresses itself to the parties

as to whom pendent jurisdiction is sought, here Brighton

and Lawrence. Or, to put it another way, whether or not

section 185 evidences any congressional intent to allow

federal court’s to take jurisdiction over pendent parties

such as Brighton anr Lawrence. I think this section does

not reach these parties.

In Aldinger, the Court found that, because section 1983

excluded counties from liability, a pendent party could

‘‘argue with a great deal of force that the scope of’’ a civil

action over which a court has jurisdiction based on 28

U.S.C. See. 1334(3), ‘‘should not be so broadly read as

to bring them back within that power merely because the

facts also give rise to an ordinary civil action against them

under state law.’ 44 U.S.L.W. at 4993 (emphasis in orig-

inal). In the case at bar, the same principle applies.

Section 185 provides federal courts with jurisdiction only

over ‘‘[s]luits for violation of contracts' between an em-

ployer and a labor organization . . . or between any such

labor organizations . . .’’ The reach of this statute does

not extend to the various state law claims brought by the

plaintiffs in their complaint or by the defendant Lawrence

in its counter- and crossclaim—it reaches only suits for

breach of a collective bargaining contract. Furthermore,

the statute does not reach the pendent parties in this action,

Lawrence and Brighton—it reaches only labor organizations

and employers with a contractual relationship, or labor or-

ganizations with contractual relationships with each other.

Therefore, because neither Brighton nor Lawrence come

within the ambit of section 185’s jurisdictional grant, this

10a Memorandum Opinion

Court’s pendent jurisdiction should not be so expansively

construed as to drag defendants within this Court’s power

‘‘merely because the facts also give rise to an ordinary civil

action against them under state law.’’ This is true because

the plaintiffs could have brought their entire action before

a Michigan court of general jurisdiction.

It is my recommendation that on the basis of the Su-

preme Court’s decision in Aldinger, this Court cannot

exercise its pendent jurisdiction over the defendants Law-

rence and Brighton and, therefore, they should be dismissed

from the lawsuit. For the same reasons, Lawrence’s counter

and crossclaims should be dismissed. The plaintiffs retain

their cause of action in counts one and four against the

defendant Morse.

There being ‘‘no just reason for delay’’ I would also

grant plaintiffs’ request that a Rule 54(b), FReivP., entry

of judgment be made allowing plaintiffs to appeal, if they

so desire, any decision by Judge Gubow that dismisses

Lawrence and Brighton from this lawsuit.

Finally, it should be noted that a slight procedural error

by the plaintiffs in naming the fringe benefit trust fund

itself, rather than the trustees of that fund, as a plaintiff

warrants comment.

Plaintiffs are a union and the union’s fringe benefit

trust fund. It has been held that suits involving a union

trust fund must be brought by or against the trustees of

that fund, not against the fictional entity. Pignotti v Local

#3 Sheet Metal Workers Int’l Ass’n, 343 F. Supp. 236, 242

(D. Neb. 1972), aff’d, 477 F.2d 825 (8th Cir.), cert. denied,

414 U.S. 1067 (1973) ; Nedd v United Mine Workers of Am.,

400 F.2d 103, 107 (3d Cir. 1967); Warshaw v Local 415,

Int’! Ladies’ Garment Workers’ Union, 325 F.2d 148, 145

(5th Cir. 1963); Dersch v United Mine Workers of Am.

Memorandum Opinion lla

Welfare & Retirement Fund, 309 F. Supp. 395, 396 (S.D.

Ind. 1969) ; Yonce v Miners Memorial Hosp. Ass’n, 161 F.

Supp. 178, 188 (W.D. Vir. 1958) ; 48 Am. Jur. 2d Labor and

Labor Relations Sec. 225 (1970). This procedural faux pas

does not, however, warrant dismissal of plaintiffs’ claim.

See FRCivP 17(a). Plaintiffs, therefore, should be given

fifteen days from entry of any opinion or order by Judge

Gubow that is in conformity with this opinion to amend

its complaint by naming the trustees of the fringe benefit

fund as plaintiffs. Section 185, 29 U.S.C., supports the

jurisdiction of a federal district coutr in actions by the

trustees of union benefit trust funds to recover unpaid

benefits. Calhoun v Bernard, 359 F.2d 400 (9th Cir. 1966) ;

Hann v Harlow, 271 F. Supp. 674, 675 (D.D.C. 1967);

Thomas v Reading Anthracite Co., 264 F. Supp. 339, 340-

42 (D.D.C. 1966).

As to the propriety of the union as a party plaintiff, it

has been held that the ‘‘right of action to recover from

an employer contributions due from him to a union welfare

fund has been held to belong to the trustees and not to the

union.’’ 48 Am. Jur. 2d Labor and Labor Relations Sec. 225

(1970). In this case, however, the collective bargaining

agreement in effect while the project was being completed

provides that an employer failing to make contributions to

the fringe benefit fund is delinquent and

the employees or their representatives shall take

such action as necessary, forthwith, to collect such

delinquent payments....

1974-1976 Agreements art. VI, par. 10, at 17. This language

allows the union, as a representative of the employees, to

etand in the shoes of the employees it represents to collect

fringe benefits via a court action. Therefore, at least for

eee

ON nt A ea a te 5

12a Memorandum Opinion

purposes of count one of the complaint which names Morse,

a party to the collective bargaining contract, the union is

a proper party plaintiff.

It should also be noted here that the collective bargaining

agreement allows

Trustees of the fringe benefit fund [to] require any

Employer who has been frequently delinquent in

making such contributions . . . to comply with the

provisions of paragraphs 9 and 10 of this Article

VI [requiring an employer to pay fringe benefits

that are due each pay period].

1974-1976 Agreements art. VI, par. 12, at 17-18. Thus, the

employees, by virtue of the collective bargaining agree-

ment, have in effect, assigned their right to collect these

benesfits to both the union and the trustees of the fringe

benefit fund. Cf. United States v Carter, 353 U.S. 210,

219-20 (1957).

Memorandum Opinion 13a

CONCLUSION

I recommend that the Court enter an order dismissing

Brighton Mall Apartments and Lawrence Properties, Inc.

as defendants in this case. I recommend further that the

counter- and crossclaims of defendant Lawrence be dis-

missed as well. The dismissal should specify that the order

is entered because the Court lacks jurisdiction over these

parties as to the subject matter of the causes of action

asserted.

I recommend further that the order of dismissal contain

language which specifically grants plaintiffs’ request that

a Rule 54(b), FRCivP, entry of judgment be made to

allow an immediate appeal.

I recommend further that plaintiff be given 15 days from

entry of such an order to amend its complaint by naming

the trustees of the Fringe Benefit Fund as plaintiffs.

The parties are given 10 days from the date of filing of

this report to file objections and exceptions with the Dis-

trict Judge. A failure to file objections or exceptions shall

not be deemed a waiver of any position previously asserted,

but on the contrary it is presumed that the parties persist

in the positions previously taken. Thereafter, it is expected

that the District Judge will rule upon the motions after

such review of the papers, including this Memorandum

Opinion, as he may deem appropriate.

Respectfully submitted,

/s/ PAUL J. KOMIVES

United States Magistrate

Dated : September 27, 1976

l4a Order

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

CARPENTERS DISTRICT COUNCIL OF

DETROIT, WAYNE, OAKLAND AND

MACOMB COUNTIES AND VICINITY;

UNITED BROTHERHOOD OF

CARPENTERS AND JOINERS OF

AMERICA, AFL-CIO; and DETROIT

CARPENTERS FRINGE BENEFIT FUNDS,

Plaintiffs,

v. Civil Action

GEORGE E. MORSE, individually No. 75-70007

and d/b/a RESIDENTIAL FRAMERS

COMPANY; BRIGHTON MALL

APARTMENTS, and LAWRENCE

PROPERTIES, INC.,

Defendants.

ORDER

At a session of said court held at Detroit, Michigan, this

18th day of October, 1976. PRESENT: Hon. Lawrence

Gubow U. S. District Judge

This case came on for hearing before the U. S. Magis-

trate, Paul J. Komives, at the stipulation of the parties;

the Magistrate heard the arguments and entered a written

opinion and recommendation, including a provision that

allowed the parties to enter objections to the opinion and

recommendation; and the plaintiffs in this case did enter

objections to the opinion. The court has reviewed the file

in this matter, especially the briefs of the parties, the

opinion and recommendation of the Magistrate, and the

Order 15a

objection to the Magistrate’s opinion, and enters the fol-

lowing order based on the opinion issued by the Magistrate:

IT IS ORDERED that the motions for summary judg-

ment brought by defendants, Brighton Mall Apartments and

Lawrence Properties, Inc., be,*and the same hereby are,

GRANTED, the court lacking subject matter jurisdiction

over these defendauts ;

IT IS FURTHER ORDERED that plaintiffs’ motion to

dismiss and/or strike certain parts of defendant Lawrence

Properties, Inc.’s pleadings in this action need not be de-

cided as it is now moot;

IT IS FURTHER ORDERED that the counter- and

crossclaims of defendant Lawrence Properties, Inc. be, and

hereby are, DISMISSED, the court lacking subject matter

jurisdiction over those claims ;

IT IS FURTHER ORDERED that plaintiffs, if they so

choose, may consider this order an appealable order within

the meaning of Rule 54(b), Fed. R, Civ. P.; ¥

IT IS FURTHER ORDERED that the plaintiffs be

given fifteen days from entry of this order, or, if plaintiffs

appeal this matter pursuant to Rule 54(b), from the entry

of an order by the United States Court of Appeals for the

Sixth Circuit remanding this case back to this court, to

amend its complaint by naming the trustees of the fringe

benefit trust fund as plaintiffs’;

IT IS FURTHER ORDERED that plaintiffs’ request

that the Notice of Lis Pendens, which will expire on Jan-

uary 8, 1978, be extended for another three year period

pursuant to M.C.L.A. § 600.2715 and 600.2735, be, and

hereby is, DENIED as premature. Plaintiffs may renew

their request when the time for expiration of the Notice

draws closer.

léa Order

Plaintiffs’ actions against defendant George E. Morse

in Counts one and two of the complaint remain.

/s/ LAWRENCE GUBOW

U.S. District Judge

(Title of Court and Cause)

ORDER FOR RULE 54(b) CERTIFICATE

At a session of said Court held in the Federal Building,

Detroit, Michigan, on the 20th day of October, 1976. PRES-

ENT: HONORABLE LAWRENCE GUBOW, United

States District Judge

In accordance with the Court’s Order of October 18, 1976.

IT IS ORDERED that, with respect to such Order, the

following Federal Rule of Civil Procedure 54(b) Cer-

tificate be, and it is hereby, issued :

RULE 54(b) CERTIFICATE

With respect to the issues determined by the Order of

October 18, 1976, it is hereby CERTIFIED in accordance

with Federal Rule of Civil Procedure 54(b) that:

1. The Court now directs entry of final judgment on all

matters disposed of in said Order of October 18, 1976; and

2. The Court determines that there is no just reason

for delay.

IT IS FURTHER ORDERED that the sixty (60) day

period within which a notice of appeal may be filed, thereby

initiating an appeal of said final judgment, shall commence

on this date.

/s/ LAWRENCE GUBOW

United States District Judge

Dated : October 20, 1976

Order 17a

No. 77-1071

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

CARPENTERS DISTRICT CUUNCIL OF

DETROIT, WAYNE, OAKLAND AND

MACOMB COUNTIES AND VICINITY,

UNITED BROTHERHOOD OF

CARPENTERS AND JOINERS OF

AMERICA, AFL-CIO, a voluntary

unincorporated labor association, and

DETROIT CARPENTERS FRINGE

BENEFIT FUNDS, a voluntary

unincorporated trust fund,

Plaintiffs-Appellants, ORDER

v.

GEORGE E. MORSE, Individually

and d/b/a RESIDENTIAL FRAMERS

COMPANY, BRIGHTON MALL

APARTMENTS, a Michigan Limited

partnership, and LAWRENCE

PROPERTIES, INC., a corporation

incorporated under the laws of

the State of Michigan,

Defendants-Appellees.

Decided and Filed June 13, 1979

BEFORE: CELEBREZZE, ENGEL, KEITH, Circuit

Judges.

Plaintiffs-appellants brought this action against a sub-

contractor, who subsequently petitioned for bankruptcy,

and against defendants-appellees, the general contractor

and the owner of the land upon which the construction

occurred. The only jurisdiction alleged as to appellees was

18a Order

based upon pendent state law claims inasmuch as appel-

lants had not contracted with appellees and there was no

independent federal jurisdiction over appellees. The dis-

trict court declined to exercise pendent jurisdiction over

appellees and ordered the appellees dismissed from the

case.

The court has considered the briefs and oral arguments

of counsel and has studied the record and is fully advised

in the premises. The court is of the opinion that the dis-

trict court had no power to exercise jurisdiction over ap-

pellees. Pendent jurisdiction cannot be used, except in

possible limited circumstances not present here, to obtain

jurisdiction over a party not otherwise subject to federal

court jurisdiction. Aldinger v Howard, 427 U.S. 1 (1976).

Nor can Federal Rule of Civil Procedure 64 provide an

independent basis for jurisdiction.

Therefore, it is hereby ordered that the judgment of

the district court be, and it hereby is, affirmed.

ENTERED BY ORDER OF

~~ THE COURT

/s/ JOHN P. HEHMAN,

Clerk

(Title of Court and Cause)

ORDER

Before: CELEBREZZE, ENGEL and KEITH, Circuit

Judges.

Appellants have petitioned the court for rehearing, with

a suggestion of rehearing en banc. No judge in active

service having voted in favor of rehearing en banc, the

petition has been referred to the hearing panel.

Order 19a

In order to remove any potential conflict between the

decision in this cause and the decision in Bricklayers Fringe

Benefit Funds v North Perry Baptist Church, 590 F.2d 207

(6th Cir. 1979), it is hereby ordered that the order in this

cause be amended by deleting the following sentence: ‘‘ The

court is of the opinion that the district court had no power

to exercise jurisdiction over appellees. ’’

In all other regards, the petition for rehearing is with-

out merit and is hereby denied.

It is so ordered.

ENTERED BY ORDER OF

THE COURT

/s/ JOHN P. HEHMAN

Clerk

Filed July 23, 1979