Respondents Brief — United Mine Workers, Local No. 1854 v. National Labor Relations Board

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Office Supreme Court, U.S.

ihe. FIBED

Nos. 80-289 and 80-692

Iu the Supreme Cowt of the | rent L. STEVAS,

OCTOBER TERM, 1980 © CLERK

UNITED MINE WoRKERS OF AMERICA, LOCAL No. 1854

AND UNITED MINE WORKERS OF AMERICA,

PETITIONERS

Vv.

NATIONAL LABOR RELATIONS BOARD AND

AMAX COAL COMPANY, A DIVISION OF AMAX, INC.

NATIONAL LABOR RELATIONS BOARD, PETITIONER

: v.

AMAX COAL COMPANY,

A DIVISION OF AMAX, INC., ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF FOR THE NATIONAL LABOR

RELATIONS BOARD

WADE H. McCCREE, JR.

Solicitor General

ANDREW J. LEVANDER

Assistant to the Solicitor General

WILLIAM A. LUBBERS Department of Justice

General Counsel Washington, D.C. 20530

JouN E. Hiccins, JR. (202) 633-2217

Deputy General Counsel

‘ ROBERT E. ALLEN

, Acting Associate General Counsel

2 Norton J. COME

: Deputy Associate General Counsel

| LINDA SHER

Assistant General Counsel

RICHARD B. BADER

Attorney

National Labor Relations Board

QUESTION PRESENTED

Whether the management-appointed trustee of a

jointly administered multiemployer trust fund estab-

lished under Section 302(c) (5) of the Labor-Manage-

ment Relations Act of 1947, 19 U.S.C. 186(c) (5), isa

collective bargaining representative within the mean-

ing of Section 8(b) (1) (B) of the National Labor Re-

lations Act, 29 U.S.C. 158(b) (1) (B).

(1)

TABLE OF CONTENTS

NUNS TIN lati gd a ect Senin dacsndereinlccnaaioassemmcehbies

EE IR LE CRAIN RIL NER OC rs tO

I Nee

Statement:

A. The federal regulation of pension and other

| EERE LELAREER Sit Oe” CIN tat RTD Mae. es ea

Be ITD issscecpeccttnacccstcbachtisemnishiebanmieditied

SARL AITO OPA He

Argument:

The management-appointed trustee of a jointly ad-

ministered multiemployer trust fund established

under Section 302(c) (5) of the Labor-Manage-

ment Relations Act of 1947 is not a collective

bargaining representative within the meaning of

Section 8(b) (1) (B) of the National Labor Rela-

I RD aii cites asa a a aD

A. A management-appointed trustee of a pension

or welfare fund owes his sole and exclusive

duty of loyalty to the fund beneficiaries ..........

se oe

, | Na Gna RT ee tts Ey cd Seen ee

8. ERISA and the Multiemployer Pension

Plan Amendments Act of 1980 ....................

B. Trustees of a Section 802(c) (5) employee

trust fund are not collective bargaining rep-

resentatives within the meaning of Section

8(b) (1) (B) of the NLRA .......0000000000000..

a a

Ss &

TABLE OF AUTHORITIES

Cases: Page

Alabama Power Co. v. Davis, 481 U.S. 581 .......... 19

Allied Chemical & Alkali Workers v. Pittsburgh

Plate Glass Co., 404 U.S. 157 ..............-..2. 16, 19, 38, 39

American Broadcasting Companies v. Writers

Guild of America, West, Inc., 487 U.S. 411....16, 35, 43

Andrus Vv. Glover Construction Co., 446 U.S. 608.. 82

Arroyo V. United States, 359 U.S. 419 .................... 26

Associated Contractors of Essex County, Inc. V.

Laborers International Union, 559 F.2d 222...... 12

Berenyi V. Immigration Director, 885 U.S. 630.... 17

Blankenship v. Boyle, 829 F. Supp. 1089, aff’d

In UB. re HOT" ciccakihpetidiricscvocedsncuieasivatinna 28, 24, 26, 28

Blassie v. Kroger Co., 345 F.2d 58 ....................--.. 27

Bond and Mortgage Guarantee Co., In re, 808

Fs eo ee RN RI II bina cid its rdcacibnacebuibapuiaces 22-23

Busic Vv. United States, 446 U.S. 898 ....................-. 82

Carbon Fuel Co. v. United Mine Workers, 444

TS. SRN i i i catusionicnodalind 88

Curren V. Freitag, 482 F. Supp. 668 ..................... 80-31

Cutaiar Vv. Marshall, 690 F.2d 628 .......................... 28, 32

Denver Metropolitan Ass’n of Plumbing Contrac-

tors v. Journeyman Plumbers Local No. 8, 586

og AR SR IES CLA TER 5a mae 18, 24, 26-27, 31

Florida Power & Light Co. v. IBEW, Local 641,

I sd iene 16, 35

Ford Motor Co. v. NLRB, 441 U.S. 488 .................. 19, 41

Gooding v. United States, 416 U.S. 480 .................. 238

Hubbell, In re, 8302 N.Y. 246, 97 N.E.2d 888 .......... 22

Isbrandtsen Co. Vv. Johnson, 848 U.S. 779 ..........-... 238

Jacobs Transfer, Inc., 227 N.L.R.B. 1281 .............. 42

Keystone Steel & Wire Division v. NLRB, 606

PEs 5 Se ACSA BIO ETRE ED OR eoghe ONETS 20, 38

L & M Carpet Contractors, Inc., 218 N.L.R. B. 802.. 42

Lamb v. Carey, 498 F.2d 789 ...............-2.---20-00-00- 24, 36, 38

Lipic v. Wheeler, 8362 Mo. 499, 242 S.W.2d 438........ 22

Local 80, Sheet Metal Workers International

Ass’n (Turner-Brooks, Inc.), 161 N.L.R.B. 229.. 42

Local 169, Teamsters v. Teamsters Health & Wel-

fare Fund, 827 F. Supp. 260 ....................-.2.-.-...- 27

Cases—Continued Page

Malone v. White Motor Corp., 485 U.S. 497 .......... 19

Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 5465.... 22

Miniard Vv. Lewis, 887 F.2d 864 ................--.------- 16, 28, 39

Morgan Vv. Laborers Pension Trust Fund, 448 F.

TN I i ssa valihealonbeteiogh 31

Morissette v. United States, 342 U.S. 246 ......: Baile 24

Mosser V. Darrow, 841 U.S. 267 ....2....2............eceee00e 22

Nachman Corp. v. Pension Benefit Guaranty

I NID i ne sas 4

NLRB vy. Allis-Chalmers Mfg. Co., 888 U.S. 175... 34

NLRB vy. American National Insurance Co., 348

SEY MII nen slisdaaintcalbcekin sh asccek’ cenit cuca dehclnsone esos 17

NLRB v. Construction & General Laborers’ Union

Local 1140, 577 F.2d 16 cert. denied, 489 U.S.

IIIS Se casisk ack ss Lada sidbstelbleticlaceanecee bogeniabeaahsesosbistaeh ia 80, 31, 39

NLRB vy. Insurance Agents’ International Union,

AL GREECE REESE Seana On GOMER Na O mM AT haar 17, 88, 41

NLRB vy. Local 964, United Brotherhood of Car-

penters and Joiners, 447 F.2d 648 ...................... 20

Nedd v. United Mine Workers, 556 F.2d 190 .......... 37

Owen V. City of Independence, 445 U.S. 622 ....... f 23

Perrin v. United States, 444 U.S. 87 ............00........ 24

Rehmar v. Smith, 655 F.2d 1862 ......................-..-.. 16, 89

Seatrain Shipbuilding Corp. V. Shell Oil Co., 444

RN ee aL allcsshsabboesnlolthgienrealiaus 34

Sheet Metal Workers’ International Association,

234 N.L.R.B. 1238, petition for review pending

sub nom. Central Florida Sheetmetal Contrac-

tors Ass’n V. NLRB, No. 79-2396 (5th Cir.) ......9, 10, 20

Simpson V. United States, 485 U.S. 6 ...........0202.00---. 82

Toensing V. Brown, 528 F.2d 69 .................. 16, 24, 36, 39

United Brotherhood of Carpenters, Local 1913

(Fixtures Unlimited), 218 N.L.R.B. 368, rev’d

in pertinent part and enforced as modified on

other grounds, 581 F.2d 424 ......00000. ee. 42

United Marine Division, ILA Vv. Essex Transpor-

Ne Mi Ek. ER RCE Ra cata geal eae ea 28

United Slate, Tile & Composition Roofers, Local

No. 220 (Jones and Jones, Inc.), 177 N.L.R.B.

Cases—Continued Page

United States v. Carter, 358 U.S. 210 .................... 86

United States v. Ryan, 350 U.S. 299 ............. 16, 26, 38-39

Walsh v. Schlect, 429 U.S. 401 ............2.....-.---222------ 26

Woods vy. City National Bank & Trust Co., 312

EERE G SE ee TREE TE OD HP = EP I a 22

Statutes :

Employee Retirement Income Security Act of

1974, Pub. L. No. 98-406, 88 Stat. 829, 29 U.S.C.

Balle RR RAPALA Cit OR SID OO A ARO I 2,4, 20

Section 8(1) and (2), 29 U.S.C. 1002(1)

RGR, Ragin SSSR NET EASE Ls A RR 29

Section 3(7), 29 U.S.C. 1002(7) .................. 29

Section 8(8), 29 U.S.C. 1002(8) .................. 29

Section 401, 29 U.S.C. 1101 et seq. .............. 4,14

Section 408 (a), 29 U.S.C. 1108 (a) .................. 4,31

Section 408(c) (1), 29 U.S.C. 1108(c) (1)....4, 14-15,

Section 404(a), 29 U.S.C. 1104(a) .................. 81

Section 404(a) (1), 29 U.S.C. 1104(a) (1)....4, 14, 29

Section 405(a), 29 U.S.C. 1105(a) .............. 80

Section 405 (a) (3), 29 U.S.C. 1105 (a) (8)...... 42

Section 405 (b) (1) (A), 29 U.S.C. 1105 (b) (1)

18 LEDER EINER, CSET CET ACN PRE CTE 42

ORION Gs Te es CRO. sidicecicicerccestcctcicsonee. 81

Section 406 (a) (1) (E), 29 U.S.C. 1106 (a) (1)

| ARRRREE RTS CARR EOI Caen BURT al Sar IPE AE ARI 4-5, 30

Section 406(b) (2), 29 U.S.C. 1106(b) (2)...... 4, 30

Section 407, 29 U.S.C. 1107 ......................... 4-5, 14, 29

Section 408, 29 U.S.C. 1108 .....22..2.........22--22000 80

Section 408(c) (3), 29 U.S.C. 1108 (c) (8)...... 80, 31

Section 4041, 29 U.S.C. 1841 et seg. ............ 88

Labor-Management Relations Act of 1947, 29

pT EB a A072 RSI LOE LOE cE RO 2

Section 802, 29 U.S.C. 186 .ou.......2...0...... ee eeeeeee 2

Section 302(c) (5), 29 U.S.C. 186(c) (5) ........ passim

Section 802(c) (5) (A), 29 U.S.C. 186(c) (5)

EAD slave dichpsakshbtbinaictcnhe inca etd iae tr Asal ies 2,3, 18

Section 802(c) (5) (B), 29 U.S.C. 186(c) (5)

CEIED: . whcdhdidenenenbuvsiehiadsinceenatinintaintisiocinnhinkdwmmiisiainied 3,7, 14, 28

VII

Statutes—Continued Page

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

RS ASEM Ira pie arate PUY Sa VR 3

Section 302(c) (7), 29 U.S.C. 186(c) (7), as

amended by Pub. L. No. 91-86, 83 Stat. 133.. 40

Labor Management Reporting and Disclosure Act

of 1959, Section 501, 29 U.S.C. 501 .................... 28

Multiemployer Pension Plan Amendments Act of

1980, Pub. L. No. 96-364, 94 Stat. 1208:

Section 83(a) (8), 94 Stat. 1209 ........000000000.. 5,18

Section 3(a) (4) (A), 94 Stat. 1209 ............ 5, 18, 41

Section 8(c) (2) and (8), 94 Stat. 1209-1210.. 82, 41

Section 104, 94 Stat. 1217 .............................. 5

National Labor Relations Act, 29 U.S.C. 151 et

fo Hh A SAUER AL ERD 5 CEU EY E01 wy MAUR ETT ORM 2

on BS ORS oR |) REE ERP Le 42

Section 8(a) (5), 29 U.S.C. 158(a) (5) 00.0... 89, 42

Section 8(b)(1)(B), 29 U.S.C. 158(b) (1)

(GES REIT ARLE EE LER OA OO Ce OO SS OR passim

Section 8(b) (3), 29 U.S.C. 158(b) (3) ..8, 10, 12, 42

Section 8(b) (4) (A), 29 U.S.C. 158(b) (4)

Of ORES OOS URES SAE ee boca an 6

Section 8(d), 29 U.S.C. 158(d) -...000000... 19, 38, 42

Section 8(e), 29 U.S.C. 158(e) ......00. 11

Miscellaneous :

ABA Labor Relations Law (1977) ...........ccccccccc0ee 41

G. Bogert, Trusts and Trustees (rev. 2d ed.

DERE SITS CASTER AI OER DE Lek TET RIE 21, 22, 37

98 Cong. Rec. (1947):

RACES EES SO Re mae Be DENT PER PFC ASSO 25

TE seiibanddtiiech pista aii dasebinbinbdsboton ccupdccsdaodeccesmnedebibila 86

RO aE SU SENS TON RL SE Opes LA Ne 86

UN ei 24

ERAS ET OS LORY DEEN cree pe RENEE 28

RET GRR RICE ECS SPST OSs Wr IN A RL SR 26, 28

IP ree RE EES SRD RN Ne PIL OME PE 25

126 Cong. Rec. :

H7902 (daily ed. Aug. 26, 1980) 0000000000000... 15, 34

$10104 (daily ed. July 29, 1980) .................... 15, 88

VIII

Miscellaneous—Continued Page

Department of Labor, Pension and Welfare Benefit

Programs: Study of Multi-Employer Plans

fe ARE SR SAR LS PRONE SE EOCARON! TOSS NF RO Oi 18

H.R. 8020, 80th Cong., lst Sess. (1947) ................ 40

H.R. Conf. Rep. 510, 80th Cong., 1st Sess. (1947) .. 25

H.R. Conf. Rep. 98-1280, 98d Cong., 2d Sess.

hc | ARB TO Wee tact /eieme eer ASE DORA BTUBODS = Oe 9 20S are 29, 31

H.R. Rep. No. 245, 80th Cong., lst Sess. (1947)... 25,

35-36, 40

H.R. Rep. No. 1870, 90th Cong., 2d Sess. (1968) .... 40

H.R. Rep. No. 91-286, 91st Cong., 1st Sess. (1969) .. 40

H.R. Rep. No. 98-533, 98d Cong., 1st Sess. (1973) .. 31, 32

H.R. Rep. No. 98-779, 98d Cong., 2d Sess. (1974)... 82

H.R. Rep. No. 98-807, 98d Cong., 2d Sess. (1974)... 18

H.R. Rep. No. 98-1280, 98d Cong., 2d Sess. (1974).. 15, 32

H.R. Rep. No. 96-869 (Parts 1 & 2), 96th Cong., 2d

I A 5, 18, 33

NLRB, Legislative History of the Labor Manage-

ment Relations Act of 1947, Vols. I & II (1948).. 24, 25,

26, 27, 36, 40

Restatement (Second) of Trusts (1959) ................ 21

Scott, The Fiduciary Principle, 37 Calif. L. Rev.

BE IY sein aldcad si iairaticniclgnisicrchisiceromiinaaieranadaliainl 21

II Scott on Trusts (8d ed. 1967) ..................2...---00- 21, 37

S. Rep. No. 105 (Parts 1 & 2), 80th Cong., 1st

UE, NED ‘ici sthienciokscediddookestibinktiphatie-elocn 25, 26, 35, 36, 40

S. Rep. No. 93-127, 98d Cong., 1st Sess. (1973).... 31, 32

S. Rep. No. 93-388, 98d Cong., Ist Sess. (1973).... 31, 32

Subcomm. on Labor of the Senate Comm. on Labor

and Public Welfare, 94th Cong., 2d Sess., Leg-

islative History of the Employee Retirement In-

come Security Act of 1974, Vols. II & III

CERI, Ne SE ens acchicnsiacciiasiiphicadinbuiditenans 81, 32

Iu the Supreme Court of the United States

OCTOBER TERM, 1980

No. 80-289

UNITED MINE WORKERS OF AMERICA, LOCAL No. 1854

AND UNITED MINE WORKERS OF AMERICA,

PETITIONERS

Vv.

NATIONAL LABOR RELATIONS BOARD AND

AMAX COAL COMPANY, A DIVISION OF AMAX, INC.

No. 80-692

NATIONAL LABOR RELATIONS BOARD, PETITIONER

Vv.

AMAX COAL COMPANY,

A DIVISION OF AMAX, INC., ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF FOR THE NATIONAL LABOR

RELATIONS BOARD

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-

32a)’ is reported at 614 F.2d 872. The decision and

order of the National Labor Relations Board (Pet.

App. 43a-227a) are reported at 238 N.L.R.B. 1583.

JURISDICTION

The judgment of the court of appeals (Pet. App.

33a-40a) was entered on April 3, 1980. A petition for

rehearing was denied on May 29, 1980 (Pet. App.

1“Pet. App.” refers to the appendix to the petition in No.

80-692.

(1)

41a-42a). The petition for a writ of certiorari in

No. 80-289 was filed on August 26, 1980. On Sep-

tember 18, 1980, Justice Brennan extended the time

within which a petition for a writ of certiorari.could

be filed until October 26, 1980 (a Sunday), and the

petition in No. 80-692 was filed on October 27, 1980.

Both petitions were granted on January 19, 1981

(A. 298-299). The jurisdiction of this Court is in-

voked under 28 U.S.C. 1254(1).

STATUTES INVOLVED

The relevant provisions of the National Labor Re-

lations Act, 29 U.S.C. 151 et seq.; the Labor-Manage-

ment Relations Act of 1947, 29 U.S.C. 141 et seq.;

and the Employee Retirement Income Security Act

of 1974, 29 U.S.C. 1001 et seq., are set forth at Pet.

App. 228a-255a.

STATEMENT

A. The Federal tach Re Of Pension And Other Wel-

fare Funds

1. In 1947, Congress first began to regulate pen-

sion and other welfare funds. Although Section 302

of the Labor-Management Relations Act of 1947

(“LMRA”), 29 U.S.C. 186, generally prohibits em-

ployer payments to any representative of his employ-

ees, Section 302(c) (5), 29 U.S.C. 186(c) (5), permits

employer contributions to a welfare trust fund pro-

vided that the fund satisfies various requirements.

For example, qualifying welfare funds must be in

the form of a trust. See 29 U.S.C. 186(c) (5) (A).

The fund can provide only certain types of benefits

2 The grant in No. 80-289 was limited to Question 1, which

is the same question presented by the petition in No. 80-692.

for employees and their families and dependents,® and

the basis for such payments must be specified in a

written, detailed agreement with the employer. See

29 U.S.C. 186(c)(5)(A) and (B). The fund must

also be audited annually, and the results of the audit

must be made available to all interested persons.

29 U.S.C. 186(c)(5)(B). Furthermore, pension or

annuity funds are to be kept in a trust separate from

other welfare funds. 29 U.S.C. 186(c) (5) (C).

In addition to these requirements, Section 302

(c)(5)(B) directs that “employees and employers

[be] equally represented in the administration of

such_fund,.together with such neutral persons as the

representatives of the employers and the representa-

tives of employees may agree upon * * *.” 29 U.S.C.

186(c) (5)(B). Thus, the employees and the employ-

ers are required to select an equal number of trustees

for such funds, and may jointly agree upon any num-

ber of other persons as trustees. If the trustees of

the fund deadlock, Section 302(c)(5)(B) further

provides that the trustees may select a neutral arbiter

or “in event of their failure to agree within a rea-

sonable length of time, an impartial umpire to de-

cide such dispute shall, on petition of either group,

be appointed by the district court of the United States

for the district where the trust fund has its principal

office * * *.” 29 U.S.C. 186(c) (5) (B).

2. In 1974, Congress enacted a more comprehen-

sive scheme of pension and welfare fund regulation.

* The trust funds are limited to paying “for medical or

hospital care, pensions on retirement or death of employees,

compensation for injuries or illness resulting from occupa-

tional activity or insurance to provide any of the foregoing,

or unemployment benefits or life insurance, disability and

sickness insurance, or accident insurance.” 29 U.S.C. 186

->.

The Employee Retirement Income Security Act of

1974 (“ERISA”), Pub. L. No. 93-406, 88 Stat. 829,

codified at 29 U.S.C. 1001 et seq., sets forth detailed

requirements concerning the creation, administration,

and termination of pension and welfare funds. See

generally Nachman Corp. v. Pension Benefit Guaranty

Corp., 446 U.S. 359 (1980). In particular, Part 4

of Title I of ERISA (29 U.S.C. 1101 et seg.) im-

poses various duties and restrictions on the trustees

of such pension funds, and limits or prohibits certain

types of transactions.

Thus, Section 403(a) of ERISA requires that “all

assets of an employee benefit plan shall be held in

trust by one or more trustees * * * and upon accept-

ance of being named or appointed, the trustee or

trustees shall have exclusive authority and discre-

tion to manage and control the assets of the plan

** *” 29 U.S.C. 1108(a). Section 403(c)(1) fur-

ther provides that, with certain limited exceptions,

“the assets of a plan shall never inure to the benefit

of any employer and shall be held for the exclusive

purposes of providing benefits to participants in the

plan and their beneficiaries and defraying reasonable

expenses of administering the plan.” 29 U.S.C.

1103 (¢) (1).

Moreover, Section 404(a) (1) establishes a prudent

man standard of care for all trust fiduciaries, and

requires that “a fiduciary shall discharge his duties

with respect to a plan solely in the interest of the

participants and beneficiaries.” 29 U.S.C. 1104(a) (1).

Section 406(b) (2) prohibits a trustee from “act[ing]

in any transaction involving the plan on behalf of a

party (or represent[ing] a party) whose interests

are adverse to the interests of the plan or the inter-

ests of its participants or beneficiaries.” 29 U.S.C.

1106(b) (2). And Sections 406(a)(1)(E) and 407

limit the amount and kinds of employer property and

securities that a trust may acquire. See 29 U.S.C.

1106(a)(1)(E) and 1107.

3. Recognizing that “the continued well-being and

security of millions of employees, retirees, and their

dependents are directly affected by multiemployer pen-

sion plans” (Section 3(a)(3) of the Multiemployer

Pension Plan Amendments Act of 1980 (“1980 Act’’),

Pub. L. No. 96-364, 94 Stat. 1209), Congress amended

ERISA in 1980 specifically to address the special

problems of multiemployer trust funds. Because

“withdrawals of contributing employers from a multi-

employer pension plan frequently result in substan-

tially increased funding obligations for employers

who continue to contribute to the plan, adversely

affecting the plan, its participants and _benefici-

aries, and labor-management relations” (Section

3(a)(4)(A) of the 1980 Act, 94 Stat. 1209), Con-

gress established a comprehensive statutory scheme

regarding the withdrawal from and termination of

multiemployer pension plans. In particular, Congress

determined to eliminate an employer’s financial in-

centive to withdraw from a multiemployer plan by

requiring a withdrawing employer to continue fund-

ing a proportional share of the plan’s unfunded bene-

fit obligations. See Section 104 of the 1980 Act, 94

Stat. 1217; H.R. Rep. No. 96-869, 96th Cong., 2d

Sess., Part I, at 51-55, 65-70, 73-90 and Part II, at

4-7, 10-11, 14-31, 42 (1980).

B. Proceedings Below

1. Amax Coal Company, a division of Amax, Inc.,

is in the business of mining coal, primarily in deep

shaft bituminous mines located in the midwestern

United States. It bargains with the United Mine

Workers of America (“the Union”) for its mid-

western mines as a member of the Bituminous Coal

Operators Association (“BCOA’’), a nationwide mul-

tiemployer group. In 1972, Amax opened the Belle

Ayr Mine in Wyoming, its first sub-bituminous sur-

face mine. Although that mine, like most western

surface mines, did not become a member of BCOA,

Amax and the Union agreed to a contract regarding

the Belle Ayr Mine, which was patterned after the

BCOA national contract. Pursuant to this contract,

Amax contributed specified amounts to the Union’s

national pension and welfare trust funds (Pet. App.

3a, 76a-79a; A. 25, 38-34, 42-438, 49, 75).

In January 1975, after the western surface mine

contracts, including the Belle Ayr Mine contract, had

expired,* the Union struck the Belle Ayr Mine and

other employers. Amax resisted the Union’s attempts

to compel establishment of a multiemployer bargain-

ing group,’ and, in February 1975, the Union, after

learning that the Board’s Regional Director was pre-

paring to issue a complaint, began separate negotia-

tions with Amax regarding the Belle Ayr Mine.

These negotiations were unproductive, however, and

by mid-March 1975, the parties had reached an im-

passe on several points. During the week of March

17, 1975, Amax resumed operations at the Belle Ayr

Mine under the terms of its last contract offer. Al-

* These contracts, like the BCOA national contract, were

originally scheduled to expire on November 12, 1974, but

they had been extended for two months (Pet. App. 3a-4a,

46a-48a, 80a-84a; A. 99).

5 The Board found that, insofar as the strike was designed

to compel Amax to bargain through a multiemployer group,

the Union had violated Sections 8(b) (1) (B) and 8(b) (4) (A)

of the National Labor Relations Act, 29 U.S.C. 158(b) (1) (B)

and 158(b) (4) (A). See Pet. App. 45a-56a. The court of

appeals affirmed this finding (Pet. App. 7a-12a), which is not

before this Court.

though sporadic negotiations occurred during the next

year, no agreement was ever reached (Pet. App. 3a-

7a, 46a-5la, 80a-125a; A. 38-42, 49-54, 58-63, 224-

226).

In particular, Amax would not agree to continue

making its pension and welfare contributions to the

Union’s existing national trust funds. These funds

provide comprehensive health and retirement benefits

to coal miners and their families. In accordance with

Section 302(c)(5)(B) of the LMRA, three trustees

administer the funds: one trustee selected by man-

agement, one trustee selected by the Union, and one

trustee jointly selected by the other trustees. See 29

U.S.C. 186(c) (5) (B); page 3, supra. At the time

of the Belle Ayr negotiations, the three trustees of

the national funds had been chosen and were admin-

istering the funds. Amax had participated in the

prior selection of the management-appointed trustee

through its membership in the BCOA. It claimed the

sole right to appoint its own trustee, however, with

regard to any trust fund covering the employees of

the Belle Ayr mine, which was not part of the BCOA

bargaining unit (Pet. App. 57a, 185a-137a & n.48;

A. 34-35, 37-39, 47, 49-50, 52-54, 272-273).

The collective bargaining agreement sets the level

of employer contributions to the particular trust fund.

The trust documents, in turn, establish the amount

and eligibility requirements for each category of bene-

fit, and the amount of employer contributions to be

allocated to each class of beneficiary. Within this

framework, the trustees exercise significant discre-

tion regarding the assets of the trust and adminis-

tration of the fund, including the determination of

eligibility for benefits, the approval of insurance car-

riers, and the investigation of insurance claims. In

addition, the trustees have the authority to decide

whether an employer has failed to make a required

contribution and, where appropriate, to pursue legal

remedies against the employer on behalf of the bene-

ficiaries. The trustees also have the power to reduce

or suspend the payment of benefits if there is a short-

fall in fund assets, and may propose amendments to

the trust instruments for the consideration of the em-

ployers and the Union (Pet. App. 57a-58a, 135a-137a;

A. 97-98x, 241-269, 274-277).

2. The Board unanimously concluded that the

Union did not violate Sections 8(b)(1)(B) and

8(b)(3) of the National Labor Relations Act

(“NLRA”’”’), 29 U.S.C. 158(b) (1) (B) and 158(b) (3),

by bargaining to impasse and striking in support of

its proposal that Amax continue to contribute to the

Union’s existing national pension and welfare trust

funds with regard to the Belle Ayr employees. The

Board observed that proposals concerning employer

contributions to employee benefits funds are unques-

tionably mandatory subjects of bargaining (Pet. App.

58a). The Board rejected Amax’s claim that, not-

withstanding the otherwise mandatory nature of the

Union’s trust fund proposal, the Union’s insistence on

an existing trust fund was unlawful, because it co-

erced Amax in its selection of a collective-bargaining

representative by forcing it to accept the previously

selected management-appointed trustee of the Union’s

existing multiemployer trust fund. Affirming in rele-

vant part the decision of the administrative law

judge, the Board held that “the trust funds’ manage-

ment trustee is not a collective-bargaining representa-

tive within the meaning of Section 8(b)(1)(B) of

the Act” (Pet. App. 57a).

The Board explained that the trustees of a jointly

administered, multiemployer trust fund are not col-

lective-bargaining representatives because such trus-

tees “are solely fiduciaries, owing undivided loyalty

to the beneficiaries of such a plan” (Pet. App. 58a).

This distinction had been. fully explicated in the

Board’s prior decision in Sheet Metal Workers’ In-

ternational Association, 234 N.L.R.B. 1288 (1978),

petition for review pending sub nom. Central Florida

Sheet Metal Contractors Ass’n v. NLRB, No. 79-2396

(5th Cir.) (cited with approval at Pet. App. 58a-

59a): ;

[W]e conclude that the * * * trustees are not

collective-bargaining representatives within the

meaning of Section 8(b) (1) (B) of the [NLRA].

In arriving at this conclusion, we note first that,

by insulating an employer from union interfer-

ence in the selection process, Section 8(b) (1) (B)

ensures that an employer may bargain through

a freely chosen representative that is completely

faithful to his interests. Indeed, an individual

or entity that possesses duly delegated authority

to act as a bargaining agent must, in conformity

with the most basic principles of agency law, fol-

low the instructions and act in the sole interest

of his appointing party. * * * [H]owever, the

trustees of a joint trust fund * * * are required

to act solely in the interests of the beneficiaries

of the trust fund. The fiduciary obligations im-

posed on the trustees are of overriding im-

portance, and, although they should, of course,

carefully consider all recommendations submitted

by the parties who have appointed them, the

trustees are bound to exercise their independent

judgment when making decisions with respect

to the administration of the trust fund. We

therefore conclude, in agreement with the weight

of judicial precedent on this issue, that there is

nothing in either the statute or its underlying

legislative history to support the contention that

Congress intended that trust funds established

pursuant to Section 302(c)(5) [of the LMRA]

are to deviate from the established principle of

trust law that a trustee must always act in a

manner that operates solely to the advantage of

the beneficiaries.

234 N.L.R.B. at 1248 (footnote omitted).°

Since the trustees of a fund established under Sec-

tion 302(c)(5) of the LMRA are not collective-

bargaining representatives, the Union’s demand that

Amax contribute to the existing trust funds did not

restrain or coerce Amax‘in violation of Section

8(b)(1)(B) of the NLRA, even though the manage-

ment trustee of the fund had previously been selected.

And, since the Union’s proposal otherwise concerned

a mandatory subject of bargaining (see Sheet Metal

Workers’, supra, 234 N.L.R.B. at 1243-1245), the

Union’s bargaining to impasse and striking over the

welfare and pension fund issue did not run afoul of

its obligation to bargain under Section 8(b) (3).

Accordingly, the Board dismissed this portion of the

complaint (Pet. App. 59a).

The Board further concluded that the Union did

not violate Section 8(b) (3) of the NLRA by bargain-

ing in bad faith, after the commencement of the

separate Belle Ayr negotiations in February 1975

(Pet. App. 44a n.3, 208a-218a). The administrative

law judge, affirmed by the Board, found that “[t]he

record does not establish that the UMWA [bargained ]

* * * with a closed mind or from a fixed inflexible

®The Secretary of Labor filed an amicus curiae brief in

both this case and in Sheet Metal Workers’ expressing the

view that “the fiduciary obligations imposed by ERISA are

diametrically opposed to the obligations of a collective-

bargaining representative” (234 N.L.R.B. at 1246). The

Secretary also concurs in this brief, which reflects the joint

views of the Board and the Secretary.

position or was rigidly unwilling to consider seriously

any possible alternatives to [its proposals]” (id. at

205a). The ALJ noted that “[t]he fact that the

UMWA violated the Act by insisting to impasse

that Amax agree to contract provisions containing

nonmandatory and illegal bargaining subjects, and

further violated the Act by striking Amax for an

object of securing a contract which included illegal

provisions, does not support an inference that the

UMWA was engaged in overall bad-faith bargaining”

(id. at 209a).’ He therefore concluded (id. at 213a;

emphasis in original & footnote omitted) :

Based on the foregoing, and the entire record,

I find that the UMWA’s bargaining stance and

conduct, considered in its totality, does not estab-

lish a case of overall bad-faith bargaining. Ac-

cordingly, I shall recommend that this portion

of the complaint be dismissed.

3. On appeal, a two-judge panel of the court of

appeals reversed in part.* The court agreed with the

Board that the Union had not bargained in bad faith

T As noted above (note 5, supra), the Board found that the

Union violated the NLRA by attempting to coerce Amax

into joining a new multiemployer bargaining group being

formed by several other western surface mines, and it fur-

ther found, inter alia, that the Union violated the NLRA

by failing to notify properly the Federal Mediation and

Conciliation Service of its dispute with Amax before striking,

and by insisting to impasse upon several contract clause

proposals that would have violated Section 8(e) of the NLRA,

29 U.S.C. 158(e) (Pet. App. 127a-128a, 176a-199a). The

court of appeals affirmed these findings (Pet. App. 7a-12a,

24a-30a), and they are not before this Court.

8 Although Judge Gibbons heard oral argument in this case

in the court of appeals, he did not participate in the decision.

See Pet. App. la n.*.

(Pet. App. 30a). But it rejected the Board’s determi-

nation regarding the status of management-appointed

trustees of a joint trust fund and held that such

trustees are collective-bargaining representatives cov-

ered by Section 8(b)(1)(B) of the NLRA. Relying

on its prior decision in Associated Contractors of Es-

sex County, Inc. v. Laborers International Union, 559

F.2d 222, 227-228 (8d Cir. 1977), the court stated

(Pet. App. 18a):

Naturally, the trustees of such a trust fund func-

tion as fiduciaries for the funds’ beneficiaries but

they also serve as representatives of the parties

who appoint them. Insofar as it is consistent

with their fiduciary obligations, employer trus-

tees are expected to advance the interests of the

employer while employee trustees are expected

to further the concerns of the union in the on-

going collective bargaining process between them.

The court of appeals accordingly concluded that the

Union had coerced Amax in its selection of a collec-

tive-bargaining representative and had unlawfully re-

fused to bargain insofar as the Union had insisted on

its proposal that Amax continue to contribute to the

Union’s existing national trust funds whose trustees

had previously been selected (id. at 14a). Because,

in the court’s view, the Union’s behavior thus vio-

lated Sections 8(b)(1)(B) and 8(b)(8) of the

NLRA, the court ordered the Union to cease and

desist from “insisting to the point of impasse that

Amax * * * participate in the [Union’s] multi-

employer pension and welfare funds” (Pet. App.

36a).

SUMMARY OF ARGUMENT

This case concerns the proper characterization of a

management or union appointed trustee of a jointly-

administered, multiemployer trust fund established

pursuant to Section 302(c) (5) of the Labor-Manage-

ment Relations Act of 1947 (“LMRA’’), 29 U.S.C.

186(c) (5). Rejecting the concurrent views of the

National Labor Relations Board and the Secretary

of Labor, the court of appeals has held that such

trustees represent the party that appoints them (2.e.,

the employer or the union), as well as the benefi-

ciaries of the trust fund, and that therefore a man-

agement-appointed trustee is a management collec-

tive-bargaining representative within the scope of

Section 8(b)(1)(B) of the National Labor Relations

Act (“NLRA’’), 29 U.S.C. 158(b) (1) (B). As a re-

sult, a union cannot bargain to impasse and strike

about employer contributions to existing multiem-

ployer trust funds, even though the use and con-

tinuity of such trust funds is often critical to the

portability and stability of employee health and pen-

sion benefits. In other words, under the court of

appeals’ ruling, an employer need not discuss or bar-

gain about an important term or condition of em-

ployment, but rather may unilaterally insist upon

contributing to a single-employer trust fund. Noth-

ing in the language or history of the federal labor

laws supports this illogical result.

The court of appeals’ unprecedented ruling rests on

the erroneous premise that, following his appoint-

ment, a trustee of a jointly-administered trust fund

continues to represent the appointing party. Under

well settled common law principles, however, a trustee

owes an exclusive duty of loyalty to the beneficiaries

of the trust and may not act to further the interests

of other parties. The court of appeals nonetheless

concluded that Section 302(c) (5) (B) of the LMRA,

which provides that “employees and employers [be]

equally represented in the administration of such

fund[s]” (29 U.S.C. 186(c)(5)(B)), abrogates

this common law standard. But although Section

302(c) (5) (B) thus requires an equal balance between

the number of trustees appointed by the employers

and those appointed by the union, it does not indi-

cate that a trustee once appointed represents the

party that appointed him. To the contrary, the lan-

guage of Section 302(c)(5) as a ‘whole and its legis-

lative history show that Congress intended these

funds to be created as formal trusts and to be ad-

ministered strictly on behalf of the trust beneficiaries.

In short, Section 302(c) (5) incorporates rather than

abrogates the applicable common law fiduciary stand-

ards.

Part 4 of Title I of the Employee Retirement In-

come Security Act of 1974 (“ERISA”), 29 U.S.C.

1101 et seq., resolves any possible doubt on this point.

Thus, Section 404(a)(1) of ERISA requires that a

trustee “discharge his duties * * * solely in the inter-

est of the [trust] participants and beneficiaries and

* * * for the exclusive purpose of * * * providing

benefits to participants and their beneficiaries * * *.”

29 U.S.C. 1104(a) (1) (emphasis supplied). In addi-

tion, Section 406(b) (2) provides that a trustee may

not “act in any transaction involving the plan on

behalf of a party (or represent a party) whose in-

terests are adverse to the interests of the plan or the

interests of its participants or beneficiaries.” 29

U.S.C. 1106(b) (2). And Section 403(c)(1) spe-

cifically declares that except upon termination of a

fund or unless necessary to correct an overpayment

by an employer to the fund, “the assets of a plan

shall never inure to the benefit of any employer and

shall be held for the exclusive purposes of providing

benefits to participants in the plan and their bene-

ficiaries and defraying reasonable expenses of ad-

ministering the plan.” 29 U.S.C. 1103(c) (1).

The conclusion of the court of appeals that a

management-appointed trustee owes his loyalty both

to the trust beneficiaries and to management is thus

wholly at odds with the plain meaning of ERISA. As

the House Conference Report explains, ERISA im-

poses “rules and remedies similar to those under

traditional trust law to govern the conduct of fiduci-

aries” (H.R. Conf. Rep. No. 93-1280, 93d Cong., 2d

Sess. 295 (1974)), and is designed to “prevent[] a

fiduciary from being put in a position where he has

dual loyalties, and, therefore, he cannot act exclu-

sively for the benefit of a plan’s participants and

beneficiaries” (id. at 309). Moreover, in amending

ERISA in 1980, Congress reaffirmed that trustees

must act solely on behalf of the trust beneficiaries

and participants, and it expressly condemned the de-

cision of the court of appeals in this case. 126 Cong.

Rec. S10104 (daily ed. July 29, 1980) (colloquy be-

tween Sens. Randolph and Williams) ; 126 Cong. Rec.

H7902 (daily ed. Aug. 26, 1980) (remarks of Rep.

Thompson). See H.R. Rep. No. 96-869 (Part I), 96th

Cong., 2d Sess. 67 (1980).

We further submit that, even if a manage-

ment-appointed trustee could be thought to owe

a residual duty to represent the employer that ap-

pointed him, the court of appeals erroneously charac-

terized such trustees as collective bargaining repre-

sentatives within the meaning of Section 8(b) (1) (B).

“Both the language and the legislative history of

§ 8(b) (1) (B) reflect a clearly focused congressional

concern with the protection of employers in the selec-

tion of representatives to engage in two particular

and explicitly stated activities, namely collective bar-

gaining and the adjustment of grievances.” Florida

Power & Light Co. v. IBEW, Local 641, 417 U.S.

790, 803 (1974). Thus, Congress enacted Section

8(b)(1)(B) merely to ensure the undivided loyalty

of an employer’s freely chosen representatives while

engaged in collective bargaining and grievance ad-

justment. See 417 U.S. at 803-805; American Broad-

casting Companies v. Writers Guild of America, West,

Ine., 487 U.S. 411, 422-423, 429-481, 435-486 (1978).

In contrast, a trustee is primarily, if not exclu-

sively, loyal to the beneficiaries of the trust. Indeed,

a trustee must represent the beneficiaries of the trust

against management if the employer fails to make

required contributions. Furthermore, a trustee neither

engages in collective bargaining nor adjusts griev-

ances under the collective bargaining agreement.

Rather, he administers a trust fund, which is a sepa-

rate document from the collective bargaining agree-

ment, and he manages the fund assets and resolves

disputes between the trust fund and its beneficiaries,

who may or may not be employees. In short, a trustee

is simply not a collective bargaining representative.

Accord, Allied Chemical & Alkali Workers v. Pitts-

burgh Plate Glass Co., 404 U.S. 157, 170 (1971);

United States v. Ryan, 350 U.S. 299, 305 (1956);

Rehmar v. Smith, 555 F.2d 1862, 1870 (9th Cir.

1976) ; Toensing v. Brown, 528 F.2d 69, 72 (9th Cir.

1975) ; Miniard vy. Lewis, 387 F.2d 864, 865 n.5 (D.C.

Cir. 1967).

ARGUMENT

THE MANAGEMENT-APPOINTED TRUSTEE OF A

JOINTLY ADMINISTERED MULTIEMPLOYER

TRUST FUND ESTABLISHED UNDER SECTION

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

TIONS ACT OF 1947 IS NOT A COLLECTIVE

BARGAINING REPRESENTATIVE WITHIN THE

MEANING OF SECTION 8(b)(1)(B) OF THE NA-

TIONAL LABOR RELATIONS ACT

At issue in this case is whether a union may bar-

gain to impasse and strike with regard to its pro-

posal that an employer contribute to an existing

multiemployer pension or welfare fund.* Such multi-

employer funds often provide a more secure and

effective means of administering the employees’ fringe

® Amax erroneously suggests (Br. in Opp. 7-10) that the

court of appeals held that the Union bargained in bad faith

about the multiemployer pension and welfare fund issue. To

the contrary, the court of appeals expressly affirmed the

Board’s finding that, after the commencement of separate

negotiations in February 1975, the Union bargained in good

faith. See Pet. App. 30a, 44a n.3, 208a-218a. This Court

should not review these concurrent factual determinations.

See, e.g., Berenyi v. Immigration Director, 385 U.S. 630, 635

(1967); NLRB v. American National Insurance Co., 348

U.S. 395, 409-410 (1952).

Amax also incorrectly contends (Br. in Opp. 10) that this

case involves the Union’s right to “force” an employer to

participate in a multiemployer fund. Even if, as we submit,

a Union may bargain to impasse with regard to the multi-

employer pension fund issue, an employer can, of course,

bargain for a single-employer pian and refuse to accede to

the Union’s proposals—rights that Amax effectively exercised

in this case. See also NLRB v. Insurance Agents’ Interna-

tional Union, 361 U.S. 477, 495 (1960) (“the use of economic

pressure by the parties to a labor dispute * * * is part and

parcel of the process of collective bargaining”).

benefits than do single-employer funds.” In addition

to the “obvious advantages * * * of economies of scale

in administrative costs and investments” (Denver

Metropolitan Ass’n of Plumbing Contractors v. Jour-

neyman Plumbers Local No. 3, 586 F.2d 1367, 1875

(10th Cir. 1978)), multiemployer funds “have an

added element of financial strength in that their con-

tributions come from a number of employers who as

a group are less likely than comparable single em-

ployers to experience business difficulties.” H.R. Rep.

No. 93-807, 98d Cong., 2d Sess. 25 (1974). Further-

more, particularly in industries sich as construction

or entertainment, where employees typically do not

work continuously for one employer, a multiemployer

fund will often be the only means of ensuring that

an employee can continuously accumulate retirement

credits and enjoy continuity of benefits. See, e.g.,

Denver Metropolitan Ass’n of Plumbing Contractors

v. Journeyman Plumbers Local No. 3, supra, 586 F.2d

at 1371, 1375; H.R. Rep. No. 96-869 (Part I), 96th

Cong., 2d Sess. 538 (1980). In sum, as Congress ex-

pressly recognized in the preamble to the Multiem-

ployer Pension Plan Amendments Act of 1980, Pub.

L. No. 96-364, Section 3(a) (3) and (4) (A), 94 Stat.

1209, “the continued well-being and security of mil-

lions of employees, retirees, and their dependents are

directly affected by multiemployer pension plans” and

10 Multiemployer pension plans cover more than 8.8 mil-

lion employees and pensioners, and total more than $22.7

billion in assets. See Department of Labor, Pension and Wel-

fare Benefit Programs: Study of Multi-Employer Plans 1-2,

I-10, IV-5 (1979) (based on 1975 figures). The number and

size of multiemployer funds is growing. See id. at I-15 (pre-

dicting more than 16 million covered employees by 2000) ;

H.R. Rep. No. 96-869 (Part 1), 96th Cong., 2d Sess. 51-57

(1980).

employer participation in and “withdrawal[] * * *

from a multiemployer pension plan * * * affect[s]

the plan, its participants and beneficiaries, and labor-

management relations.” ™

The court of appeals nonetheless concluded that the

Union in this case could not lawfully bargain to im-

passe and strike with regard to its important multi-

employer pension fund proposal. The court reasoned

that Section 8(b)(1)(B) of the National Labor Re-

lations Act (“NLRA”), 29 U.S.C. 158(b) (1) (B),

which provides that a union may not coerce an em-

ployer in its choice of collective bargaining repre-

sentative, bars a union from bargaining to impasse

about employer contributions to an existing multi-

employer fund that is administered by previously

appointed trustees. In the court of appeals’ view, a

management-appointed trustee of a fund established

in accordance with Section 302(c) (5) of the Labor-

Management Relations Act of 1947 (“LMRA”), 29

U.S.C. 186(c) (5), is a collective bargaining repre-

11 Because the issue whether an employer contributes to a

multiemployer plan directly affects the reliability and avail-

ability of employee fringe benefits, a union proposal regard-

ing contributions to a multiemployer plan concerns “wages,

hours, and other terms and conditions of employment,” and

is thus subject to a mandatory bargaining obligation under

Section 8(d) of the National Labor Relations Act, 29 U.S.C.

158(d). See, e.g., Ford Motor Co. v. NLRB, 441 U.S. 488,

498, 500-501, 503 n.15 (1979) ; Malone v. White Motor Corp.,

435 U.S. 497, 504 (1978) ; Alabama Power Co. v. Davis, 431

U.S. 581, 592-593 (1977) ; Allied Chemical & Alkali Workers

v. Pittsburgh Plate Glass Co., 404 U.S. 157, 180-181 (1971).

Neither the court of appeals nor Amax has suggested that the

Union’s proposal in this case does not fall within the scope of

Section 8(d). Rather, as discussed infra, the contention

made is that Section 8(b)(1)(B) of the NLRA constitutes

an independent bar to the Union’s proposal regarding Amax’s

continued contributions to existing multiemployer funds.

sentative for purposes of Section 8(b)(1)(B). Ac-

cordingly, the court of appeals held that the Union’s

proposal that Amax continue contributing to the

miners’ existing multiemployer funds unlawfully cir-

cumscribed Amax’s unfettered discretion to choose its

collective bargaining representative (7.e., the man-

agement-appointed trustee), in violation of Section

8(b) (1) (B).”

As we now demonstrate, the court of appeals’

analysis is egregiously flawed in two respects. First,

following his appointment, a trustee ceases to repre-

sent the interests of the party that appointed him.

Both the common law, which was incorporated and

not abrogated by the LMRA, and the Employee Re-

tirement Income Security Act of 1974 (“ERISA”),

29 U.S.C. 1001 et seqg., require that a trustee admin-

ister a trust fund solely on behalf of the trust bene-

12 Where, as here, the union proposes that an employer

contribute to an existing multiemployer fund that is admin-

istered by previously appointed trustees, the union is obvi-

ously unable to negotiate with the employer about the struc-

ture of the plan or the selection of its trustees. In such cir-

cumstances, the Board has determined that, since the accept-

ance of the named trustees is an inseparable part of the

proposal to participate in the fund at all, the entire pro-

posal, including the request to accept the previously desig-

nated trustees, is a mandatory subject of bargaining. Sheet

Metal Workers’, supra, 234 N.L.R.B. at 1244; United Slate,

Tile & Composition Roofers, Local No. 220 (Jones and

Jones, Inc.), 177 N.L.R.B. 632, 651 (1969). In other con-

texts, however, where the proposal would not affect the bene-

fits provided to employees, a union proposal designed to influ-

ence the employer’s selection of a management-appointed

trustee would not be a mandatory bargaining subject. See

NLRB v. Local 964, United Brotherhood of Carpenters and

Joiners, 447 F.2d 648, 646 (2d Cir. 1971). See also Keystone

Steel & Wire Division v. NLRB, 606 F.2d 171, 178-179 (7th

Cir. 1979).

ficiaries. Thus, a trustee may not represent or other-

wise act on behalf of an employer at all. See Point

A, infra. Moreover, even if a management-appointed

trustee could in some sense represent an employer, the

court of appeals erroneously concluded that a trustee

is a collective bargaining representative within the

narrow scope of Section 8(b)(1)(B). As we show in

Point B, infra, a trustee does not negotiate collective

bargaining agreements or supervise day-to-day em-

ployer-employee relations, but rather administers the

relationship between trust beneficiaries, who may

or may not be employees, and the fund.

A. A Management-Appointed Trustee Of A Pension Or

Welfare Fund Owes His Sole And Exclusive Duty

Of Loyalty To The Fund Beneficiaries

1. The Common Law. The court below held that

the trustee of a trust fund established pursuant to

Section 302(c) (5) of the LMRA represents both the

party that appointed him and the beneficiaries of the

fund. Under common law principles, however, a

trustee has an unwavering duty to “display through-

oi: the administration of the trust complete loyalty

to the interests of the beneficiary, and [to] exclude

all selfish interests and all consideration of the inter-

ests of third persons.” G. Bogert, Trusts and Trustees

§ 543 (rev. 2d ed. 1978). See Restatement (Second)

of Trusts §170(1) (1959); II Scott on Trusts § 170

(3d ed. 1967); Scott, The Fiduciary Principle, 37

Calif. L. Rev. 539 (1949). Thus, regardless of the

actual injury to the trust beneficiaries, it is well set-

tled that a trustee may not administer a trust for

the financial benefit of himself, of the trust settlor

(2.e., the employer and the union), or of any other

third person. See G. Bogert, supra, at §543. Re-

statement (Second) of Trusts §170, comment q

(1959) (“The trustee is under a duty to the bene-

ficiary in administering the trust not to be guided

by the interest of any third person”); In re Bond

and Mortgage Guarantee Co., 303 N.Y. 423, 108

N.E.2d 721 (1952); In re Hubbell, 302 N.Y. 246, 97

N.E.2d 888 (1951); Lipie v. Wheeler, 362 Mo. 499,

242 S.W.2d 43 (1951). Moreover, in order to in-

sulate the trustee from all temptation and to deter

any injury to the beneficiaries, the rule against dual

loyalties has been enforced with “[u]ncompromising

rigidity.” Meinhard v. Salmon, 249 N.Y. 458, 464,

164 N.E. 545, 546 (1928) (Cardozo, J.). See, e.g.,

G. Bogert, supra, at § 543.

The court of appeals’ view (Pet. App. 13a; see

Amax Br. in Opp. 15) that fund trustees may none-

theless advance the interest of the party that ap-

pointed them “[i]nsofar as it is consistent with their

fiduciary obligations” to the trust beneficiaries is

thus wholly at odds with the basic thrust of fiduciary

law. As this Court explained in Woods v. City Na-

tional Bank and Trust Co., 312 U.S. 262, 268 (1941),

any potential conflict of interest may serve “‘to dilute

the undivided loyalty” of the trustee in a manner

that “can seldom be measured with any degree of

certainty.” Accordingly, a fiduciary may not be heard

to contend “that, although he had conflicting inter-

ests, he served his several masters equally well or

that his primary loyalty was net weakened by the

pull of his secondary one.” Jd. at 269. See also,

e.g., Mosser v. Darrow, 341 U.S. 267, 271 (1951) ;

In re Bond and Mortgage Guarantee Co., supra, 303

183Jn Woods, the Court concluded that the trustees who

breached their duty of exclusive loyalty were not entitled to

compensation for the services rendered to the bankrupt

estate regardless of whether any unfairness had resulted.

312 U.S. at 268.

N.Y. at 480-431, 108 N.E.2d at 725; Cutaiar v.

Marshall, 590 F.2d 528 (8d Cir. 1979) ; Blankenship

v. Boyle, 329 F. Supp. 1089, 1094 (D.D.C. 1971),

aff’d mem., 511 F.2d 447 (D.C. Cir. 1975).

We submit that Amax’s statutory contentions re-

garding the proper role of pension and welfare fund

trustees must be measured against this common law

background. In light of the well established rule

against dual loyalties, the court of appeals should

not have concluded that the LMRA fundamentally

alters the common law of fiduciary loyalty unless

Congress has unequivocally evidenced its intent to do

so. See, e.g., Owen v. City of Independence, 445 U.S.

622, 637 (1980); Gooding v. United States, 416 U.S.

430, 457-458 (1974) ; Isbrandtsen Co. v. Johnson, 343

U.S. 779, 783 (1952). However, as we now demon-

strate, Congress has expressly determined that all

welfare and pension trusts, including those covered

by Section 302(c) (5) of the LMRA, shall be admin-

istered in accordance with strict fiduciary principles.

In short, Congress has adopted rather than abrogated

the common law prohibition against dual loyalties.

2. The LMRA. The court of appeals’ decision

rests on Section 302(c) (5)(B) of the LMRA, which

provides that “employees and employers [be] equally

represented in the administration of such [pension

and welfare] fund[s].” 29 U.S.C. 186(c) (5) (B).

Although that statute requires an equal balance be-

tween the trustees appointed by the employers and

those designated by the union, nothing in the lan-

guage of Section 302(c)(5) indicates that Congress

intended that a trustee should in any degree admin-

ister a trust fund on behalf of the party that ap-

pointed him. To the contrary, Section 302(c) (5) as

a whole is “designed not to alter, but to reinforce

‘the most fundamental duty ewed by the trustee’: the

duty of undivided loyalty to the beneficiaries.” Blank-

enship v. Boyle, supra, 329 F. Supp. at 1095. See

Denver Metropolitan Ass’n of Plumbing Contrac-

tors v. Journeyman Plumbers Local No. 8, su-

pra, 586 F.2d at 1878-1875. For example, Con-

gress directed that such funds be established as

a written, formal trust, and that the assets of the

fund be “held in trus*” “for the sole and exclusive

benefit of the employees * * * and their families and

dependents.” 29 U.S.C. 186(c)(5) (emphasis sup-

plied)..* At the same time, the LMRA does not

explicitly empower an employer to direct or supervise

a trustee’s decisions or to remove a management-

appointed trustee who does not satisfactorily repre-

sent the employer’s interests. See Toensing v. Brown,

528 F.2d 69, 72 (9th Cir. 1975) ; Lamb v. Carey, 498

F.2d 789, 798-794 (D.C. Cir. 1974).

The legislative history of the LMRA confirms that

“the sole purpose” of Section 302(c) (5) is to ensure

that employee pension and “welfare funds * * * are

legitimate trust funds, used actually for the specified

benefits to the employees.” 93 Cong. Rec. 4678 (1947)

(remarks of Sen. Ball), reprinted in II NLRB, Leg-

islative History of the Labor Management Relations

Act, 1947, at 13805 (1948) (hereinafter “Leg. Hist.

LMRA’”’). As Senator Ball, the sponsor of Section

14 “TW]here Congress borrows terms of art in which are

accumulated the legal tradition and meaning of centuries

of practice, it presumably knows and adopts the cluster of

ideas that were attached to each borrowed word in the body

of learning from which it was taken and the meaning its

use will convey to the judicial mind unless otherwise in-

structed.” Morissette v. United States, 342 U.S. 246, 2638

(1952). Accordingly, the terms “trust” and “sole and exclu-

sive benefit” should be given their ordinary, common law

meaning and significance. See also, e.g., Perrin v. United

States, 444 U.S. 87, 42 (1979).

302(c) (5), explained, “all we seek to do by the

amendment [Section 302(c)(5)] is to make sure

that the employees whose labor builds this fund and

who are really entitled to benefits under it shall

receive the benefits; that it is a trust fund, and that,

if necessary, they can go into court and obtain the

benefits to which they are entitled.” 938 Cong. Rec.

4753 (1947), reprinted in II Leg. Hist. LMRA

1332." See also H.R. Rep. No. 245, 80th Cong., 1st

Sess. 29, 78-79 (1947); H.R. Conf. Rep. No. 510,

80th Cong., lst Sess. 66-67 (1947); 93 Cong. Rec.

3565 (1947) (remarks of Rep. Case); II Leg. Hist.

LMRA 1804, 1810-1312, 1321-1322.

The congressional debates further indicate that

Congress purposefully directed that employee pension

and welfare plans be cast in the traditional trust form

precisely because the strict common law fiduciary re-

quirements governing the administration of trusts

would best protect the employee beneficiaries. Thus, an

opponent of the bill suggested that Section 302 (c) (5)

was unnecessary because, even without that provi-

sion, the “‘officials who administer [the funds] thereby

become trustees, subject to all of the common law and

State safeguards against misuse of funds by trustees.”

II Leg. Hist. LMRA 1318 (remarks of Sen. Morse).

Senator Taft, the primary author of the LMRA, re-

sponded that many existing funds were not currently

15 Section 302(c) (5) was a Senate-sponsored amendment

to the 1947 bill that was patterned after a similar section in

the Case bill (the 1946 version of the LMRA), which had

passed Congress but was vetoed by the President. See II

Leg. Hist. LMRA 1805, 1310 (remarks of Sens. Byrd,

Pepper, and Taft); S. Rep. No. 105 (Part 1), 80th Cong.,

Ist Sess. 52 (1947). A similar proposal was originally

defeated in the House, but was agreed to in conference. See

II Leg. Hist. LMRA 1749-757, 782.

”%>

established as trusts and that the requirement in

Section 302(c) (5) that each fund be a specific and

enforceable trust would ensure that the future opera-

tions of all such funds would be subject to supervi-

sion by a “court of chancery.” II Leg. Hist. LMRA

1322. See ibid. (remarks of Sen. Ball). In sum,

Section 302(c)(5) was designed “to prevent the

abuse of welfare funds” by “requir[ing] that the

fund shall be established in definite, detailed form,

in the form of a trust fund, with respect to which

the employees can determine their rights and can

insist upon them.” 98 Cong. Rec. 4747 (1947) (re-

marks of Sen. Taft), reprinted in II Leg. Hist.

LMRA 13812. See also S. Rep. No. 105 (Part 1),

80th Cong., 1st Sess. 52 (1947) (Section 302(c) (5)

“requires * * * such funds * * * be, in fact, trust

funds for the employees’) ; I Leg. Hist. LMRA 758,

873; II Leg. Hist. LMRA 1498, 1524.

The legislative history also reflects congressional

concern about the breach of fiduciary duties by union

trustees, including the appropriation of trust assets

for a union “war chest.” II Leg. Hist. LMRA 1312

(remarks of Sen. Taft). See Walsh v. Schlecht, 429

U.S. 401, 410-411 (1977); Arroyo v. United States,

359 U.S. 419, 425-426 (1959) ; United States v. Ryan,

850 U.S. 299, 304-307 (1956) ; Blankenship v. Boyle,

supra, 329 F. Supp. at 1094-1095. Contemplating that

independent employer-appointed trustees would consti-

tute an additional check against union misuse of

employee funds, Congress required that there be an’

equal balance between the trustees appointed by the

union and those appointed by the employers. No-

where, however, did Congress express the view either

that each participating employer had the right to

select a trustee or that management-appointed trus-

tees should further the interests of the appointing

employers. See Denver Metropolitan Ass’n of Plumb-

ing Contractors v. Journeyman Plumbers Local No. 8,

supra, 586 F.2d at 1373-1375; Blassie v. Kroger Co.,

345 F.2d 58, 72-73 (8th Cir. 1965) ; Local 169, Team-

sters v. Teamsters Health and Welfare Fund, 327

F’. Supp. 260, 264 (E.D. Pa. 1971)."*

Moreover, since the sole purpose of Section 302

whose toil creates these welfare funds” (II Leg. Hist.

LMRA 1524 (remarks of Sen. Ball)), it is incon-

ceivable that Congress silently sought to impose a

dual loyalty standard on the fund trustees, thereby

diluting the common law protections theretofore en-

joyed by trust beneficiaries. Likewise, the court of

appeals’ construction of Section 302(c) (5) would un-

16 Tn fact, the only even arguable indication that Congress

may have considered that Section 302(c) (5) was meant to

protect any interest of the employers is an isolated statement

by Senator Wiley made after the amendment constituting

Section 302(c) (5) had passed the Senate. Senator Wiley

stated that he understood Section 802(c)(5) to “giv[e]

employers their rightful voice in the administration of union

welfare funds and [to] limit[] the uses for which the money

may be spent.” II Leg. Hist. LMRA 1471. But Senator

Wiley had previously observed that he had “refrairied thus

far from expressing my views on the measure, largely be-

cause I am not a member of the Senate Labor and Public

Welfare Committee and did not have the opportunity to ex-

amine in the closest detail all of the provisions of the bill”

and that his remarks were only “some general thoughts in

summary on the nature of this legislation.” II Leg. Hist.

LMRA 1469. Given the repeated statements of Senators Ball

and Taft, the sponsors of Section 802(c) (5), that the sole

purpose of Section 302(c) (5) was to protect the interests of

the employee-beneficiaries (see, e.g., II Leg. Hist. LMRA

1805, 1810-1312, 1321, 1822, 1498, 1524), Senator Wiley’s

off-hand comment is entitled to no weight.

7»

’>%

dermine Congress’ evident intent to eradicate union

manipulation and abuse of welfare funds and “to

isolate such welfare funds from labor-management

polities.” Blankenship v. Boyle, swpra, 329 F. Supp.

at 1094. See 93 Cong. Rec. 4746-4747 (1947) (re-

marks of Sen. Taft). The court of appeals would re-

quire a union-appointed trustee to advance the in-

terests of the union against the employer and would

thus return the administration of such funds to the

arena of labor-management conflict.”

For these reasons, even prior to the enactment of

ERISA in 1974, the lower courts had uniformly con-

cluded that the trustees of funds established pursuant

to Section 302(c)(5) owe their exclusive duty of

loyalty to the fund beneficiaries and “do not act as

representatives of either the employers or the union.”

Miniard v. Lewis, 387 F.2d 864, 865 n.5 (D.C. Cir.

1967). See United Marine Division, ILA v. Essex

Transportation Co., 216 F.2d 410, 412 (3d Cir. 1954)

(trustees are not “representatives of either union or

employers”); Blankenship v. Boyle, supra, 329 F.

Supp. at 1095 (Section 302(c) (5) is “designed * * *

17 Amax erroneously argues (Br. in Opp. 14) that Section

501 of the Labor-Management Reporting and Disclosure Act

of 1959, 29 U.S.C. 501, supports its contention that a trustee

of a welfare fund may simultaneously represent the interests

of the employer or union. Section 501 provides only that a

union official occupies a position of trust with regard to the

union and its members. There is obviously no potential con-

flict of interest for a union official to act as both a collective

bargaining representative and fiduciary for the same union.

This case, however, does not concern whether a trustee of

the fund may represent the fund beneficiaries. Rather, here

the issue is whether the trustee of the fund, who unquestion-

ably owes a fiduciary duty to the fund beneficiaries, may at

the same time represent the potentially adverse interests of

the employer.

to reinforce * * * the duty of undivided loyalty to

the beneficiaries”). As the discussion below demon-

strates, the enactment of ERISA explicitly confirms

these principles.

3. ERISA and the Multiemployer Pension Plan

Amendments Act of 1980. In 1974, Congress codified

the strict common law fiduciary standards as applied

to the trustees of all pension and welfare funds, in-

cluding Section 302(c)(5) trusts. See 29 U.S.C.

1002(1) and (2); H.R. Conf. Rep. No. 98-1280, 93d

Cong., 2d Sess. 296, 307 (1974). Part 4 of Title I

of ERISA, which is not adverted to at all in the court

of appeals’ opinion,’* unambiguously provides that

every trustee must act solely on behalf of the trust

beneficiaries and may not represent the interests of

any other party, including an employer. Thus, Sec-

tion 404(a) (1) of ERISA requires a trustee to “dis-

charge his duties * * * solely in the interest of the

participants and beneficiaries and * * * for the

exclusive purpose of * * * providing benefits to par-

ticipants and their beneficiaries * * *.” 29 U.S.C.

1104(a) (1) (emphasis supplied).’* Furthermore, Sec-

tion 406(b) (2) declares that a trustee may not “act

in any transaction involving the plan on behalf of a

party (or represent a party) whose interests are

18 The Board’s brief and petition for rehearing, as well as

the amicus curiae submission of the Secretary of Labor in

support of the petitions for rehearing in the court below, ex-

tensively discussed the ERISA issue.

1® ERISA defines “participant” as “any employee or former

employee * * * who is or may become eligible to receive a

benefit of any type from an employee benefit plan * * *, or

whose beneficiaries may be eligible to receive any such bene-

fit.” 29 U.S.C. 1002(7). A “beneficiary” is defined as “a

person designated by a participant, or by the terms of an

employee benefit plan, who is or may become entitled to a

benefit thereunder.” 29 U.S.C. 1002(8).

adverse to the interests of the plan or the interests of

its participants or beneficiaries.” 29 U.S.C. 1106

(b) (2). And Section 405(a) imposes an affirmative

duty on each trustee to prevent every other trustee

of the same fund from breaching their fiduciary

duties, including their duty to act solely on behalf

of the trust beneficiaries. See 29 U.S.C. 1105(a).

In addition, the fiduciary provisions of ERISA are

specifically designed to insulate the administration

of the trust from the employer’s interests. Except in

limited circumstances involving excess contributions

and fund termination, “the assets of a plan shall

never inure to the benefit of any employer and shall

be held for the exclusive purposes of providing bene-

fits to participants in the plan and their beneficiaries

and defraying reasonable expenses of administering

the plan.” Section 403(c) (1), 29 U.S.C. 1103(¢) (1).

Similarly, Section 406(a)(1)(E) generally prohibits

any transaction between the plan and a “party in

interest,” including an employer, and Section 407

strictly limits the amount and kinds of employer

property and securities that the trustee may acauire

on behalf of the trust. See 29 U.S.C. 1106(a) (1) (E)

and 1107. See also 29 U.S.C. 1108 (authorizing cer-

tain exemptions).* Moreover, ERISA explicitly vests

2° Section 408(c) (3) provides that an officer, employee,

agent or other representative of an employer or a union may

serve as a fiduciary of a pension plan. 29 U.S.C. 110€8(c) (3).

Contrary to Amax’s assertion (Br. in Opp. 15-16), that stat-

ute does not authorize a trustee once appointed to act as the

representative for the appointing party in administering the

trust. Rather, Section 408(c) (8) permits “[a] trustee of such

a fund * * * [to] be the agent of the union [or the employer]

in other contexts” and to discharge his different roles “in

separate spheres.” NLRB v. Construction & General Laborers’

Union Local 1140, 577 F.2d 16, 20 n.6, 21 (8th Cir. 1978),

cert. denied, 489 U.S. 1070 (1979). See also Curren Vv.

Freitag, 482 F. Supp. 668, 672 (S.D. Ill. 1977). In fact, by

the “exclusive authority and discretion to manage and

control the assets of the plan” in the trustees ‘alone,

and not in the employer or the union. 29 U.S.C.

11038 (a).

The extensive legislative history of ERISA confirms

what the unambiguous language of the Act makes

plain: In administering an employee trust fund, a

trustee may not represent the interests of the em-

ployer in any degree or fashion. Accord, Denver

Metropolitan Ass’n of Plumbing Contractors v.

Journeyman Plumbers Local No. 3, supra, 586 F.2d

at 1375; NLRB v. Construction & General Laborers’

Union Local 1140, 577 F.2d 16, 20-21 (8th Cir. 1978),

cert. denied, 489 U.S. 1070 (1979); Morgan v. La-

borers Pension Trust Fund, 443 F. Supp. 518, 530

(N.D. Cal. 1977). As Amax concedes (Br. in Opp.

14-15), ERISA incorporates the strictest common law

fiduciary standards. See H.R. Conf. Rep. No. 93-

1280, supra, at 295, 306; S. Rep. No. 93-127, 93d

Cong., 1st Sess. 30, 33 (1973) ; H.R. Rep. No. 93-533,

93d Cong., lst Sess. 11-13 (1973) ; Subecomm. on Labor

of the Senate Comm. on Labor and Public Welfare,

94th Cong., 2d Sess., II Legislative History of

the Employee Retirement Income Security Act of

1974, at 3370 (Comm. Print 1976) (hereinafter

“Leg. Hist. ERISA”). The legislative reports fur-

ther show that Congress rigorously tightened and

supplemented those standards in order “to re-

duce substantially the potentialities for [fiduciary]

abuse.” ** S. Rep. No. 93-388, 93d Cong., 1st Sess. 31

its own terms, Section 408(c) (3) merely constitutes a clarifi-

cation of Section 406 of ERISA, and does not exempt a trystee

from the duty of exclusive loyalty set forth in Section 404 (a).

See 29 U.S.C. 1108 (c) (3).

21 At the same time, Congress provided new remedies for

breaches of fiduciary duty including excise tax penalties and

criminal punishment. See S. Rep. No. 93-888, 98d Cong., 1st

Sess. 31-32 (1973).

(1973). See zd. at 95, 97-106; H.R. Rep. No. 93-779,

93d Cong., 2d Sess. 6 (1974); II Leg. Hist. ERISA

3370. In particular, Congress sought to prohibit

trustees “from engaging in actions where there would

be a conflict of interest with the fund, such as repre-

senting any other party dealing with the fund.” S.

Rep. No. 93-383, supra, at 8, 32 (emphasis supplied).

See id. at 104; S. Rep. No. 93-127, supra, at 46; H.R.

Rep. No. 93-533, supra, at 18, 21; II Leg. Hist.

ERISA 1726, 3378-3379, 3474, 3495; III Leg. Hist.

ERISA 4562, 4759, 4808. In other words, the fidu-

ciary responsibility provisions of ERISA afe designed

to prevent a trustee “from being put into a position

where he has duel loyalties and therefore he cannot

act exclusively for the benefit of a plan’s participants

and beneficiaries” (H.R. Conf. Rep. No. 93-1280,

supra, at 309)—precisely the “position” created by

the decision below.” See also Cutaiar v. Marshall,

590 F.2d 5238, 529-530 (8d Cir. 1979).

Finally, Congress amended ERISA in 1980 to foster

“the maintenance and growth of multiemployer pen-

sion plans * * * [and] to provide reasonable protection

for the interests of participants and beneficiaries of

financially distressed multiemployer pension plans.”

Section 3(c) (2) and (3) of the Multiemployer Pen-

sion Plan Amendments Act of 1980, Pub. L. No. 96-

364, 94 Stat. 1209-1210. See also pages 5 & 18-19,

supra. This legislation imposes numerous new re-

22In our view, the requirements of ERISA are fully con-

sistent with the trust requirement earlier established in the

LMRA. Insofar as there is any conflict between the two stat-

utes, however, ERISA, which is a more recent and specific

statute with regard to fiduciary duties, controls. See, e.g.,

Busic v. United States, 446 U.S. 898, 406 (1980); Andrus v.

Glover Construction Co., 446 U.S. 608, 618-619 (1980);

Simpson V. United States, 485 U.S. 6, 15 (1978).

sponsibilities upon trustees of multiemployer funds,

and Congress reaffirmed that the trustees of such

funds must continue to act solely on behalf of the

trust beneficiaries and participants. See H.R. Rep.

No. 96-869 (Part 1), 96th Cong., 2d Sess. 67 (1980).

Indeed, the sponsors of the 1980 Act in both Houses

of Congress expressly disapproved the decision of the

court of appeals in this case, noting that pension

fund trustees have no “obligations to the parties who

appoint them,” but rather must act “with the sole

interest of the plan’s beneficiaries in mind.” 126

Cong. Rec. $10104 (daily ed. July 29, 1980) (col-

loquy between Sens. Randolph and Williams) .™

28 The following colloquy occurred during the Senate de-

bates (126 Cong. Rec. S10104 (daily ed. July 29, 1980) ):

MR. RANDOLPH. * * * If the chairman of the com-

mittee is agreeable, I wonder if I might address him to

clarify a point which concerns me. Although this bill

has added new and additional responsibilities of plan

trustees, particularly under the reorganization provisions

of the bill, is it not correct that this legislation reaffirms

the present law, that these plan trustees as fiduciaries

still have the sole responsibility, as I understand it, to

the beneficiaries of the plan? My concern is based partly

on a recent Court of Appeals decision, which I believe

will be overturned on appeal, that apparently suggests

that the trustee[s] have some obligations to the parties

who appoint them. I do not believe that we in the Con-

gress have ever expressed an intent under ERISA or any

other Federal law that an agency status should or does

exist between trustees and their appointers.

e * . + *

MR. WILLIAMS. I am happy to respond to the Sena-

tor from West Virginia that that is the situation and

that is correct. In all instances the actions of the trustees

B. Trustees Of A Section 302(c)(5) Employee Trust

Fund Are Not Collective Bargaining Representatives

Within The Meaning Of Section 8(b)(1)(B) Of The

NLRA

The preceding discussion demonstrates that the

trustee of an employee pension or welfare fund may

not lawfully represent the interests of either the em-

ployer or the union in administering the trust. Even

if the Court were to disagree with this contention,

however, we submit that the decision of the court of

appeals is wrong for still another reason. Whatever

residual duty of representation a trustee may owe to

the party that appointed him, a trustee of ar em-

ployee fund cannot properly be characterized as a

collective bargaining representative covered by Sec-

tion 8(b)(1)(B) of the NLRA. Hence, the Union

properly bargained to impasse and struck with regard

to its proposal that Amax continue to contribute to

must be made with the sole interest of the plan’s benefi-

ciaries in mind. That was, that is, and that will be.

Likewise, Representative Thompson stated (126 Cong. Rec.

H7902 (daily ed. Aug. 26, 1980) ) :

Although this bill has added important new respon-

sibilities for plan trustees, particularly under the reor-

ganization provisions, this legislation simply reaffirms

the present law, that these plan trustees as fiduciaries

have sole responsibility to the participants and benefi-

ciaries of the plan. A recent Court of Appeals decision,

Amax Coal Company against NLRB which was wrongly

decided, apparently suggests that the trustees are collec-

tive bargaining agents for the parties who appoint them.

That is an erroneous interpretation of both ERISA and

federal labor law and does not reflect congressional] intent.

Congressional] intent in amending ERISA is clearly relevant

to determining the scope of its original provisions. See e.g.,

Seatrain Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572,

596 (1980) ; NLRB v. Allis-Chalmers Mfg. Co., 888 U.S. 175,

198-194 (1967).

the miners’ existing multiemployer pension and wel-

fare funds.

1. Section 8(b)(1)(B) prohibits a union from

restraining or coercing “an employer in the selection

of his representatives for the purposes of collective

bargaining or the adjustment of grievances.” 29

U.S.C. 158(b)(1)(B). Thus, although Sections

8(b)(1)(B) and 302(c) (5) were both part of the

1947 Act, neither provision explicitly refers to the

other.“ Moreover, on its face, Section 8(b) (1) (B)

does not apply to every kind of employer representa-

tive. Rather, as this Court concluded in Florida Power

& Light Co. v. IBEW, Local 641, 417 U.S. 790, 808

(1974), “[b]oth the language and the legislative his-

tory of § 8(b) (1) (B) reflect a clearly focused congres-

sional concern with the protection of employers in the

selection of representatives to engage in two par-

ticular and explicitly stated activities, namely collec-

tive bargaining and the adjustment of grievances.”

In other words, Section 8(b) (1) (B) is a narrow pro-

vision designed to protect employers from being forced

into multiemployer bargaining units and to ensure

the undivided loyalty of an employer’s freely chosen

representatives while they are engaged in collective

bargaining and grievance adjustment. See 417 U.S.

at 803-805; American Broadcasting Companies v.

Writers Guild of America, West, Inc., 437 U.S. 411,

422-423, 429-431, 435-436 (1978); S. Rep. No. 105

(Part 1), 80th Cong., 1st Sess. 21 (1947) ; H.R. Rep.

** Likewise, although the same congressional committees

considered the issue of employee funds, multiemployer bar-

gaining, and loyalty of employer representatives—the sub-

ject matter of Sections 8(b)(1)(B) and 302(c) (5)—, the

legislative history is barren of any indication that Congress

considered Section 8(b)(1)(B) to govern the employer-

appointed trustees of Section 302(c) (5) funds. See also

pages 39-40, infra.

No. 245, 80th Cong., 1st Sess. 14-17 (1947) ; 93 Cong.

Rec. 3837, 4143 (1947) (remarks of Sens. Taft and

Ellender), reprinted in II Leg. Hist. LMRA 1012,

1077.”

In administering an employee trust fund, an em-

ployer-appointed trustee is thus plainly not engaged

in conduct regulated by Section 8(b)(1)(B). Even

in the court of appeals’ view, a trustee is primarily

obligated to represent the trust beneficiaries and

therefore cannot be loyal to the employer’s interests

or faithful to his orders. Although the trustees may

confer with the collective bargaining parties and may

consider their recommendations, such recommenda-

tions “are not binding or obligatory” upon the trus-

tees. Toensing v. Brown, 528 F.2d 69, 72 (9th Cir.

1975). Instead, the trustees “have a duty to exercise

their independent judgment in administering [the]

trust funds.” Jbid. See, e.g., Lamb v. Carey, 498

F.2d 789, 793-794 (D.C. Cir. 1974); pages 21-38,

supra. Indeed, the trustees have an obligation

to enforce the terms of the collective bargaining

agreement regarding employee fund contributions

against the employer “for the sole benefit of the

beneficiaries of the fund” (United States v. Carter,

353 U.S. 210, 220 (1957) ), and they lack discretion

25 The Senate Report defined with specificity the activities

to which Section 8(b) (1) (B) was intended to apply (S. Rep.

No. 105 (Part 1), supra, at 21):

Thus, a union or its responsible agents could not * * *

coerce an employer into joining or resigning from an

employer association which negotiates labor contracts on

behalf of its members; also, this subsection would not

permit a union te dictate who shall represent an employer

in the settlement of employee grievances, or to compel

the removal of a personnel director or supervisor who

has been delegated the function of settling grievances.

to compromise such claims in order to benefit either

the employer or the union (Nedd v. United Mine

Workers, 556 F.2d 190, 210, 212-218 (8d Cir. 1977) ).

And in stark contrast to the relationship between

a collective bargaining representative and an employer

or union, a trustee is paid by the fund and not the

appointing party, and he ordinarily may be removed

only for cause. Compare Lamb v. Carey, supra;

G. Bogert, swpra, at § 520; and II Scott on Trusts

§ 107.2 (3d ed. 1967) ; with H.R. Rep. No. 245, supra,

at 17 (employer need not have as his collective bar-

gaining representative “one whom, for any reason,

he does not trust”) .”

Moreover, the trustees’ exercise of discretion with

regard to benefit eligibility and other similar matters

(see Pet. App. 1386a-187a; Amax Br. in Opp. 12-13)

does not constitute collective bargaining or the ad-

justment of grievances under the collective bargain-

ing agreement. Whereas collective bargaining and

2°The UMW trust agreement specifically provides that a

trustee may be removed only for cause (A. 272).

*7 As the administrative law judge explained (Pet. App.

145a-146a) :

A primary attribute of individuals who act as bar-

gaining representatives is that they owe undivided al-

legiance to the union or employer that appoints them and

are bound to follow the instructions and act in the inter-

est of their principals. The trustees involved in this

case, however, are required by law and by the terms of

the UMWA’s proposed collective-bargaining agreement

to act exclusively in the interest of the Funds’ benefi-

ciaries regardless of the consequences to the UMWA or

the employers. The trustees are required to consider the

recommendations of the employers and the UMWA in

“a deliberate fiduciary atmosphere,” not in the give-and-

take atmosphere of the bargaining table. Moreover, the

Funds’ trustees differ in other crucial respects from

collective bargaining representatives because of the fidu-

ciary duty they owe to the Funds’ beneficiaries. * * *

grievance adjustment concern the relationship be-

tween the employer and his employees (see, ¢.g.,

Keystone Steel & Wire Division v. NLRB, 606 F.2d

171, 176, 179-180 (7th Cir. 1979)), the trustee pri-

marily manages the fund assets and resolves eligibility

questions between the independent trust and the benefi-

ciaries, who may or may not be employees (Allied

Chemical & Alkali Workers v. Pittsburgh Plate Glass

Co., 404 U.S. 157, 164-171 (1971) ). And, in perform-

ing their discretionary duties, the fund trustees must

act “ ‘in a deliberate fiduciary atmosphere’ ” (Lamb v.

Carey, supra, 498 F.2d at 794), which is antithetical to

the “horse trading,” compromise, and economic pres-

sures that characterize collective bargaining (see

NLRB vy. Insurance Agents’ International Union, 361

U.S. 477, 495 (1960)). Furthermore, an employee

trust is a distinct (and not necessarily coterminous)

document from the collective bargaining agreement,

and the termination and modification of trust funds are

governed by different statutory provisions from those

that govern the termination and modification of col-

lective bargaining agreements. Compare 29 U.S.C.

1341 et seg. with 29 U.S.C. 158(d). In addition,

Section 302(c)(5) provides for the compulsory arbi-

tration of deadlocks among the fund trustees, whereas

Congress rejected compulsory arbitration as a means

of resolving collective bargaining disputes. Compare

29 U.S.C. 186(c) (5) with 29 U.S.C. 158(d) ; Carbon

Fuel Co. v. United Mine Workers, 444 U.S. 212, 218-

219 (1979).

In sum, the trustees are administrators of an in-

dependent trust fund and their duties are wholly dif-

ferent from those of collective bargaining representa-

tives. Indeed, on two occasions this Court has recog-

nized the distinction between collective bargaining

representatives and fund trustees. In United States

v. Ryan, 350 U.S. 299 (1956), the Court held that

the word “representatives” in Section 302 of the

LMRA is not limited solely to “exclusive [%.e., col-

lective] bargaining representative[s].” The Court

pointed out that if Section 302 covered only collective

bargaining representatives, “[p]ayments made * * *

to other individuals as trustees [of employee welfare

350 U.S. at 305. More recently, in Allied Chemical

& Alkali Workers v. Pittsburgh Plate Glass Co.,

supra, 404 U.S. at 170, the Court, in concluding that

there was no anomaly in considering retired workers

as “employees” for purposes of Section 302(c) (5) but

not for purposes of the bargaining obligation imposed

by Section 8(a) (5), observed that “the union’s role

in the administration of the fund is of a far different

order from its duties as collective-bargaining agent.”

Accord, NLRB v. Construction & General Laborers’

Union Local 1140, supra, 577 F.2d at 20-21; Rehmar

v. Smith, 555 F.2d 1362, 1870 (9th Cir. 1976);

Toensing v. Brown, supra, 528 F.2d at 72; Miniard

v. Lewis, supra, 387 F.2d at 865 n.5.

2. The decision of the court below that Section

8(b)(1)(B) precludes a union from bargaining to

impasse and striking with regard to an employer’s

contributions to a multiemployer fund is wholly at

odds with the history and policy of the labor laws.

As indicated above (note 24, supra), nothing in the

legislative history of the LMRA, which contained both

Sections 8(b)(1)(B) and 302(c) (5), suggests that

Congress intended Section 8(b)(1)(B) to cover the

trustees of Section 302(c)(5) funds or otherwise to

limit collective bargaining with regard to such funds.

To the contrary, the legislative discussion regarding

Section 3802(c)(5) reflects Congress’ understanding

that employee funds are a mandatory subject of bar-

‘ 40

gaining. See, e.g., I Leg. Hist. LMRA 485 (S.

Rep. No. 105 (Part 2), supra, at 23 (Minority

Report) ), 798 (remarks of Rep. Lodge); II Leg.

Hist. LMRA 1804-1306, 1811-1313 (remarks of

Sens. Ball, Byrd, Pepper and Taft). In fact, despite

extensive congressional discussion of, and opposition

to, John L. Lewis’ ongoing demands that each mining

employer contribute to the UMW’s existing welfare

funds that covered numerous employers (see, ¢.g.,

I Leg. Hist. LMRA 458 (S. Rep. No. 105 (Part 1), su-

pra), 612, 672-673, 753 (remarks of Reps. Hartley,

Fisher and Case); II Leg. Hist. LMRA 1305, 1811-

1313, 1815 (remarks of Sens. Byrd and Taft) ), Con-

gress specifically rejected proposals that would have

made the topic of pension and welfare funds a permis-

sive subject of bargaining and would have prohibited

all such funds that were even indirectly established or

_managed by a union. See H.R. 3020, 80th Cong., 1st

Sess. §§ 2(11), 8(a) (2) (C) (ii) (1947), reprinted in

I Leg. Hist. LMRA 39-40, 51; H.R. Rep. No. 245,

supra, at 20-21, 29-30.

More recently, two subsequent legislative enact-

ments have confirmed Congress’ evident views on this

point. In 1969, Congress amended Section 302(c) to

permit the creation of trust funds for the purpose of

scholarships and child care centers. See Pub. L. No.

91-86, 83 Stat. 133, codified at 29 U.S.C. 186(c) (7).

Congress explicitly provided that these limited kinds

of funds are not a mandatory subject of bargaining.

See 29 U.S.C. 186(c) (7); H.R. Rep. No. 1370, 90th

Cong., 2d Sess. 2, 4 (1968); H.R. Rep. No. 91-286,

91st Cong., Ist Sess. 3 (1969). No such provision

governs the Section 302(c)(5) pension and welfare

trusts at issue in this case, however, and, particularly

im light of the legislative history described above, none

should be implied.

The result reached by the court below would also

frustrate the explicit congressional intent informing

the 1980 amendments to ERISA. Section 3(a) (4) (A)

of the 1980 Act states that “withdrawals of con-

tributing employees from a multiemployer pension

* * * adversely affect[s] the plan, its participants

and beneficiaries, and labor-management relations”

(94 Stat. 1209; emphasis supplied). Similarly, Sec-

tion 3(c) (2) of the Act declares that it is the policy

of the 1980 Act to encourage “the maintenance and

growth of multiemployer pension plans” (94 Stat.

1209). The court of appeals, on the other hand, would

preclude unions from bargaining to impasse and

striking over multiemployer funds, thereby jeopardiz-

ing the creation of new multiemployer plans and the

continued existence of established plans. See ABA

Labor Relations Law 213-214 (1977).

Finally, the reasonableness of the Board’s conclu-

sion that trust fund administration does not consti-

tute “collective bargaining” within the meaning of

the NLRA is confirmed by the fact that the contrary

conclusion would thrust the Board “into a new area

of regulation which Congress [has] not committed

to it.” Ford Motor Co. v. NLRB, supra, 441 U.S. at

497; NLRB v. Insurance Agents’ International Union,

361 U.S. 477, 499 (1960). For the first time, the dis-

cretionary actions of trustees in administering a fund

28 In this case, 1786 of the 2009 employers who contribute

to the UMWA funds at issue are independent signatories and

are not members of BCOA, which selected the employer

trustee. A holding that Section 8(b) (1) (B) precludes man-

datory bargaining over the multiemployer fund issue would

thus provide more than 85% of the contributing employers

with a non-bargainable veto over their employees’ efforts to

maintain the important benefits offered by the multiemployer

plans. See pages 17-19, supra.

would be subject to the duty of good faith bargaining

set forth in Sections 8(a) (5), 8(b) (3), and 8(d) of

the NLRA, 29 U.S.C. 158(a) (5), 158(b) (3), and 158

(d), and would become subject to the economic pres-

sure that is an integral part of the process of collective

bargaining under the NLRA.” Additionally, the duty

owed to the trust beneficiaries might be diluted be-

cause a trustee would be regulated by the Board, the

Secretary of Labor, and the courts, and would face

the different and possibly conflicting duties imposed

by Section 7 of the NLRA, Section 302(c) (5) of the

LMRA, and ERISA.”

2? As Amax notes (Br. in Opp. 17), the Board has found

the trustees of joint administered funds to be agents of the

employers and the union for certain limited purposes. See,

for example, United Brotherhood of Carpenters, Local 1913

(Fixtures Unlimited), 218 N.L.R.B. 368 (1974), rev’d in

pertinent part and enforced as modified on other grounds,

581 F.2d 424, 426-427 (9th Cir. 1976) (trustees required

to accept contributions provided for under a Board back pay

order); Jacobs Transfer, Inc., 227 N.L.R.B. 1231 (1977)

(same) ; Local 80, Sheet Metal Workers International Ass’n,

(Turner-Brooks, Inc.), 161 N.L.R.B. 229 (1966) (trustees

found to have helped enforce unlawfully obtained agreement

of employer to contribute to an industry promotion fund).

See also L & M Carpet Contractors, Inc., 218 N.L.R.B. 802

(1975) (employer violated Section 8(a) (5) of the NLRA by

refusing to open his books to the trust as required by the

bargaining agreement). As the Board pointed out in the

instant case (Pet. App. 59a n.15), those decisions have no

applicability to the trustees’ “ ‘discretionary functions in the

internal administration of the trust,’” which is at issue here.

8° For example, Sections 405(a) (3) and 405(b) (1) (A) of

ERISA require a trustee to prevent any other trustee from

breaching his fiduciary responsibilities to the employee bene-

ficiaries. On the other hand, it is a violation of Section

8(b) (1) (B) of the NLRA for a union representative to

interfere with the employer’s collective bargaining agent’s

performance of his duties in accordance with the employer’s

CONCLUSION

The judgment of the court of appeals with respect

to Amax’s participation in the Union’s pension and

welfare funds should be reversed.

Respectfully submitted.

WADE H. MCCREE, JR.

Solicitor General

ANDREW J. LEVANDER

Assistant to the Solicitor General

WILLIAM A. LUBBERS

General Counsel

JOHN E. HIGGINS, JR.

Deputy General Counsel

ROBERT E. ALLEN

Acting Associate General Counsel

NORTON J. COME

Deputy Associate General Counsel

LINDA SHER

Assistant General Counsel

RICHARD B, BADER

Attorney

National Labor Relations Board

MARCH 1981

instructions. American Broadcasting Companies v. Writers

Guild of America, West, Inc., supra, 487 U.S. at 436. Thus,

if trust fund administration is “collective bargaining” as the

court of appeals concluded, a trustee might well be found to

have committed an unfair labor practice merely by fulfilling

his obligations under ERISA.

W ou. 8. covennment paintine orrice; 1961 339347 281

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