Petition — Associated Builders & Contractors, Northern California Chapter v. Carpenters Vacation & Holiday Trust Fund

Supreme Court brief1983

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OCTOBER TERM, 1983

ASSOCIATED BUILDERS & CONTRACTORS, Northern

California and Golden Gate Chapters, individually and on

behalf of their members; OPINSKI CONSTRUCTION;

THORNHILL CONSTRUCTION COMPANY; FRANK TORRES

CONSTRUCTION COMPANY; WHITAKER CONSTRUCTION,

INC.; GREAT WESTERN CONSTRUCTION, INC.; DRW

CONSTRUCTION; WILLARD ENTERPRISES, INC.; on behalf of

themselves and all others similarly situated,

Petitioners,

VS.

CARPENTERS VACATION AND HOLIDAY TRUST FUND FOR

NORTHERN CALIFORNIA and GORDON W. HANSON; RICHARD

CLARK; CHARLIE PETERSON; JAMES WHITTAKER; HOYLE

HASKINS; L.E. BEE; RUSSELL POOL, individually and as

trustees for said Carpenters Vacation and Holiday Trust

Fund; CARPENTERS 46 NORTHERN CALIFORNIA COUNTIES

CONFERENCE BOARD OF THE UNITED BROTHERHOOD OF

CARPENTERS AND JOINERS OF AMERICA (AFL-CIO) on behalf

of itself and its member unions,

Respondents.

Petition for Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

THIERMAN, SIMPSON & COOK

Mark R. Thierman

50 California Street, Suite 2840

San Francisco, California 94111

Telephone: (415) 434-4672

(916) 442-3100

SORG PRINTING COMPANY OF CALIFORNIA, 346 FIRST STREET. SAN FRANCISCO 94105

QUESTIONS PRESENTED

Whether Section 302 of the Labor Management Relations

(Taft Hartley) Act of 1947, as amended, 29 U.S.C. §186,

permits an employee benefit trust fund established thereun-

der to collect union dues and transfer such dues to a labor

organization representing employees in an industry affecting

commerce.

Whether an employer's payment to a labor union via a bank

account owned and controlled by a jointly administered trust

fund violates Section 302 of the Labor Management Relations

(Taft-Hartley) Act of 1947, as amended, 29 U.S.C. §186.

Whether a bank may properly be considered the agent of an

employer when the employer’s monies are remitted to an

account solely owned and controlled by a vacation and holiday

trust fund established for the sole and exclusive purpose of

providing vacation and holiday benefits pursuant to Section

302(c)(6) of the Labor Management Relations (Taft-Hartley)

Act of 1947, as amended, 29 U.S.C. §186.

Whether an employer has standing under the Employee

Retirement Income Security Act of 1974 (ERISA, 29 U.S.C.

§§ 1001, et seg. (1976) to seek an injunction against a mul-

tiemployer benefit plan the assets of which are not used for the

exclusive purpose of providing benefits to partipants in the

plan and their beneficiaries and defraying the costs of adminis-

tering the plan.

LIST OF ALL PARTIES

PETITIONERS

1. Associated Builders and Contractors, Northern Califor-

nia Chapter.

2. Associated Builders and Contractors, Golden Gate

Chapter.

3. Opinski Construction.

4. Thornhill Construction Company.

5. Frank Torres Construction Company.

6. Whitaker Construction

7. Great Western Construction, Inc.

8. DRW Construction

9. Willard Enterprises, Inc.

RESPONDENTS

1. Carpenters Vacation and Holiday Trust Fund for North-

ern California.

2. Gordon W. Hanson, trustee of the Carpenters Vacation

and Holiday Trust Fund.

3. Richard Clark, trustee of the Carpenters Vacation and

Holiday Trust Fund.

4. Charlie Peterson, trustee of the Carpenters Vacation

and Holiday Trust Fund.

5. James Whittaker, trustee of the Carpenters Vacation

and Holiday Trust Fund.

6. Hoyle Haskins, trustee of the Carpenters Vacation and

Holiday Trust Fund.

7. L.E. Bee, trustee of the Carpenters Vacation and Holi-

day Trust Fund.

8. Russell Pool, trustee of the Carpenters Vacation and

Holiday Trust Fund.

9. Carpenters 46 Northern California Counties Conference

Board of the United Brotherhood of Carpenters and

Joiners of America, AFL-CIO, and its member and af-

filiated District Council and Local Unions which are sig-

natory to the 1980-1983 Carpenters’ Master Agreement

for Northern California.

ill

TABLE OF CONTENTS

Questions presented ......... cece eee eee e ee eeees

Table of Authorities ......... cc ccc cece rece eens

Petition for Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit ..........+--

pS ee

OE OE COU gg nc ci rice ce seen ceseeengess

Reasons for granting Writ .......... eee sere eens

SE a

Appendix

Opinion of the United States Court of Appeals for

the Ninth Circuit Dated March 10, 1983........

Order of the United States District Court for the

Northern District of California denying motion for

preliminary injunction ........660e ee eee eee

Order of the United States District Court for the

Northern District of California denying request for

reconsideration of denial of preliminary injunction

Order of the United States District Court for the

Northern District of California denying injunction

OMG BORE cw. cc cee cece ces eenses

Judgment and order of the United States District

Court for the Northern District of California granting

defendants’ motions to dismiss on the ground of

mootness and for summary judgment .......-.-

Judgment of the United States Court of Appeal for

Dt I AG ee

Page

Text of Section 302 of the Labor Management

Relations Act (1976) 29 U.S.C. §186 .......... 28

Text of Section (3)(a), (4), (5), (6) and (14) (A), (B),

(C), (D) and (E) of the Employee Retirement

Income Security Act of 1974 (ERISA): 29 U.S.C.

§1002(3)(a), (4), (5), (6) and (14) (A), (B), (C), (D)

We ee 33

Text of Section 403(c)(1) of the Employee

Retirement Income Security Act of 1974 (ERISA):

We ee WE gc oe ce kn... 34

Text of Section 404(a)(1) of the Employee

Retirement Income Security Act of 1974 (ERISA);

a ee 34

Text of Section 406(a)(1) and (b) of the Employee

Retirement Income Security Act of 1974 (ERISA):

ae U.S.C, S006) and (b) ................ 35

Text of Section 409 of the Employee Retirement

Income Security Act of 1974 (ERISA); 29 U.S.C.

tes oc RR EE SG SEI eer 36

Text of Section 502 of the Employee Retirement

Income Security Act of 1974 (ERISA): 29 U.S.C.

Oe ee ge ee, 36

Exhibit ‘A’ to petitioners’ reply brief to the United

States Court of Appeals for the Ninth Circuit ... 4]

Exhibit 1 to declaration of C. Bruce Sutherland in

support of motion of Respondent Trust Fund and its

Trustees for dismissal on the ground of mootness or

for summary judgment in the United States District

Court for the Northern District of California... . 43

Exhibits 4 and 5 to declaration of C. Bruce

Sutherland in support of motion of Respondent

Trust Fund and its Trustees for dismissal on the

ground of mootness or for summary judgment in the

United States District Court for the Northern

esi ey g gi 46

TABLE OF AUTHORITIES

Cases Page(s)

Alvares v. Erickson, 514 F.2d 156 (9th Cir. 1975).... 16

Alyeska Pipeline Service Co. v. Wilderness Society,

OE ee 30

Arroyo v. United States, 359 U.S. 419 (1959)... 13, 16, 17

Associated Builders v. Trust Fund, 700 F.2d 1269

nook wn hee eee es 2

Burroughs v. Board of Trustees of the Pension Trust

Funds for Operating Engineers, 542 F.2d 1128 (9th Cir.

Carpenters Health & Welfare Trust Funds, et al. v.

Opinski, still pending (N.D. Cal., Case No. C-80-1197

(RS ea ESS GL, Rape are 9

Cutaiar v. Marshall, 590 F.2d 253 (3d Cir. 1979) ... 25

Data Processing Service Organization v. Camp, 397 U.S.

OI eee er 29

Felter v. Southern Pacific Co. 359 U.S. 326 (1959) .. 20

Fentron Industries, Inc. v. National Shopmen’s Pension

Fund. 674 F.20 1900 Ge Ce. W962) ............. a2, @

Haley v. Dalatnik, 509 F.2d 1038 (2d Cir. 1975)..... 15

Be Ce A Ge Fe on he sc ew cee ccsee

International Longshoremen’s Association v. Seatrain

a he ga | eee 20

Jones v. Commercial Federal Savings & Loan Assn.,

319 N.W. 2d 88, 94 C.C.H. Labor Cases 413,522 (Neb.

oe iz, 13, 14

Lewis v. Benedict Coal Corp., 361 U.S. 459 (1960) .. 13

Local Union No. 626, United Brotherhood of Carpenters

and Joiners of America v. Delaware Contractors

Association, 344 F.Supp. 1281 (D. Del., 1972) ...... 16

Marshall v. Davis, 517 F.Supp. 551 (W.D. Mich. 1981) 23, 24,

oa ao

Cases Page(s)

Marshall v. Snyder, 572 F.2d 894 (2d Cir. 1978) .. 15, 24,

21. 2 2

Mills v. Electric Auto-Lite Co., 369 U.S. 375 (1970) . 39

Moglia v. Geoghegan, 403 F.2d 110 (2d Cir. 1968), cert.

PTT GR as Ne 16

Morgan v. Laborers Penston Trust Fund for Northern

California, 433 F.Supp. 518 (N.D. Cal. 1977) ....... 26

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

(3d Cir. 1972), cert. den., 434 U.S. 1013 (1978) ..... 15

NLRB v. Amax Coal, Co., 453 U.S. 950 (1981) .13, 17, 18

Smith v. Evening News Assn. , 371 U.S. 195 (1962) .. 12

Teamsters Local 174 v. Lucas Flour Co., 369 U.S. 95

a i ra no cee ws 12

Thurber v. Western Conference of Teamsters Pension

Pies, G42 Fe 1 ee Cee. 17S)... ....-..... 16, 20

United Mine Workers of America Health & Welfare

Retirement Fund v. Robinson, 455 U.S. 562 (1982) .12, 13,

15, 18, 19

Waish o. Schlecht, 429 U.S. 401 977) ............ 13

Winpisinger v. Aurora Corp. of Illinois, 456 F.Supp. 559

Oy Oe i kc wks cn ees 26

STATUTES

Judicial Code and Judiciary, §§1254(1) and 1331, 28

Oe I NG oo ike cee vee s es ya >

Employee Retirement Income Security Act

(ERISA), 29 U.S.C. §§1001 §2 et seq. . 1, 3, 12, 17, 21, 22

Employee Retirement Income Security Act §3,

a ME iw, 4,

Employee Retirement Income Security Act §403

(ERISA), 20 U.S.C. S1G.......... wv, 2, 4, 2, 3, om

Employee Retirement Income Security Act §404

(ERISA), 29 U.S.C. S1004....... mw, 2. 3, 2 2h on ae

vil

STATUTES Page(s)

Employee Retirement Income Security Act $406

(ERISA), 20 U.S.C. $1106... ...-. wv, 2, 4, 21, 24, 2

Employee Retirement Income Security Act §409

(een 2m Uo She... 2... ess. ww, 2, 4, 22. 2

Employee Retirement Income Security Act 8411

Os Oe tr Ge BEEEE oe oo ow eee eee. iv, 2, 26

Employee Retirement Income Security Act §502

(RRrae), 22 U.S.C. Siise......-.-.... iv, 2, 9, 10, 29

Labor Management Relations Act, Sections 301-33

CRO OU. 98 Pies)...» 2. eee 11, 12

Labor Management Relations Act, Sections 301-33

Ng AN SR ee ree passim

TEXTS

Goetz, “Employee Benefit Trusts Under Section 302 of

the Labor Management Relations Act,” 59 Nw. U.L.

NN A er 12, i

Restatement (Second) of Agency §1 (1957) ....... 14, 15

OTHER

Oe oo ine ce cece 13

House Report no. 533, 93d Cong., 2d Sess......... 26

2 lees, Wet. LA TS... .....---------- 2s: 13

pa eee 13

2 Legis. Hist. LMRA 1321-1322 ................-. 13

2 Legis. Hist. LMRA 4882, 4883 .............-.... 13

Senate Report No. 93-127, 93d Cong. 2d Sess. ..... 26

OTHER Page(s)

Senate Report No. 93-383, 93d Cong. 2d Sess. ..... 26

3 U.S. Code Congressional and Administrative News,

ee ee 26

No.

In The Supreme Court

of the United States

OCTOBER TERM, 1983

ASSOCIATED BUILDERS & CONTRACTORS, Northern

California and Golden Gate Chapters, individually and on

behalf of their members; OPINSKI CONSTRUCTION;

THORNHILL CONSTRUCTION COMPANY; FRANK TORRES

CONSTRUCTION COMPANY; WHITAKER CONSTRUCTION,

INC.; GREAT WESTERN CONSTRUCTION, INC.; DRW

CONSTRUCTION; WILLARD ENTERPRISES, INC.; on behalf of

themselves and all others similarly situated, oc

Petitioners,

VS.

CARPENTERS VACATION AND HOLIDAY TRUST FUND FOR

NORTHERN CALIFORNIA and GORDON W. HANSON; RICHARD

CLARK; CHARLIE PETERSON; JAMES WHITTAKER; HOYLE

HASKINS; L.E. BEE; RUSSELL POOL, individually and as

trustees for said Carpenters Vacation and Holiday Trust

Fund; CARPENTERS 46 NORTHERN CALIFORNIA COUNTIES

CONFERENCE BOARD OF THE UNITED BROTHERHOOD OF

CARPENTERS AND JOINERS OF AMERICA (AFL-CIO) on behalf

of itself and its member unions,

Respondents.

Petition for Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

To the Honorable, the Chief Justice and Associate Justices of

the Supreme Court of the United States:

Petitioners pray that a writ of certiorari issue to review the

judgment of the United States Court of Appeals for the Ninth

Circuit entered in the above-entitled case on March 10, 1983.

OPINIONS BELOW

The March 10, 1983 opinion of the Court of Appeals, whose

judgment is herein sought to be reviewed, is reported at 700

F.2d 1269, 112 LRRM 3001, and is reprinted in the Appendix

hereto, infra, pp. 2 through 15. The prior orders and opinions

of the United States District Court for the Northern District of

California, also.reprinted in the Appendix hereto, infra, are as

follows:

(a) February 20, 1981, unreported Order Denying Motion

For Preliminary Injunction, reprinted in the Appendix hereto,

infra, pp. 16 through 20.

(b) September 28, 1981, unreported Order Denying Re-

quest For Reconsideration of Denial of Preliminary Injunction,

reprinted in the Appendix hereto, infra, pp. 21 and 22.

junction Pending Appeal, reprinted in the Appendix hereto,

infra, pp. 23 and 24.

(d) November 25, 1981, unreported Judgment And Order

granting Defendants motions for dismissal on the ground of

mootness and for summary judgment, reprinted in the Appen-

dix hereto, infra, pp. 25 and 26.

JURISDICTION

The judgment of the Court of Appeals was entered March

10, 1983, and is reprinted in the Appendix hereto, infra, p. 27.

The jurisdiction of this Court is invoked pursuant to 28 U.S.C.

§1254(1).

STATUTES INVOLVED

(1) Labor Management Relations (Taft-Hartley) Act, §302,

29 U.S.C. §186. Reprinted in the Appendix hereto, infra, at

pp. 28 through 32.

(2) Relevant portions of the Employee Retirement Income

Security Act of 1974, as amended, §§403, 404, 406, 409, 502,

29 U.S.C. §§1002, 1103, 1104, 1106, 1109, 1132 (1976). Re-

printed in the Appendix hereto, infra, at pp. 33 through 40.

STATEMENT OF CASE

Petitioners herein seek, by this action, to test the structural

validity of Respondent Carpenters’ Vacation and Holiday

Trust Fund for Northern California under Section 302 of the

Labor Management Relations (Taft-Hartley) Act of 1947, as

amended, (29 U.S.C. §186, hereinafter “LMRA”) on the

grounds that said Trust Fund pays money directly to the Union

in the form of “Supplemental Dues” or a “work fee,” contrary

to the prohibitions of the statute. Section 302 prohibits an

employer from paying any monies to union, and prohibits a

union from either demanding or accepting such money unless

certain conditions exist. Thus, Section 302(c)(6) permits an

employer to contribute money to a jointly administered trust

fund established only for the exclusive purpose of pooled

vacation, holiday, severance or similar benefits, or defraying

the costs of apprenticeship or other training program (29

U.S.C. §186(c) (6)).

Petitioners contend that the payment of money directly

from the Vacation and Holiday Trust Fund to an employee

representative (the Union) renders the Trust Fund structur-

ally defective. An employee may authorize his employer to

deduct union dues from the employee’s wages (“dues check-

off’) (29 U.S.C. §186(c) (4)). However, Section 302 does not

authorize any hybrid, dual purpose trusts, such as a vaction

and holiday fund to pay dues directly to a union. Since a

vacation and holiday trust fund exists solely for the stated

purpose of providing the statutorily specified employee be-

nefits, employer contributions to Respondent Trust Fund

herein are not wages; but are pooled fringe benefits beyond

the control of the individual employee. In addition, under

302(c)(4), each employer must receive a dues authorization

card from each employee. This is not the case here. Con-

sequently Respondent Vacation and Holiday Trust Fund may

not pay monies to the Union as “dues,” since no valid “dues

check-off’ exists. Employers who contribute to such struc-

turally defective 302 trust funds have standing to seek to

enjoin the illegal practices.

By allowing Respondent Trust Fund to act in this unlawful

manner, the individual Trustees have violated their fiduciary

duties under Sections 4 and 5 of the Employee Retirement

Income Security Act of 1974 (29 U.S.C. Section 1001, et seq.,

hereinafter referred to as “ERISA”’). Specifically, 29 U.S.C.

Section 1104(a)(1) (ERISA §404(a) (1)) states that a fiduciary

shall discharge his duties with respect to a plan solely in the

interest of the participants and beneficiaries, for the exclusive

purpose of providing benefits to participants and beneficiaries

and defraying reasonable expenses of administering the plan.

Payment of monies by the Respondent Trustees to the Re-

spondent Union is not for the exclusive purpose of providing

benefits to the employees or defraying reasonable administrat-

ive expenses. In addition, Section 1106 of Title 29 (ERISA

$406 (a) (1) (D)) provides that it is unlawful for the trustees of

an employee benefit trust to pay money (or other thing of

value) to any party in interest. Because the Respondent Union

is an employee organization whose members are covered by

the plan, Respondent Trust Fund is paying money to a party in

interest within the meaning of 29 U.S.C. Section 1002(14

(ERISA §3(14)). Accordingly, by paying money to Respon-

dent Union as a “work fee,” the Respondent Trustees have

breached their fiduciary duty since they have not operated the

plan solely and exclusively for the benefit of participants as

required by ERISA §403(c)(1), 29 U.S.C. §1103(c)(1). For this

reason, the Respondent Trust Fund should be enjoined im-

mediately from continuing the illegal practice of paying money

to the Union as a “work fee” or “supplemental dues.”

Obviously, the Trustees are in a conflict of interest situation

vis-a-vis the “work fee” issue. As trustees, they each are

personally liable for damages resulting from the breach of their

fiduciary duties. ERISA §409(a), 29 U.S.C. §1109(a). Yet, the

Trust itself must conform to the law and endeavor to rectify

the past misconduct, including reimbursement and suit for

indemnity against the individual Trustees. The present Trust-

ees cannot be expected to sue themselves for breach of their

fidicuary duties leading to acceptance of the “work fee” provi-

sion. Accordingly, the Court should appoint a qualified person

both to marshall fund assets and to bring suit against named

individual Trustees for indemnity, if appropriate. Therefore,

Petitioners sought below a Court-appointed receiver to man-

age the fund assets pendente lite. Petitioners are contributors

to the structurally defective fund and are being forced, by

order of the Court below, to continue payment to an illegal

trust fund. Petitioners seek relief because the Court below

has ordered Petitioners to commit an illegal and criminal act.

For the reasons set forth herein, this Court should forthwith

require the Court below to issue a preliminary injunction

ordering Respondents to cease and desist from the unlawful

activity of payment of money to the Respondent Union and

appoint a receiver to manage the fund assets during the con-

duct of this litigation, and declare that Petitioners have no

obligation to contribute to Respondent Trust Fund until the

structural defect is corrected.

Statement of Facts

Petitioners’ Amended Complaint alleges, inter alintia, that

the illegal diversion of Vacation and Holiday Trust Fund

monies directly to Respondent Union renders Respondent

Trust Fund structurally defective. The details of this illegal

diversion of monies from the Trust Fund to the Union are set

forth in Section 43-A of the 46 Northern California Counties

Carpenters’ Master Agreement for Northern California, ef-

fective June 16, 1977 to June 15, 1980, with its renewal effec-

tive June 16, 1980 to June 15, 1983 (hereinafter referred to as

the “Carpenters’ Master Agreement”); a copy of the 1977-

1980 agreement was annexed to the Complaint as Exhibit B.

Section 43-A of the 1977-1980 Carpenters’ Master Agreement

states:

“Work Fee. Effective for all work performed on or after

January 1, 1978, it is agreed that upon written authoriza-

tion, provided by the Union, as required by law, the

amount of ten (10¢) cents per hour, for each hour paid for

or worked, shall be deducted from the Vacation and

Holiday benefit of each workman and remitted directly to

the Union, or the appropriate Local Union or District

Council of the Union, as the Union may from time to time

direct. The amount of the deduction shall be specified on

a statement transmitted to the workman. Such remit-

tance shall be made to the Union not less than twelve (12)

times per year. [Exhibit B of the Complaint at page 17].

Petitioners contended below that this “work fee” is a blat-

antly unlawful diversion of trust fund monies. Section 302 of

the LMRA specifically states that it is illegal for a union to

demand or receive or agree to accept any payment directly

from an employer except pursuant to the fringe benefit excep-

tions of Section 302(c). Since Respondent Trust Fund is a

vacation and holiday trust, it qualifies only under Section

302(c)(6); that section explicity states that such a trust fund

must be used exclusively “for the purpose of pooled vacation,

holiday, severance or similar benefits, or defraying costs of

apprenticeship or other training programs. .. * 28. U3.C.

Section 186(c)(6)). The Defendant Trust Fund fails to qualify

as a vacation and holiday trust fund under Section 302(c)(6),

since it pays Respondent Union ten cents (10¢) per hour as

“supplemental dues” or as a “work fee,” and such payments

are not for the exclusive purposes delineated under LMRA

Section 302(c)(6).! Accordingly, any demand by Respondent

Union or Respondent Trust Fund acting as the Union’s collec-

tion agent, that an employer pay money to this illegal fund, or

Respondent Union's acceptance or receipt of such illegally

diverted money, violates Section 302(b) of the LMRA which

states:

It shall be unlawful for any person to request, demand,

receive, or accept, or agree to receive or accept, any

payment, loan or delivery of any money or other thing of

value prohibited by subsection (a) of this Section.”

Also asserted below was the fact that the work fee does not

qualify as a “dues deduction” under Section 302(c)(4) of the

LMRA. Section 302(c)(4) allows a dues deduction from an

employer only if the money is deducted from wages, the

employer has received a valid written authorization, and the

money is or dues. Here, the money comes to the Union from

the Trust Fund, not an employer; the money is deducted from

the “benefit” —as opposed to wages; the employer never re-

ceives a written authorization, although the Trust Fund may;

and the Union uses the money for both general purposes and

political functions unrelated to collective bargaining. When the

Petitioners first filed this lawsuit, such supplemental dues

were voluntary, and not uniformly required by all locals of the

| Effective January 1, 1981, the “Supplemental Dues” were increased to $.25 per

hour.

2 Section 302(A) of the LMRA prohibits any payment from an employer to any

employee representative (such as a umon) except as provided by Section 302(c)

of the LMRA.

union. Because the Respondent Union uses the money in part

as a political war chest, it cannot be dues. The individual

employers do not receive “dues check-off’ authorization cards

from the employees; rather a single card, deposited with the

Trust Fund, (copy to the Bank) is used for all employers—

whether members of a multiemployer association or individual

employers (thereby effectively denying the employee the

right to revoke the authorization when he changes employ-

ment). Indeed, the work fee is not a mandatory dues uniformly

required of all members, but is a gift tothe Union to be used for

the Union’s organizational purposes vis-a-vis other em-

ployers. Originally, when suit was filed, the “work fee” money

went directly into the “vacation” trust fund, was commingled

with other trust assets, did not earn interest, and was paid to

the union monthly, although the remaining money was under

the control of the individual employee only once a year when it

was paid to him as “vacation” monies. In 1981, the system was

changed cosmetically as explained below.*

The post-January 1981 plan merely inserted a trust fund

collection agent (Lloyds Bank of California) as a “fiscal inter-

mediary”; the individual employers now mail their combined

Trust Fund and Supplemental Dues payments to the bank, the

employers still send to the bank only one check made payable

to the Carpenters Trust Fund; the bank (acting pursuant to

the direction of the “owner of the account” —the Trust Fund)

then divides the contribution and mails the Union its share of

said monies with the remainder to the Trust Fund. In this

endeavor, the Trust Fund completely controls the bank; the

bank even pays the Union interest on its “dues” while waiting

for the checks to clear before giving the Union its “cut” of the

Trust Fund contributions. The individual worker never has

the opportunity to “re-execute” or refuse to re-execute a dues

check-off when he/she moves from one employer to another

and Trust Fund machinery is used to collect union dues by way

3 On November 26, 1980, District Court Judge Spencer Willams stated in open

court that he was “satisfied it’s violated Section 302..." Only after this

statement by the Court did the Union take action. On February 23, 1981, the

Union and the Associated General Contractors of California, Inc.. and the Bay

Counties General Contractors Association, Inc., reached an agreement to

modify the Carpenters’ Master Agreement so as to cosmetically change the

“work fee.”

of employer audits and suits for collection of deficiencies. The

pre-January 1981 and post-January 1981 schemes are identical

except that the post-January 1981 scheme added the subter-

fuge of a fiscal conduit (Lloyds Bank) which the Union and/or

Trust Fund entirely controls.

The decision of the United States Court of Appeals for the

Ninth Circuit is based upon several factual errors, apparent

from the record below. First, under the modified Supplemen-

tal Dues plan, monies are sent for both dues and trust fund

contributions for all carpentry employees to the bank in one

check made payable to the Carpenters Trust Fund. The bank

then segregates the dues money from the trust fund moneyt,

as directed by the trust fund. Contrary to the opinion below,

the bank does not transmit to the trust fund once a month

additional vacation monies for those who have refused to sign

a check-off card. Instead, the complicated procedure is de-

signed to ensure the individual employee and the employer

never segregate the trust fund money from the union’s

money. In fact, an individual employer does not even know

who has executed a dues check-off card and who has not.®

4 Although the Trust Fund amended its dues check-off procedure in early 1981,

Respondents still use pre-1981 dues check-off authorization cards to justify

employee contributions under the post-January 1981 plan, thereby, again deny-

ing employees the free choice guaranteed under Section 302(c)(4) of the

LMRA.

5 Inaddition, Respondent Trust Fund uses its assets to collect delinquent dues

and trust monies from employers. Because the employee cannot exercise

control over the money in the trust fund, these after-tax dollars are not wages.

Thus, not only does using a vacation and holiday trust as a vehicle for a dues

check-off violate the “sole and exclusive purpose” provisions of Section

302(c)(6), this “dues check-off” fails to qualify under Section 302(c)(4) as well.

Section 302(c)(4) is a narrow exception which explicity states that it is not illegal

for an employer to pay money to a union:

with respect to money deducted from the wages of employees in payment

of membership dues in a labor organization: Provided, that the employer

has received from each employee, on whose account such deductions are

made, a written assignment which shall not be irrevocable for a period of

more than one year, or beyond the termination date of the applicable

collective agreement whichever occurs sooner.

6 As can be seen from the original and modified supplemental dues deduction

forms, exhibits 4 & 5 to the declaration of C. Bruce Sutherland included in

excerpt of the record filed in the Ninth Circuit and reprinted in the appendix

hereto, m/fra, pp. 46 and 47, the money for dues ts segregated on the form for

every employee, whether he signed a dues deduction or not, then is agam

combined with the nomral vacation trust fund payment and sent to the bank ina

single check. The sum of column B plus column A together times the benefit

rate equals the benefit rate times column B plus the benefit rate times column A.

A second factual flaw in the opinion of the Court below is the

assumption that Petitioners Associated Builders and Contrac-

tors, Golden Gate and Northern California Chapters

negotiated the Carpenters Master Agreement. As seen from

the cover of the Carpenters Master Agreement in evidence

below, and annexed as Exhibit B to the Complaint in this case,

the Court of Appeals is confusing the Associated Builders and

Contractors with the Associated General Contractors of

California, an entirely separate organization. Petitioner Asso-

ciated Builders and Contractors brought this action on behalf

of itself and its members who are or were signatory to the

Carpenters Master Agreement.

Third, Petitioners do not base their claim upon the fact that

the dues amount fluxuates with the hours worked, but that

initially, the system was voluntary and not uniformily re-

quired. Nor has Petitioner abandoned any claims for the return

of money to the trust fund and/or the settlors of the funds,

and/or the employees, as such claim was made both to the

district court and in its brief to the Court of Appeals.

Contrary to the opinion of the Court of Appeals, the record

below fully supports the allegation that trust assests are used

to collect “supplemental dues.” Exhibit 1 to the Declaration of

C. Bruce Sutherland in Support of Motion, contained in ex-

cerpt of record filed in the Ninth Circuit and reprinted in the

Appendix hereto, infra pp. 43 through 45, states:

“Any delinquency in the payment of such [supplemental

dues] and amount shall be subject to the same liquidated

damage, interest and other delinquency provisons applic-

able to contributions to the Northern California Car-

penter Funds.” [p.44]

As can be seen from the diagram attached to Petitioners’

Reply Brief to the Ninth Circuit as Exhibit A, and reprinted in

the Appendix hereto, infra, pp. 41 and 42, both “vacation

dues” check-off schemes vary significantly from lawful dues

check-off procedures normally adopted by labor organiza-

tions. The Trust Funds and the Union have demanded and

continue to demand payment to what remains a structurally

defective fund. See, e.g., Carpenters Health & Welfare Trust

Funds, et al. v. Opinski, a related case still pending before

Judge Spencer Williams, U.S.D.C. N.D. Cal. Case No. C-

a 1107 CW Tinder the nrovisians of the Section 50? of

ERISA 3 as amended by 1980 Multiemployer Pension Plan

Amendments Act, (29 U.S.C. 1132), Respondents may actu-

ally claim attorney’s fees and liquidated damages for collection

of trust fund deficiencies. Clearly, Congress did not intend to

award attorney’s fees in actions to collect union dues.

C. Bruce Sutherland, Secretary of the Board of Trustees of

Respondent Trust Fund, in his declaration filed in support of

Respondents’ Motion to Dismiss for Mootness, declares that

Exhibit 8 to his declaration “is a description of the Revised

Dues Supplement Arrangement Procedures which became

effective January 1, 1981, and which have been in effect since

that date.” Exhibit 8 provides in material part:

Revised Dues Supplement Arrangement

Procedures effective January 1, 1981

1. Signed Authorization Cards

a. To be sent directly to Bank.

b. Bank sends to Fund Office for processing.

c. Fund Office retains original cards and furnishes

Bank with microfiche copies.

2. Revocations

a. Requests sent directly to Bank.

b. Bank sends to Fund Office for processing.

c. Fund Office retains original and furnishes Bank

with microfiche copies.

3. Applications

a. Fund Office matches authorization cards on file

with contributions by employer to the Supplemental

Dues Option Account each month, after one month

lag, to cover for bad checks and adjustments. [em-

phasis supplied]

b. Fund Office advises Bank as to amount to pay over

to Conference Board based on signed authorization

cards (as revised) on file; at the same time, the Fund

Office advises the Bank as to the amount to pay over to

the Conference Board on behalf of the Vacation and

Holiday Trust Fund as vacation deductions based on

old form authorization cards on file; balance to be

transferred to Vacation and Holiday Fund Savings

Account. [emphasis supplied]

c. Where a revised authorization card is on file for a

carpenter who previously signed an old form authori-

zation card, the old card will be marked “superseded”

but will be retained by the Fund Office.

d. For both old and revised cards, the Fund Office will

apply deductions only to Funds held by Bank, 1.e.,

April payment applies to funds received in February

for Jcauary work month. [emphasis supplied]

e. Fund Office furnishes Bank with microfiche details

regarding transfer of funds to the Conference Board.

f. Fund Office furnishes Conference Board with de-

tails by Local Union of Supplemental Dues Option

payments based on both old and revised cards with an

indication as to the type of card on file. [emphasis

supplied]

Petitioners contend that the “modified approach” does no-

thing to rectify the structural defect in Respondent Trust Fund

and that Petitioners’ arguments regarding the defect made

before the modification still apply with equal force and effect.’

If the bank is anyone’s agent, it is the agent of the Trust Fund.

Furthermore, this modification has at no time been accepted

by Petitioners herein, and the Court below ordered Petition-

ers to make contributions before this cosmetic modification

was enacted. Thus, it is difficult to imagine how this slight of

hand can moot the issues presented herein.

Existence of Jurisdiction Below.

Federal jurisdiction in the United States District Court for

the Northern District of California, the court of first instance

herein, was obtained pursuant to Sections 301-303 of the

7 The Trust Funds “advise” the bank with regard to every move the bank makes.

In the same declaration, Sutherland notes that the Union has paid “Jafll of the

cost of services” which are “required in the implementation of the procedures

described in Exhibit 8.”

Labor Management Relations (Taft-Hartley) Act of 1947, as

amended, (29 U.S.C. $§185-187) the Employee Retirement

Income Security Act of 1974 (29 U.S.C. §§1001, et seq. ) and 28

U.S.C. Section 1331.

REASONS FOR GRANTING WRIT

CERTIORARI SHOULD BE GRANTED TO RESOLVE

CONFLICT BETWEEN THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

AND THE NEBRASKA SUPREME COURT

In 1982, the Supreme Court of the State of Nebraska ad-

dressed the issue of whether Section 302(c)(5) permits em-

ployer holiday trust fund contributions to be paid to a union as

dues and assessments pursuant to employees’ written au-

thorizations. Jones v. Commercial Federal Savings & Loan

Assn., 319 N.W.2d 88, 94 CCH Labor Cases 413,522 (Neb.

1982). The court first properly determined that it had jurisdic-

tion to hear the matter pursuant to Section 301 of the Labor

Management Relations Act, citing Smith v. Evening News

Assn. , 371 U.S. 195 (1962). In reaching its decision, the court

applied fedei al labor law as prescribed in Teamsters Local 174

v. Lucas Flour Co., 369 U.S. 95 (1962).

In Jones, supra, anemployee trustee for the “Holiday Trust

Fund” approached the multiemployer association to ask

whether the association would agree to a dues check-off from

the holiday Trust Fund. The association rejected the idea. The

trustees then deadlocked over whether to alter the terms of

the trust agreement. Thereafter, the employees filed a class

action suit seeking a declaration of their right to assign funds

from their individual Holiday Trust Fund accounts at commer-

cial Federal Savings & Loan to the Union. 94 CCH Lab. Cases

p. 20,918.

The Nebraska Supreme Court relied extensively on this

Court’s decision in United Mine Workers of America Health &

Retirement Funds v. Robinson, 455 U.S. 562. (1982). After

correctly noting that “[o]ne of the primary purposes for the

enactment of §186 [§302] was to prohibit the use of employee

benefit funds for purposes unrelated to their benefit,” the

court cited Goetz, “Employee Benefit Trusts Under Section

302 of the Labor Management Relations Act,” 59 Nw. U. L.

Rev. 719 at 732:

The more restrictive aspect of this provision is the re-

quirement that the trust fund be established for the sole

and exclusive benefit of certain employees and their de-

pendents. This provision has a twofold effect: (a) it im-

poses a restriction on the class of persons the trust may

benefit, and (b) it imposes a restriction on the nature of

the uses to which the funds may be put. [94 CCH Lab.

Cases p. 20,919. |

More importantly, the Nebraska Supreme Court relied

on the following language from UMW Health & Retire-

ment Funds v. Robinson, supra, interpreting Section

302(c)(5):

Its plain meaning is simply that employer contributions

to employee benefit trust funds must accrue to the benefit

of employees and their familtes and dependents, to the

exclusion of all others. Indeed, this has been this Court's

consistent interpretation of §302(c)(5).

Just last Term, the Court reiterated that “the ‘sole

purpose’ of §302(c)(5) is to ensure that employee benefit

trust funds ‘are legitimate trust funds, used actually for

the specified benefits to the employees of the employers

who contribute tothem... ’” NLRB v. Amax Coal Co.,

Ue. : (quoting 93 Cong. Rec. 4678

(1947), reprinted in 2 Legislative History of the Labor

Management Relations Act, 1947, 1305 (Leg. Hist.

LMRA) ). See Arroyo v. United States, |37 LC 965,404 |

359 U.S. 419, 425-426. Accord, Walsh v. Schlecht, 429

U.S. 401, 410-411; Lewis v. Benedict Coal Corp. , {39 LC

166, 240] 361 U.S. 459, 474 (Frankfurter, J., dissenting).

This reading is amply supported by the legislative his-

tory. See, e.g., 93 Cong. Rec. 4877 (1947), 2 Leg. Hist.

LMRA, at 1312 id. , at 4882-4883, 2 Leg. Hist. LMRA, at

1321-1322. The section was meant to protect employees

from the risk that funds contributed by their employers for

the benefit of the employees and their families might be

diverted to other union purposes, or even to the private

benefit of faithless union leaders. Proponents of this

section were concerned that pension funds administered

entirely by union leadership might serve as “war chests”

to support union programs or political factions, or might

become vehicles through which “racketeers” accepted

bribes or extorted money from employers.

Our interpretation of the purpose of the “sole and

exclusive benefit” requirement is reinforced by the other

requirements of §302(c)(5). Section 302(c)(5) is an ex-

ception in a criminal statute that broadly prohibits em-

ployers from making direct or indirect payments to unions

or union officials, Each of the specific conditions that

must be satisfied to exempt employer contributions to

pension funds from the criminal sanction is consistent

with the nondiversion purpose. (Emphasis supplied. ) 50

U.S.L.W. at 4290. [94 CCH Lab Cases pp. 20,919-

20,920. ]

Relying on this Court’s clear interpretation of Section

302(c)(5), the Nebraska Supreme Court held that the payment

of Holiday Trust Fund monies by Commercial Federal directly

io the Union pursuant to employee assignments was “neither

contemplated by §186 nor permissable under the statute's sole

and exclusive benefit requirement.” 94 CCH Lab. Cases p.

20,920.

CERTIORARI SHOULD BE GRANTED TO RESOLVE

CONFLICT BETWEEN THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT,

OPINIONS OF OTHER CIRCUIT COURTS OF

APPEAL, AND PRIOR DECISIONS OF THIS COURT

The judgment sought to be reviewed herein concerns the

same scheme held illegal by the Nebraska Supreme Court on

the Jones cases. But in this case, the Ninth Circuit ignored

Section 302(c)(5) and (6). Presumably this was no mere over-

sight, but rather reliance on the cosmetic insertion of Lloyds

Bank of California as a conduit for the employer contributions.

However, the court in Jones placed no significance on the fact

that the vacation monies in that case were held in individual

accounts at a commercial savings and loan institution. Thus,

the Ninth Circuit has condoned payment of monies by an

employer to a Trust fund agent® which in turn pays them

& The Restatement of the Law, Avency 2d, 81, states:

Agency; Principal; Agent

(1) Agency ts the fiduciary relation winch results from the manifestation of

directly to the Union, in direct derogation of Section 302(c)(5)

and(6). To say the bank acts as agent for the employer is

tantamount to rendering LMRA §302 a total nullity, since

unions could always appoint “straw” or “paper” (bag-men)

agents.® Thus, the payments remain direct payments from an

employer to a union, in violation of Section 302 of the LMRA.

The use of a bank as a fiscal intermediary does not conceal

what is a clear violation of LMRA Section 302. In Nedd v.

United Mine Workers of America, 556 F.2d 190 (3rd Cir.

1972), cert. denied 434 U.S. 1013 (1978), the Trust Fund

transferred $250,000 of assets to a Union-dominated bank.

The Court held this very transfer a Section 302 violation

because the bank itself was not a jointly administered trust

fund. In Marshall v. Snyder, 430 F.Supp. 1224 (E.D. N.Y,

1977) affirmed in part and remanded, 572 F.2d 894 (2d Cir.

1978), the trust fund caused a trust fund management com-

pany to lend money to a union directly. The court found this

transaction violated Section 302, and the court therefore re-

8 Continued

consent by one person to another that the other shall act on his behalf and

subject to his contro!, and consent by the other to so act.

Comment b. to subsection 1 of Section 1 above states:

_.. Agency is a legal concept which depends upon the existence of re-

quired factual elements: the manifestation by the principal that the agent

shall act for him, the agent’s acceptance of the undertaking and the

understanding of the parties that the principal ts to be in control of the

undertaking... .

When it is doubtful whether a representative is the age

other of two contracting parties, the function of the court is toascertain the

factual relation of the parties to each other and in so doing can properly

disregard a statement in the agreement that the agent is to be the agent of

one rather than of the other, or a statement by the parties as to the legal

relations which are thereby created. . . . The agency relation results if, but

only if, there is an understanding between the parties which, as interpreted

by the court, creates a fiduciary relation in which the fiduciary ts subject to

the directions of the one on whose account he acts. (emphasis supphed).

9 Asimilar form of Trust Fund abuse under the “sole and exclusive” requirements

of Section 302 of the NLRA is seen in the case of Haley ¢ Palatnik, WOK 2d

1038 (2d Cir. 1975). In that case, the Apprenticeship Trust hired the Union

business agent to administer a Sectron $0216) trust similar to the instant

Respondent Vacation and Holiday Trust Fund. The Court of Appeals held that

payment of wages to the Union business agent was a sham, and thus, the

employer violated Section $02(c)(6), stating that “It Jo bold otherwise would be

to render the Act practically useless. Trust Funds would, with employer -union

agent connivance, become a means to siphon fron) the employer payments to

the union official who would thus become the reciprent of the emplover’s Cor bins

trustee representative) bounty.”

nt of one or the

moved the trustees, enjoined the payments and appointed a

receiver pendent lite. In the instant situation, Lloyds Bank is

the agent of either the Union, the Trust Fund or both because

the bank has no independent interest in the welfare of either

the employees or employers; moreover, the Trust Fund owns

and controls the account. Respondents selected the bank

account solely as a cosmetic cover for the dues check-off

scheme. As the Ninth Circuit has stated in Thurber v. Western

Conference of Teamsters Pension Plan, 542 F.2d 1106, 1108

(9th Cir. 1976):

Federal regulation of employee benefit trusts under Sec-

tion 302(c)(5)(B) was premised on the purpose of insur-

ing that the trust funds were not tampered with or used

for illicit purposes. See Alvares v. Erickson, 514 F.2d

156, 164 (9th Cir. 1975). In accord with this purpose the

Second Circuit, in a well considered opinion, held that

“any payment made by an employer to an employee rep-

resentative, and this includes trustees administering a

pension trust fund. . and the receipt of such payments by

an employee representative are absolutely forbidden un-

less there is a written agreement between the employer

and the Union specifying the basis upon which the pay-

ments are made... the reason for the rigid structure of

Section 302 ts to insure that employer contributions are

only for a proper purpose and to insure that the benefits for

the established fund reach only the proper parties.” Moglta

v. Geoghegan, 403 F.2d 110, 116 (2d Cir. 1968), cert. den.

394 U.S. 919, 89 S.Ct. 1193, 22 L.Ed.2d 453 (1969).

[emphasis supplied. ]

See also Local Union No. 626, United Brotherhood of Carpen-

ters and Joiners of America v. Delaware Contractors Ass’n.,

344 F.Supp. 1281 (D. Del. 1972), holding that vacation monies

submitted in the name of an individual employee by his em-

ployer in a bank selected by the Union was illegal since the

bank was a fortiori an agent of the Union and not a jointly

administered trust fund.

The post-January 1981 vacation dues plan is also clearly

illegal under this Court's decision in Arroyo v. United States,

359 U.S. 419 (1959). In Arroyo the Court held that a union

nn Eo, Pa rE Na Ro ee

official's embezzlement of trust fund assets did not render

employer contributions to the fund illegal, if, and only if, “| t}he

good faith of the employers in delivering the two checks to the

petitioner—their intent that the money go to the welfare fund

created by the collective bargaining agreement— was not

questioned... ” 319 U.S. at 423. Here the intent is clear:

Lloyds Bank acts as a conduit to pay the Union money directly

from employer contributions to the Vacation and Holiday

Trust Fund. The imposition of the bank is a cosmetic sham,

and as this Court stated in Arroyo, “both|the employer and his

representative on the trust fund] would be guilty if the pay-

ment were ostensibly made for one of the lawful purposes

specified in §302(c) if both [the employer or his represen-

tative] knew that such a purpose was merely a sham.” 319

U.S. at 424. Here, submission of money to Lloyds Bank is a

sham and subterfuge for putting Trust Fund money into the

pockets of local Union business agents.

Congress did ot intend a vacation and holiday trust fund to

act as a Union dues collector. LMRA Section 302(a) generally

prohibits an employer from making payments to any represen-

tatives of his employees. Section 302(c)(6) allows an employer

to contribute to an employee benefit trust fund that satisfies

certain requirements. “To ensure that the funds in sucha trust

are not used as a union ‘war chest’, Arroyo v. United States,

359 U.S. 426, 429, the Act provides that it may be used only

for specified benefits for employees and their depen-

dents...” NLRB v. Amax Coal Co., 453 U.S. 950, 952,

(1981). Paying dues money directly to a Union does not pro-

vide vacation and holiday benefits, the sole and exclusive

purpose mandated by Section 302(c)(6). In addition, the Em-

ployee Retirement Income Security Act of 1974, as amended,

29 U.S.C. §§1001 ef seqg., has further tightened these re-

quirements by codifying common law trust fund fiduciary

duties against self-dealing and waste of trust fund assets. In

sum, strong statutory prescriptions prohibit Trust Fund pay-

ments to the Union; in addition, the Trust Fund lacks any

independent reason for acting as a Union dues collection

agency.

Perhaps the central question herein concerns why the

trustees of the Vacation and Holiday Trust Fund have allowed

the fund to be used as a Union dues collection vehicle. Clearly

the Trust Funds’ fiduciaries are not allowed to let Union

loyalty influence their decision. In NLRB v. Amax Coal, Co.,

supra, this Court stated at length that by enacting Section 302,

Congress “intended to impose on trustees traditional fiduciary

duties... ” and “nothing in the language of §302(c)(5) reveals

any Congressional intent that a trustee should or may adminis-

ter a trust fund in the interest of the party that appointed

him... ” Collecting union dues is an extra burden the trust

fund is not permitted by statute. In sum, “the duty of the

management [or union] appointed trustee of an employee

benefit fund under §302(c)(5) is directly antithetical to that of

an agent of the appointing party.” 453 U.S. at 954.

This Court has emphatically stated that it will not tolerate

structural defects in Section 302 trusts. In United Mine Work-

ers of America Health & Welfare Retirement Funds v. Robin-

son, 455 U.S. 562, 109 LRRM 2865 (1982), this Court stated

clearly that employer contributions to collectively bargained

employee benefit funds must accrue to the benefit of em-

ployees and their families and dependents, to the exclusion of

all others. Thus,

[Section 302] was meant to protect employees from

the risk that funds contributed by their employers for the

benefit of the employees and their families might be

diverted to other union purposes or even to the private

benefit of faithless union leaders. Proponents of this

section were concerned that pension funds administered

entirely by union leadership might serve as ‘war chests’

to support union programs or political factions, or might

become vehicles through which ‘racketeers’ accepted

bribes or extorted money from employers.

Our interpretation of the purpose of the “sole and

exclusive benefit” requirement is reinforced by the other

requirements of §302(c)(5). Section 302(c)(5) is an ex-

ception in a criminal statute that broadly prohibits em-

ployers from making direct or indirect payments to

unions or union officials. Each of the specific conditions to

pension funds from the criminal sanction is consistent

with the nondiversion purpose. The fund must be estab-

lished “for the sole and exlusive benefit” of employees

and their families and dependents; contributions must be

held in trust for that purpose and must be used exclu-

sively for health, retirement, death, disability, or unem-

ployment benefits; the basis for paying benefits must be

specified in a written agreement; and the fund must be

jointly administered by representatives of management

and labor.!° All the conditions in the section fortify the

basic requirement that employer contributions be ad-

ministered for the sole and exclusive benefit of em-

ployees.?!

Robinson, supra, 109 LRRM at 2868-2869.

Finally, it is a clear violation of Section 302 to use Trust

Fund counsel and auditors, to institute Trust Fund lawsuits, or

to utilize other Trust Fund assets to force the employer to pay

Union dues. There is no exception in Section 302 for a hybrid

trust that provides $5 million annually to the Union for its own

10 Robinson involved a Section 302(c)(5) Trust Fund. Respondent Vacation and

Holiday Benefit Trust Fund is a 302(c)(6) Trust Fund, and by statute can only

exist for the sole and exclusive purpose of providing pooled vacation and holiday

pay, severance or similar benefits, or apprenticeship or other training, although

the trust document itself limits the fund to pooled vacation and holiday pay.

11 The Congressional purpose of Section 302 was reported in Robinsn at footnotes

9 and 10, as follows:

® Senator Taft, the primary author of the LMRA, stated:

Certainly unless we impose some restrictions we shall find that the welfare

fund will become merely a war chest for the particular union, and that the

employees for whose benefit it is supposed to be established, for certain

definite welfare purposes, will have no legal rights and will not receive the

kind of benefits to which they are entitled after such deductions from their

wages.

1° Senator Ball, one of the sponsors of the floor amendment that became

§302, stated:

All that is sought to be done by the amendment is to protect the rights of

employees. After all, on any reasonable basis, payments by anemployer to

such a fund are in effect compensation to his employees. All that is sought

to be done in the amendment is to see to it that the rights of employees in

the fund are protected.

eee

In other words, when the union has complete control of this fund, when

there is no detailed provision in the agreement creating the fund respecting

the benefits which are to go to employees, the union and its leadership will

always come first in the administration of the fund, and the benefits to

which the employees supposedly are entitled will come second. [109

LRRM at 2868. |

general purposes."

Other variatons of the“Supplemental Dues” plan herein

have been held illegal by other Courts of Appeal. In the case of

International Longshoremen's Association v. Seatrain Lines,

326 F.2d 916, 920 (2d Cir. 1964), the Court specifically held

unlawful a contract requiring payment of a percentage of trust

fund contributions into the general fund of the union. The

Court noted that

[t]he present controversy involves precisely the kind of

payment which Section 302 was designed to prohibit . . .

Obviously, no exception from the inhibitions of Section

302 was intended to permit such payments where the

union’s claim to them is based on a collective bargaining

agreement or other contract. !2

Another critical point must be considered. Under both the

old and the revised Vacation Fund dues check-off plans, the

dues check-off authorization card signed by an employee is

used in any subsequent employment and therefore extends this

relationship to limitless employers, many of whom are not

members of any multiemployer association. This procedure

effectively nullifies the employee's statutory ability to defer or

cease union dues check-off upon changing employers. The

check-off authorization’s automatic yearly renewal provisions

and its hyper-technical notice and window period provisions

operate to lock in the innocent employee to a dues check-off

scheme ad infinitum, contrary to the true intent of Section

302(c)(4). See Felter v. Southern Pacific Co., 395 U.S. 326

(1959).

Respondents have tacitly admitted the illegality of the dues

check-off provisions of the Carpenters Vacation and Holiday

Trust Fund, but plead an inability to conform to Section 302

requirements. Such an inability should not be excused: pre-

venting Union domination of jointly administered Trust Funds

12 The Ninth Circuit has also concluded that payments to the trust fund or to any

other agent of the union are strictly illegal unless within the exact letter of the

sole and exclusive purpose provisions of Section 302(c). See Thurber v, West-

ern Conference of Teamsters Pension Plan, supra. The Court of Appeals for the

Ninth Circuit offers no explanation for its digression from past precedent in this

case.

and the use of such Trust Funds as a device for building union

war chests, requires strict interpretation of Section 302.

CERTIORARI SHOULD BE GRANTED

TO SETTLE AN IMPORTANT

QUESTION OF FEDERAL LAW

UNDER THE EMPLOYEE RETIREMENT

INCOME SECURITY ACT OF 1974

(29 U.S.C. §§1001 et seq.)

The Employee Retirement Income Security Act of 1974, 29

U.S.C. 1001 et seg. (ERISA) requires that the assets of a plan

such as Respondent Trust Fund are to be held for the exclu-

sive purpose of providing benefits to participants in the plan.

29 U.S.C. 1103(c)(1) provides in material part:

Except as provided... 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 partici-

pants in the plan and their beneficiaries and defraying

reasonable expenses of adminstering the plan.

Section 1104(a)(1) of Title 29 of the United States Code

established the fundamental standard to which all fiduciaries

of employee benefit plans are subject. 29 U.S.C. §1104(a)(1)

provides:

... afiduciary shall discharge his duties with respect to a

plan solely in the interest of the participants and ben-

eficiaries and

(a) for the exclusive purpose of:

(i) providing benefits to participants and their ben-

eficiaries; and

(ii) defraying reasonable expenses of administering

the plan; (emphasis added).

Section 1106 of Title 29 (Prohibited Transactions) provides

in relevant part:

(a) Except as provided in Section 1108 of this Title:

(1) A fiduciary with respect to a plan shall not cause

the plan to engage in a transaction, if he knows or

should know that such transaction consititutes a

direct or indirect

eee

(B) lending of money or other extension of credit

between the plan and a party in interest;

eee

(D) transfer to or use by or for the benefit of, a party in

interest, of any assets of the plan... ”’ [emphasis add-

ed].

ERISA defines “party in interest” to include “an employee

organization any of whose members are covered by such

plan.” 29 U.S.C. Section 1002(14) (ERISA §3(14)).

ERISA, 29 U.S.C. Section 1109 provides for liability for

breach of fiduciary duty. This section of ERISA also. provides

for equitable and/or injunctive relief. Under ERISA, Petition-

ers have standing to redress this structural defect because

they have suffered injury, in fact, due to (1) being required by

Court order to contribute to an unlawful fund, (which is tan-

tamount to commission to a criminal act with resulting criminal

liability under Section 302(d) of the NLRA), and (2) the

economic loss sustained by the employers for the lost interest

and decreased vacation pay with respect to future Union

demands at the bargaining table. Therefore, Petitioners seek

the return of these monies from the Union and Trust Fund for

distribution to employees. As previously stated, these

monies, termed “vacation benefits,” are used by employees in

the seasonal construction industry, to supplement their nor-

mal unemployment benefits. Thus, the employers, as settlors

of this Vacation Trust Fund, and as those ultimately responsi-

ble for the welfare of their employees, are within the zone of

interest protected by ERISA, and are not prohibited by sta-

tute from suing under ERISA. Accordingly, the employers as

Petitioners herein, clearly have standing to sue under ERISA.

See Fentron Industries, Inc. v. National Shopmen Pension

Fund, 674 F.2d 1300 (9th Cir. 1982) which states:

Fentron’s alleged injuries also fall within the zone of

interests that Congress intended to protect when it

enacted ERISA. Section 2(a) of ERISA, 29 U.S.C.

§1001(q), recognizes that pension plans “have become an

important factor affecting the stability of employment and

the successful development of industrial relations,” and

that therefore it was desirable to enact ERISA. The

threat to Fentron’s relationship with the Union, and to

the continued employment by Fentron of its employees,

falls within this range of concerns.

The United States District Court for the Western District of

Michigan decided a case on all fours with the instant action. In

Marshall v. Davis, 517 F.Supp. 551 (W.D. Mich. 1981), the

Secretary of Labor brought an action under ERISA claiming

that the trustees of the Michigan Carpenters’ District Council

Vacation and Holiday Fund, in cooperation with the Carpen-

ters’ Union, had violated ERISA by “deducting union dues

from monies in the Plan on a monthly basis while disbursing

funds to the Plan’s participants on an annual basis.” The

Secretary of Labor claimed that the trustees violated their

fiduciary duty to the plan’s participants since they did not

operate the plan “solely and exclusively for the benefit of

participants as required by ERISA Section 403(c)(1), 29

U.S.C. §1103(c)(1).” The Court summarized the Secretary of

Labor’s argument as follows:

As the sole stated purpose of the Plan is to provide

payments for vacations and holidays and as participants in

the Plan are unable to withdraw these funds until the

annual disbursement or to assign them for the benefit of

creditors until the funds are released, Plaintiff contends

that these arrangements to permit the Union to gain dues

in this manner are in contravention of specific provisions

of ERISA as well as the interests of the Plan participants

and beneficiaries in favor of those of the Union.

Money that is set aside for union dues is not invested

while assets disbursed on an annual basis are invested in

short-term securities which are timed to mature annually

when the funds are to be returned to the participants. If

the Plan makes profitable investments, dividends are

declared (less costs of administering the Plan) which are

included in the annual payments to participants. If costs

exceed the return on investment, they are assessed to

the participants. 517 F.Supp. at 551.

This is precisely the situation presented in the instant ac-

tion.” As provided in the Carpenters Vacation and Holiday

Trust Fund trust agreement (Exhibit C to Petitioners’ First

Amended Complaint):

The distribution of benefits for each vacation year shall be

made by checks mailed to Employees in a single mail-

ing... immediately preceeding the vacation year.” (Ar-

ticle V, “Vacation and Holiday Benefits” §2).

However, Section 43-A, of the Carpenters Master Agree-

ment herein, “Work Fee” (“Supplemental Dues”), supra,

provides for a monthly distribution of a portion of the fund’s

assets to the Union. Thus, the contributions from the em-

ployers to the Trust Fund which Respondent Trustees dis-

tribute to the Union each month are not being invested or

otherwise used for the sole and exclusive benefit of the em-

ployee beneficiaries of the Trust Fund as required by ERISA

Section 403(c)(1).

In Marshall v. Davis, supra, the Court cited ERISA Sec-

tions 403(c)(1), 404(a) and 406 and concluded that the Secre-

tary of Labor properly founded his suit on ERISA which does

not permit transactions such as those here at issue.

The Court declared:

The legislative history of ERISA makes it clear that, as

the House report on HR2 indicates, “The intent of the

Committee ts to provide the full range of legal and equitable

remedies available in both state and federal courts and to

remove jurisdictional and procedural obstacles which in the

past appear to have hampered effective enforcement of

fiduciary responsibilities under state law for recovery of

benefits due to participants.” Marshall v. Snyder, supra, at

901.

It is my opinion that there is a per se adverse transac-

tion involved when the Defendant-Trustees attempt to

“balance the interests” involved by facilitating a Union

dues assessment program and by managing in a finan-

cially responsible way the Vacation and Holiday Trust

Fund for the benefit of participants. The Third Circuit

Court of Appeals addressed the dangers inherent in try-

ing to balance divergent interests in administering two

union funds when there was an obvious ove: .ap in the

identity of the participants, the union locals, and the

employers who were parties to the plans when both had

the same trustees.

Cutaiar v. Marshall, 590 F.2d 523 (CA 3 1979) stated:

‘We note the national public interest in safeguarding

anticipated employee benefits by establishing muni

standards to protect employee benefit plans. The sub-

stantial growth of plans affecting the security of millions

of employees and their dependents, as well as the limited

resources of the Department of Labor in the enforcement

of ERISA, leads us to believe that Congress intended to

create an easily applied per se prohibition of the type of

transaction in question... We do not regard this as a

harsh rule.’ I find that the Plan must be represented by

trustees who are free to exert the maximum economic

power manifested by their fund whenever they are

negotiating a commercial transaction and that Section

406(b)(2) speaks of the interests of the Plan or ben-

eficiaries not “some” or “many” or “most” of the particip-

ants. While the trustees may have operated with the best

of intentions to accommodate all the parties involved,

provision for the monthly distribution of Plan assets to

the Union dilutes the economic viability of the Holiday and

Vacation Fund. Until the funds are available to the par-

ticipants, the trustees may not disburse Plan assets to a

party in interest. [517 F.Supp. at 552-553. |

The individual trustees named in the Compaint have jointly

and/or separately violated their fiduciary duty in acquiescing in

and/or failing to prevent the illegal payments of Trust assets

from respondent Trust Fund to Respondent Union. Each is

liable for breach of the fiduciary duty pursuant to 29 U.S.C.

§1109 (liability for breach of fiduciary duty), and each is, by

virtue of that section, subject to removal by the Court:

(a) Any person who is a fiduciary with respect to a plan

who breaches any of the responsibilities, obligations or

duties imposed upon fiduciaries by this subchapter shall

be personally liable to make good to such plan any losses to

the plan resulting from each such breach, and to restore to

such plan any profits of such fiduciary which have been

made through use of assets of the plan by the fiduciary,

and shall be sulyect to such other equitable or remedial

relief as the court may deem appropriate, including removal

of such fiduciary. A fiduciary may also be removed for a

violation of Section 1111 of this title. (emphasis added).

It is submitted that there has been a past and continuing

breach of the fiduciary duty by the individual Trustees. The

purpose of Congress in enacting 29 U.S.C. §1104, supra,

mandates that the Courts interpret the “solely” and “exclusive

purpose” provisions strictly, and that such fiduciary duties be

interpreted so that employees with years of employment

would receive all anticipated benefits. See Winpisinger v. Au-

rora Corp. of Illinois, 456 F.Supp. 559 (N.D. Ohio 1978). In

Morgan v. Laborers Pension Trust Fund for Northern Califor-

nia, 433 F.Supp. 518 (N.D. Cal. 1977), the Court recognized

that all trustess of employee funds have the duty to take those

actions believed to be in the best interest of the fund’s ben-

eficiaries and no other persons or parties. Why then have the

trustees permitted the Trust Fund to be used for such a

non-trust purpose as collecting union dues? As the House

report on ERISA indicates:

The intent of the Committee is to provide the full range of

legal and equitable remedies available in both state and

federal courts and to remove jurisdictional and procedural

obstacles which in the past appear to have hampered

effective enforcement of fiduciary responsibilities under

State law for recovery of benefits due to participants.”

(H. Rep. No. 533, 93d Cong., 2d Sess., reprinted in

[1974] 3 U.S. Code, Cong. & Admin. News, pp. 4639,

4655).

Senate Report No. 93-127 repeated the language of the

House Report, in reporting on S.4, 93d Cong. 3d Sess.,

reprinted in [1974] 3 U.S. Code Cong. & Admin. News, pp.

4639, 4871. Senate Report No. 93-383, reporting on S. 1179,

in discussing the broad range of remedies proposed in the

Senate Bill said (id. 4989):

Also, the bill specifically provides that a fiduciary may be

removed through civil action brought by the Secretary or

participants or beneficiaries if he has violated any of the

specified fiduciary obligations, or Is serving in violation of

the criminal conviction provisions. (The Attorney Gen-

eral also may bring an action to remove in the latter case. )

It is expected that a fiduciary (other than one serving in

violation of the criminal conviction provisions) may be

removed for repeated or substantial violation of his re-

sponsibilities, and that upon removal the court nay, in its

discretion, appoint someone to serve until a fiduciary 1s

properly chosen in accordance with the plan.

The case of Marshall v. Synder, 430 F.Supp. 1224 (E.D.

N.Y. 1977), affirmed in part and remanded, 572 F.2d 894 (2d

Cir. 1978), is also analogous to the case at bar. In that case, the

Secretary of Labor charged a Teamster Welfare and Annuity

Benefit plan with many abuses of ERISA, the most significant

being that the Welfare Funds bought a trust fund administra-

tion management company, and then caused it to loan money

to the Union directly, and caused it to give money to union field

representatives in the form of repayment for “benefit adminis-

tration” when the primary purpose of each field representative

was to get the Union new members. In Marshall v. Synder,

the Court granted the requested injunctive relief and entered

an order for appointment of a receiver as follows:

_.. Judge Pratt granted the Secretary's motion to the

extent of enjoining all defendants pendente lite from mak-

ing or permitting to be made any payments by RPI or any

of the employee benefit plans to defendants Calagna,

Isola, William Synder or Clarke, and appointed a receiver

of the Welfare, Pension and Annuity Funds and of RPI

pending final determination of the action. A detailed re-

ceivership order was entered later which vested the

receiver with legal title to and exclusive possession and

control of all of the assets and property of the three plans.

The receiver was specifically empowered, in ultimate

substance, to conduct the affairs of the employee benefit

plans and of RPI: the defendants and their agents were

enjoined from dealing in any way of the employee benefit

plans or of RPI, and were enjoined from interfering with

the receiver’s administration in any way. The receiver

was directed to undertake a review of the manner of

administering the plans and RPI in order to determine

generally what changes if any in administration were

necessary to the lawful and orderly operation of the

plan... and to report to the Court any proposed changes

as well as a proposal for the future administration of the

plans and of RPI.” /d., 572 F.2d at 897 (1978).

As contributors to the fund, Plaintiffs have standing to raise

the ERISA claim because this ERISA violation is also a struc-

tural defect under Section 302 of the NLRA. The case of

Marshall v. Snyder demonstrates that the “sole and exclusive”

purposes language of Section 302(c)(6) of the NLRA is to be

complemented and further narrowed by the requirement that

trust assets be used “solely in the interest of the participants

and beneficiaries... for the exclusive purpose of providing

benefits to participants and their beneficiaries... ” 29 U.S.C.

§1104(a)(1). In Marshall v. Snyder, the district court recog-

nized that paying money to a union or union official is not in the

sole interest of the plan participants, is not using trust fund

assets “exclusively to provide benefits” to the beneficiaries

and creates an

. inherent conflict of interest and potential for self-

dealing which result from the union officers’ controlling

both the Plans and RPI, which is the administrative agent

of the Plans...

ece

... and when interpreted in the light of the serious

charges of misappropriation of trust fund monies alleged

in the complaint, require immediate and drastic action by

the court in order to preserve from further dissipation the

assets of the Plans for the benefit of their participants and

beneficiaries. . .

@ee

This dissipation of plan assets must stop if the legitimate

rights and expectations of the Plans’ participants and

their beneficiaries are to be protected... For the

present purposes, the trustees for each of the three plans

need only to be suspended from their functions and ac-

tivities as trustees pending final determination of the

action. Marshall v. Snyder, supra, 430 F.Supp. at 1232-

1233.

The foregoing argument clearly shows that trustees may

not transfer any assets of the Respondent Trust Fund to a

party in interest for that party’s use or benefit. ERISA Section

406, 29 U.S.C. §1106(a)(a)(D); Marshall v. Davis, supra. To

prohibit multi employer vacation plans from collecting and

transmitting Union dues before the money is payable to fund

beneficiaries is to uphold the intent of Congress to provide

security for welfare benefit plans by creating a broad remedial

statute to be liberally construed. Marshall v. Davis, 517

F.Supp. at 554. There can be no doubt that the check-off

system is designed to assist Respondent Union, a party in

interest, in the collection of Union dues. By these same

transactions the Respondent Trust Fund incurs an economic

loss since the diverted funds are not available for investment.

Therefore, Petitioners urge that this Court remand this case

for decision in light of Marshall v. Davis, where the Court

enjoined the trustees from further disbursing fund assets prior

to their availability to fund participants.

Attorneys’ Fees

Respondents argue that attorneys fees are not allowable

under Section 502(g) of ERISA, 29 U.S.C. §§1132(g), be-

cause they assert that Appellants do not have standing to sue

under that section. Petitioners’ injuries clearly fall within the

“zone of interests” protected by ERISA under the test of Data

Processing Service Organization v. Camp, 397 U.S. 150

(1970). As set forth in Data Processing, supra, and adopted as

atest in Fentron Industries, Inc. v. National Shopmen Pension

Fund, supra, in order to have standing to sue for violations ofa

federal statute, a plaintiff must (1) suffer an injury in fact; (2)

fall arguably within the zone of interest protected by the

statute allegedly violated; and (3) show that the statute itself

does not preclude the suit. Clearly, Petitioners meet the

requirements of this test and attorneys’ fees are therefore

allowable under Section 502(g) of ERISA.

In addition, attorneys’ fees are recoverable in a Section 302

action under the authority of Burroughs v. Board of Trustees of

the Pension Trust Funds for Operating Engineers, 542 F.2d

1128 (9th Cir. 1976). As in Burroughs, Petitioners herein

brought this action contesting the structural validity of a Sec-

tion 302 Trust Fund, and seek the return of diverted money to

the properly intended beneficiaries. By seeking a declaration

that the Trust Fund was structurally invalid, and that the

Union should be disgourged of its illegal “skim” money taken

from the top of the Vacation Trust, Petitioners herein seek a

common good, the return of money from the Union to the

Trust Fund. Even if the substitution of a fiscal intermediary

has cured the structural defect, which Petitioners contend it

does not, then Petitioners have performed a service to the

Trust Fund and are therefore entitled to attorneys’ fees. See,

e.g., Alyeska Pipeline Service Co. v. Wilderness Society, 421

U.S. 240 (1975); Mills v. Electric Auto-Lite Co. , 396 U.S. 375

(1970); Hall v. Cole, 412 U.S. 1 (1973).

CONCLUSION

Wherefore, Petitioners respectfully pray that a writ of cer-

tiorari issue from this Court to review the judgment of Ninth

Circuit Court of Appeals. In the event that the petition is

granted, Petitioners pray that the judgment of the Ninth Cir-

cuit be reversed, that the cause be remanded to the United

States District Court for the Northern District of California

and that the District Court be directed to issue preliminary

injunction, appoint a receiver to oversee the operation and

restructuring of Respondent Trust Fund, order all “supple-

mental dues” monies returned to Respondent Trust Fund by

Respondent Union, and order that Petitioners recover all

costs including attorneys’ fees.

THIERMAN, SIMPSON & COOK

Mark R. Thierman

50 California Street, Suite 2840

San Francisco, California 94111

Telephone: (415) 434-4672

(916) 442-3100

Counsel for Petitioners

No.

In The Supreme Court

of the United States

OCTOBER TERM, 1983

ASSOCIATED BUILDERS & CONTRACTORS, Northern

California and Golden Gate Chapters, individually and on

behalf of their members; OPINSKI CONSTRUCTION;

THORNHILL CONSTRUCTION COMPANY; FRANK TORRES

CONSTRUCTION COMPANY; WHITAKER CONSTRUCTION,

INC.: GREAT WESTERN CONSTRUCTION, INC.; DRW

CONSTRUCTION; WILLARD ENTERPRISES, INC.; on behalf of

themselves and all others similarly situated,

Petitioners,

VS.

CARPENTERS VACATION AND HOLIDAY TRUST FUND FOR

NORTHERN CALIFORNIA and GORDON W. HANSON; RICHARD

CLARK; CHARLIE PETERSON; JAMES WHITTAKER; HOYLE

HASKINS; L.E. BEE; RUSSELL POOL, individually and as

trustees for said Carpenters Vacation and Holiday Trust

Fund; CARPENTERS 46 NORTHERN CALIFORNIA COUNTIES

CONFERENCE BOARD OF THE UNITED BROTHERHOOD OF

CARPENTERS AND JOINERS OF AMERICA (AFL-CIO) on behalf

of itself and its member unions,

Respondents.

APPENDIX

THIERMAN, SIMPSON & COOK

Mark R. Thierman

50 California Street, Suite 2840

San Francisco, California 94111

Telephone: (415) 434-4672

(916) 442-3100

2 Appendix

United States Court of Appeals

For the Ninth Circuit

ASSOCIATED BUILDERS & Nos. 81-4122,

CONTRACTORS et al., 82-4359,

Plainttffs-Appellants 81-4687

ae D.C. No.

CARPENTERS VACATION AND HOLIDAY C-80-2918-SW

TRUST FUND FOR NORTHERN

CALIFORNIA et. al., OPINION

Defendants-Appellees.

Appeal from the United States District

Court for the District of Northern California

The Honorable Spencer Williams, Presiding.

Argued and Submitted September 14, 1982

Filed March 10, 1983

Before: DUNIWAY, FLETCHER, AND BOOCHEVER,

Circuit Judges.

FLETCHER, Circuit Judge:

This is an appeal from a summary judgment for defendants

in an action challenging a dues check-off provision in a collec-

tive bargaining agreement between the United Brotherhood

of Carpenters and Joiners (the Union) and various employers

engaged in the construction industry. The plaintiffs, an em-

ployer organization known as Associated Builders & Contrac-

tors (ABC) and several ABC members, brought the action on

behalf of all member employers who transfer dues to the

Union pursuant to the check-off provision. They contend that

the dues check-off procedure violates the provisions of the

Labor management Relations Act (LMRA) and the Employ-

ment Retirement Income Security Act (ERISA). We have

jurisdiction under 28 U.S.C. 1291 (1976) and affirm.

Appendix 3

FACTS

ABC brought this action on July 14, 1980. At that time, the

46 Northern California Counties Carpenters Agreement (the

1978 Master Agreement) required employers to contribute

vacation and holiday benefits to the Carpenters Vacation and

Holiday Trust Fund of Northern California (Trust Fund), that

funded an employee welfare benefit plan established by the

parties to the 1978 Master Agreement. The amounts contrib-

uted for each employee were calculated according to the

numbers of hours worked. By the terms of the 1978 Master

Agreement, the contributions were deemed additional com-

pensation.

The 1978 Master Agreement included a union security

clause that required employees to be Union members in good

standing in order to retain their jobs. For each hour worked,

an employee was assessed supplemental union dues of ten

cents. The agreement allowed an employee to authorize the

trustees to deduct assessed supplemental dues from the em-

ployee’s vacation and holiday benefits account. For each em-

ployee who signed a card authorizing the deduction, the trust-

ees of the Trust Fund remitted to the Union a monthly pay-

ment of supplemental dues. The trustees distributed the re-

maining funds in the vacation and holiday account of each

employee to the employee on an annual basis.’

Contending that the payment of union dues out of the Trust

Fund violated section 302 of the LMRA and sections 403, 404,

and 406 of the ERISA, ABC sued the Trust Fund, the Fund's

trustee, and the Union. ABC sought to have the Union return

to the employers or, alternatively, to the Trust Fund all

supplemental dues tansferred under the check-off procedure

of the 1978 Master Agreement. ABC also sought a preliminary

injunction restraining the trustees from paying any further

monies to the Union under the check-off procedure. The

district court denied the motion for preliminary relief and

ABC’s motion for reconsideration.

In 1980, the parties to the 1978 Master Agreement agreed

to a modified collective bargaining agreement (the 1981 Mas-

ter Agreement) in an attempt to remedy the alleged defects. ?

Under the 1981 Master Agreement, supplemental dues are

4 Appendix

assessed against each employee at the rate of twenty-five

cents per hour worked. Every month, each employer sends a

check in an amount equal to the total supplemental dues

assessed against all employees working for that employer

during that month to the employer's designated agent, Lloyds

Bank of California (Lloyds). For each employee’s paycheck,

the amount remitted to Lloyds as supplemental dues for that

employee is deducted from total taxable wages. Lloyds depo-

sits the monies remitted by the employer as supplemental

dues in a special account. Once a month, the bank transfers

the monies from the account in part to the Union (for payment

of supplemental dues), and in part to the Trust Fund (for

payment of additional vacation and holiday benefits), based on

an allocation between monies designated as supplemental

dues by employees and monies as to which there is no out-

standing check-off authorization.*

After the 1981 Master Agreement was signed, the district

court granted summary judgment to the defendants on the

ground that the modification has mooted ABC’s claims of

invalidity of the check-off procedure under the 1978 Master

Agreement. ABC appeals both from this judgment and from

the earlier orders denying ABC’s motions for preliminary

relief. ABC contends that the modification did not cure the

alleged violations of section 302 of the LMRA and the ERISA

provisions.

The district court's denial of preliminary relief and refusal to

reconsider that denial have merged into the final order dispos-

ing of the action. See SEC v. Mt. Vernon Memonal Park, 664

F.2d 1358, 1361-62 (9th Cir.), cert. dented, 102 S. Ct. 2037

(1982). We therefore dismiss ABC’s two interlocutory appeals

(Nos. 81-4122 and 81-4359) and consider only the appeal from

the final judgment (No. 81-4687).

ll.

SECTION 302

Section 302 of the LMRA, 29 U.S.C. § 186 (1976), prohibits

an employer from paying any monies to a union and fortifies

that prohibition with criminal sanctions. Section 302(c)(4) of

the Act establishes one of several exceptions to that prohibi-

tion for payments from employer to union that constitute

Appendix 5

money deducted from the wages of employees in payment of

membership dues in a labor organization: Provided, That the

employer has received from each employee, on whose ac-

count such deductions are made, a written assignment which

shall not be irrevocable for a period of more than one year, or

beyond the termination date of the applicable collective

agreement, v hichever occurs sooner.

29 U.S.C. §186(c)(4) (Supp. II 1978). Thus, the LMRA per-

mits an employer to transfer money to a union if: (1) the money

is in payment of membership dues; (2) the employer has

received a valid written authorization from the employee; and

(3) the money is deducted from wages.

ABC contends that, under the terms of the 1981 Master

Agreement, transfers of “supplemental dues” monies by

Lloyds to the Union in effect constitute payments by the

employers to the Union in violation of section 302 since the

payments to the Union originate in funds transferred by the

employer to Lloyds and since the requirements set forth in

section 302(c)(4) are not met. ABC urges us to overturn the

summary judgment granted below and to grant declaratory

and injunctive relief forbidding further transfers from Lloyds

to the Union. We reject the argument and uphold the dues

check-off procedure under the 1981 Master Ageement.5

A. Membership Dues.

ABC argues first that the monies transferrred to the Union

as “supplemental dues” are not in payment of “membership

dues” because the Union uses part of the revenues from such

supplemental dues for “political” purposes, that is, to hire

organizers to combat the “open shop” movement in the

California construction industry and to discourage employers

from going non-union. ABC contends that since “membership

dues” cannot be expended for political purposes, the money

deducted here is not “in payment of membership dues” and

thus Lloyds is prohibited by section 302(c)(4) from transfer-

ring such monies to the Union. We disagree.

Where federal or state law authorizes a union security

agreement (an agreement that conditions an employees con-

tinued employment on the payment of union dues), the first

and fourteenth amendments prohibit a union from expending

an employee's membership dues for political causes, over the

¢*

‘.

6 Appendix

employee’s objection. Abood v.Detroit Board of Education,

431 U.S. 209, 235-36 (1977) (Michigan labor law); Ellis v.

Brotherhood of Railway clerks, 685 F.2d 1065, 1067 (9th Cir.

1982) (Railway Labor Act); Seay v. McDonnell Douglas Corp. ,

427 F.2d 996, 1003 (9th Cir. 1970)(LMRA).

A union’s expenditure of dues revenue for political goals is

not proscribed by the first amendment, however, unless the

employee from whom the dues are exacted affirmatively ob-

jects to the expenditure. See Abood, 431 U.S. at 236, 241.

Here, there is no suggestion that any employee objects to the

use of his supplemental dues to hire union organizers.

Furthermore, an expenditure is considered “political” for

purposes of first amendment analysis only if it is not germane

to the union’s work in the realm of collective bargaining. Ellis,

685 F.2d at 1072-73. Money spent on organzing to eliminate

competition from non-union employers is germane to collec-

tive bargaining and therefore is not a “political” expenditure

for purposes of first amendment analysis. Jd. at 1074.

For these reasons, we reject ABC’s contention that the

monies collected here and transferred to the Union are outside

the scope of compulsory “membership dues” permitted by the

first amendment. Thus, even assuming that a union’s violation

of the first amendment proscriptions would transform pay-

ments by the employer into something other than membership

dues, no such violation has been shown here.®

B. Valid Written Authorization.

Section 302(c)(4) allows dues check-offs only if “the em-

ployer has received from each employee, on whose account

such deductions are made, a [valid] written assignment.” 29

U.S.C. § 186(c)(4)(emphasis added). ABC contends that the

check-off provision of the 1981 Master Agreement is invalid

because the individual employers do not receive the dues

check-off authorization cards. Instead, each employer ap-

points a common intermediary (Lloyds) as its agent to receive

the authorization cards from its employees and to deduct

monies pursuant to such authorizations on behalf of the em-

ployer.

Nothing in the language of the Act proscribes an employer's

appointing an agent for this purpose. Indeed, the statutory

definition of “employer” includes “any person acting as an

Appendix 7

agent of an employer, directly or indirectly.” 29 U.S.C. §

152(2)(1976).

Moreover, the purpose of requiring an employer to receive

authorization is to prohibit the deductions of dues without an

employee’s consent. See 93 Cong. Rec. 4876 (1947)(state-

ment of Sen. Taft), reprinted in 2 NLRB, Legislative History of

the Labor Management Relations Act, 1947, at 1311 (1948). In

construing the dues check-off provision of section 2, Eleventh

(b) of the Railway Labor Act, which is very similar to section

302(c)(4) in both language’ and legislative intent, see Felter v.

Southern Pacific Co., 359 U.S. 326, 332 n.10 (1959), the

Supreme Court stated that employers and unions have con-

siderable latitude to set up procedures for processing individ-

ual authorizations and revocations of check-offs, as long as the

procedures do not infringe upon the employee's freedom to

revoke the check-off. /d. at 333-35. The Court noted that

employers may make reasonable designations of agents to

whom revocations may be sent. /d. at 335 (dictum).

In this case, the provision in the 1981 Master Agreement

permitting an employer to designate a bank as its agent to

receive authorizations and revocations is a reasonable adapta-

tion of the requirements of section 302(c)(4) to the transitory

nature of employment in the construction industry. A contrac-

tual requirement that each employee must send authorizations

and revocations directly to each of the employee’s employers

would be impractical because an employee ordinarily works

for several different employers during the course of a year.

Contrary to ABC’s assertion, the procedures under the

1981 Master Agreement do not restrict an employee's right to

revoke a check-off authorization. ABC asserts that a single

card used for all employers effectively denies an employee the

right to revoke the check-off at the time he changes em-

ployers. Section 302(c)(4), however, does not require that an

employee be free to revoke the check-off whenever he

changes employers. Rather, section 302(c)(4) requires only

that, for any dues deducted from an employee's wages pur-

suant to that provision, the employer paying those wages

must have received an authorization from the employee that is

not irrevocable for longer than a year, regardless of how many

employers the authorization covers. Since each authorization

8 Appendix

signed by an employee in this case expressly authorizes “all

individual employers” who were parties to the 1981 Master

Agreement to deduct supplemental dues, the check-off provi-

sion in the 1981 Master Agreement satisfies this requirement.

C. Deduction from Wages.

ABC contends finally that the transfer of “supplemental

dues” monies from Lloyds to the Union violates section

302(c)(4) of the Act since those payments are deducted not

from “wages” but from a commingled fund of dues and fringe

benefits held by Lloyds. ABC argues that since some of those

monies transferred from the employers to Lloyds are in turn

transferred to the Trust fund and used for the purpose of

vacation and holiday benefits pursuant to section 302(c)(6) of

the Act, * the supplemental dues are in effect commingled with

Trust Fund monies and thus are not money deducted from

“wages” as required by section 3.2(c)(4). We disagree.

Under the terms of the 1981 Master Agreement, all monies

remitted to Lloyds that are designated as “supplemental dues”

are deducted by the employer from the appropriate em-

ployee’s “wages” and appear as deductions on the employee’s

paychecks and tax statements, whether or not Lloyds eventu-

ally transfers those “wages” deductions to the Trust Fund or

to the Union.? Hence, those monies sent to Lloyds are clearly

money deducted from wages as required by section 302(c)(4).

Contrary to ABC’s contentions, the procedures of the 1981

Master Agreement safeguard against an employer’s transfer-

ring to the Union any monies as to which there is not a valid

dues check-off. P» nents to the Union are made by Lloyds

from the account dvsignated “supplemental dues” at such time

as a precise allocation between dues and vacation and holiday

benefit monies has been made and at the same time as the

funds due the Trust Fund are disbursed to it.!° The Union

does not have access to the Trust Fund monies; it merely

receives supplemental dues from Lloyds that would otherwise

be due directly from the employees."

The dues checkoff procedure of section 302(c)(4) is de-

signed to ensure not only the “protection of the employee” but

also administrative convenience in the collection of dues.

NLRB v. Atlanta Printing Specialties and Paper Products

Union 527, 523 F.2d 783, 786 (5th Cir. 1975); Anheuser-

Appendix i)

Busch, Inc. v. International Brotherhood of Teamsters, Local

822, 584 F.2d 41, 43 (4th Cir. 1978). Given the transitory

nature of employment in the construction industry, we con-

clude that the Union cannot be expected to provide individual

authorization cards to each employer with whom an employee

might work; conversely, an employer simply cannot rea-

sonably be required to make separate deductions for dues and

fringe benefits from an employee's “wages,” to do the book-

keeping for such allocations, and to submit separate checks for

each. To prohibit the employers in this case from designating

an agent to allocate dues and fringe benefits from employee

“wages” deductions would frustrate the legislative purpose of

section 302(c)(4), since no other practical manner exists to

ensure the remittance to the Union of those dues that em-

ployees have voluntarily and affirmatively authorized the em-

ployer to deduct.

ERISA

ABC contends that the trustees of the Trust Fund, by

allowing the bank to disburse monies to the Union that are

allegedly assets of the Trust Fund, !? have failed to operate the

plan solely and exclusively for the benefit of the plan's particip-

ants as required by sections 403, 404, and 406 of the ERISA,

29 U.S.C. §§ 1103, 1104, 1106 (1976). The trustees counter

that ABC lacks standing to sue under the ERISA.

Although the ERISA does not prohibit employers from

suing to enforce its provisions, an employer must allege, inter

alia, “specific and personal” injuries from violations of the

ERISA in order to have standing to enforce the statute.

Fentron Industries, Inc v. National Shopmen Pension Fund,

674 F.2d 1300, 1304 (9th Cir. 1982). The trustees of the trust

fund in Fentron refused to pay earned pension benefits to

Fentron employees unless they quit Fentron and worked at

least a year for another contributing employer. The fund's

action threatened direct injury to Fentron. The Trust Fund’s

action in this case poses no comparable threat to ABC or its

member employers. Furthermore, whereas the trustees in

Fentron unilaterally modified the criteria for disbursements

from the fund in order to penalize Fentron for failing to renew a

10 . Appendix

collective bargaining relationship, the ABC employers them-

selves bargained over and agreed to the Trust Fund arrange-

ment, including the check-off provision.

ABC contends that the payment of union dues out of Trust

Fund money decreases the vacation pay that some employees

would otherwise receive and that this decrease in benefits will

cause the employees to demand more fringe benefits when the

next collective bargaining agreement is negotiated. All collec-

tive bargaining, however, involves compromise. In return for

accepting a check-off provision that might lead to pressure

from employees for increased fringe benefits, the employers

in this case presumably gained something of value at the

bargaining table. See Connecticut State Federation of Teachers

v. Board of Education, 538 F.2d 471, 482 (2d Cir. 1976) (citing

cases). Employee demands arising from these “give-and-

take” negotiations, which are characteristic of any collective

bargaining relationship, are not a cognizable “injury” to the

ABC employers. The employers allege as their injury putative

employees dissatisfaction arising from the performance under

the agreement that was bargained for. This is simply not the

personal and specific injury to the employers that imparts

standing under the ERISA.

CONCLUSION

In Nos. 81-4122 and 81-4359, the appeals are dismissed. In

No. 81-4687, we affirm the summary judgment against ABC

and its members.

Appendix 1]

FOOTNOTES

1 Section 43-A of the 1978 Master Agreement provided:

Effective for all work performed on and after January 1, 1978, it is agreed

that upon written authorization, provided by the Union, as required by law,

the amount of ten cents (10¢) per hour, for each hour paid for or worked, shall

be deducted from the Vacation and Holiday benefit of each workman and

remitted directly to the Union, or the appropriate Local Union or District

Council of the Union, as the Union may from time to time direct. The amount

of the deduction shall be specified on a statement transmitted to the workmen.

Such remittance shall be made to the Union not less than twelve (12) times per

year.

Section 11 of Article V of the Trust Agreement adopted by the parties to the 1978

Master Agreement provided:

Notwithstanding any other provision of this Trust Agreement to the con-

trary, the Board of Trustees is authorized, and is hereby expressly directed

by the parties hereto, to deduct the amount specified in Section 43-A of the

Carpenters 46 Northern Counties Master Agreements... from the undis-

bursed vaction and holiday benefits of each employee who executes a volun-

tary dues authorization therefore as required by law, for all hours paid for or

worked by such employee on and after January 1, 1978, under any of such

agreements, and to remit said amount directly to the Union, or to the

appropriate District Council or Local Union as the Union may direct, not less

than 12 times per year commencing on and after June 1, 1978, as supplemental

membership dues of such employee. The Union shall provide the Board of

Trustees with a receipt for each such remittance signed by its Executive

Officer, and the Fund shall send each employee from whose benefits a

deduction has been made a quarterly statement specifying the amount of such

deduction. The Union shall exonerate, reimburse and save harmless the

Fund, the Board of Trustees and the Trustees, individually and collectively,

against any and all liabilities and reasonable expenses arising out of any such

deduction or remittance.

The voluntary dues authorization under the 1978 Master Agreement was un the

following form:

AUTHORIZATION FOR CHECK-OFF

I hereby authorize the Carpenters Vaction-Holiday Trust Fund for Northern

California to deduct the amount specified in Section 43-A of the Carpenters

Master Agreement . . . from my undisbursed Vacation-Holiday benefit for all

hours paid for or worked by me on or after January 1, 1978, and remit said

amount directly to the Carpenters 46 Northern California Counties Confer-

ence Board or to the appropriate District Council or Local Union as said

Conference Board may direct as supplemental work dues. This authorization

may be revoked by me, in writing to the Trust Fund, within the 30 day period

prior to the expiration of said Master Agreement... or one year from the

date hereof whichever is sooner. If not revoked, this authorization shall be

deemed as renewed from year to year thereafter.

Signature __ ALE Date Signed

oe ere Local Union No.

2 Section 43-A of the 1981 Master Agreement provides:

Effective for all work performed on and after January 1, 1981, .. . the amount

covered by the Supplemental Dues option in connection with the Vacation and

Holidays contribution, amounting to a total of twenty-five cents (25¢) per

hour, shall be remitted by the individual employer as follows:

. Appendix

(1) The individual employer shall include such amount in the single check

mailed with his combined employer report of contributions to the Depository

Bank for the Northern California Carpenters Trust Funds.

(2) In such report the individual employer shall designate the Depository

Bank as his or its agent to receive written dues authorizations from employees

covered by this Agreement pursuant to Section 302(c)(4) of the Labor-

Management Relations Act, as amended, and any revocation of such authori-

zations, and shall direct the Bank (a) to deposit the monies reported under the

column headed Supplemental Dues (Column B) in a special account, (b) to

transfer monthly from such account the monies paid with respect to the work

of each employee who has on file with the Bank an unrevoked dues authoriza-

tion in a form complying with law to the account of the Union as supplemental

dues and (c) to transfer the remaining monies in said account to the Carpen-

ters Vacation and Holiday Trust Fund for Northern California for credit to the

vacation and holiday accounts of the other employees. Any delinquency in the

payment of such amount shall be subject to the same liquidated damage,

interest and other delinquency provisions applicable to contributions to the

Northern California Carpenter Funds.

The dues authorization form was revised to read:

Authonization For Supplemental Dues Check-Off

I hereby authorize all individual employers, individually and collectively, to

deduct the amount specified in Section 43-A of the Carpenters Master

Agreement... from my wages for hours paid for or worked by me on or after

January 1, 1981, and remit said amount directly to the Carpenters 46 Northern

California Counties Conference Board or to the appropriate District Council or

Local Union as said Conference Board may direct as supplemental dues. This

authorization may be revoked by me in writing to Lloyds Bank California, as

the agent for this purpose of the individual employer at P. O. Box 45930,

Rincon Annex, San Francisco, California 94145, within the 30-day period prior

to the expiration of said Master Agreement... or one year from the date

hereof whichever is sooner. If not revoked, this authorization shall be deemed

as renewed from year to year thereafter.

“lc “Local Union No.

: =. : ee oe . SES — eho

The form that the individual employer used to remit payments required by the

1981 Master Agreement was revised to include the following certification:

By submitting this report the above-named employer certifies the follow-

ing: ... (5) that the depository bank is designated by the employer as his or its

agent to receive written dues authorizations from such employees pursuant to

Section 302(c)(4) of the LMRA, and any revocations of such authorizations;

(6) that said bank is directed by the employer (a) to deposit the monies

reported herein under Vacation and Holiday - Column B - Supplemental Dues

ina special account, (b) to transfer monthly from such account the monies paid

with respect to the work of each employee who has on file with the bank an

unrevoked dues authorization in a form complying with law to the account of

the Carpenters 46 Northern California Counties Conference Board as sup-

plemental dues and (c) to transfer the reraining monies to the Carpenters

Vacation and Holiday Trust Fund for Northern California for credit to the

Vacation and Holiday accounts of the other employees. . .

Date eo a i ‘Signature yy : Title

Appendix 13

3 For each employee who has authorized a check-off of dues, the Union receivesa

monthly disbursement from Lloyds in payment of supplemental dues for all

work performed that month by that employee for all employers. Conversely, for

each employee who has not authorized a check-off, the bank transfers the

amount previously designated as “supplemental dues” to the Trust Fund for

Credit to the employee's vacation and holiday benefits account. The Union must

obtain the supplemental dues owned by that employee in some other manner.

Since the 1978 Master Agreement has now been modified in an attempt to

correct prior defects and since there is no showing that either the Union or ABC

or any employers intend to reinstitute the earlier procedures, we review the

denial of ABC’s request for injunctive and declaratory relief solely in regard to

the propriety of the 1981 Master Agreement. See, e.g., County of Los Angeles v.

Davis, 440 U.S. 625, 631 (1979).

At various points in the proceedings below, ABC contended that the Union

should be required to return to ABC member employers or to the Trust Fund

monies received under the 1978 and 1981 Master Agreements in violation of

§302 of the LMRA. We need not reach these claims on this appeal, however.

ABC's request that the Union be ordered to return to ABC member em-

ployers monies unlawfully received by the Union must be denied. As to monies

received under the 1981 Master Agreement, our conclusion mira that the

procedures thereunder comply fully with the §302(c)(4) exception make such

relief unnecessary. As to monies received by the Union under the 1978 Master

Agreement, even assuming arguendo that such payments were unlawful under

§302, only the Trust Fund or its employee beneficiaries—and not ABC or its

member employers—are entitled to a return of those monies. Designated by

the employer as vacation and holiday benefits compensation and transferred to

the Trust Fund before being sent to the Union, such monies, even if not

properly transferable by the Trust Fund to the Union as “supplemental dues,”

certainly could not be returned to the employer. Such a transfer would violate

the terms of the trust agreement between the parties, which provides: “No

Individual Employer shall have any right, title or interest in such payments,

[i.e., contributions to the Fund designated as vacation holiday and benefits, | or

any part thereof, and no part thereof shall revert to any such Individual

Employer.”

ABC's request that the Union be ordered to return to the Trust Fund monies

unlawfully received by the Union must also be denied on this appeal. While

ABC's amended complaint requested the Union to return to the Trust Fund

monies received by the Union in violation of section 302, ABC never pressed

that claim for relief in district court. When defendants moved for dismissal or

summary judgment on the ground that the changes in procedure embodied in

the 1981 Master Agreement “mooted” plaintiffs’ claims for relief, ABC defended

the continuing “live” nature of its claim solely on the ground that even if the

court were to find the pre-1981 defects remedied by the procedures set forth in

the 1981 Master Agreement, plaintiffs’ claim for damages and the “return [to the

employers] of all monies contributed to the trust fund from January 1, 1978”

onward remained justiciable:

Even if defendant could convince the court that it is now complying with

section 302 and with respect to these Plaintiffs, Plaintiffs are still seeking the

reimbursement of monies up until the date of compliance.

Both the Trust Fund defendant and the district court asserted that the

employers’ claim for reimbursement for monies paid under the 1978 Master

Agreement was “inconceivable,” yet plaintiffs never responded that a return of

monies to the Trust Fund—and not to the employers—was the desired relief.

. Appendix

In view of ABC's abandonment below of its claim for the return of monies to the

Trust Fund and in light of the failure of the Trust Fund and its trustees, both

parties to this action, to assert such a request for relief on appeal, we decline to

address that claim here. We address neither ABC's standing to raise such a

claim on behalf of the Trust Fund nor the propriety of a return of such pre-1981

Master Agreement payments to the Trust Fund.

ABC also argues that the supplemental dues are not “membership dues”

because the obligation to pay the supplemental dues is imposed not on all

members but only on those Union members who find employment as carpen-

ters. ABC assumes that in order to constitute “membership dues” under

§302(c)(4), the supplemental dues must qualify as “periodic dues and. . . initia-

tion fees uniformly required as a condition of acquiring or retaining member-

ship” under §8(a)(3) of the National Labor Relations Act, 29 U.S.C.

§158(a)(3)(1976). The supplemental dues, ABC argues, are not uniformly

required because they are not imposed on all Union members.

We do not agree. Assuming arguendo that §302(c)(4) “membership dues”

must be “uniformly required” within the meaning of §8(a)(3), but see UMW

Local 515 v. American Zinc, Lead & Smelting Co., 311 F.2d 656, 659-60 (9th

Cir. 1963), a dues structure that bases the amount of compulsory dues on the

size of an employee's earnings nonetheless meets the uniformity requirement

of §8(a)(3), see Aluminum Workers Trades Council, 185 N.L.R.B. 69, 70

(1970); cf. Bagnall v. Air Line Pilots Ass'n, 626 F.2d 336, 339-40 (4th Cir.

1980), cert. denied, 449 U.S. 1125 (1981) (construing §2, Eleventh of the Railway

Labor Act). See also Schwartz v. Associated Musicians, Local 802, 340 F.2d

228, 233-34 (2d Cir. 1964) (monies collected from 1-'2% levy on all members’

earnings deemed “membership dues” within §302(c)(4)).

Section 2, Eleventh (b) provides that an employee’s authorization for a dues

check-off “shall be revocable in writing after the expiration of one year or upon

the termination date of the applicable collective bargaining agreement,

whichever occurs sooner.” 45 U.S.C. §152, subd. 11(b)(1978).

Section 302(c)(6) of the Act, 29 U.S.C. §186(c)(6)(Supp. II 1978), permits

employers to make payments to a vacation and holiday trust fund established by

a union, if and only if the payments are for the purpose of vacation and holiday

benefits.

The provisions of the Trust Fund agreement themselves specifically provide

that “all contributions to the fund shall be deemed to be. . . a part of the wages

due to the [e|mployees.”

Only the amounts actually authorized by employees to be deducted as dues are

in fact transmitted to the Union as dues. An employee who does not authorize

the check-off of supplemental dues from wages never in fact has any supplemen-

tal dues deducted from his wages, since the amount the employer remits to

Lloyds as “supplemental dues” will eventually be received by the employee

from the Trust Fund in the form of extra holiday and vacation pay. The

nonauthorizing employee also receives any interest earned on monies in the

account at Lloyds during the time between the deposit of the monies in the

Lloyds account and transfer of those monies to the employee's Trust Fund

account.

ABC asserts on appeal that the Union uses Trust Fund assets to collect

delinquent dues. This allegation does not appear in ABC's complaint nor does

Appendix 15

ABC support it with any reference to the affidavits and collective bargaining

agreements in the record. Because ABC has failed to substantiate this factual

assertion as required by Fed. R. App. P. 28 (a)(3) and (e), we decline to

consider it. See Mitchel v. General Elec. Co. , 689 F.2d 877, 878 (9th Cir. 1982).

The trustees appear to have considerable control over the bank's disbursement

to the Union. Although the employees send their authorization cards to the

bank, the bank in turn sends the cards to the Trust Fund. On the basis of the

authorization cards, the Trust Fund instructs the bank each month as to how

much money to pay the Union and to the Trust Fund.

16 Appendix

United States District Court

For the Northern District of

California

FILED FEBRUARY 20, 1981

ASSOCIATED BUILDERS & CONTRAC-

TORS, Northern California and Golden

Gate Chapters, Ind., and on behalf of

their members; OPINSKI CONSTRUC-

TION; THORNHILL CONSTRUCTION

COMPANY; FRANK TORRES CON-

STRUCTION COMPANY; WHITAKER

CONSTRUCTION, INC.; GREAT

WESTERN CONSTRUCTION INC.;

DRW CONSTRUCTION; WILLARD EN-

TERPRISES, et al.,

Plaintiffs,

VS.

CARPENTERS VACATION and HOLI-

DAY TRUST FUND for NORTHERN

CALIFORNIA and PAUL R. BALDACCI;

GORDON W. HANSON; CLEMENT A.

CLANCY; BUDD O. STEVENSON; A.A.

SHANSKY; RAYMOND SCHEFFEL;

PHIL GILLIS; HOYLE HASKINS, Ind.,

and as trustees for said Carpenters Va-

cation and Holiday Trust Fund; CAR-

PENTERS 46 NORTHERN CALIFORNIA

COUNTIES CONFERENCE BOARD OF

THE UNITED BROTHERHOOD OF

CARPENTERS AND JOINERS OF

AMERICA, AFL-CIO, et al.,

Defendants.

Nee me eee ee ee ee ee ee a a a es ee ee ae ee es es

C 80 2918

Appendix 17

ORDER DENYING MOTION

FOR PRELIMINARY INJUNCTION

One June 14, 1980 plaintiffs filed this class action on behalf of

all contractors who have paid monies to defendant Carpenters

Vacation and Holiday Trust Fund of Northern California (de-

fendant Fund) against defendant Fund, its Trustees, and de-

fendant Carpenters 46 Northern California Counties Confer-

ence Board of the United Brotherhood of Carpenters and

Joiners of America (AFL-CIO) and its individual member

unions (defendant Union).

The Complaint charges: (a) defendant Fund pays monies

directly to the defendant Union and is thus structurally defec-

tive; (b) defendant Trustees have created and condoned this

defect; and (c) defendant Union wrongfully has demanded and

accepts said payments. The Complaint prays that as a result of

this structural defect, the court should enjoin further pay-

ments from the defendant Fund to defendant Union, appoint a

receiver to manage the Fund during the conduct of this litiga-

tion, and ultimately, order defendant Union to return to plain-

tiffs all monies received and spent pursuant to such allegedly

illegal procedure (approximately twenty-six million dollars).

Following extensive briefing and argument, the matter was

finally submitted on December 1, 1980.

For the reasons hereinafter stated, plaintiffs’ motion is

denied.

The controversy swirls primarily around Sections 43 and

43A of the Collective Bargaining Agreement between defen-

dant Union and Northern California Home Builders Confer-

ence and the California Contractors Council. This agreement,

which became effective on June 16, 1980, is a continuation of a

series of similar collective bargaining agreements starting in

1971. Section 43 provides that for each hour worked by an

employee covered by the agreement, each employer shall

contribute to defendant Fund, for the benefit of such em-

ployee, an amount set by Section 40 of the Agreement. The

amounts contributed to the Fund are deemed compensation

and are distributed annually (in January) to the employees for

whom the funds are accumulated.

Effective January 1, 1978 the Collective Bargaining Agree-

18 Appendix

ment was amended (Section 43A) to allow employees to au-

thorize a check off of supplemental dues in the amount of ten

cents per hour worked. The check off authorization form

specifies that on the first of every month defendant Fund shall

deduct the supplemental dues from the Vacation and Holiday

Fund and transmit the same to defendant Union.

Plaintiffs argue this is a violation of Section 302(b) of the

NRLA which forbids any direct payments from an employer to

a Union. The argument is based on the premise that defendant

Fund is acting as an agent for defendant Union. The argument

however, is not supported by the facts.

Defendant Fund was established by mutual agreement of

both parties to the Collective Bargaining Agreement— the

Employers and the Union. As created, it acts as a fiscal

intermediary on behalf of both parties. It accepts from the

various employers for whom a union member might work its

contributions to the Vacation and Holiday Fund, and credits

such amounts to the account of the individual union member.

In addition, it serves the employer by determining which

employees have filed check off authorizations and makes their

payments to the Union. This is a bookkeeping and disburse-

ment function that would be Employers’ responsibility were

the check off authorization filed directly with them. It serves

the Union by making these monthly payments of supplemen-

tary dues, and the Union members by servicing their Holiday

and Vacation benefits and, when requested, for payment of

their dues. Contrary to plaintiffs’ claim, the payments are not

directly from the Employer to the Union, nor is defendant

Fund acting solely —or even primarily —on behalf of defendant

Union.

Grounds for granting or denying the requested relief rest to

a large extent on the discretion of the Court. Since injunctive

relief is viewed as an extraordinary remedy, it is to be denied

unless there is a clear showing that all the essential elements

for issuance have been met. These are, of course:

(1) The threat of irreparable harm to plaintiffs if the relief is

not granted;

(2) The state of the balance of harm to the plaintiffs if the

relief is not granted and harm to the defendants if it is;

Appendix 19

(3) Probability of plaintiffs’ ultimate success on the merits;

and

(4) The public interest.

In the Court’s view, there is a substantial short fall in the

merit of plaintiffs’ argument that it faces irreparable harm if the

request for preliminary injunction is not granted. It is true, as

plaintiffs assert, that substantial monies are involved. But

these are not plaintiffs’ monies and it would be inconceivable

that they would ever be returned to plaintiffs, or to plaintiffs’

class if there be one.

The monies are earned by individual Union member em-

ployees. They are wages for which required State and Federal

taxes have been withheld. They are paid to defendant Fund

pursuant to the Collective Bargaining Agreement. Some of

these funds are distributed annually to the employees as their

Holiday and Vacation benefit. Another portion is paid by de-

fendant Fund to the Union pursuant to specific written au-

thorization from individual employees. Even if we were to

assume, arguendo, that the procedure is somehow defective,

it is difficult to see how it irreparably harms plaintiffs. Plaintiffs’

strident cry that the public interest will suffer irreparable harm |

because these are illegally obtained monies being used for

improper political purposes lacks sufficient factual or legal

support to be given serious attention. The funds are being

spent as any other union’s funds have and may be spent. The

illegal collection, if one there be, does not make the purpose

for which they are spent also illegal.

While the foregoing is, by itself, ample ground for denying

the relief sought, a brief discussion of at least one additional

short fall seems appropriate—balance of the equities.

The balance is not, as plaintiffs argue, plaintiffs’ possible

loss of its ability to obtain the repayment it seeks against

defendants’ mere temporary loss of use of the money pending

ultimate resolution of the litigation. As mentioned above, it is

inconceivable under the facts of this case that plaintiffs would

ever receive a repayment no matter what the Court’s ultimate

conclusion as to the validity of the fiscal intermediary system

employed here. The actual balance of equities is between

plaintiffs’ being compelled to disburse these funds, duly

earned by the union members, through a possibly defective

20 Appendix

distribution system, against defendant Union's loss of its

monthly receipt of check off dues and possible interference

with distribution of annual Vacation and Holiday benefits to the

individual members. And, in this Court's opinion, the harm

flowing to defendant Union from the latter instance is substan-

tial, while that suffered by plaintiffs from the former is not.

Accordingly, plaintiffs’ motion for preliminary injunction is

HEREBY ORDERED DENIED.

In order to discuss the future direction of this litigation and

the impact thereon, if any, of the alleged changes in the

procedures for payment of supplemental dues mentioned in

open court on November 20, 1980,

IT IS HEREBY ORDERED that the parties appear for a

status conference on March 4, 1981... ll a.m.

DATED: 20 FEB 1981

_ SPENCER WILLIAMS ____

UNITED STATES DISTRICT JUDGE

Appendix 2]

LAW OFFICES OF MARK R. THIERMAN

MARK R. THIERMAN

PAUL V. SIMPSON

JOSEPH M. SWEENEY

649 Mission Street, Suite 320

San Francisco, California 94105

Telephone: (415) 777-0944

(916) 972-9229

Attorneys for Plaintiffs

United States District Court

Northern District of California

FILED SEPTEMBER 8, 1981

ASSOCIATED BUILDERS & Civil Action No.

CONTRACTORS, Northern California and C-80-2918 SW

Golden Gate Chapters, individually and on

behalf of their members; OPINSKI

CONSTRUCTION; THORNHILL

CONSTRUCTION COMPANY; FRANK

TORRES CONSTRUCTION COMPANY;

WHITAKER CONSTRUCTION, INC.; DRW

CONSTRUCTION; WILLIARD

ENTERPRISES, INC. on behalf of

themselves and all others similarly

situated,

Plaintiffs,

¥.

CARPENTERS VACATION AND HOLIDAY

TRUST FUND FOR NORTHERN

CALIFORNIA and PAUL R. BALDACCI:

GORDON W. HANSON; CLEMEMT A.

CLANCY; BUDD O. STEVENSON; A.A.

SHANSKY; RAYMOND SCHEFFEL; PHIL

GILLIS; HOYLE HASKINS, individually and

as trustee for said Carpenters Vacation

and Holiday Trust Fund; CARPENTERS 46

NORTHERN CALIFORNIA COUNTIES

CONFERENCE BOARD OF THE UNITED

BROTHERHOOD OF CARENTERS AND

JOINERS OF AMERICA (AFL-CIO) on

behalf of itself and its member union,

Defendants.

22 Appendix

ORDER DENYING REQUEST FOR RECONSIDERATION

OF DENIAL OF PRELIMINARY INJUNCTION

This cause came on to be further heard on Motion of

Plaintiffs for reconsideration for the Court’s Order denying a

preliminary injuction, and appearing to the Court, having con-

sidered the files, records, pleadings and Exhibits thereto, and

having heard oral evidence in open Court, that the relief herein

granted is not necessary to perserve the status quo and for the

reasons stated in the Court’s Order of February 20, 1981 in

this case, the Motion is hereby denied.

Dated: 28 SEP 1981

_SPENCER WILLIAMS __

United States District Judge

LAW OFFICES OF MARK R. THIERMAN

MARK R. THIERMAN

PAUL V. SIMPSON

JOSEPH M. SWEENEY

649 Mission Street, Suite 320

San Francisco, California 94105

Telephone: (415) 777-0944

(916) 972-9229

Attorneys for Plaintiffs

Appendix

United States District Court

Northern District of California

FILED SEPTEMBER 18, 1981

ASSOCIATED BUILDERS &

CONTRACTORS, Northern California and

Golden Gate Chapters, individually and on

behalf of their members; OPINSKI

CONSTRUCTION; THORNHILL

CONSTRUCTION COMPANY; FRANK

TORRES CONSTRUCTION COMPANY;

WHITAKER CONSTRUCTION, INC.: DRW

CONSTRUCTION; WILLARD

ENTERPRISES, INC. on behalf of

themselves and all others similarly

situated,

Plaintiffs,

CARPENTERS VACATION AND HOLIDAY

TRUST FUND FOR NORTHERN

CALIFORNIA and PAUL R. BALDACCI:

GORDON W. HANSON; CLEMEMT A.

CLANCY; BUDD O. STEVENSON; A.A.

SHANSKY; RAYMOND SCHEFFEL; PHIL

GILLIS; HOYLE HASKINS, individually and

as trustee for said Carpenters Vacation

and Holiday Trust Fund; CARPENTERS 46

NORTHERN CALIFORNIA COUNTIES

CONFERENCE BOARD OF THE UNITED

BROTHERHOOD OF CARENTERS AND

JOINERS OF AMERICA (AFL-CIO) on

behalf of itself and its member union,

Defendants.

Civil Action No.

C-80-2918 SW

ORDER DENYING INJUNCTION PENDING APPEAL

This cause came on to be further heard on Motion of

Plaintiffs for an injunction pending appeal, and it appearing to

the Court, having considered the files, records. pleadings and

Exhibits thereto, and having heard oral evidence in open

24 Appendix

Court, that relief herein granted is not necessary to preserve

the status quo pending appeal by Plaintiffs to the United States

Court of appeals for the Ninth Circuit; the Motion is hereby

denied.

Dated: 28 SEP 1981

SPENCER WILLIAMS

United States District Judge

Appendix 25

United States District Court

Northern District of California

ENTERED NOVEMBER 25, 1981

ASSOCIATED BUILDERS & Civil Action No.

CONTRACTORS, etc., C-80-2918 SW

Plaintiffs, Labor-Management

‘ Relations

Judgment

CARPENTERS VACATION AND HOLIDAY — and Order

TRUST FUND FOR NORTHERN

CALIFORNIA, et al,

Defendants.

The motions of defendants for the dismissal of the above-

entitled action on the ground of mootness and for summary

judgment having come on regularly for hearing by the Court on

Wednesday, November 4, 1981; Mark R. Thierman. Esq.,

having appeared for plaintiffs, Messrs. Johnson & Stanton by

Thomas E. Stanton, Jr., Esq., having appeared for defendants

Carpenters Vacation and Holiday Trust Fund for Northern

California and its Trustees and Messrs. Van Bourg, Allen,

Weinberg & Roger by Michael B. Roger, Esq., having ap-

peared for defendant Carpenters 46 Northern California

Counties Conference Board of the the United Brotherhood of

Carpenters and Joiners of America (AFL-CIO) on behalf of

itself and its member unions; the Court having considered the

briefs and arguments of counsel and the declarations and other

papers on file herein, hereby finds that the parties to the

Carpenters 46 Northern California Counties Agreements and

the 46 Counties Piledriving Agreement established by collec-

tive bargaining and implemented effective January 1, 1981,

modified dues check off procedures which comply with the

requirements of Seciton 392(c)(4) of the Labor-Management

Relations Act, 29 U.S.C. §186 (c)(4), and which were within

their negotiating authority under federal labor policy, thereby

rendering moot plaintiffs’ attack on the validity on the Vacation

26 Appendix

and Holiday Fund Trust Agreement and their request for relief

against defendants, and hereby determines that there is no

genuine issue as to any material fact and that said defendants

are entitled to a judgment in their favor as a matter of law:

It is ke reiv ORDERED, ADJUDGED AND DECREED

that:

1. Defendai:'s «-otions be and the same are hereby granted.

2. Plaintiffs’ frst amended complaint, and each claim or cause

of action asserted therein against defendants, and each of

them, be and the same hereby are dismissed with prejudice.

Dated: November 25, 1981

UNITED STATES DISTRICT JUDGE

Appendix 27

United States Court of Appeals

For the Ninth Circuit

FILED AND ENTERED MARCH 10, 1983

ASSOCIATED BUILDERS & No. 81-4122

CONTRACTORS, et al., 81-4359

Plaintiffs/Appellants, 81-4687

: i:

CV-80-2918-SW

CARPENTERS VACATION AND HOLIDAY

TRUST FUND FOR NORTHERN

CALIFORNIA et al.,

Defendants/Appellees.

APPEAL from the United States District Court for the

NORTHERN District of California

THIS CAUSE came on to be heard on the Transcript of the

Record from the United States District Court for the

NORTHERN District of CALIFORNIA and was duly submit-

ted.

ON CONSIDERATION WHEREOF, It is now here or-

dered and adjudged by this Court, that the appeals in Nos.

81-4122 and 81-4359, are DISMISSED. In appeal No. 81-4687

summary judgment is AFFIRMED.

28 Appendix

TEXT OF SECTION 302 OF THE LABOR

MANAGEMENT RELATIONS ACT (1976) 29 U.S.C. §186

SEC. 302.(a) It shall be unlawful for any employer or asso-

ciation of employers or any person who acts as a labor rela-

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

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

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

value—

(1) to any representative of any of his employees who are

employed in an industry affecting commerce; or

(2) to any labor organization, or any officer or employee

thereof, which represents, seeks to represent, or would

admit to membership, any of the employees of such em-

ployer who are employed in an industry affecting com-

merce; or

(3) to any employee or group or committee of employees

of such employer employed in an industry affecting com-

merce in excess of their normal compensation for the pur-

pose of causing such employee or group or committee

directly or indirectly to influence any other employees in the

exercise of the right to organize and bargain collectively

through representation of their own choosing; or

(4) to any officer or employee of a labor organization

engaged in an industry affecting commerce with intent to

influence him in respect to any of his actions, decisions, or

duties as arepresentative of employees or as such officer or

employee of such labor organization.

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

mand, receive, or accept, or agree to receive or accept, any

payment, loan, or delivery of any money or other thing of value

prohibited by subsection (a).

(2) It shall be unlawful for any labor organization, or for any

person acting as an officer, agent, representative, or em-

ployee of such labor organization, to demand or accept from

the operator of any motor vehicle (as defined in part II of the

Interstate Commerce Act) employed in the transportation of

property in commerce, or the employer of any such operator,

any money or other thing of value payable to such organization

or to an officer, agent, representative or employee thereof as

Appendix 29

a fee or charge for the unloading, or the connection with the

unloading, of the cargo of such vehicle: Provided, That nothing

in this paragraph shall be construed to make unlawful any

payment by an employer to any of his employees as compensa-

tion for their services as employees.

in respect to any money or other thing of value payable by an

employer to any of his employees whose established duties

include acting openly for such employer in matters of labor

relations or personnel administration or to any representative

of his employees, or to any officer or employee of a labor

organization, who is also an employee or former employee of

such employer, as compensation for, or by reason of, his

service as an employee of such employer; (2) with respect to

the payment or delivery of any money or other thing of value in

satisfaction of a judgment of any court or a decision or award of

an arbitrator or impartial chairman or in compromise, adjust-

ment, settlement, or release of any claim, grievance, or dis-

pute in the absence of fraud or duress; (3) with respect to the

sale or purchase of an article or commodity at the prevailing

market price in the regular course of business: (4) with re-

spect to money deducted from the wages of employees in

payment of membership dues in a labor organization: Pro-

vided, That the employer has received from each employee,

on whose account such deductions are made, a written as-

signment which shall not be irrevocable for a period of more

than one year, or beyond the termination date of the applicable

collective agreement, whichever occurs sooner: (5) with re-

spect to money or other thing of value paid to a trust fund

established by such representative, for the sole and exclusive

benefit of the employees of such employer, and their families

and dependants (or of such employees, families, 7d depen-

dants jointly with the employees of other employers making

similar payments, and their families and dependants): Pro-

vided: That (A) such payments are held in trust for the purpose

of paying, either from principal or income or both, for the

benefit of employees, their families and dependants, for medi-

cal or hospital care, pensions on retirement or death of em-

ployees, compensation for injuries or illness resulting from

30 Appendix

occupational activity or insurance to provide any of the forego-

ing, or unemployment benefits or life insurance, disability and

sickness insurance, or accident insurance; (B) the detailed

basis on which such payments are to be made is specified in a

written agreement with the employer, and employees and

employers are equally represented in the administration of

such fund together with such neutral persons as the represen-

tatives of the employers and the representatives of employees

may agree upon and in the event the employer and employee

groups deadlock on the administration of such fund and there

are no neutral persons empowered to break such deadlock,

such agreement provides that the two groups shall agree on an

impartial umpire to decide such dispute, or in event of their

failure to agree within a reasonable length of time, an impartial

umpire to decide such dispute shall, on petition of either

group, be appointed by the district court of the United States

for the district where the trust fund has its principal office, and

shall also contain provisions for an annual audit of the trust

fund, a statement of the results of which shall be available for

inspection by interested persons at the principal office of the

trust fund and at such other places as may be designated in

such written agreement; and (C) such payments as are in-

tended to be used for the purpose of providing pensions or

annuities for employees are made to a separate trust which

provides that the funds held therein caanot be used for any

purpose other than paying such pensions or anuities; (6) with

respect to money or other thing of value paid by any employer

to a trust fund established by such representative for the

purpose of pooled vacation, holiday, severance or similar

benefits, or defraying costs of apprenticeship, or other train-

ing program: Provided, That the requirements of clause (B) of

the proviso to clause (5) of this subsection shall apply to such

trust funds; or (7) with respect to money or other thing of

value paid by any employer to a pooled or individual trust fund

established by such representative for the purpose of (A)

scholarships for the benefit of employees, their families, and

dependents for study at educational institutions, or (B) child

care centers for preschool and school age dependents of

employees: Provided, That no labor organization or employer

Appendix 31

shall be required to bargain on the establishment of any such

trust fund, and refusal to do so shall not constitute an unfair

labor practice: Provided further, That the requirements of

clause (B) of the provisio to clause (5) of this subsection shall

apply to such trust funds*; or (8) with respect to money or any

other thing of value paid by any employer to a trust fund

established by such representative for the purpose of defray-

ing the costs of legal services for employees, their families,

and dependents for counsel or plan of their choice: Provided,

That the requirements of clause (B) of the provisio to clause

(5) of this subsection shall apply to such trust funds: Provided

further, That no such legal service shall be furnished: (A) to

initiate any proceeding directed (i) against any such employer

or its officers or agents except in workman’s compensation

cases, or (ii) against such labor organization, or its parent or

subordinate bodies, or their officers or agents, or (iii) against

any other employer or labor organization, or their officers or

agents, in any matter arising under the National Labor Rela-

tions Act, as amended, or this Act; and (B) in any proceeding

where a labor organization would be prohibited from defraying

the costs of legal services by the provisions of the Labor

Management Reporting and Disclosure Act of 1959. *

(d) Any person who willfully violates any of the provisons of

this section shall, upon conviction thereof, be guilty of a

misdemeanor and be subject to a fine of not more than $10,000

or to imprisonment for not more than one year, or both.

(e) The district courts of the United States and the United

States courts of the Territories and possessions shall have

jurisdiction, for cause shown, and subject to the provisions of

section 17 (relating to notice to opposite party) of the Act

entitled “An Act to supplemental existing laws against unlaw-

ful restraints and monopolies, and for other purposes,” ap-

proved October 15, 1914, as amended (U.S.C., title 28, sec.

381), to restrain violations of this section, without regard to

the provisions of sections 6 and 20 of such Act of October 15,

1914, as amended (U.S.C. title 15, sec. 17, and title 28, sec.

52), and the provisions of the Act entitled “An Act to amend

the Judicial Code and to define and limit the jurisdiction of

courts sitting in equity, and for other purposes,” approved

32 Appendix

March 23, 1932 (U.S.C., title 29, secs. 101-115).

(f) This section shall not apply to any contract in force on the

date of enactment of this Act, until the expiration of such

contract, or until July 1, 1948, whichever first occurs.

(g) Compliance with the restrictions contained in subsection

(c)(5)(B) upon contributions to trust funds, otherwise lawful,

shall not be applicable to contributions to such trust funds

established by collective agreement prior to Januray 1, 1946,

nor shall subsection (c)(5)(A) be construed as prohibiting

contributions to such trust funds if prior to January 1, 1947,

such funds contained provisions for pooled vacation benefits.

*Sec. 302(c\(7) has been added by Public Law 91-86, 91st Cong., S. 2068. 83

Stat. 133, approved Oct. 14, 1969; Sec. 302(c) (8) was added by Public Law 93-95,

93d Cong., S. 1423, 87 Stat. 314-315, approved Aug. 15, 1973.

Appendix K

ERISA, §§3(1), (4), (5), (6) and (14) (AX B)C)(D) and

(E); 29 U.S.C. §§ 1002(1), (4), (5), (6) and (14)

(A)(B)(C)(D) and (E).

DEFINITIONS

SEC. 3. For purposes of this title:

(1) The terms “employee welfare benefit plan” and “welfare

plan” mean any plan, fund, or program which was heretofore

or is hereafter established or maintained by an employer or by

an employee organization, or by both, to the extent that such

plan, fund, or program was established or is maintained for the

purpose of providing for its participants or their beneficiaries,

through the purchase of insurance or otherwise, (A) medical,

surgical, or hospital care or benefits, or benefits in the event of

sickness, accident, disability, death or unemployment, or va-

cation benefits, apprenticeship or other training programs, or

day care centers, scholarship funds, or prepaid legal services,

or (B) any benefit described in section 302(c) of the Labor

Management Relations Act, 1947 (other than pensions on

retirement or death, and insurance to provide such pensions).

eee

(4) The term “employee organization” means any labor

union or any organization of any kind, or any agency or em-

ployee representation committee, association, group, or plan,

in which employees participate and which exists for the pur-

pose, in whole or in part, of dealing with employers concerning

an employee benefit plan, or other matters incidental to em-

ployment relationships; or any employees’ beneficiary associ-

ation organized for the purpose in whole or in part, of establish-

ing such a plan.

(5) The term “employer” means any person acting directly

as an employer, or indirectly in the interest of an employer, in

relation to an employee benefit plan; and includes a group or

association of employers acting for an employer in such capac-

ity.

(6) The term “employee” means any individual employed by

an employer.

34 Appendix

eee

(14) The term “party in interest” means, as to an employee

benefit plan—

(A) any fiduciary (including, but not limited to, any admin-

istrator, officer, trustee, or custodian), counsel, or em-

ployee of such employee benefit plan;

(B) a person providing services to such plan;

such plan;

(E) an owner, direct or indirect, of 50 percent or more

of—

(i) the combined voting power of all classes of stock

entitled to vote or the total value of shares of all

classes of stock of a corporation.

(ii) the capital interest or the profits interest of a

partnership, or

(iii) the beneficial interest of a trust or unincorpo-

rated enterprise,

which is an employer or an employee organization de-

scribed in subparagraph (C) or (D);

ERISA §403 (c)(1), 29 U.S.C. § 1103 (c)(D.

ESTABLISHMENT OF TRUST

(c)(1) Except as provided in paragraph (2) or (3) or subsec-

tion (d), or under section 4042 and 4044 (relating to termina-

tion of insured plans), the asset of a plan shall never insure 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 ad-

ministering the plan.

ERISA §404 (a1), 29 U.S.C. § 1104 (a1).

FIDUCIARY DUTIES

SEC. 404.(a)(1) Subject to sections 403(c) and (d), 4042,

and 4044, a fiduciary shall discharge his duties with respect to

a plan solely in the interest of the participants and beneficiaries

and—

Appendix 35

(A) for the exclusive purpose of;

(i) providing benefits to participants and their be-

neficiaries; and

(ii) defraying reasonable expenses of administering

the plan;

(B) with the care, skill, prudence, and diligence under

the circumstances then prevailing that a prudent man

acting in a like capacity and familiar with such matters

would use in the conduct of an enterprise of a like charac-

ter and with like aims;

minimize the risk of large losses, unless under the cir-

cumstances it is clearly prudent not to do so: and

(D) in accordance with the documents and instruments

governing the plan insofar as such documents and instru-

ments are consistent with the provisions of this title.

(2) In the case of an eligible individual account plan (as

defined in section 407(d)(3) ), the diversification requirement

of paragraph (1) (C) and the prudence requirement (only to the

extent that it requires diversification) of paragraph (1)(B) is

not violated by acquisition or holding of qualifying employer

real property or qualifying employer securities (as defined in

section 407(d) (4) and (5) ).

ERISA §406(a)(1) and (b), 29 U.S.C. §1106(a)(1 and (b).

PROHIBITED TRANSACTIONS

SEC. 406 (a) Except as provided in section 408:

(1) A fiduciary with respect to a plan shall not cause the plan

to engage in a transaction if he knows or should know that such

transaction constitutes a direct or indirect —

(A) sale or exchange, or leasing, of any property be-

tween the plan and a party in interest:

(B) lending of money or other extension of credit be-

tween the plan and a party in interest:

the plan and a party in interest;

(D) transfer to, or use by or for the benefit of, a party in

interest, of any assets of the plan; or

36 Appendix

(E) acquisition, on behalf of the plan, of any employer

security or employer real property in violation of section

407(a)

eee

(b) A fiduciary with respect to a plan shall not—

(1) deal with the assets of the plan in his own interest or

for his own account,

(2) in his individual or in any other capacity act in any

transaction involving the plan on vehalf ofa party (or represent

a party) whose interests are adverse to the interests of the

plan or the interesis of its participants or beneficiaries, or

(3) receive any consideration for his own personal ac-

count from any party dealing with such plan in connection with

a transaction involving the assets of the plan.

ERISA §409, 29 U.S.C. §1109.

LIABILITY FOR BREACH OF FIDUCIARY DUTY

SEC. 409 (a) Any person who is a fiduciary with respect toa

plan who breaches any of the responsibilities, obligations, or

duties imposed upon fiduciaries by this title shall be personally

liable to make good to such plan any losses to the plan resulting

from each such breach, and to restore such plan any profits of

such fiduciary which have been made through use of assets of

the plan by the fiduciary, and shall be subject to such other

equitable or remedial relief as the court may deem approp-

riate, including removal of such fiduciary. A fiduciary may also

be removed for a violation of section 411 of this Act.

(b)No fiduciary shall be liable with respect to a breach of

fiduciary duty under this title if such breach was committed

before he became a fiduciary or after he ceased to be a

fiduciary.

ERISA §502, 29 U.S.C. §1132.

CIVIL ENFORCEMENT

SEC. 502 (a) A civil action may be brought —

(1) by a participant or beneficiary —

(A) for the relief provided for in subsection (c) of this

Appendix 37

section, or

(B) to recover benefits due to him under the terms of his

plan, to enforce his rights under the terms of the plan, or

to clarify his rights to future benefits under the terms of

the plan;

(2) by the Secretary, or by a participant, beneficiary or

fiduciary for appropriate relief under section 409;

(3) by a participant, beneficiary, or fiduciary (A) to enjoin

any act or practice which violates any provision of this title or

the terms of the plan, or (B) to obtain other appropriate

equitable relief (i) to redress such violation or (ii) to enforce

any provisions of this title or the terms of the plan;

(4) by the Secretary, or by a participant, or beneficiary for

appropriate relief in the case of a violation of 105(c);

(5) except as otherwise provided in subsection (b), by the

Secretary (A) to enjoin any act or practice which violates any

provision of this title, or (B) to obtain other appropriate equit-

able relief (i) to redress such violation or (ii) to enforce any

provision of this title; or

(6) by the Secretary to collect any civil penalty under sub-

section (i).

(b) In the case of a plan which is qualified under section

401(a), 403(a), or 405(a) of the Internal Revenue Code of 1954

(or with respect to which an application to so qualify has been

filed and has to been finally determined) the Secretary may

exercise his authority under subsection (a) (5) with respect to

a violation of, or the enforcement of, parts 2 and3 of this

subtitle (relating to participation, vesting, and funding), only

(1)(A) requested by the Secretary of the Treasury, or

1(B) one or more participants, beneficiaries, or fiduciaries,

of such plan request in writing (in such manner as the Secre-

tary shall prescribed by regulation) that he exercise such

authority on their behalf. In the case of such a request under

this paragraph he may exercise such authority only if he

determines that such violation affects, or such enforcement is

necessary to protect, claims of participants or beneficiaries to

benefits under the plan.

38 Appendix

(2) The Secretary shall not initiate any action to enforce

section 515.

request for any information which such administrator is re-

quired by this title to furnish to a participant or beneficiary

(unless such failure or refusal results from matters reasonably

beyond the control of the administrator) by mailing the mate-

rial requested to the last known address of the requesting

participant or beneficiary within 30 days after such request

may in the court’s discretion be personally liable to such

participant or beneficiary in the amount of up to $100 a day

from the date of such failure or refusal, and the court may in its

discretion order such other relief as it deems proper.

(d)(1) An employee benefit plan may sue or be sued under

this title as an entity. Service of summons, subpena, or other

legal process of a court upon a trustee or an employee benefit

plant in his capacity as such shall constitute service upon the

employee benefit plan. In a case where a plan has not desig-

nated in the summary plan description of the plan an individual

as agent for the service of legal process, service upon the

Secretary shall constitute such service. The Secretary, not

later than 15 days after receipt of service under the preceding

sentence, shall notify the administrator or any trustee of the

plan of receipt of such service.

(2) Any money judgment under this title against an em-

ployee benefit plan shall be enforceable only against the plan as

an entity and shall not be enforceable against any other person

unless liability against such person is established in his individ-

ual capacity under this title.

(e)(1) Except for actions under subsection (a)(1)(B) of this

section, the district courts of the United States shall have

exclusive jurisdiction of civil actions under this title brought by

the Secretary or by a participant, beneficiary, or fiduciary.

State courts of competent jurisdiction and district courts of the

United States shall have concurrent jurisdiction of actions

under subsection (a)(1)(B) of this section.

(2) Where an action under this title is brought in a district

court of the United States, it may be brought in the district

where the plan is administered, where the breach took place,

Appendix 39

or where a defendant resides or may be found, and process

may be served in any other district where a defendant resides

or may be found.

(f) The district courts of the United States shall have juris-

diction, without respect to the amount in controversy or the

citizenship of the parties, to grant the relief provided for in

subsection (a) of this section in any action.

(g)(1) In any action under this title (other than an action

described in paragraph (2) by a participant, beneficiary, or

fiduciary, the court in its discretion may allow a reasonable

attorney's fee and costs of action to either party.

(2) In any action under this title by a fiduciary for or on behalf

of a plan to enforce section 515 in which a judgment in favor of

the plan is awarded, the court shall award the plan—

(A) the unpaid contributions

(B) interest on the unpaid contributions,

“(i) interest on the unpaid contibutions, or

“(ul) liquidated damages provided for under the plan in

an amount not in excess of 20 percent (or such higher

percentage as may be permitted under Federal or

State law) of the amount determined by the court under

subparagraph (A),

(D) reasonable attorney's fees and costs of the action, to be

paid by the defendant, and

(E) such other legal or equitable relief as the court deems

appropriate. For purposes of this paragraph, interest on un-

paid contributions shall be determined by using the rate pro-

vided under the plan, or, if none, the rate prescribed under

section 6621 of the Internal Revenue Code of 1954.

(h) A copy of the complaint in any action under this title bya

participant, beneficiary, or fiduciary (other than an action

brought by one or more participants or beneficiaries under

subsection (a)(1)(B) which is solely for the purpose of recover-

ing benefits due such participants under the terms of the plan)

shall be served upon the Secretary and the Secretary of the

Treasury by certified mail. Either Secretary shall have the

right in his discretion to intervene in any action, except that

the Secretary of the Treasury may not intervene in any action

40 Appendix

under part 4 of this subtitle. If the Secretary brings an action

under subsection (a) on behalf of a participant or beneficiary,

he shall notify the Secretary of the Treasury.

(i) In the case ofa transaction prohibited by section 406 by a

party in interest with respect to a plan to which this part

applies, the Secretary may assess a civil penalty against such

party in interest. The amount of such penalty may not exceed

5 percent of the amount involved (as defined in section

4975(f)(4) of the internal Revneue Code of 1954); except that if

the transaction is not corrected (in such manner as the Secre-

tary shall prescribe by regulation, which regulations shall be

consistent with section 4975(f)(5) of such Code) within 90

days after notice from the Secretary (or such longer period as

the Secretary may permit), such penalty may be in an amount

not more than 100 percent of the amount involved. This

subsection shall not apply to a transaction with respect to a

plan described in section 4975 (e)(1) of such Code.

(j) In all civil actions under this title, attorneys appointed by

the Secretary may represent the Secretary (except as pro-

vided in section 518(a) of title 28, United States Code), but all

such litigation shall be subject to the direction and control of

the Attorney General.

(k) Suits by an administrator, fiduciary, participant, or ben-

eficiary of an employee benefit plan to review a final order of

the Secretary, to restrain the Secretary from taking any action

contrary to the provisions of this Act, or to compel him to take

action required under this title, may be brought in the district

court of the United States for the district where the plan has its

principal office, or in the United States District Court for the

District of Columbia.

Appendix

LAWFUL DUES

CHECK-OFF

FRINGE

BENEFITS

EMPLOYER >

DUES

CHECK OFF

zO-2¢

TAXED &

NON-TAXED

FRINGE

BENEFIT

TRUSTS

CHECK-OFF

AUTHORIZATION

wages

EMPLOYEE <—

VACATION

BENEFIT PLAN

ONCE A YEAR

(supplement unemployment

in seasonal industry)

PRE 1981 SCHEME

r-— EMPLOYER A

— B

EMPLOYER C

WAGES

Fringes

* ay TRUST

Dues FUNDS

abe ae

ww 2 st. | VACATION

O75“ '| | BeNerrrs

era” | ONCE

wee A YEAR

Union 50% of trustee (less dues

AUTHORIZATION and interest

CARDS on dues)

EMPLOYEES ~

42 Appendix

POST 1981 SCHEME

one-month

hold controlled

by Trust Fund

and/or Union

EMPLOYERA—___ ['g CONTROL ae

Fringes ba

EMPLOYERB & : MONEY —_| FUNDS

Dues K .

—— EMPLOYER C Sates

Wa. ose

monthly a) Onc

oh fl | | ave

interest PS

& union 50% |

of trustees |

UNION

Authorization for

dues check-off

prove cement mtemapen ees stuns tao nm eames semen oat

——-» EMPLOYEES <

(less dues and interest on dues money)

Note: Union gets interest on money held as dues.

Employee vacation fund suffers one month “delay”

while bank clears checks.

“Old” check-off and “new” check-off cards used inter-

changeably.

Bank investing money at Trustee funds/Union request.

Fund (not Bank) impliments dues check-off (keep cards,

determines amounts, etc.)

Appendix 43

AGREEMENT

It is hereby agreed by and between the undersigned parties

to that agreement known as the Carpenters 46 Northern

California Counties Agreement that said Agreement shall be

modified and amended effective January 1, 1981, as follows:

1. The provisions of Section 36, as amended by the agree-

ment dated June 15, 1977, and the reference to “Trust Fund

Enforcement (Section 36)” under the heading “Fringe Bene-

fits” in Section 40, are deleted.

2. The amount listed for Supplemental Dues under “Vaca-

tion” below the “Fringe Benefits” heading in section 40 is

increased from $.20 Total to $.25 Total effective for all work

performed on and after January 1, 1981.

3. The following paragraph is added to Section 43:

“The parties agree that up to a maximum of $100,000 in any

one calendar year shall be provided to insure employer contri-

butions to the Vacation and Holiday Fund, which after all

practical legal and administrative means of collection available

to the Fund and the Union have been exhausted, have been

declared uncollectible by the Joint Delinquency Committee of

the Northern California (MWW R Bes) Carpenters Funds. Of

this amount, up to $50,000 shall be provided by the Union; and

up to $50,000 shall be provided by the Construction Industry

Advancement Fund and the California Construction Ad-

vancement Program, in proportion to the amount of contri-

butions received in the calendar year by such Fund and Pro-

grams, respectively.”

The following paragraphs are added to Section 43A:

“Effective for all work performed on and after January 1,

1981, the provisions of the first paragraph of this Section shall

not apply, and the amount covered by the Supplemental Dues

option in connection with the Vacation and Holiday contribu-

tion, amounting to a total of twenty-five cents (.25¢) per hour,

shall be remitted by the individual employer as follows:

(1) The individual employer shall include such amount in the

single check mailed with his combined employer report of

contributions to the Depository Bank for the Northern

California Carpenters Trust Funds.

(2) In such report the individual employer shall designate

44 Appendix

the Depository Bank as his or its agent to receive written dues

authorizations from employees covered by this Agreement

pursuant to Section 302(c)(4) of the Labor-Management Rela-

tions Act, as amended, and any revocation of such authoriza-

tions, and shall direct the Bank (a) to deposit the monies

reported under the column headed Supplemental Dues (Col-

umn B) in a special account, (b) to transfer monthly from such

account the monies paid with respect to the work of each

employee who has on file with the Bank an unrevoked dues

authorization in a form complying with law to the account of the

Union as supplemental dues and (c) to transfer the remaining

monies in said account to the Carpenters Vacation and Holiday

Trust Fund for Northen California for credit to the vacation

and holiday accounts of the other employees. Any delinquency

in the payment of such amount shall be subject to the same

liquidated damage, interest and other delinquency provisions

applicable to contributions to the Northern California Car-

penter Funds.

It is the intent and purpose of the parties to comply fully with

all laws, rules and regulations applicable to the dues check-off

provided by this Section. If any provision of this Section, or

any procedure in the implementation or administration of this

Section, is determined to violate any such law, rule or regula-

tion, the parties will promptly enter into lawful negotiations to

correct such violation.

The Union shall exonerate, reimburse and save harmless

the Employer, each individual employer, the Bank or other

depository designated pursuant to this Section and the Car-

penter Funds Administrative Office of Northern California,

Inc., and their respective officers, directors, agents, and

Appendix 45

employees, individually and collectively, against any and all

liabilities and reasonable expenses arising out of the payment,

receipt or distribution of the amounts listed in section 40 for

Supplemental Dues.”

Executed this 23 day of February, 1981

ASSOCIATED CARPENTERS 46

GENERAL NORTHERN

CONTRACTORS OF CALIFORNIA

CALIFORNIA, INC., COUNTIES

BAY COUNTIES CONFERENCE BOARD

GENERAL

CONTRACTORS

ASSOCIATION, INC.

BY BY

46 Appendix

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