Amicus Curiae Brief — Laborers Health & Welfare Trust Fund v. Advanced Lightweight Concrete Co.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

LABORERS HEALTH AND WELFARE TRUST FUND

FOR NORTHERN CALIFORNIA, et al.,

Petitioners,

V.

ADVANCED LIGHTWEIGHT CONCRETE Co., INC.,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

en

MOTION FOR LEAVE TO FILE A BRIEF

AMICUS CURIAE AND BRIEF AMICUS CURIAE OF THE

NATIONAL COORDINATING COMMITTEE

FOR MULTIEMPLOYER PLANS

IN SUPPORT OF PETITIONERS

GERALD M. FEDER *

DAVID R. LEVIN

FEDER & ASSOCIATES

1527 - 18th Street, N.W.

Washington, D.C. 20036

(202) 387-1515

Attorneys for National

Coordinating Committee

for Multiemployer Plans

Dated: May 1987 * (Counsel of Record)

WILSON - Eres Printing Co., Inc. - 789-0096 - WasHINcTon, D.C. 20001

S

No. 85-2079

LABORERS HEALTH AND WELFARE TRUST FUND

FOR NORTHERN CALIFORNIA, et al.,

Petitioners,

v.

ADVANCED LIGHTWEIGHT CONCRETE Co., IN c.,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

MOTION OF THE

NATIONAL COORDINATING COMMITTEE

FOR MULTIEMPLOYER PLANS FOR LEAVE

TO FILE A BRIEF AMICUS CURIAE

To the Honorable Chief Justice and Associate Justices of

the Supreme Court of the United States:

Pursuant to Rule 36 of the Rules of this Court, the

National Coordinating Committee for Multiemployer

Plans (“NCCMP”) respectfully moves for leave to file

the accompanying brief amicus curiae urging reversal of

the decision below. Petitioners have consented to the fil-

ing of this brief; the respondent has not.

INTEREST OF THE NCCMP

The NCCMP is a nonprofit, tax-exempt organization

formed after the enactment of the Employee Retirement

Income Security Act of 1974 (“ERISA”)* to represent

the interests of multiemployer plans and their partici-

pants in the regulation of benefit plans under ERISA and

other laws. More than 180 multiemployer plans (includ-

ing the petitioners) and related international unions are

members of the NCCMP. These plans are fairly repre

sentative of all the nation’s multiemployer plans, covering

more than nine million workers and their families.

contacts with the hundreds of trustees charged with op-

erating multiemployer plans, the NCCMP believes that it

is uniquely qualified to provide the Court with insight

concerning the practical, negative implications of the de-

cision below for multiemployer plans and to state the

position of trustees, participants, and beneficiaries of such

plans. The NCCMP has recently participated as an

amicus curiae before this Court in Connolly v. PBGC,

475 US. ——, 89 L.Ed2d 166 (1986) and Central

States, Southeast and Southwest Areas Pension Fund v.

Central Transport Inc., 472 US. ——, 86 L.Ed.2d 447

(1985).

The NCCMP urges this Court to reverse the decision

below that multiemployer plan trustees cannot invoke fed-

eral jurisdiction under ERISA to collect all delinquent

contributions owed to a plan by an employer. That deci-

sion, if left unreversed, will have broad, adverse conse-

quences upon the financial soundness of the NCCMP’s

member employee benefit plans and, therefore, upon the

plans’ ability to provide benefits.

* ERISA was substantially amended by the Multiemployer Pen-

sion Plan Amendments Act of 1980 (“MPPAA”), P.L. 96-364, 94

Stat. 1208 (1980).

ISSUES DEVELOPED BY THE NCCMP

The NCCMP’s brief focuses on issues which it believes

may not be adequately presented elsewhere, including:

(a) the particularly adverse impact that the deci-

sion below will have on national employee bene-

fit policy generally, and on multiemployer plans

in particular; and

(b) the fundamental conflict in principle between the

decision of the court below and decisions of this

Court, as well as a conflict in principle between

the decision of the court below and decisions in

the other federal circuits.

The NCCMP, therefore, moves for leave to file the ac-

companying brief amicus curiae.

Dated: May 1987

Respectfully submitted,

GERALD M. FEDER *

DAVID R. LEVIN

FEDER & ASSOCIATES

1527 - 18th Street, N.W._

Washington, D.C. 20036

(202) 387-1515

Attorneys for National

Coordinating Committee

for Multiemployer Plans

* (Counsel of Record)

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES S8 ii

I. INTEREST OF THE NATIONAL COORDI-

NATING CQMMITTEE FOR MULTIEM-

PLOYER PLANS 2

II. SUMMARY OF REASONS FOR REVERSAL... 3

III. REASONS FOR REVERS Al 6

A. Multiemployer plan trustees must have an

independent, federal cause of action to col-

lect delinquent contributions for the entire

period that employers have an obligation to

make such contribution 6

B. The NLRB does not provide trustees with a

forum to satisfy their fiduciary duty to seek

to maintair. the financial stability of multi-

ee 11

. T— 15

ii

TABLE OF AUTHORITIES

Cases: Page

Baker v. International Alliance of Theatrical Stage

Employees, 691 F.2d 1291 (9th Cir. 1982) 13

Board of Trustees, Container Mechanics Welfare/

Pension Fund v. Universal Enterprises, Inc., 751

F.2d 1177 (11th Cir. 19889 ————ͤ—(—Ä—.ͤͥ2—ęꝗQS5ꝑłœrƷ2— 5, 11

Central States Southeast and Southwest Areas

Pension Fund v. Central Transport, Inc., 472

U.S. ——, 86 L.Ed.2d 447 (1985) -.......... 4, 5, 6, 7, 8, 14

Central States Southeast Pension Fund v. Hitch-

ings Trucking, Inc., 472 F. Supp. 1243 (E.D.

TD , ) ae 7

Fibreboard Corporation v. NLRB, 379 U.S. 203

(1964) 14

Gilbert v. Burlington Industries, Inc., 765 F.2d 320

(2d Cir. 1985) ; af d, 477 U.S. ——, 91 L.Ed.2d

GES (1660 ————— ——— 12

Jime Neff, Inc. v. Todd, 461 U.S. 260 (1983) 4, 7

Laborers Health & Welfare Trust Fund v. Kauf-

man & Broad, 707 F. 2d 412 (9th Cir. 1983) ........ 12

Laborers Health & Welfare Trust v. Advanced

Lightweight Concrete, 779 F.2d 497 (9th Cir.

ee 11

Leigh v. Engle, 727 F.2d 113 (7th Cir. 1984 11

Lewis v. Benedict Coal Corp., 361 U.S. 459 (1960) 4

Malone v. White Motor Corp., 435 U.S. 497 (1978). 9

Massachusetts Mut. Life Ins. Co. v. Russell, 473

U.S. ——, 87 L. Ed. 2d 96 (1985) 12

Mo-Kan Teamsters Pension Fund v. Botsford

Ready Miz, 605 F. Supp. 1441 (W.D. Mo. 1985). 5, 6,

11, 13

Moldovan v. Great Atlantic & Pacific Tea Co., Inc.,

790 F.2d 894 (3d Cir.), petition for cert. filed,

55 U.S. L. W. 3127 (U.S. Aug. 8, 1986) ................. 4

Nachman Corporation v. PBGC, 446 U.S. 359

Oe 8

NLRB v. Amaz Coal, 453 U.S. 322 (1981) ............... 4,7,13

NLRB v. Laborers International Union of North

America, AFL-CIO, Local 282, 567 F.2d 833 (Stn

Cir. 1977) 14

iii

TABLE OF AUTHORITIES—Continued

Page

NLRB v. Marsden, 701 F.2d 238 (2d Cir. 1983) 12

NLRB v. Sears, Roebuck & Co., 421 U.S. 132

0, ) ee 6, 12

NLRB v. Seven-Up Bottling Co., 344 U.S. 344

(1953) 14

NLRB v. Shipbuilding Local 22, 391 US. 418

55 ——7jr——E—è———7r——.—ß—ß—— 13

Office and Professional Employees Insurance Trust

Fund v. Laborers Fund Administrative Office,

783 F.2d 919 (9th Cir. 1986) -....-......-.....---...-----. 4

Pattern Makers’ Pension v. Badger Pattern Works,

615 F. Supp. 792 (N.D. III. 19858) 4, 6, 11

Penn Central Transportation Co., In re, 484 F. 2d

1300 (3rd Cir. 1973), cert. denied, 415 U.S. 951

|, | oe 14

Pokratz v. Jones Dairy Farm, 771 F.2d 206 (7th

I 9

Republic Steel Corp. v. NLRB, 311 U. 8. 7 (1940) 5, 13

Retail Clerks v. Schermerhorn, 375 U.S. 96 (1963) 9

Roberts v. Burlington Industries, Inc., 54 U.S.L.W.

3836 (U.S. June 24, 1988)005ĩ/ʒ·: 12

Rosen v. Hotel and Restaurant Employees, Etc.,

637 F.2d 592 (3d Cir.), cert. denied, 454 U.S. 898

en 8

Saco Local Development Corp., In re, 711 F.2d

GEE Chad Cle. EDGR) «.......-20-02-0nceve-crsecsecosccsessesceeveces 14

Saez v. Goslee, 463 F.2d 214 (ist Cir.), cert. de-

nied, 409 U.S. 1024 (1972) 12

Smith v. CMTA-IAM Pension Trust, 654 F.2d 650

(Bite Cle. 5 ——7— ——7jr—˖ 12

Tate v. New York, New Haven & Hartford R. R.,

332 F.2d 449 (2d Cir. 196)))))))))))ÿ;j: 14

U.A. 198 Health & Welfare, Education & Pension

Funds v. Rester Refrigeration Service, Inc., 790

F.2d 423 (5th Cir.), petition for cert. filed, 55

U.S.L.W. 3152 (U.S. Aug. 20, 1986) 4

UMWA Health & Retirement Funds v. Robinson,

PIII 9

iv

TABLE OF AUTHORITIES—Continued

Page

Van Gunten v. Central States, Etc., 672 F.2d 587

nee 7

Wisconsin Department of Industry v. Gould, Inc.,

475 U.S. ——, 89 L.Ed.2d 223 (1986) ............... 13

Federal Statutes:

. 10

e —— 14

.. 14

ZZ 7

TT 12

r ... 12

29 U.S.C. § 164 (c) (17 r 12

3 — 6

29 U.S.C. § 101 — — — 3

e 2, 3, 6, 13

29 U.S.C. § 1001 (o) — 2, 5, 6, 13

r 6

D 0 6

r ...r 7

29 U.S.C. 8 1103 (a . 7

Z — 5, 7, 8, 9

r 7,9

. — CE 5, 8

. 3, 4, 7, 13

7 12

—— — 7, 8, 9, 13

Legislative Materials:

Report of the House of Representatives Committee

on Education and Labor on H.R. 3904, H. Rep.

No. 96-869 (Part I);-96th Cong., 2d Sess. (April

K 9

S. 3017 ERISA Improvements Act of 1978 8

Senate Labor Committee Summary and Analysis of

Consideration of S. 1076 (April 1980) 10

126 Cong. Rec. 23039, 23288 (1980)ÿꝛ) 10

v

TABLE OF AUTHORITIES—Continued

Administrative Materials: Page

969880 000.——E᷑˖.;¶k-—-— 14

29 C. F. R. § 101.9 (1984) 14

29 C. F. R. 6 101.9 (e) (19849 5

Department of Labor Advisory Op. No. 76-89

(Aug. 31, 1976) 6

Gen. Couns. Mem. 39048 (Nov. 2, 1983) 6, 8

Miscellaneous:

2 Scott on Trusts §§ 170, 171 (3d ed. 1967) 4

2A Sutherland Stat. Const., § 46.07 at 110 (4th

rn. 11

IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

No. 85-2079

LABORERS HEALTH AND WELFARE TRUST FUND

FOR NORTHERN CALIFORNIA, et al.,

Petitioners,

v.

ADVANCED LIGHTWEIGHT CONCRETE Co., INC.,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF AMICUS CURIAE OF THE

NATIONAL COORDINATING COMMITTEE

FOR MULTIEMPLOYER PLANS

IN SUPPORT OF PETITIONERS

The National Coordinating Committee for Multiem-

ployer Plans (“NCCMP”) submits this brief amicus

curiae to urge the Court to reverse the holding below that

multiemployer plan trustees cannot invoke federal juris-

diction under ERISA to exercise their fiduciary respon-

sibility for collecting delinquent contributions for the

period subsequent to the expiration date set forth in a

collective bargaining agreement, but prior to the bar-

2

gaining parties reaching impasse or a new agreement.

Instead, the court below held that trustees must seek to

invoke the jurisdiction of the National Labor Relations

Board (the “NLRB”) to collect contributions due and

owing during that interim period.

I. INTEREST OF THE NATIONAL COORDINATING

COMMITTEE FOR MULTIEMPLOYER PLANS

The nature and purpose of the NCCMP is set forth in

the accompanying motion for leave to file this brief. As

set forth herein, the NCCMP submits that the decision

below contravenes national employee benefit policies estab-

lished by Congress and recognized by this Court. Accord-

ingly, the decision below—unless reversed—will have a

significant adverse effect upon the nation’s multiemployer

plans and the benefit security of more than nine million

plan participants and their families.

The impact of the decision below is to force multiem-

ployer plans to provide benefits for hours worked, while

denying the self-same plans a judicial forum and, in

some circumstances, any forum in which to collect the

contributions that should have been paid for those hours

worked. That result is totally at odds with the purposes

of ERISA. See, e.g., 29 U.S.C. §§ 1001 (b), 1001a.

A financially sound pension plan, and one operating

within the confines of law, requires a proper actuarial

relationship between employer contributions and employee

benefits. The necessary predicate to maintaining the

legally mandated financial integrity of multiemployer

pension plans is the implementation of an ongoing system

to collect employer contributions. The inabilit) to collect

these contributions can lead to inadequate funding of the

multiemployer plans involved.

After the expiration date of a collective bargaining

agreement, employees in the bargaining unit commonly

continue to work during the period of negotiations for a

new agreement between the employer and the union. Such

negotiations may continue for extended periods of time.

The decision below undercuts efforts to ensure proper

funding of employee benefit plans, by encouraging em-

ployers to refuse to contribute during the post-expiration

period when negotiations are ongoing. This incentive not

to contribute, resulting from the decision below, is bol-

stered by employers’ awareness that the NLRB may

compromise the amount of contributions the employer

owes to the plan. Moreover, the NLRB may permit an

employer to pay to the plan something less than the

mandatory remedy for collection actions brought in fed-

eral court, i.e., contributions, interest, liquidated dam-

ages, costs, and reasonable attorney fees, 29 U.S.C. § 1132

(g) (2). Thus, the decision below undermines the fiduci-

ary authority of trustees and threatens the financial foun-

dation of multiemployer plans.

By enacting ERISA, Congress sought to enhance the

financial stability of multiemployer plans and to foster

the maintenance and growth of such plans. 29 U.S.C.

1001. The legislative history of both ERISA and

MPPAA confirms the importance of ready and direct ac-

cess to the federal courts to collect contributions. Ensur-

ing the funding of pension plan benefits through timely

payment of employer contributions is one of the stat-

ute’s principal objectives. Id.; 29 U.S.C. §100la. The

decision below is contrary to these Congressional goals.

It is to elaborate upon these concerns that the NCCMP

has sought permission to file this brief.

II. SUMMARY OF REASONS FOR REVERSAL

A. Consistent with established Congressional policy

recognizing the importance of employee benefits to the

financial well-being of millions of Americans, 29 U.S.C.

1001, 1001a, this Court has declared that employee

benefit plan trustees have an absolute duty of loyalty to

plan beneficiaries and the exclusive authority to control

4

plan administration. See Central States Southeast and

Southwest Areas Pension Fund v. Central Transport,

Inc., 472 U.S. ——, 86 L.Ed. 2d 447 (1985); NLRB v.

Amar Coal Co., 453 U.S. 322 (1981). To fulfill these

responsibilities, this Court has consistently recognized the

right and duty of multiemployer plan trustees to calcu-

late and collect employer contributions due and owing to

employee benefit funds. See Central Transport; Jim

McNeff, Inc. v. Todd, 461 U.S. 260 (1983); Am Coal

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

The independent right of trustees to collect employer

contributions is a fundamental prerequisite to the dis-

charge of all fiduciary duties. Accord, Central Transport;

Jim McNeff, Inc. v. Todd; 2 Scott on Trusts §§ 170, 171

(3d ed. 1967). Moreover, ERISA expressly directs the

federal courts to award not only the delinquert contribu-

tions, but also interest, liquidated damages, an the cost

of collection, including reasonable attorney fees. 9 U.S.C.

§ 1132(g) (2). Congress stated its intent that the pur-

pose of this mandatory judicial remedy is to discourage

delinquencies and to foster the financial integrity wf mul-

tiemployer plans. Yet, contrary to these fundamental

principles and the express intent of Congress, the court

below limited trustees’ authority to collect delinquent con-

tributions that are due after the expiration date of a

collective bargaining agreement, but prior to impasse or

the successful negotiation of a new bargaining agree-

ment.“ The decision below forces trustees to seek to in-

The Third and Fifth Circuits and another panel of the Ninth

Circuit have reached the same result in similar cases. Moldovan v.

Great Atlantic & Pacific Tea Company, Inc., 790 F.2d 894 (2d Cir.

1986); CL. A. 198 Health & Welfare, Education & Pension Funds

v. Rester Refrigeration Service, Inc., 790 F.2d 423 (5th Cir. 1986

Office and Professional Employees Insurance Trust Fund v. Labor-

ers Fund Administrative Office, 783 F.2d 919 (9th Cir. 1986). The

Fifth and Ninth Circuits cited the decision below. See also Pattern

Makers’ Pension v. Badger Pattern Works, 615 F. Supp. 792, 799-

800 (N.D. III. 1985).

voke the jurisdiction of the NLRB, albeit that agency

cannot provide the remedies mandated by Congress under

ERISA. Accord, Republic Steel Corp. v. NLRB, 311

U.S. 7, 10-12 (1940). Yet, Congress directed that plan

trustees be given “ready access” to the federal courts,

29 U.S.C. § 1001(b).

The decision of the court below, which failed to recog-

nize federal district court jurisdiction under ERISA

sufficiently broad to enable plan trustees themselves to

enforce employer funding obligations, threatens the finan-

cial integrity of the multiemployer plans that trustees—

not the NLRB—are obligated to protect. See, e.g., 29

U.S.C. § 1104.

B. The Congress has chosen to exclude government

agencies from the contribution collection process of multi-

employer plans. See 29 U.S.C. § 1132(b) (2). That point

has been underscored by this Court and the Department

of Labor, which, as a practical matter, simply does not

have “the resources for policing the day-to-day operations

of each multiemployer plan ir the Nation.” Central

Transport, Inc., 86 L.Ed.2d at 462. Nonetheless, the deci-

sion below forces trustees to resort to the NLRB admin-

istrative mechanism in order to exercise their essential

fiduciary right to collect delinquent contributions, even

though the NLRB may fashion a remedy that compro-

mises the interests of the employee benefit plan’s partici-

pants. See, e.g., Mo-Kan Teamsters Pension Fund v.

Botsford Ready Miz, 605 F. Supp. 1441, 1444 (W.D.

Mo. 1985) ; 29 C. F. R. § 101.9 (e

Moreover, courts in at least two circuits have con-

cluded that neither employee benefit funds nor their

trustees have standing to invoke the jurisdiction of the

NLRB. Board of Trustees, Container Mechanics Welfare/

Pension Fund v. Universal Enterprises, Inc., 751 F.2d

1177, 1183 (Iich Cir. 1985); Botsford Ready Miz, 605

F. Supp. at 1447.“ Applying the ruling below in

circuits excludes plan trustees from any forum in

to collect contributions due and owing,

continue to have the obligation to provide the benefits

which the contributions should have been made. See

tral Transport, 86 L.Ed.2d at 455 n.7 and 463

this

Absent a uniform rule enunciated

tees will be whipsawed between the diminution of their

authority by the court below and the ultimate

bilities imposed on them by the judiciary, see C

Transport; by the executive, see Gen. Couns. Mem. 39048

(Nov. 2, 1983) reprinted in Pens. Rep. (BNA) No. 471

at 1764-65 (Nov. 21, 1983) and Department of Labor

Advisory Op. No. 76-89 (Aug. 31, 1976); and by the

Congress, see 29 U.S.C. §§ 1001 (b), 1001a, 1053, 1054.

In Pattern Makers’ Pension v. Badger Pattern Works, 615

F. Supp. at 799, the court expressly left unresolved the issue of

whether multiemployer plan trustees have standing to file unfair

labor practice charges with the NLRB.

Even in a circuit where the trustees are held to have standing

to file an unfair labor practice charge, the NLRB may decline to

exercise jurisdiction for various reasons, and its decision to do so

is essentially precluded from review. See, eg, NLRB vw. Sears,

Roebuck & Co., 421 U.S. 132, 138-39 (1975).

7

tory obligation to pay and fund trustees have a statutory

duty to try to collect. See 26 U.S.C. § 412 and 29 U.S.C.

§§ 1082, 1104, 1106, 1132(g)(2), 1145. Moreover,

ERISA “vests the ‘exclusive authority and discretion to

manage and control the assets of the plan’ in the trustees

alone . . 29 U.S.C. § 1103 (a).“ Amazx Coal, 453 U.S.

at 333.

One of Congress’ principal purposes in adopting amend-

ments to ERISA in 1980 was “to strengthen the funda-

mental requirements and enhance the financial stability

of multiemployer pension plans,” Amazx Coal, 453 U.S.

at 338 n.22, by, inter alia, assuring that fund trustees

will have the ability to recover delinquent contributions

quickly and effectively. Accord, Central Transport; Jim

McNeff, Inc. v. Todd; 29 U.S.C. §§ 1132 (g) (2), 1145.

Moreover, as the Court acknowledged in Central Trans-

port, 86 L.Ed.2d at 460, trustees have no real choice in

this matter. Any failure on the part of fund trustees to

pursue diligently their obligation to seek to collect con-

tributions can constitute a breach of their statutory fidu-

ciary obligation, as well as an unlawful extension of

credit to a delinquent employer. /d.

Furthermore, the fact that an employer has wrongfully

failed to make contributions on behalf of an employee has

been held not to form the basis for trustees’ refusal to

pay the employee a benefit. See Van Gunten v. Central

States, Etc., 672 F.2d 586 (6th Cir. 1982); Central

States Southeast Pension Fund v. Hitchings Trucking,

Inc., 472 F. Supp. 1243, 1247 (E.D. Mich. 1979). Thus,

the entitlement to and amount of a pension benefit are a

function of hours of service, not hours of service for

which contributions were paid. Id. Moreover, in the view

of the Internal Revenue Service,

a multiemployer plan must credit an employee’s

years of service even though the employer failed to

make the required contributions. . . [blecause... .

8

the employee should not bear the risk of employer

non-contribution.

Gen. Couns. Mem. 39048 (Nov. 2, 1983).

In order “to make as certain as possible that pension

fund assets would be adequate” to pay benefits due, Con-

gress “prescribed standards of conduct” for plan fidu-

ciaries. Nachman Corporation v. PBGC, 446 U.S. 359,

375 (1980). See 29 U.S.C. § 1104. Therefore, the trus-

tees, upon whom Congress has imposed a nondelegable

fiduciary duty to maintain the financial integrity of the

trust, must have a meaningful mechanism to seek to col-

lect the amounts that employers are obligated to contrib-

ute. Central Transport; Rosen v. Hotel and Restaurant

Employees, Etc., 637 F.2d 592 (3d Cir. 1981).

In this regard, “neither the structure of ERISA nor

the legislative history show any Congressional intent that

trustees should rely primarily on centralized federal mon-

itoring of employer contribution requirements.“ Cen-

tral Transport, 86 L.Ed.2d at 463. Indeed, Congress ex-

pressly withheld from the Secretary of Labor the au-

thority to initiate actions to enforce an employer’s con-

tribution obligations. See 29 U.S.C. §§ 1132 (b) (2), 1145.

In contrast, “trustees were given the authority to sue to

enforce an employer’s obligations to a plan.” Central

Transport, 86 L.Ed.2d at 463. “The Court of Appeals’

argument obviously conflicts with one of the principal

Congressional concerns motivating the passage of the Act,

that plans should assure themselves of adequate funding

For example, 8.3017 (entitled the “ERISA Improvements Act

of 1978”) provided, inter alia, for the establishment of an inde-

pendent federal agency—the Employee Benefit Commission—to ad-

minister and enforce Titles I and IV of ERISA. Although 8.3017

included a provision identical to 29 U.S.C. § 1145, obligating em-

ployers to contribute, the bill expressly precluded the proposed

Commission from bringing collection actions to enforce the pro-

vision.

9

by promptly collecting employer contributions.” Id. at

464. (citations omitted) (emphasis added).

Multiemployer plan trustees must seek to collect con-

tributions from employers, for the entire period that the

employers continue to have an obligation to contribute.

29 U.S.C. §§ 1104, 1106, 1145. A trustee determination

that an employer has an obligation to contribute to the

plan is critical to the administration of the plan. As

with all matters of plan administration, the federal judi-

ciary defers to the decision of the trustees, unless the

decision is found to be arbitrary and capricious. See, e.g.,

Pokratz v. Jones Dairy Farm, 771 F.2d 206, 209 (7th

Cir. 1985). Accord, UMWA Health & Retirement Funds

v. Robinson, 455 U.S. 562 (1982).

The 1980 amendments to ERISA were prompted by

Congressional anxiety about the financial stability of

multiemployer plans and concern that the maintenance

and growth of such plans were being discouraged. See

generally Report of the House of Representatives Com-

mittee on Education and Labor on H.R. 3904, H.Rep.

No. 96-869 (Part I), 96th Cong., 2d Sess. (April 3,

1980). Certainly, “the purpose of Congress is the ulti-

mate touchstone,” Malone v. White Motor Corp., 435

U.S. 497, 504 (1978), quoting Retail Clerks v. Schermer-

horn, 375 U.S. 96, 103 (1963), and the drafters of the

1980 amendments did explain the problem they sought to

remedy by the enactment of section 515 of ERISA, 29

U.S.C. § 1145:

Delinquencies of employers in making required con-

tributions are a serious problem for most multi-

employer plans. Failure of employers to make

promised contributions in a timely fashion imposes

a variety of costs on plans. While contributions re-

main unpaid, the plan loses the benefit of investment

income that could have been earned if the past due

amounts had been received and invested on time.

Moreover, additional administrative costs are in-

10

curred in detecting and collecting delinquencies. At-

torneys fees and other legal costs arise in connection

with collection efforts.

These costs detract from the ability of plans to

formulate or meet funding standards and- adversely

affect the financial health of plans. Participants and

beneficiaries of plans as well as employers who honor

their obligation to contribute in a timely fashion

bear the heavy cost of delinquencies in the form of

lower benefits and higher contributions rates. More-

over, in the context of this legislation, uncollected

delinquencies can add to the unfunded liability of

the plan and thereby increase the potential with-

drawal liability for all employers.

Recourse available under current law for collecting

delinquent contributions is insufficient and unneces-

sarily cumbersome and costly. Some simple collection

actions brought by plan trustees have been converted

into lengthy, costly and complex litigation. This

should not be the case. Federal pension law must

permit trustees of plans to recover delinquent con-

tributions efficaciously. Sound national pension pol-

icy demands that employers who enter into agree-

ments providing for pension contributions not be

permitted to repudiate their pension promises.

Senate Labor Committee Summary and Analysis of Con-

sideration of S.1076 (April 1980) (emphasis added). See

126 Cong. Rec. 23039 (1980) (remarks of Rep. Thomp-

son) ; id. at 23288 (remarks of Sen. Williams).

Given the clear intent of Congress to foster the finan-

cial integrity of multiemployer plans and to provide

“ready access” to the federal judiciary, the language of

ERISA § 515—which expressly provides the basis for

direct federal court jurisdiction of trustee suits to collect

contributions where the employer is obligated to contrib-

ute “under the terms of the plan or under the terms of a

collectively bargained agreement”—is broad enough to

include an employer’s obligation to contribute in accord-

11

ance with the terms of the plan or agreement that have

been extended by operation of labor-management rela-

tions law.“

B. The NLRB does not provide trustees with a forum

to satisfy their fiduciary duty to seek to maintain

the financial stability of multiemployer plans.

The court below predicated its decision, that the fed-

eral judicial forum should be displaced by the NLRB for

collection actions like the instant case, on the premise

that plan trustees can invoke the jurisdiction of the

NLRB. Laborers Heaith & Welfare Trust v. Advanced

Lightweight Concrete, 779 F.2d 497, 503 (9th Cir. 1985).

Yet, in Board of Trustees v. Universal Enterprises, 751

F.2d 1177, 1183 (11th Cir. 1985), the Eleventh Circuit

concluded that multiemployer plan trustees have no stand-

ing to invoke the jurisdiction of the NLRB.“ Moreover,

in Mo-Kan Teamsters Pension Fund v. Botsford Ready

Miz, 605 F. Supp. 1441, 1447 (W.D. Mo. 1985), a dis-

trict court within the Eighth Circuit asserted that multi-

employer plan trustees “are powerless to initiate” an ac-

tion before the NLRB.’ Therefore, although “|p]ension

plan trustees must have a forum in which to enforce

5 The court below arrived at a contrary conclusion through a

strict construction of a remedial statute. But see, e.g., Leigh v.

Engle, 727 F.2d 113, 139 (7th Cir. 1984) (ERISA must be

construed broadly); 2A Sutherland Stat. Const. § 46.07 at 110

(4th ed.).

The government, at page 9 of its brief amicus curiae in support

of the petition for a writ of certiorari in the instant case, asserts:

“To be sure, the trustees could file a charge with the NLRB seek-

ing to recover delinquent contributions in that forum.” This asser-

tion is made without benefit of supporting citation or discussion

of the contrary case law, herein discussed.

T Also, in Pattern Makers’ Pension v. Badger Pattern Works, 615

F. Supp. at 799, a district court within the Seventh Circuit ex-

pressly left unresolved the issue of whether multiemployer benefit

plan trustees have standing to file unfair labor practice charges

with the NLRB.

12

trust obligations,” Laborers Health & Welfare Trust

Fund v. Kaufman & Broad, 707 F.2d 412, 416 (9th Cir.

1983), there is a conflict among the circuits as to whether

multiemployer plan trustees can even gain access to the

NLRB.

Assuming arguendo that multiemployer plan trustees

have standing to invoke the jurisdiction of the NLRB,

access to that forum is of limited value, because the

NLRB may of its own volition decline to exercise that

jurisdiction. See e.g., NLRB v. Marsden, 701 F.2d 238,

241 (2d Cir. 1983) ; 29 U.S.C. § 164(c) (1). The general

counsel’s discretionary decisions regarding the investiga-

tion of charges, and the issuance and prosecution of com-

plaints are precluded from review under LMRA § 3(d),

29 U.S.C. § 153 0d). See, eg., NLRB v. Sears, Roebuck

E Co., 421 U.S. 132, 138-39 (1975); Saez v. Goslee, 463

F.2d 214, 215 (Ist Cir.), cert. denied, 409 U.S. 1024

(1972). As the court below itself admits:

We confess that it is difficult to imagine a situation

where the refusal of the general counsel to issue a

complaint would violate an express statutory com-

mand of the [Labor] Act as it now exists, because

nothing in it requires the general counsel to issue

complaints upon the finding of a violation. As we

have already pointed out, his statutory authority is

permissive. 29 U.S.C. §§ 153(d), 160(b).

Accord, Roberts v. Burlington Industries, Inc., 54 U.S.L.W. 3836

(U.S. June 24, 1986), affirming, Gilbert v. Burlington Industries,

Inc., 765 F.2d 320 (2d Cir. 1985) ; 29 U.S.C. § 1144. This need for

consistency is also reflected in the express Congressional directive

that the United States courts fashion a federal common law of

pensions to fill the statutory interstices extant in ERISA. See, e.g.,

Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. ——, 87 L.Ed.

2d 96, 113 n.18 (1985) (Brennan, J., concurring) ; Smith v. CMTA-

1AM Pension Trust, 654 F.2d 650, 663 (9th Cir. 1981).

13

Baker v. International Alliance of Theatrical Stage Em-

ployees, 691 F.2d 1291, 1296-97 (9th Cir. 1982). Thus,

forcing trustees to resort to the discretion of the NLRB

is clearly at odds with the Congressional intent to pro-

vide trustees with a forum in which to collect contribu-

tions and thereby bolster the “financial soundness” of

multiemployer plans. 29 U.S.C. § 1001(a). See 29 U.S.C.

$§ 1001(b), 1132(g) (2), 1145.

Moreover, a proceeding before the NLRB “is not to

adjudicate private rights but to effectuate a public pol-

icy” of promoting labor peace. NLRB v. Shipbuilding

Local 22, 391 U.S. 418, 424 (1968). See Republic Steel

Corp. v. NLRB, 311 U.S. 7, 10-12 (1940). Yet, preserv-

ing the financial integrity of multiemployer plans was

not even an afterthought in the Congressional design of

the statute regulating the collective bargaining process.

“The atmosphere in which employee benefit trust fund

fiduciaries must operate, as mandated by § 302(c) (5)

and ERISA, is wholly inconsistent with this process of

compromise and economic pressure.” Amar Coal, 453

U.S. at 336.

The Congressional intent to give trustees real clout in

collection actions by providing for mandatory awards of

contributions, plus interest, liquidated damages, costs,

and reasonable attorney fees, 29 U.S.C. § 1132(g) (2), is

inconsistent with requiring trustees to proceed before

the NLRB, where the grant of relief, if any, resides in

the sole discretion of the Board.“ Thus, for example, in

Botsford Ready Mix, 605 F. Supp. at 1443, the court

acknowledged that the NLRB’s general counsel had set-

tled the union unfair labor practice charge by requiring

The regulatory scheme established for labor relations by Con-

gress is ‘essentially remedial,’ and the [NLRB] is not generally

authorized to impose penalties solely for the purpose of deterrence

or retribution. Republic Steel Corp. v. NLRB, 311 U.S. 7, 10-12

(1940).” Wisconsin Department of Industry v. Gould, Inc., 475

US. , 89 L.Ed.2d 223, n.5 (1986).

14

the defendant employer to pay only 80 percent of the

contributions, which the employer owed to the plaintiff

multiemployer benefit plan.“ See also NLRB v. Laborers

International Union o/ North America, AFL-CIO, Local

282, 567 F.2d 833 (8th Cir. 1977); 29 C.F.R. § 101.9

(permitting the general counsel to settle claims under

terms opposed by the charging party); 29 C. F. R. § 101.4

(NLRB regional director may dispose of unfair labor

practice case through informal methods of withdrawal,

dismissal, and settlement).

This less than adequate remedial power of the NLRB

is a broad, discretionary one, which is subject only to

limited review. See Fibreboard Corporation v. NLRB,

379 U.S. 203, 216 (1964); NLRB v. Seven-Up Bottling

Co., 344 U.S. 344, 346 (1953). Consequently, under the

decision below, multiemployer pension plan trustees, who

must provide full benefits for hours worked, would be

at the mercy of the NLRB and its general counsel, who

—unlike the trustees—may not be bound by any of

ERISA’s fiduciary duties in deciding whether and to

what extent to exercise the jurisdiction of the Board.

Contrary to “the structure of ERISA [which] makes

clear that Congress did not intend for government en-

forcement powers to lessen the responsibilities of plan

fiduciaries,” Central Transport, 86 L.Ed.2d at 462, the

decision below diminishes trustees’ fiduciary authority

and undermines the financial stability of multiemployer

plans.

Congress has expressly chosen to permit only employers seek-

ing relief under the Bankruptcy Code to pay—in certain limited

circumstances less than the actual amount of contributions such

employers owe to employee benefit plans. For, even under the Bank-

ruptey Code, certain contributions to employee benefit plans are

accorded priority. 11 U.S.C. §§ 507(a)(1), 507(a)(3). See In re

Saco Local Development Corp, 711 F.2d 441, 448 (ist Cir. 1983) ;

In re Penn Central Transportation Co., 484 F.2d 1300, 1304 (3d Cir.

1973), cert. denied, 415 U.S. 951 (1974); Tate v. New York, New

Haven 4 Hartford K. R., 332 F.2d 449 (2d Cir. 1964).

15

IV. CONCLUSION

For the foregoing reasons, the NCCMP respectfully

urges this Court to reverse the decision of the court below.

Respectfully submitted,

GERALD M. FEDER *

Davm R. LEVIN

FEDER & ASSOCIATES

1527 - 18th Street, N.W.

Washington, D.C. 20036

(202) 387-1515

Attorneys for National

Coordinating Committee

for Multiemployer Plans

* (Counsel of Record)

Dated: May 1987