Petition for Writ of Certiorari — General Marine Transport Corp. v. O'Hare

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Y FILED |

84-995.) DEG 6 1984

oO.

ALEXANDER L. STEVAS

: |

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

GENERAL MARINE TRANSPORT CORP,

Petitioner,

—_—V.—

JOSEPH O’HARE, ALBERT M. CORNETTE, PETER GALE,

BRUCE A. MCALLISTER, ROBERT W. SANDERS, THOMAS

E. MORAN, as Trustees of the NEW YORK MARINE

TOWING & TRANSPORTATION INDUSTRY PENSION FUND &

INSURANCE FUND,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

JARED STAMELL

540 Madison Avenue

New York, New York 10022

(212) 752-9222

Attorney for Petitioner

—

QUESTIONS PRESENTED

The court beiow was asked to decide petitioner’s liability for

pension contributions under a collective bargaining agreement

which had already been the subject of extensive litigation

before the National Labor Relations Board and the court of

appeals. The dispute arose in 1976 when petitioner, a vessel

owner, and a union disagreed about whether the union repre-

sented petitioner’s employees. Petitioner refused to abide by a

multiemployer collective bargaining agreement which would

have covered all its employees. The NLRB dismissed the

union’s unfair labor practice charges, which alleged that peti-

tioner was bound by the agreement, and decided that peti-

tioner’s employees, except those on two vessels, should hold an

election to choose a labor union. In the election, the employees

selected a new union. Afterward, the NLRB decided that

petitioner’s continued refusal to abide by the agreement was an

unfair labor practice with respect to the employees on the two

vessels. However, in General Marine Transport Corp. v.

NLRB, 619 F.2d 180 (1980), the court of appeals held that the

Board was incorrect since the six month statute of limitations

applicable to unfair labor practices had expired with respect to

petitioner’s refusa! to abide by the agreement. Petitioner never

did abide by the agreement. This subsequent action by pension

fund trustees presents the following questions:

1. Is this a case within the exclusive jurisdiction of the

NLRB to remedy unfair labor practices and resolve representa-

tion disputes, and not a suit for “violation of contracts

between an employer and a labor organization” within the

district court’s jurisdiction under LMRA § 301, 29 U.S.C.

§ 185?

2. Does the six month statute of limitations in 29 U.S.C.

§ 160(b) applicable to unfair labor practices, apply in a § 301

action that litigates the duty to honor a collective bargaining

agreement, or is the court of appeals correct that the six month

limitations rule announced in De/ Costello v. Teamsters, 462

U.S. 151 (1983), applies only to hybrid § 301/fair representa-

tion cases?

3. Can an employer be liable under a collective bargaining

agreement he has no duty to abide by under the National

Labor Relations Act?

4. Are the due process and ex post facto clauses of the

Constitution violated by imposing civil penalties under a stat-

ute enacted in 1980 for an employer’s repudiation of a collec-

tive bargaining agreement in 1976?

5. If an employer does not commit an unfair labor practice

by refusing to abide by a collective bargaining agreement, did

Congress intend that the employer could nonetheless violate

§ 306 of the 1980 Multiemployer Pension Plan Amendments,

94 Stat. 1295, by refusing to make pension contributions under

the agreement?

6. If employees elect a new labor union and become ineligi-

ble to participate further in pension and insurance trusts of the

former union, does 29 U.S.C. § 186(c)(S) require that the

contributions held in the former union’s trust funds be trans-

ferred to a new trust for the benefit of those employees?

iil

TABLE OF CONTENTS

re ee le ka ee cha ecaeebkaeeade

Nee eee awee és

EEE OY gw cca s ccc ccecncesccens

SSS ee

Constitutional and Statutory Provisions Involved......

Reasons for Granting The Writ .....................

Il.

Ill.

IV.

The Circuits Conflict About District Court Juris-

diction To Decide Cases In Which The Existence

Of A Collective Bargaining Agreement Is In Dis-

a a 6 a date we e040 eon eee kes

The Duty To Abide By A Collective Bargaining

Agreement Should Be Time-Barred In Section 301

Actions If It Is Time-Barred In Unfair Labor

Practice Proceedings; The Court Of Appeals Ap-

plied Del Costello v. Teamsters Too Narrowly. .. .

An Employer Should Not Be Liable Under A

Collective Bargaining Agreement He Has No Duty

To Honor Under The National Labor Relations

Act; The Decision Below Conflicts With Decisions

Of This Court And Other Circuits .............

Congress Did Not Intend An Employer To Violate

A 1980 Statute By Repudiating A Contract In

1976 Or To Penalize Lawful Collective Bargain-

ing; The Court Should Clarify MPPA § 306 To

Eliminate Conflict With The NLRA............

PAGE

V. Substantial Monies Contributed By the Employer

For The Benefit Of Employees Will Be Lost To

Them Unless The Writ Is Granted; No Group

Should Be Denied A Remedy Under 29 U.S.C.

§ 186(c)(S) Because They Are Few In Number ... 20

NS a Og ere Do be te en ee aero 22

APPENDIX

Opinion of the Court of Appeals dated July 20,

Opinion of the District Court dated March 31, 1983 A42

Opinion of the Districi Court dated September 19,

PENNE SAw4 kA 4a 64 6 ROD aS ORS ONO sReRkEeneNsas A60

Opinion of the District Court dated February 3,

PE eT ee rete eT errr er rye A63

Order denying Petition for Rehearing............ A7l

Judgment of the District Court ................. A72

Supplemental Judgment of the District Court ..... A74

Opinion of the Court of Appeals dated March 26,

SE Kee Cac kdnb cacksesaie keene eukteeeebuus A76

Opinion of the National Labor Relations Board

Gated September 29, 1978 ... occ cn cccccnncccs A99

Opinion of the National Labor Relations Board

Gateg December 10, 1976... 2... ccc ccncccnccen A122

TABLE OF AUTHORITIES

Cases:

Alvares v. Erickson, 514 F.2d 158 (9th Cir. 1975) cert.

i Gee Shs Ee CTE Kio kx onbh betas enaness

American Commercial Barge Lines Co. v. SIU, 730 F.2d

Se EE Wak Nowe Ruud nkecennnneseuenseant

B & B Industries, Inc., 162 N.L.R.B. 833 (1967) ......

Carpenters v. Stevens, 743 F.2d 1271 (9th Cir. 1984) ...

Carpenters Local No. 1846 v. Pratt-Farnsworth, Inc.,

690 F.2d 490 (Sth Cir. 1982), cert. denied, 104 S. Ct.

Ene rr rir rr er ere ee ee

Charles Bonanno Linen Services, Inc. v. NLRB, 454

pis Se Ng wc 6645 CSR ROR ee ee ee

Del Costello v. Teamsters, 462 U.S. 151 (1983)........

Electrical Workers v. lowa Electric Light & Power Co.,

— ge £ ite fe B, . Pereeeeerrere rere reece

Garment Workers v. NLRB, 366 U.S. 731 (1960)......

General Marine Transport Corp. v. NLRB, 619 F.2d 180

Ca Ge: We 0k 6 kc Gcinie ccc rasta 9, 14,

Kaiser Steel Corp. v. Mullens, 455 U.S. 72 (1982) . .13, 18,

Local 50 Health Benefit Fund v. Local 3 Welfare Fund,

mig pb fe fo 9 Rewrrer ey tr rr rere

Local 7-210 v. Union Tank Car Co., 475 F.2d 194 (7th

Cir. 1973), cert. denied, 414 U.S. 875 (1973) ........

Midwest Piping & Supply Co., 63 N.L.R.B. 1060 (1945)

NLRB vy. Seibler Heating & Air Conditioning, Inc. 563

F.2d 366 (8th Cir. 1977), cert. denied, 437 U.S. 911

CUTE & 6. canchac deccessGuaenecuubanauseaee danke

PAGE

Pension Benefit Guaranty Corp. v. R.A. Gray & Co.,

HOGS. Ct. 27OD (GBM) ow. cc ccccccccncncccccee 19

Teamsters v. California Consolidators, Inc. , 693 F.2d 81

(9th Cir. 1982), cert. denied, 53 U.S.L.W. 3263 (Oct.

Wy TOUS 66000050 enusceueneorscscinecdsa bes 12

Statutes:

Multiemployer Pension Plan Amendments Act of 1980:

Title I, § 108(a)(1), 94 Stat. 1267.................. 19

Title III, § 306, 94 Stat. 1295, 29 U.S.C. §§ 1132(g),

FON 645 66 Sb04cecadhissdicnennsccescaawcuices 18, 19

Labor Management Relations Act:

§ 301, 29 U.S.C. § 185 2... passim

§ 302, 29 U.S.C. § 186 2... 8, 20, 21

National Labor Relations Act:

§ 8, 29 U.S.C. § 158 20 eee. passim

§ 9, 29 U.S.C. § 159. ccc e eee. 12

§ 10, 29 U.S.C. § 160... eee. 11, 12, 14, 15

28 U.S.C. § 1254(1) 0c cece cece. 2

28 U.S.C. § 1331 ooo ce eee eee. 8

28 U.S.C. § 1337 oo oooccccc cece ee. 8

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

GENERAL MARINE TRANSPORT CORP,

Petitioner,

—_V—

JOSEPH O’HARE, ALBERT M. CORNETTE, PETER GALE,

BRUCE A. MCALLISTER, ROBERT W. SANDERS, THOMAS

E. MORAN, as Trustees of the NEW YORK MARINE

TOWING & TRANSPORTATION INDUSTRY PENSION FUND &

INSURANCE FUND,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

General Marine Transport Corp. petitions for a writ of

certiorari to review the judgment of the United States Court of

Appeals for the Second Circuit entered July 20, 1984 and an

order denying a petition for rehearing of said judgment con-

taining a suggestion for rehearing en banc entered September

7, 1984. The court of appeals affirmed a district court judg-

ment entered May 19, 1983, an order entered September 19,

1983 denying petitioner’s motion to amend the judgment, as

well as a supplemental judgment awarding attorneys’ fees

entered February 21, 1984 by the United States District Court

for the Southern District of New York in favor of respondents.

CITATION TO OPINION BELOW

The opinion of the court of appeals is reported at 740 F.2d -

160 and is set out in the Appendix (A1). The order of the court

of appeals denying the petition for rehearing is unreported and

§ set out in the Appendix (A71). The opinions of the district

court are reported at 534 F. Supp. 120 (A26) (granting respond-

ents partial summary judgment), 564 F.Supp. 1064 (A42)

(awarding damages and dismissing petitioner’s counterclaim)

and 578 F. Supp. 72 (A60) (denying petitioner’s motion to

amend the judgment). Each opinion is set out in the Appendix.

The opinion of the district court awarding attorney’s fees is

unreported and is set out in the Appendix (A63).

Also set out in the Appendix is the opinion of the Court of

Appeals in the related unfair labor practice case, reported at

619 F.2d 180 (A76). The opinion of the National Labor

Relations Board in that case is reported at 238 N.L.R.B. 1372,

and is set out in the Appendix (A99). The related opinion of

the National Labor Relations Board in the representation case

is unreported and is set out in the Appendix (A122).

JURISDICTION

The judgment of the court of appeals was entered on July

20, 1984. Following this judgment, petitioner filed a timely

petition for rehearing containing suggestions for rehearing en

banc. On September 7, 1984, the court of appeals denied the

petition. Jurisdiction of this Court is invoked pursuant to 28

U.S.C. §1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

This case involves the following constitutional provisions

and federal statutes:

(a) U.S. Constitution, Art. 1, § 9, Clause 3

No Bill of Attainder or ex post facto Law shall be

passed.

(b) U.S. Constitution, Amendment V

No person shall . . . be deprived of life, liberty, or

property, without due process of law... .

(a) Suits for violation of contracts between an em-

ployer and a labor organization representing employees in

an industry affecting commerce as defined in this chapter,

or between any such labor organizations, may be brought

in any district court of the United States having jurisdic-

tion of the parties, without respect to the amount in

controversy or without regard to the citizenship of the

parties.

(d) 29 U.S.C. § 186

(a) It shal! be unlawful for any employer or association

of employers or any person who acts as a labor relations

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

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

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

value—

(1) to any representative of any of his employees

who are employed in an industry affecting com-

merce; or

(2) to_any labor organization, or any officer or

employee thereof, which represents, seeks to repre-

sent, or would admit to membership, any of the

employees of such employer who are employed in an

industry affecting commerce; or

(3) to any employee or group or committee of

employees of such employer employed in an industry

affecting commerce in excess of their normal com-

pensation for the purpose of causing such employee

or group or committee directly or indirectly to in-

fluence any other employees in the exercise of the

right to organize and bargain collectively through

representatives of their own choosing; or

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

tion engaged in an industry affecting commerce with

intent to influence him in respect to any of his

actions, decisions, or duties as a representative of

employees or as such officer or employee of such

labor organization.

* * * * *

plicable

* * * * *

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

paid to a trust fund established by such representa-

tive, for the sole and exclusive benefit of the employ-

ees of suci employer, and their families and

dependents (or of such employees, families, and

dependents jointly with the employees of other em-

ployers making similar payments, and their families

and dependents): Provided, 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 dependents, for medi-

cal or hospital care, pensions on retirement or death

of employees, compensation for injuries or illness

resulting from occupational activity or insurance to

provide any of ihe foregoing, 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 repre-

sented in the administration of such fund.

* * * * *

(e) 29 U.S.C. § 158

(a) It shall be an unfair labor practice for an em-

ployer—

(i) to interfere with, restrain, or coerce employees

in the exercise of the rights guaranteed in section 157

of this title;

* * * * *

(5) to refuse to bargain collectiveiy with the repre-

sentatives of his employees, subject to the provisions

of section 159(a) of this title.

* * * * *

(d) For the purposes of this section, to bargain collec-

tively is the performance of the mutual obligation of the

employer and the representative of the employees to meet

at reasonable times and confer in good faith with respect

to wages, hours, and other terms and conditions of

employment, or the negotiation of an agreement, or any

question arising thereunder, and the execution of a written

contract incorporating any agreement reached if re-

quested by either party, but such obligation does not

compel either party to agree to a proposal or require the

making of a concession:

(f) 29 U.S.C. § 160

(a) The Board is empowered, as hereinafter provided,

to prevent any person from engaging in any unfair labor

practice (listed in section 158 of this title) affecting com-

merce. This power shall not be affected by any other

means of adjustment or prevention that has been or may

be established by agreement, law, or otherwise:

* * * * *

(b) Whenever it is charged that any person has engaged

in or is engaging in any such unfair labor practice, the

Board, or any agent or agency designated by the Board

for such purposes, shall have power to issue and cause to

be served upon such person a complaint stating the

charges in that respect, and containing a notice of hearing

before the Board or a member thereof, or before a

designated agent or agency, at a place therein fixed, not

less than five days after the serving of said complaint:

Provided, That no complaint shall issue based upon any

unfair labor practice occurring more than six months

prior to the filing of the charge with the Board and the

service of a copy thereof upon the person against whom

such charge is made,

(g) Multiemployer Pension Plan Amendments Act of 1980,

§ 306 (94 Stat. 1295) (29 U.S.C. §§ 1132(g)(2), 1145)

SEC. 306. LIQUIDATED DAMAGES WITH RESPECT TO

DELINQUENT CONTRIBUTIONS

(a) Part 5 of subtitle B of title I is amended by adding

after section 514 the following new section:

“DELINQUENT CONTRIBUTIONS

“SEC. 515. Every employer who is obligated to make

contributions to a multiemployer plan under the terms of

the plan or under the terms of a collectively bargained

agreement shall, to the extent not inconsistent with law,

oe een cre rete oe

make such contributions in accordance with the terms and

conditions of such plan or such agreement.”

(b) Section 502 is amended by—

(1) redesignating subsection (b)(1) and (2) as sub-

section (b)(1) (A) and (B), and adding at the end

thereof the following new paragraph:

“(2) The Secretary shaJl not initiate an action to en-

force section 515”;

(2) redesignating subsection (g) as paragraph (1)

of such subsection and inserting “(other than an

action described in paragraph (2))” between “title”

and “by” in such redesignated paragraph (1), and

adding at the end thereof the following new para-

graph:

“(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,

“(C) an amount equal to the greater of—

“(i) interest on the unpaid contributions, or

“(ii) 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 bv the defendarc, and

“(E) such other legal or equitable relief as the

court deems appropriate.

For purposes of this paragraph, interest on unpaid contri-

butions shall be determined by using the rate provided

under the plan, or, if none, the rate prescribed under

section 6621 of the Internal Revenue Code of 1954.”

(h) Multiemployer Pension Plan Amendments Act of 1980,

§ 108(a)(1) (94 Stat. 1267)

“Except as provided in paragraphs (2), (3) and (4), the

amendments to this Act made by the Multiemployer

Pension Plan Amendments Act of 1980 shall take effect

on the date of the enactment of that Act.”

STATEMENT OF THE CASE

This petition is the most recent round in a much litigated

dispute between General Marine Transport Corp. (“peti-

tioner”), the operator of two vessels which dispose of sewage

sludge in New York Harbor, and Local 333, United Marine

Division, International Longshoreman’s Association (“Local

333”), a union which at one time represented petitioner’s

employees. Respondents invoked the jurisdiction of the district

court under the Labor Management Relations Act § 301, 29

U.S.C. § 185 (“§ 301” or “LMRA § 301”). For its counter-

claim, petitioner invoked the jurisdiction of the district court

under LMRA § 302, 29 U.S.C. § 186 and 28 U.S.C. §§ 1331

and 1337. The case was decided on cross-motions for summary

judgment and all factual inferences should be made in favor of

petitioner.

At issue here are pension and insurance trust fund payments

(“Fund payments”) allegedly due from petitioner under a

disputed collective bargaining agreement covering the period

1976-1979 (the “Agreement”). Petitioner refused to abide by

the Agreement because it covered employees the vnion did not

represent. In previous litigation, the court of appeals set aside

a NLRB decision and held that petitioner had no duty under

the National Labor Relations Act (“NLRA”) to abide by the

Agreement. General Marine Transport Corp. v. NLRB, 619

F.2d 180 (2d Cir. 1980). Petitioner is now appealing a subse-

quent decision by a different panel of the court of appeals,

holding that petitioner nonetheless owes Fund payments under

that Agreement based on LMRA § 301. In addition, petitioner

appeals the decision below to include a double interest penalty

and attorneys’ fees—a total award ($314,000) four times com-

pensatory damages. The district court based its authority to

assess these penal damages on a statute passed in 1980, four

years after this dispute arose. Finally, petitioner appeals the

circuit court’s decision to dismiss petitioner’s counterclaim to

transfer payments petitioner made to Local 333’s trust funds

during the period 1973-1976. The transferred funds ($200,000)

would cover employees the NLRB, in 1976, included in a

bargaining unit ineligible to participate in the trust. These

employees were expelled from Local 333 after they voted for a

different unioa and will never be entitled to benefits unless the

funds are transferred.

The dispute arose in 1976, during collective bargaining

between Local 333 and the Marine Towing & Transportation

Industry Employees Association (the “Association”), a multi-

employer bargaining unit representing many shipping compa-

nies operating in the Port of New York. In 1976, petitioner

authorized the Association to negotiate on its behalf a contract

with Local 333 covering the employees on petitioner’s only

vessel, the sludge vessel “Susan Frank”. (Petitioner later ac-

quired a second sludge vessel.) The Association instead signed

a three-year Agreement to take effect April 1, 1976, purporting

to cover the employees on some fifteen vessels, the sludge

vessel and all those operated by two other companies affiliated

with petitioner: Berman Enterprises Inc. (“Berman”) and Stan-

dard Tank Cleaning Corp. (“Standard”). Petitioner, Berman

and Standard are all owned by the Berman family. However,

Berman’s and Standard’s employees, unlike petitioner’s, were

not members of Local 333. In addition, most Local 333

members employed by petitioner worked on the vessels of

petitioner’s affiliates, side by side with non-Local 333 mem-

bers.

On April 13, 1976, petitioner repudiated the Agreement,

objecting to the attempt to cover its employees who worked on

the affiliates’ vessels, as well as the attempt to cover the

affiliates’ employees. Petitioner also objected to a clause which

would have required it to cease doing business with a customer

who operated unmanned barges. When Local 333 members on

the sludge vessel struck, petitioner replaced them with non-

union employees and members of a rival union, the Marine

Engineer Beneficial Association (““MEBA”). The MEBA had

been organizing the employees of petitioner and its affiliates.

Petitioner provided these employees with a health insurance

plan and never abided by the Agreement on the sludge vessels

or any other vessels.

As a result of petitioner’s refusal to abide by the Agreement,

Local 333 pressed four unfair labor practice complaints against

petitioner and affiliates between April and August 1976. None

led to an unfair labor practice charge. The NLRB decided that

petitioner and affiliates rightfully refused to abide by the

Agreement. Specifically, the NLRB held that the Agreement

had attempted to encompass employees not in the bargaining

unit, and that the unmanned barge clause amounted to an

illegal “hot cargo” agreement. (A79-81) In addition, as a result

of MEBA’s interest in representing the employees, the NLRB

held representation hearings and conducted an election. The

NLRB excluded only petitioner’s employees on the sludge

vessels on the grounds that the Agreement constituted a “con-

tract bar” to their participation.

The election was held and the employees chose Local 333’s

rival, MEBA, to represent them. After losing the election,

Local 333 expelled petitioner’s employees who participated in

the election. The NLRB certified the election results on Jan-

uary 20, 1977.

In February 1977, Local 333 again filed unfair labor practice

charges with the NLRB, claiming that petitioner’s continued

ee a a ee

refusal to abide by the Agreement for the employees on its two

Sludge vessels was an unfair labor practice now that the

election was over. In September 1978, the NLRB sided with

Local 333, holding that Local 333’s demands to enforce the

Agreement only with respect to the two Sludge vessels consti-

tuted “fresh demands” that should be honored. The NLRB

held that petitioner had violated its duty to bargain with the

union under NLRA § 8(a)(5), 29 U.S.C. § 158(a)(5), by refus-

ing to abide by the Agreement. In December 1978, respond-

ents, trustees of Local 333-Association trust funds, started this

§ 301 action to collect payments allegedly due under the

Agreement.

However, in March 1980, the court of appeals set aside the

unfair labor practice charge, holding it was barred by the six

month statute of limitations in 29 U.S.C. § 160(b) because it

was filed a year after petitioner repudiated the Agreement. 619

F.2d 180. There seems to be no dispute that this earlier decision

determines that petitioner had no duty under the NLRA to

honor the union’s demands to abide by the Agreement, even

when limited to the two sludge vessels, once six months after

the April 1976 repudiation had passed.

In December 1981, the district court decided this case on

summary judgment and held that petitioner was bound by the

Agreement to make Fund payments for employees on the

sludge vessels. The court held a six year, rather than a six

month, statute of limitations applied in the § 301 action. The

district court refused to recognize the court of appeals decision

as res judicata or collateral estoppel, notwithstanding the

holding that petitioner’s refusal to honor the Agreement did

not violate the duty to bargain with the union. On top of that,

the district court awarded respondents penalties and attorneys’

fees amounting to four times compensatory damages under a

Statute enacted in September 1980—four years after the Agree-

ment’s term began, more than one year after its expiration,

and several years after respondents’ action was filed.

In July 1984, the court of appeals affirmed the district

court’s decision. Petitioner seeks the grant of a writ of cer-

tiorari to the court of appeals.

REASONS FOR GRANTING THE WRIT

THE CIRCUITS CONFLICT ABOUT DISTRICT COURT

JURISDICTION TO DECIDE CASES IN WHICH THE

EXISTENCE OF A COLLECTIVE BARGAINING

AGREEMENT IS IN DISPUTE.

The writ should be granted because the limits of district

court jurisdiction under § 301 to enforce a collective bargain-

ing agreement is an important subject about which the circuits

conflict. See Teamsters v. California Consolidators, Inc., 693

F.2d 81 (9th Cir. 1982), cert. denied, 53 U.S.L.W. 3263 (Oct. 9,

1984) (dissenting opinion); Carpenters v. Pratt-Farnsworth,

Inc., 690 F.2d 489 (Sth Cir. 1982), cert. denied, 104 S. Ct. 335

(1983); Electrical Workers v. lowa Electric Light and Power

Co., 668 F.2d 413 (8th Cir. 1982). This case shows that the

wider conflict between the circuits, which the dissenting jus-

tices in California Consolidators feared, is occurring. In addi-

tion, the jurisdiction of the NLRB to resolve representational

and unfair labor practice disputes relating to collective bar-

gaining is undermined by conflicting decisions in § 301 suits,

such as the decision in this case.

This case is a good one in which to consider § 301 jurisdic-

tion because the controversy was extensively litigated before

the NLRB. The NLRB Regional Director dismissed unfair

labor practice charges filed by the union and the NLRB

General Counsel affirmed. The NLRB held representation

hearings and an election under NLRA § 9, 29 U.S.C. § 159, to

resolve questions of representation and conducted an unfair

labor practice proceeding under NLRA § 10, 29 U.S.C. § 160,

to litigate whether petitioner had a duty under NLRA § 8, 29

U.S.C. § 158, to abide by the contract after the election.

Unlike the decisions in which this Court has denied certiorari,

here we know that the litigation in the district court produced a

result the opposite of the result in NLRB proceedings. The

interference with NLRB jurisdiction is real and actual in this

case.

A major problem with the decisions of the courts of appeal

in these kinds of cases is the absence of any rule or standard to

determine the jurisdictional question. Here, the court of ap-

peals concluded that the district court did not exceed its

jurisdiction under § 301 to hear a breach of contract suit

because the district court said this was a contract case and not

a collective bargaining dispute:

“the district court explicitly held there was a valid con-

tract between the parties and that General Marine at-

tempted to repudiate the contract . .. The court

therefore did not order the execution of a labor contract,

a remedy that concededly lies exclusively within the en-

forcement power of the National Labor Relations

Board.” (A9)

However, this is a tautology: the result rationalizes the result.

Clearly, the district court and the court of appeals could not

find a contract in this case based upon the terms of the

contract; § 301 jurisdiction does not exist simply by claiming a

contract exists. The court should have considered whether the

facts presented a dispute that should be resolved under NLRA

§ 8, 29 U.S.C. § 158—based on the duty to bargain and enter

into a contract—or could be resolved solely under the terms of

the contract itself. Accord Electrical Workers v. lowa Electric

Light and Power Co., 668 F.2d at 419, in which the Eighth

Circuit drew the line “between those cases where the district

court has jurisdiction under Section 301 and those in which it

does not” by “examining the major issues to be decided as to

whether they can be characterized as primarily representational

or primarily contractual.” Kaiser Steel Corp. v. Mullens, 455

U.S. 72, 83 (“federal courts do not have jurisdiction over

activity which ‘is arguably subject to §7 or §8 of the

[NLRA]’ ”). The writ should be granted to resolve the conflict

between the circuits and decide this question of great impor-

tance in delineating the roles of district courts and the NLRB

in hearing labor disputes.

THE DUTY TO ABIDE BY A COLLECTIVE BARGAINING

AGREEMENT SHOULD BE TIME-BARRED IN SECTION

301 ACTIONS IF IT IS TIME-BARRED IN UNFAIR

LABOR PRACTICE PROCEEDINGS; THE COURT OF

APPEALS APPLIED DEL COSTELLO V. TEAMSTERS

TOO NARROWLY.

The writ should be granted to establish that De/ Costello v.

Teamsters, 462 U.S 151 (1983), is not limited to a particular

kind of lawsuit. The six month statute of limitations in 29

U.S.C. § 160(b) should apply to any § 301 claim that is based

upon a duty derived from the National Labor Relations Act,

such as the duty to abide by a multiemployer collective bar-

gaining agreement. Uniformity between district courts and the

NLRB is essential to prevent forum shopping and relitigation

of disputes, as well as to protect the employer’s ability to

bargain. An employer with no duty to honor a labor contact

under 29 U.S.C. § 158 cannot effectively fulfill his duty under

that statute to bargain with his employees for a mutually

agreeable alternative agreement in the face of a conflicting

§ 301 contractual liability.

In a system in which both courts and an administrative

agency hear labor disputes, the result should not depend upon

the forum. The court of appeals conceded that General

Marine, 619 F.2d 180, establishes that the six month statute of

limitations in 29 U.S.C. § 160(b) time-bars any unfair labor

practice claim derived from the employer’s refusal to abide by

the contract (A1l2). That conclusion should have barred re-

spondents’ claim. Instead, the court of appeals decided that

stn ema Se eS ee

De! Costello v. Teamsters—in which 29 U.S.C. § 160(b) was

applied in a § 301 action—.is limited to “hybrid section 301/un-

fair representation cases” since:

“they closely resemble employees unfair labor practice

actions which are geverned by that _ limitations

period . . . and cannot reasonably be expanded to all

section 301 claims that involve facts which might also

have established unfair labor practice charges.” (A12)

However, the facts in this case do not simply resemble those

which might have established an unfair labor practice action.

The facts underlying the district court’s decision are identical

to those underlying the NLRB’s unfair labor practice deci-

sion—the one the court of appeals reversed:

“In this case the district court applied those [NLRA]

principles correctly; indeed it reached the same conclusion

on the same reasoning as the Board did in the order that

was vacated in this court on statute of limitations

grounds.” (A15)

The statute of limitations should be the same whether an

action is brought as an unfair labor practice or a § 301 action.

Indeed, the six month limitations period applies better in this

case than in the hybrid § 301/fair representation situation

found in Del Costeilo. In the latter circumstance, the unfair

representation claim against the union derived from the

NLRA, but the claim against the employer involved a simple

breach of contract with no NLRA implications. In contrast, in

this case the § 301 claim against the employer derives from the

NLRA as well. It comes from the duty to abide by a collective

bargaining agreement negotiated by a multiemployer associa-

tion, a duty litigated and developed in actions before the

NLRB. E£.g. Charles D. Bonanno Linen Service, Inc. v.

NLRB, 454 U.S. 404 (1982) (bargaining impasse is not a

sufficient reason to withdraw from multiemployer bargaining);

NLRB v. Siebler Heating & Air Conditioning, Inc., 563 F.2d

366 (8th Cir. 1977), cert. denied, 437 U.S. 911 (1978) (multiem-

ployer association’s failure to provide fair representation

means employer not bound by collective bargaining agree-

ment). The writ should be granted to establish that De/ Cos-

tello stands for a uniform six month statute of limitations in

any § 301 case in which the claim is based upon the NLRA.

This will eliminate forum shopping, relitigation of disputes,

and minimize the potential for imposing conflicting obligations

on employers.

AN EMPLOYER SHOULD NOT BE LIABLE UNDER A

COLLECTIVE BARGAINING AGREEMENT HE HAS NO

DUTY TO HONOR UNDER THE NATIONAL LABOR RE-

LATIONS ACT; THE DECISION BELOW CONFLICTS

WITH DECISIONS OF THIS COURT

AND OTHER CIRCUITS.

The writ should be granted to establish that an employer’s

duty to bargain under 29 U.S.C. § 158 determines whether he

is obligated to abide by a collective bargaining agreement in a

§ 301 action. The decision below is in direct conflict with

Garment Workers v. NLRB, 366 U.S. 731 (1960). In that

unfair labor practice case, this Court held that when the union

does not represent a majority of the employees, the entire

contract is unenforceable, even with respect to employees the

union might properly represent. 366 U.S. at 737-38.

The decision below also conflicts with decisions of other

courts of appeals which hold that when an unfair labor

practice case establishes there is no duty to abide by a contract,

a § 301 action cannot come to a contrary conclusion. Carpen-

ters v. Stevens, 743 F.2d 1271 (9th Cir. 1984) (NLRB Regional

Director’s dismissal of unfair labor practice charges precludes

§ 301 action to enforce arbitrator’s award imposing contrac-

tual liability); Local 7-210 v. Union Tank Car Co., 475 F.2d

194 (7th Cir. 1973), cert. denied, 414 U.S. 875 (1973).

In this case, the NLRB Regional Director and General

Counsel specifically held that petitioner’s refusal to abide by

the collective bargaining agreement was not an unlawful re-

A pal te GORE EOE Ae) ame he A te

Oc et we

hit Gib Ay

fusal to bargain, citing B&B Industries, Inc., 162 N.L.R.B. 633

(1967) (A79-80). The NLRB’s dismissal of the charges here

followed well established policy, first announced in Midwest

Piping & Supply Co., 63 N.L.R.B. 1060 (1945). The rule is that

an employer, faced with a question of representation, may not

execute or bargain for a contract with either the incumbent or

a rival union. Furthermore, the court of appeals in General

Marine Transport Corp. v. NLRB decided that petitioner had

no duty to abide by the collective bargaining agreement after

the election.

The prior litigation should have determined that petitioner

had no contractual liability for pension fund contributions.

The duty to bargain collectively includes “the negotiation of an

agreement, or any question arising thereunder, and the execu-

tion of a written contract . . . .”, 29.U.S.C. § 158(d) (empha-

sis added). If the NLRB determines that the employer has no

duty to abide by the terms of a collective bargaining agree-

ment, then the employer and union know thai their obligations

are to bargain for another, mutually agreeable contract. If

pension fund trustees in a § 301 action can enforce an agree-

ment the employer has no duty to honor under 29 U.S.C.

§ 158, the employer will not be able to fulfill his statutory duty

to bargain with the union for a different contract. Cf. Ameri-

can Commercial Barge Lines Co. v. SIU, 730 F.2d 327, 335-37

(Sth Cir. 1984) (NLRB has primary jurisdiction to consider

employer’s refusal to make pension contributions).

The court of appeals disregarded the direct connection

between the duty to bargain and the duty to abide by a specific

collective bargaining agreement defined in 29 U.S.C.

§ 158{d)—and the obvious benefit of consistency—for the

stated goal of protecting “employees clearly represented by

Local 333 whose pensions are at issue here” (A17). However, if

the court was carving an exception from the rules to protect

employees, it carved in the wrong place. By disregarding the

rules announced in Garment Workers, and Midwest Piping, the

court of appeals protects no one. Petitioner never followed the

contract—a decision the court of appeals upheld in the prior

decision—and Local 333 members were never more than a

minority on the sludge vessels. The employees for whom

contributions are claimed will not accumulate sufficient pen-

sion credits to obtain benefits; they will never see a penny of

the money.

Moreover, the judgment—four times the contributions paya-

ble if the Agreement had been followed—deprives the em-

ployer of a considerable amount of money that could

otherwise have provided pensions its employees would actually

receive. In essence, the liability imposed is a penalty on both

the employer and employees fcr resolving representation dispu-

tes and unfair labor practices before the NLRB, rather than

capitulating to the demands of a union the employees did not

want. The duty to bargain under 29 U.S.C. § 158 should

govern the existence of a contract for purposes of a § 301

action. The writ should be granted to establish this principle.

IV.

CONGRESS DID NOT INTEND AN EMPLOYER TO VIO-

LATE A 1980 STATUTE BY REPUDIATING A CONTRACT

IN 1976 OR TO PENALIZE LAWFUL COLLECTIVE BAR-

GAINING; THE COURT SHOULD CLARIFY MPPA § 306

TO ELIMINATE CONFLICT WITH THE NLRA.

The judgment holds that petitioner violated § 306 of the

1980 Multiemployer Pension Plan Amendments Act

(“MPPA”), 94 Stat. 1295, 29 U.S.C. §§ 1132(g) and 1145

(A72-73). In Kaiser Steel Corp. v. Mullens, 455 U.S. at 87-9,

this Court expressed doubt that § 306 applied retroactively, but

did not decide the question. Section 306 imposes double

interest and attorneys’ fees on an employer who fails to pay

pension fund contributions due under a collective bargaining

agreement. By enforcing § 306 against petitioner, the court of

appeals, in effect, holds that petitioner violated federal law by

refusing to abide by a collective bargaining agreement, even

though the refusal was a legitimate response under the NLRA

to the union’s demands.

Sabb Wesates dioncsint

TSS nti dd REE IA Dy I Do WK SRR eg: get MlAMD R AIIE ARE AG IO ENE A oa Ne vi, et

The Court should grant the writ, first, to decide whether the

retroactive application of statutory penalties in a civil action

runs afoul of the due process and ex post facto clauses of the

Constitution. The Court has not previously reviewed this

question. The notice to employers present in Pension Benefit

Guaranty Corp. v. R.A. Gray & Co., 104 S. Ct. 2709 (1984),

does not exist when the new statute is applied to conduct

taking place four and one-half years before § 306 was enacted.

Nor is there any Congressional intent to apply § 306 retroac-

tively as there was in the Pension Benefit case. See MPPA

§ 108(a)(1), 94 Stat. 1267 (statute effective on date of enact-

ment unless specified otherwise). The award exceeds compen-

satory damages fourfold. The resulting penalty is a clear

violation of constitutional rights that should be rectified.

Second, the Court should grant this writ to clarify § 306 and

eliminate conflict between it and the NLRA. Congress limited

§ 306 so that it would apply “to the extent not inconsistent

with law.” Petitioner’s refusal to abide by the agreement was a

proper, lawful response to the union’s demands, as the pro-

ceedings before the NLRB and court of appeals show. Peti-

tioner was entitled to persist in its position and require the

union to engage in bargaining for a different contract. 29

U.S.C. § 158(d) (the obligation to bargain “does not compel

either party to agree to a proposal”). This Court should

establish that an employer’s NLRA-sanctioned refusal to ex-

ecute or abide by a collective bargaining agreement does not

violate § 306. To conclude otherwise would interfere with

rights guaranteed by the NLRA. The “to the extent not

inconsistent with law” language in § 306 is aimed at this

problem. Kaiser Steel Corp. v. Mullens, supra. Congress did

not intend to reduce or discourage collective bargaining or the

exercise of rights under the NLRA when it passed legislation

requiring the prompt payment of pension contributions.

SUBSTANTIAL MONIES CONTRIBUTED BY THE EM-

PLOYER FOR THE BENEFIT OF EMPLOYEES WILL

BE LOST TO THEM UNLESS THE WRIT IS GRANTED;

NO GROUP SHOULD BE DENIED A REMEDY UNDER

29 U.S.C. § 186(C)(5) BECAUSE THEY ARE FEW IN

NUMBER.

The NLRB placed most of petitioner’s employees in a

separate bargaining unit not covered by Local 333 multiem-

ployer agreements. The employees elected a different union,

MEBA, to represent them. Petitioner previously made contri-

butions ($200,000) to the Local 333 trust funds for them.

Under 29 U.S.C. §186(c)(5), the contributions petitioner made

should be administered for the benefit of the employees. In

Local 50 Health Benefit Fund v. Local 3 Welfare Fund, 733

F.2d 229 (2d Cir. 1984), the court of appeals held that 29

U.S.C. § 186(c)(S) requires partition of trust fund contribu-

tions when employees choose a different labor union. See also

Alvares v. Erickson, 514 F.2d 158 (9th Cir., 1975), cert. denied,

423 U.S. 874 (1975). Before this landmark decision, employees

saw pension monies vanish when labor unions changed or

employers reorganized. This decision offered a flexible remedy

that ERISA and the 1980 Multiemployer Pension Fund

Amendments Act, with rigid statutory requirements, cannot

provide. This is a case in point. The pension statutes do not

protect petitioner’s employees; a partition under 29 U.S.C.

§ 186(c)(5) would.

Unfortunately for petitioner’s employees, the district court

dismissed petitioner’s counterclaim and the court of appeals

affirmed. It distinguished the earlier decision by a different

panel in the Local 50 case to a situation in which:

“all of the employers and employees. . . have left a fund

en masse creating a great distortion in the organization

and financing of the funds.” (A24).

However, as a practical matter, none of petitioner’s employees

are eligible to participate in Local 333’s trusts. To do so, they

would have to be Local 333 members working under a Local

333 agreement. Since 1976, none of petitioners’ employees

have met these conditions. Requiring petitioner to pay quadru-

ple compensation into the Local 333 trust will benefit some-

one’s employees, but not those of petitioner.

The appeals court decision works a great injustice on peti-

tioner and its employees in the separate bargaining unit. When

they participated in the NLRB representation hearing, all were

told that the NLRA guaranteed that no harm would come

from voting for the union of their choice. The employees work

for the same employer and on the same vessels as before the

election. Yet they are no longer eligible to participate in the

Local 333 trust funds despite all the contributions made on

their behalf.

Finally, the court of appeals apparently feels it would be

cumbersome to partition funds for relatively small employee

groups, as that involved here. But no group of employees

should be deprived of monies contributed for their benefit just

because they are few in number. This Court should grant the

writ to establish that 29 U.S.C. § 186(c)(5) requires district

courts to grant equitable relief when groups of employees

withdraw from multiemployer trust funds, just as a court

would grant such relief when a partnerhsip or any other joint

venture dissolves.

CONCLUSION

For the reasons stated above, petitioner asks the Court to

grant the petition and issue a writ of certiorari to the court of

appeals.

Respectfully submitted,

JARED STAMELL, ESQ.

Attorney for Petitioner

540 Madison Avenue

New York, New York 10022

(212) 752-9222

Dated: New York, New York

December 6, 1984

APPENDIX

Opinion of the Court of Appeals

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

aos

No. 1353—August Term, 1983

(Argued June 4, 1984 Decided July 20, 1984)

Docket No. 83-7848

aos

JOSEPH O’HARE, ALBERT M. CORNETTE, PETER GALE,

BrucE A. MCALLISTER, ROBERT W. SANDERS,

THOMAS E. MORAN, as Trustees of the New York

Marine Towing & Transportation Industry Pension

Fund and Insurance Fund,

Appellees,

—_—_vV.—

GENERAL MARINE TRANSPORT CORP,

Appellant.

Before:

OAKES and NEWMAN, Circuit Judges,

and MISHLER, District Judge.*

° Of the Eastern District of New York, sitting by designation.

Appeal from a number of related orders and opinions

of the United States District Court for the Southern

District of New York, Robert W. Sweet, Judge, granting

summary judgment for plaintiff Pension and Insurance

Funds trustees and against defendant employer. The court

awarded the Funds damages for delinquent contributions |

found to be owed by the employer pursuant to § 301 of

LMRA, 29 U.S.C. § 185, and § 502 of ERISA, 29 U.S.C.

§ 1132.

Affirmed.

JARED STAMELL, New York, NY, for Appel-

lant.

SEYMOUR M. WALDMAN, New York, NY (Ro-

man Beck, Beck, Halberg & Williamson,

New York, NY; Vladeck, Waldman, Elias

& Engelhard, P-C., New York, NY, of

counsel), for Appellees.

OAKES, Circuit Judge:

This is an appeal from a number of orders of the

United States District Court for the Southern District of

New York, Robert W. Sweet, Judge, granting summary

judgment for trustees of employee benefit pension and

insurance funds and assessing damages against an em-

ployer for delinquent contributions. In essence, the court

held that the trustees were owed the money, along with a

double interest penalty and attorney’s fees. We affirm.

The four unpublished decisions appealed from repre-

sent the most recent phase of what appears to be an

endless dispute between General Marine Transport Corp.

(General Marine), the owner of sludge vessels used to

dispose of sewage sludge which work in the Port of New

York, and the union which represents, or purports to

represent, its employees, Local 333, United Marine Divi-

sion, International Longshoreman’s Association, AFL-

CIO (Local 333). The rights and duties of the various

parties to this dispute have been extensively litigated—be-

fore the National Labor Relations Board (the Board or

the NLRB), a number of times before Judge Sweet, and

twice recently in this court. See Berman Enterprises Inc.

v. Local 333, 644 F.2d 930 (2d Cir.), cert. denied, 454

U.S. 965 (1981); Generai Marine Transport Corp. v.

NLRB, 619 F.2d 180 (2d Cir. 1980). We assume familiarity

with our previous decisions.

At issue in this case are pension and insurance trust

fund payments (Fund payments) allegedly due from the

employer pursuant to a collective bargaining agreement

covering the period 1976-79 (the Agreement). The Agree-

ment was between Local 333 and the Marine Towing &

Transportation Industry Employees Association (the As-

sociation), an association representing shipping compa-

nies in the towing and transportation industry in the Port

of New York in a multi-employer bargaining unit. Since

the 1950s the collective agreements have provided for

both a Pension Fund and an Insurance Fund, and since

1962 General Marine has been a member of the Associa-

tion and a Fund participant.

The focus of this litigation is General Marine’s conten-

tion that it withdrew from the Association after the 1976

Agreement was reached and that it therefore is not

obliged to make Fund payments to the trustees pursuant

to the Agreement. This issue of the validity of General

Marine’s attempted withdrawal from the Association in

1976 was litigated but not reached in General Marine

Transport, 619 F.2d 180 (holding unfair labor practice

charge against employer barred by statute of limitations).

The district court held, as the Board had held before it,

that General Marine was a party to the Agreement and

that its purported withdrawal from the Association was

invalid; it therefore held that the employer owed the

trustees the Fund payments in question. In so holding, the

court also ruled on a number of preliminary contentions

raised by General Marine: that the district court had

subject matter jurisdiction over this action, that the

action was not barred by res judicata, that the suit was

not barred by the statute of limitations, and that the suit

was not barred because the trustees failed to exhaust their

administrative remedies. In a separate Opinion the court

calculated damages in a manner challenged by General

Marine, and also, on cross motions for summary judg-

ment, dismissed General Marine’s counterclaim having to

do with certain related Fund payments made by General

Marine to the Fund. We affirm the district court’s opin-

ion in all respects.

Facts

The relevant history of the bargaining between the

parties is set out in Berman Enterprises, 644 F.2d at

932-34. Briefly put, in 1976 General Marine’s president,

Evelyn Berman Frank, signed a written form authorizing

the Association to bargain with Local 333 on General

Marine’s behalf, as it had since 1962. In the course of the

negotiations, Local 333 proposed, and the Association

accepted, two contract provisions authorizing practices

which General Marine had in the past found objection-

able, so-called “vegetable oil” and “subsidiaries and affil-

iates” clauses.' Although given a chance by Local 333 and

the Association to withdraw from the Association be-

cause of these clauses, General Marine chose to remain in

the Association. The Agreement was signed on March 26,

1976, and became effective on April 1.’

On April 13, 1976, General Marine notified the Asso-

ciation and Local 333 that it did not consider itself bound

by the Agreement because the contract exceeded the

authority of the Association to negotiate on its behalf. In

particular, General Marine objected to the “vegetable oil”

and the “subsidiaries and affiliates” clauses. As of April

1, General Marine stopped making contributions to either

the Insurance or the Pension Fund for its employees.

The dispute about the “subsidiaries and affiliates”

clause, which is relevant to the counterclaim and to one

of General Marine’s substantive defenses, involves a long-

standing argument between General Marine and Local

333 concerning the employees covered by the 1973-76

agreement. General Marine is one of three subsidiary

! Before 1976, Local 333 had sought to require General Marine and a

number of other affiliated companies to cease towing certain un-

manned barges carrying animal, vegetable or fish oil. The employers

resisted, and the question was eventually litigated, with General

Marine obtaining a favorable result. See Berman Enterprises, 644 F.2d

at 932-33. The “vegetable oil” clause at issue here presented another

attempt by Local 333 to impose this limitation on General Marine. The

“subsidiaries and affiliates” clause requires affiliates of Association

members to operate under the terms of the contract. The clauses are

reprinted at id. nn. 3, 4.

2 The Agreement was signed by a representative of Local 333 on

behalf of the employees and a representative of the Association on

behalf of the participating employers. Individual employers did not

sign the Agreement, though their names were listed at the bottom of

the Agreement.

companies, along with Berman and Standard Tank, which

cperate barges in New York harbor and whic’: are all

owned by the Berman family. Only General Marine em-

ployees were explicitly covered by the Association-Local

333 agreements. The situation was complicated, however,

by the Berman family’s practice of having employees on

the payroll of one affiliate work from time to time aboard

vessels owned by another affiliate. When General Marine

employees worked aboard Berman vessels, their employer

treated them as were subject to the salary and other

provisions of a contract covering Berman, rather than

General Marine employees, but General Marine made

payments to the Funds on their behalf as dictated by the

agreement with Local 333.

Local 333 sought to have all Berman family employees,

or, failing that, at least all employees on General Marine’s

payroll, determined to be members of Local 333 and

bound by the Agieement. The issue was litigated before

the Board, and General Marine obtained favorable re-

sults. In particular, it was determined that Berman em-

ployees were not covered by the Agreement, and that

there was no “contract bar” preventing the Berman em-

ployees and the General Marine employees working on

Berman vessels from holding an election to choose a

bargaining representative. An election was held, and the

employees in question chose to be represented by a

non-Local 333 union, the Marine Engineers Beneficial

Association (MEBA). These employees were then expelled

from Local 333. Questions involving the representational

Status of all Berman family employees were, or at least

should have been, resolved.

After the representational questions had been resolved,

Local 333 filed unfair labor practices charges with the

Board concerning General Marine’s repudiation of the

Agreement as regards General Marine employees working

on General Marine vessels—the only employees whom the

Board found were members of Local 333. The Board held

that General Marine was bound by the Agreement as

regarded these employees and had therefore committed

an unfair labor practice by attempting to repudiate it.

This court then denied enforcement of the Board order,

on the procedural ground that the union had not filed the

charge within the six-month statute of limitations of

section 10(b) of the National Labor Relations Act

(NLRA), 29 U.S.C. § 160(b) (1982). General Marine

Transport Corp., 619 F.2d 180. The trustees were nof

parties to that action.

Subsequently, General Marine and its affiliates sued the

Association, many of its members, Local 333, and the

trustees, in federal district court, asserting that the Agree-

ment, and in particular the “vegetable oil” and “subsidi-

aries and affiliates” clauses were illegal and constituted a

group boycott in violation of the antitrust laws. The

trustees counterclaimed to recover the Fund payments at

issue here, but before trial the claims against the trustees

were voluntarily dismissed, and the counterclaim was

dismissed and subsequently reasserted in the separate

complaint which was litigated below. A jury resolved the

antitrust suit in favor of the defendants, a verdict which

was upheld on appeal. Berman Enterprises, 644 F.2d 930.

The present suit, evolving from the counterclaim in the

antitrust suit, sought recovery of the unpaid Fund contri-

butions due for the General Marine employees working

on General Marine vessels, including interest and attor-

ney’s fees pursuant to section 502 of the Employee

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

§ 1132. General Marine counterclaimed seeking repay-

ment to it or to a receiver for certain funds paid to the

trustees in the 1973-76 period for the General Marine

employees who worked on Berman vessels who, after the

1976 representation election was held, chose to join the

MEBA.

The suit was litigated in five stages and resulted in four

unpublished decisions. Initially the court on cross mo-

tions for summary judgment ruled that General Marine

was liable for the unpaid contributions. A separate dam-

ages trial was then held, at which time the court granted

the trustees’ motion to dismiss the counterclaim. The

court awarded the trustees $87,903.46 in pension and

health insurance contributions, and $154,404.98 in double

interest. Next General Marine moved to have the first

decision reconsidered in light of De/Costello v. Teamsters,

103 S. Ct. 2281 (1983), arguing that in light of that

decision the suit should have been dismissed as time

barred. The court reconsidered its decision but held that

the six month statute of limitations the Court held appli-

cable in De/Costello did not apply in this instance. Finally

the court awarded $71,694.37 in attorney’s fees and costs

to the trustees as prescribed by ERISA.

On appeal General Marine challenges each one of the

district court’s determinations. We will address each of its

objections, dealing first with its jurisdictional and proce-

dural objections, then with its objections as to the finding

of liability and the assessment of damages and attorney’s

fees, and finally to its objections to the court’s dismissal

of the counterclaim.

Discussion

Jurisdiction. General Marine asserts that the district

court lacked jurisdiction to decide the question whether

General Marine was a party to the Agreement. It argues

that the district court found that it never entered into a

contract, and that in the absence of such a contract the

court lacked jurisdiction to entertain a section 301 suit

between non-contracting parties. See, e.g., Aacon Con-

tracting Co. v. Association of Catholic Trade Unionists,

178 F. Supp. 129, 129-30 (E.D.N.Y. 1959), aff'd, 276 F.2d

958 (2d Cir. 1960).

The short answer to this argument is that it grossly

mischaracterizes the factual findings of the district court.

The court did not hold that General Marine illegally

refused to execute the contract. Rather the court explicitly

held that there was a valid contract between the parties

and that General Marine attempted to repudiate the

contract:

[T]he April 13 repudiation was an ineffective ter-

mination of the agreement for collective bargaining

purposes and General Marine, as of that point,

remained bound by the agreement. . . . The April 13

Frank letter after the contract had been agreed upon,

was untimely and also ineffective under federal labor

law and policies.

The court therefore did not order the execution of a labor

contract, a remedy that concededly lies exclusively within

enforcement power of the National Labor Relations

Board. E.g., Wm. Chalson & Co. v. Amalgamated Jew-

elry Workers Local No. 1, 478 F. Supp. 1103, 1108

(S.D.N.Y. 1979).

The court concluded that the facts made out a classic

section 301 case of breach of a labor contract, and

correctly based its jurisdiction on that statute. The fact

that the court relied on federal labor law principles

derived from NLRB adjudications in order so to catego-

10a

rize the dispute and subsequently in order to rule on the

substantive issues raised does not deprive the court of

jurisdiction under section 301. See Smith v. Evening

News Association, 371 U.S. 195 (1962). Evening News

makes clear that courts in section 301 suits are entitled to

consider facts that may also make out an unfair labor

practice within the competence of the NLRB. See Amal-

gamated Association of Street, Electric Railway & Motor

Coach Employees of America v. Lockridge, 403 U.S.

274, 301 (1971). Insofar as General Marine’s jurisdic-

tional argument constitutes an indirect attack on the

district court’s factfinding and characterization of this

action, for reasons we will fully discuss later we find the

court’s factfinding amply supported by the evidence on

the record.

Res judicata. General Marine asserts that this court’s

prior holding in General Marine Transport, 619 F.2d 180,

presents a res judicata bar to the current litigation. In that

case it was determined that Local 333’s unfair labor

practice charge brought by the Board against General

Marine, asserting that General Marine was not entitled to

repudiate the Agreement, was time barred. The district

court agreed that the two actions involved the same core

of operative facts (General Marine’s participation in, and

attempted repudiation of, the Agreement), and that a

ruling in Local 333’s favor in the first action would have

resulted in the trustees’ recovering at least some of the

damages they seek in the present action. The district court

nonetheless ruled that res judicata did not apply because

both the parties and some of the issues were different in

the two suits, and the contract issue, though litigated, was

not necessarily determined in the earlier action.

lla

We agree fully with the district court’s resolution of the

res judicata argument. The trustees, plaintiffs in this suit,

were not a party to the earlier action, nor could they be

considered privies to Local 333 as a matter of law by

virtue of the divergent responsibilities of pension or

insurance fund trustees and union officials and lack of

any showing of an agency relation. Cf. NLRB v. Amax

Coal Co., 453 U.S. 322 (1981) (employer-selected trustees

of trust fund are not “representatives” of the employer

for purposes of the National Labor Relations Act);

NLRB vy. Truck Drivers Local Union No. 449, 728 F.2d 80

(2d Cir. 1984). To the extent that National Benefit Fund

for Hospital and Health Care Employees v. Presbyterian

Hospital, 448 F. Supp. 136 (S.D.N.Y. 1978), suggests a

contrary result, we decline to follow it.

Moreover, there was simply never a prior holding on

the scope of the Agreement and the effect of General

Marine’s attempted revocation which could bar future

litigation on this question. All that was fully litigated in

General Marine was the question how the six month

statute of limitations applicable for unfair labor practice

actions was to be tolled in the context of Local 333’s

unfair labor practice charge brought to the NLRB. The

underlying contract question reached by the Board was

not reached on the appeal in General Marine. This is a

section 301 action, which, as we discuss infra, is governed

by a different statute of limitations period, so the prior

statute of limitations determination in General Marine

does not act as a res judicata bar to the present action.

Limitations period. General Marine asserts that under

the rule established in Del/Costello v. Teamsters, 103 S.

Ct. 2281 (1983), the six month limitation period of 29

U.S.C. § 160(b) should be applied to this section 301 suit.

12a

If that limitations period did apply, the suit would con-

cededly be time barred under the facts as found in

General Marine, 619 F.2d 180.

DelCostello held that the six month limitations period

of the NLRA should apply to hybrid section 301/fair

representation cases since they closely resemble employee

unfair labor practice actions which are governed by that

limitations period. However, this suit much more closely

resembles the traditional section 301 breach of contract

action that has in the past been governed by analogous

state contract law limitations, in this case New York’s six

year limitations period. N.Y. Civ. Prac. Law § 213.2

(McKinney 1972). See Auto Workers v. Hoosier Cardinal

Corp., 383 U.S. 696, 707 (1966). De/Costello itself quoted

with approval the holding in Hoosier Cardinal,’ and we

agree with the district court that the De/Costello holding

turns on the particular nature of the duty of fair represen-

tation action, and cannot reasonably be expanded to all

section 301 claims that involve facts which might also

have established an unfair labor practice charge.

Exhaustion of administrative remedies. Appellant

claims that the suit should be barred because the trustees

failed to make use of the arbitration procedures available

to them in the agreement. The existence of a duty of

3 The following language from Hoosier Cardinal was quoted with

approval in De/lCostello:

The present suit is essentially an action for damages caused by an

alleged breach of an employer’s obligation embodied in a collective

bargaining agreement. Such an action closely resembles an action

for breach of contract cognizable at common law. Whether other

§ 301 suits different from the present one might call for the

application of other rules on timeliness, we are not required to

decide,. . . . 383 U.S., at 705 n.7.

103 S. Ct. at 2289-90 (citations omitted).

13a

trustees to arbitrate claims for unpaid contributions be-

fore pursuing judicial remedies is to be determined by

analyzing the collective bargaining agreement and trust

agreement to see whether they call for such arbitration.

Schneider Moving & Storage Co. v. Robbins, 52

U.S.L.W. 4476 (U.S. Apr. 18, 1984). Here the court

undertook such analysis and determined that the Agree-

ment’s general arbitration provision did not apply to the

trustees, since it explicitly referred only to claims by the

employer, the union, or the Association. Since one spe-

cific arbitration provision did allow trustees to arbitrate

when the amount of a delinquency was in issue, the court

reasoned expressio unius that the exclusion of the trustees

from all other parts of the arbitration section was inten-

tional. The court’s construction of the agreement is

sound, especially in light of Schneider Moving Co., de-

cided after the district court’s decision here. It is not even

argued that the trust agreements themselves make the

question(s) arbitrable.

The merits. The district court found that General

Marine was a party to the Agreement signed by the

Association on its behalf. It based this conclusion on the

fact that Mrs. Berman gave written authorization to the

Association to negotiate on behalf of General Marine as

well as on the fact that Mrs. Berman later reaffirmed her

intention to remain in the Association and be bound by

the Agreement in spite of the inclusion of the two clauses

to which General Marine objected. General Marine’s

name was listed as one of the employers on behalf of

which the Agreement was signed, and the Agreement

became effective at the expiration of the prior agreement,

binding General Marine after it was signed, see supra note

2, on March 26, 1976.

l4a

General Marine argues that it never executed the Agree-

ment since it repudiated it by letter on April 13 and

stopped making Fund payments on the supposed effective

date of the Agreement, April 1. However, the district

court correctly, if implicitly, found that it was not up to

General Marine to “execute” the agreement, at least in

the sense of agreeing to be bound by it after it was signed.

It had previously agreed to have the Association act as its

agent, and when the Association’s representative signed

the Agreement, at that point General Marine, and all the

other represented employers, were bound by it. To sug-

gest otherwise is to ignore the past practice and clear

understanding of the employers who made up the Asso-

ciation, as well as any coherent principles of agency law

generally* or particularly in the context of the federal

labor law. As we have indicated, supra note 2, individual

employers did sot sign onto the Agreement, nor was there

any formal or informal device or procedure whereby they

had a right to accept or reject it after it was signed by the

Association on their behalf.

The court next found as a matter of federal labor law

that Evelyn Frank’s April 13 letter of repudiation was an

ineffective termination of the Agreement and that, there-

fore, General Marine remained bound by that agreement.

The court reached this conclusion by applying the labor

law principle that an employer may not, barring “unusual

circumstances,” withdraw from a multiemployer bargain-

ing unit without mutual consent once the negotiations

have commenced. E.g., Charles D. Bonanno Linen Ser-

4 Under general common law agency principles, a principal is not

entitled to repudiate its agent’s authority after a contract entered into

by the agent on behalf of the principal is executed and has become

effective. See Restatement (Second) of Agency §§ 124A, 125 (1958).

lSa

vice, Inc. v. NLRB, 454 U.S. 404, 410-11 (1982); NLRB

v. Paskesz, 405 F.2d 1201.(2d Cir. 1969).

Federal courts are at times obligated to apply labor law

principles in adjudicating claims under independent statu-

tory grounds of jurisdiction. See, e.g., Kaiser Steel Corp.

v. Mullins, 455 U.S. 72, 85 (1982); Textile Workers Union

v. Lincoln Mills, 353 U.S. 448 (1957). In this case the

district court applied those principles correctly; indeed, it

reached the same conclusion on the same reasoning as the

Board did in the order that was vacated by this court on

statute of limitation grounds. General Marine Transport,

619 F.2d 180.

General Marine argues that in any event it was entitled

to repudiate the agreement (or, as it would have it,

entitled to refuse to execute the agreement), because the

“unusual circumstances” exception should have been ap-

plied in this case, since the Association had entered into

an agreement that covered unrepresented employees, see

NLRB v. Local 210, International Brotherhood of Team-

sters, 330 F.2d 46 (2d Cir. 1964), and had thus exceeded

its authority to negotiate on behalf of General Marine.

General Marine points to the disputed “vegetable oil” and

“subsidiaries and affiliates” clauses as evidence that the

Association had exceeded its authority and purported to

bind unrepresented employees.

While it is true that there are “unusual circumstances”

which could justify a repudiation in this context, see, e.g.,

NLRB y. Siebler Heating & Air Conditioning, Inc., 563

F.2d 366 (8th Cir. 1977), cert. denied, 437 U.S. 911

(1978), General Marine’s argument fails here on a num-

ber of grounds. Even assuming, arguendo, that the two

disputed clauses are illegal,” none of the employees for

5 This court has held that the two clauses do not violate the antitrust

laws. Berman Enterprises, 644 F.2d 930. However, the Regional Direc-

l6a

whom the employer withheld Fund contributions is in any

way involved in the dispute about the two clauses,° so that

even if the clauses are invalid this would not justify the

nonpayments at issue here under the “wnusual circum-

stances” exception, nor make the entire contract unen-

forceable and void. Cf. Lewis v. Seanor Coal Co., 382

F.2d 437, 440-41 (3d Cir. 1967) (a “hot cargo” provision

would not make entire agreement void and unenforce-

able), cert. denied, 390 U.S. 947 (1968). Neither an

invalid contract provision nor a union unfair labor prac-

tice constitutes a defense to a trustees’ suit for unpaid

contributions unless the illegality lies in the trust provi-

sion sued on. See Kaiser Steel Corp. v. Mullins, 455 U.S.

72, 83-86 (1982); cf. Lewis v. Benedict Coal Corp., 361

U.S. 459 (1960) (union breach does not give rise to

defense against duty to contribute to welfare fund).

Nor is this a case like, e.g., JLGWU v. NLRB, 366

U.S. 731 (1961), where an entire contract was found

unenforceable because the union did not have majority

support of the people on whose behalf it purportedly was

bargaining. See also Mohawk Business Machines Corp..,

116 NLRB 248 (1956). Such a mistake obviously would

tor of the Board refused to issue a complaint brought by Local 333

against General Marine concerning General Marine’s abrogation of the

1976-79 Agreement before the representation question concerning the

General Marine employees on Berman vessels had been settled. She did

so because she found that the “subsidiaries and affiliates” clause was

an attempt to include employees not in the bargaining unit, and

because she found that the vegetable oil clause was a “hot cargo”

clause in violation of section 8(e) of the NLRA, 29 U.S.C. § 158(e)

(1982).

6 The vegetable oil clause affects only Berman since only Berman tows

vegetable oil barges. The “subsidiaries and affiliates” clause does not

purport to bind any of the General Marine employees for whom

pension and insurance payments are being sought, since these employ-

ees are all General Marine employees working on General Marine

vessels and were Local 333 members.

17a

infect the entire contract. Here, whatever problems there

are with the “subsidiary and affiliates” clause do not

affect the obligations General Marine has toward its

employees clearly represented by Local 333 whose pen-

sions are at issue here. Nor does the fact that Local 333

may have violated a no-strike clause, thereby, in General

Marine’s view, ending its obligations to the union, relieve

General Marine of its obligations to the trustees in the

absence of agreement to this effect. Lewis v. Benedict

Coal Corp., supra. In sum, we agree with the district

court that General Marine’s termination was ineffective,

and it therefore remained obliged to make Fund pay-

ments during the 1976-79 period.

The damage award. General Marine makes numerous

objections to the $314,000 awarded the trustees as dam-

ages in this action. First it argues that since it provided

alternate insurance coverage for its employees during the

time in question, and because the trust therefore did not

have to pay for insurance for the covered General Marine

employees during that time, it should not be held liable to

the Insurance Fund for unpaid contributions. However,

the Agreement did not give General Marine the right to

choose to whom it would make insurance payments. It

was obliged to pay into the Funds established by the

Agreement. The multiemployer Fund, which purchases a

form of group insurance, is contractually required to

keep the group intact, and the fact that appellant’s

improper conduct now requires it in essence to pay twice

is simply irrelevant as regards its obligation to the Fund.

See Brogan v. Swanson Painting Co., 682 F.2d 807, 809

(9th Cir. 1982)(employer’s obligation to make contribu-

tions to trust fund on behalf of employees for whose

benefits employer paid cash); Local 9, International

18a

Union of Operating Engineers v. Siegrist Construction

Co., 458 F.2d 1313, 1316 (10th Cir. 1972).

General Marine next objects to the fact that the court

awarded the trustees prejudginent interest at the rate set

out in the Agreement—2% above the prevailing rate

charged by Citicorp Bank. It argues that such a rate

constitutes punitive liquidated damages and it should

therefore not be enforced as against public policy.

However, section 502(g) of ERISA, 29 U.S.C.

§ 1132(g)(2), explicitly states that “interest on unpaid

contributions shall be determined by using the rate pro-

vided under the plan” or if none is specified a statutorily

prescribed rate based on an adjusted prime rate figure. 26

U.S.C. § 6621 (1982). The statute itself allows plans to

include a 20% liquidated damages provision, 29 U.S.C.

§ 1132(g)(2)(C)Gi), so it could hardly be considered

against public policy for the parties to agree to a rate of

2% above the prime rate.

General Marine also objects to the court’s awarding the

trustees double interest and attorney’s fees pursuant to 29

U.S.C. §§ 1132(g), 1145, which mandate these damages

for suits to enforce the terms of plans. Those sections

were added to the statute in a 1980 amendment to

ERISA. This suit was instituted before 1980, and General

Marine argues that the statute should not be applied to it

retroactively.

The district court applied the general rule that a court

applies the law in effect at the time it renders its decision

unless doing so would result in a manifest injustice or

would be contrary to legislative intent. Bradley v. Rich-

mond School Board, 416 U.S. 696, 711 (1974). Finding

no injustice or contrary legislative intent, it applied the

1980 amendments, relying on other decisions that have

also applied them in this context. See Central States,

19a

Southeast and Southwest Areas Pension Fund v. Alco

Express Co., 522 F. Supp. 919 (E.D. Mich. 1981). See

also San Pedro Fisherman’s Welfare Trust Fund Local 33

v. Di Bernardo, 664 F.2d 1344, 1346 (9th Cir. 1982); cf.

Bugher v. Consolidated X-Ray Service Corp., 705 F.2d

1426 (Sth Cir. 1983) (applying the 1974 ERISA attorneys’

fees provisicn to a suit initiated pre-ERiSA), cert. denied,

52 U.S.L.W. 3844 (U.S. May 21, 1984). But see Ham-

mond v. James W. Griffin Co., 520 F. Supp. 162 (N.D.

Ga. 1981).

General Marine’s argument is that section 1132(g)(2) is

not merely an additional remedy imposed on already

proscribed conduct, but rather that it is a provision which

creates a new violation of federal law, since it specifically

penalizes violations of 29 U.S.C. § 1145, a section that

was also added in 1980. It would therefore be unjust, it

argues, to impose a penalty for conduct that would not

have subjected it to federal liability when it was commit-

ted.

Whatever the strength of this argument as a matter of

law, cf. generally Pension Benefit Guaranty Corp. v. R.

A. Gray & Co., 52 U.S.L.W. 4810 (U.S. June 18, 1984)

(not unconstitutional for Congress to impose withdrawal

liability retroactivity), it misstates the facts. A default in

fund contributions would have subjected General Marine

to federal liability before the 1980 amendments, albeit

under a different statutory provision. See 29 U.S.c.A.

§ 1132 (1975) (pre- amendment); Lewis v. Benedict Coal

Corp., 361 U.S. 459 (1960). The 1980 amendments in this

regard did not penalize conduct which was previously not

subject to federal liability, they merely changed the reme-

dial scheme somewhat by requizing the award of interest

and attorney’s fees where previously those remedies were

assessed at the discretion of the trial judge. See Alco, 522

20a

F. Supp. at 922-23. The amendments also provided for a

double interest payment or alternative liquidated damages

to compensate the fund for costs incurred in connection

with delinquencies. Jd. at 928.

Moreover, the fact that the complaint was not formally

amended to allege a violation of new section 1145 does

not make application of the new statutory penalty inap-

propriate or unfair, as General Marine asserts. The appli-

cability of the double interest provision was fully briefed

and argued below, so appellant can hardly argue that it

was not on notice of the claim. Moreover, the court was

entitled to enter whatever relief it felt appropriate at the

trial, whether or not it was requested in the pleadings.

Rule 54(c), Fed. R. Civ. P.; Newberger, Loeb & Co. v.

Gross, 611 F.2d 423, 432-33 (2d Cir. 1979) (awarding

prejudgment interest).

Finally, General Marine objects to the court’s decision

to award attorney’s fees to the trustees pursuant to

section 1132(g) for costs incurred defending the counter-

claim, arguing that it is not properly part of the “action”

to enforce plan payment for which fees are authorized

under section 1132(g)(2). However, the counterclaim was

between the same parties, grew out of the same general

contractual dispute, and, if successful, would have

stopped the trustees from collecting any damages in the

Original suit, as it sought recovery of a sum greater than

that sought by the plaintiffs. In those circumstances, the

court was entitled to award attorney’s fees to the trustees

to defend the counterclaim, and indeed appellant points

to no case law or statute which suggests otherwise. It was

part of the same action.

The counterclaim. General Marine’s counterclaim

seeks repayment from the trustees for around $200,000 of

health insurance and pension contributions made to them

2la

during 1973-76 for the General Marine employees who

worked on Berman vessels. General Marine asserts that

these employees were never properly part of Local 333 or

therefore attorned to the 1973-76 agreement, and that the

payments made for those employees pursuant to that

agreement should never have been made and did not

benefit those employees. It requests that the money be

returned and placed with an independent receiver.

General Marine rests its argument on two grounds

relating to alleged violations of LMRA section 302(c)(5),

29 U.S.C. § 186(c)(5) (1982).’ First, it asserts that, pur-

suant to section 302(c)(5)(B) as interpreted by Moglia v.

Geoghegan, 403 F.2d 110 (2d Cir. 1968), cert. denied, 394

U.S. 919 (1969), the contributions should never have

initially been made to the Funds. Second, it claims that

the contributions now will not be used “for the sole and

exclusive benefit of the [covered] employees” as required

by section 302(c)(5), and so should be returned to a

receiver to be used for the benefit of the employees.

Initially, as the district court noted, there is a substan-

tial standing barrier to General Marine’s making these

claims at all, in particular in making its second claim.

General Marine has no personal stake in the outcome of

this controversy, e.g., Warth v. Seldin, 422 U.S. 490,

498-99 (1975). If it were to prevail, a receiver would have

to be appointed to hold the money for the benefit of

either the affected employees or the MEBA trust. General

Marine neither alleges that it was injured in any way by

7 (c) Exceptions

The provisions of this section shall not be applicable. . .

(5) with respect 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, . . . Provided, That

. . . (B) the detailed basis on which such payments are to be made

is specified in a written agreement with the employer. . . .

22a

its purportedly improper payments, nor that it will gain in

any way if it succeeds in the counterclaim. Nor is it in a

position as an employer to sue on behalf of its former

employees. See Fire Equipment Manufacturers’ Associa-

tion, Inc. v. Marshall, 679 F.2d 679, 681, 683 (7th Cir.

1982) (OSHA standards), cert. denied, 103 S. Ct. 728

(1983). None of the cases General Marine relies upon

were brought alone by an employer—in each case either a

trust fund, a union, or groups of employees have partici-

pated when a trust fund is sued on the ground that some

other fund or group of employees is entitled to money

that has been deposited in the fund.

But even if as settlor of the trust General Marine has

standing, the district court correctly concluded that

General Marine was not entitled to recover on the coun-

terclaim. Under section 302(c)(5)(B) of the LMRA, 29

U.S.C. § 186(c)(5)(B), an employee benefit fund may not

accept contributions from an employer unless the em-

ployer is party to a written document specifying the basis

for the contribution. Moglia, 403 F.2d 110. General

Marine argues that the employees in question were found

not to have been covered by the 1973-76 agreement, so

that there was no written agreement authorizing the

payments, and the money should therefore be returned

to it.

The argument is that the Board made a determination

that there was no contract bar to holding a representa-

tional election for all employees who worked on Berman

barges, including those at issue here who were on General

Marine’s payroll at the time. Thus it is argued that there

was no valid written agreement with Local 333 covering

these General Marine employees working on Berman

barges which would allow General Marine to contribute

to the Funds for these employees.

23a

However, the Board’s determination that there was no

contract bar to holding a representational election is not

equivalent to a holding that for all purposes there is no

valid written agreement between the employees and

another bargaining representative. See The Kroger Co.,

165 NLRB 872 (1967); General Extrusion Co., 121 NLRB

1165 (1958). The “contract bar” doctrine is a prudential

concept used by the Board for representational election

purposes only. Here there clearly was a written agreement

covering all of General Marine’s employees, including the

employees in question here, at least as regards Fund

payments. As the district court noted, each month

General Marine submitted contributions to the trustees

along with written and signed records stating that given

amounts of contributions were being made for all their

employees, including those who were working on Berman

vessels. The Fund paid ali benefit claims for these em-

ployees, and the Pension Fund has given full eligibility

and pension credit for the entire period. The situation

deemed not to give rise to a contract bar here is nothing

like that in Moglia, where an employee’s widow unsuc-

cessfully sought to recover pension payments. There the

trustees refused to pay th» funds to the alleged benefi-

ciary, successfully contending that the employee’s em-

ployer had never entered into a collective bargaining

agreement or a pension trust with the union. Here the

trustees have paid out all the claims for the employees in

question, and there is no question that General Marine

had a valid contract with Local 333 and that the employ-

ees in question were on General Marine’s payroll.

General Marine’s second and more substantial argu-

ment is that the retention by the Funds of contributions

made on behalf of these employees violates that part of

section 302(c)(5) which requires that an employer’s contri-

24a

butions must be “for the sole and exclusive benefit of the

employees of such employer ... .” General Marine

contends that section 302(c)(5) requires that a voluntarily

departing group of employees be permitted to take a

portion of the pension fund with them, either through

direct repayment of contributions or through segregation

of assets to be administered by a court-appointed ad-

ministrator. See Local 50 Health Benefits Fund v. Local 3

Welfare Fund, No. 83-7648, slip op. at 3123 (2d Cir. Apr.

19, 1984); Alvares v. Erickson, 514 F.2d 156 (9th Cir.),

cert. denied, 423 U.S. 874 (1975).

However, this is not a case like Local 50 or Alvares

where an entire group of employers and their employees

(Alvares), or all of an employer’s employees (Local 50)

have left a fund en masse creating a great distortion in the

organization and financing of the Funds.® In those cases

the “failure to transfer the portion of its reserves attribut-

able to [the departing employer’s contribution means

that]. . . none of [the employer’s] employees will benefit

at all from [the employer’s] contributions.” Local 50, slip

op. at 3138 (emphasis in original). It was precisely on that

ground that Local 50 was distinguished from United Mine

Workers of America Health & Retirement Funds v. Rob-

inson, 455 U.S. 562 (1982), where it was held that section

302(c)(5) did not otherwise impose a reasonableness re-

quirement on welfare plan provisions. Jd. at 570-76.

Here some employees once on General Marine’s payroll

voluntarily chose to join a different union and therefore a

8 Most problems created by employer withdrawal from multi-em-

ployer pension plans have subsequently been resolved by statute in the

Multiemployer Pension Plan Amendments Act of 1980, which, how-

ever, did not apply to changes in bargaining representation occurring

before April 29, 1980. See 29 U.S.C. §§ 1415, 1461(e)(2)(a) (1982).

25a

different welfare and pension plan. Other employees

remained on General Marine’s payroll and remained

members of Local 333 and fund participants. To claim

that monies retained by the Funds contributed by an

employer on behalf of all its employees is not contributed

“for the sole and exclusive benefit of the employees of

such employer” whenever some of the employees choose

to leave the union and fund would be an unfair and

unrealistic construction of section 302(c)(5). This is espe-

cially true when considering pension funds, where financ-

ing is based on long-range actuarial projections and

vesting requirements which assume that some employees

for whom contributions are made will never be eligible

for benefits. See, e.g., Aitken v. IP & GCU-Employer

Retirement Fund, 604 F.2d 1261, 1267-68 (9th Cir. 1979);

29 U.S.C. § 1053 (1982).° Here the employees in question

received pension credit for the entire period in question.

Some of these employees already have vested pension

rights and others may achieve vesting under the terms of

the plan while members of the MEBA. Simply put,

section 302(c)(5) does net require that when a small

number of employees leave a large multiemployer unit,

pension funds, by virtue of that circumstance alone, must

return money contributed on their behalf to the employ-

ees or their new funds.

Judgment affirmed.

9 It is worth noting in this regard that neither Local 50 nor Alvares

involved pension funds, both being suits to recover welfare fund

reserves.

26a

Opinion of the District Court dated December 4, 1981

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

December 4, 1981

No. 78 Civ. 6277 (RWS)

—

JOSEPH O’HARE, Albert M. Cornette, Peter Gale, Bruce A.

McAllister, Robert W. Sanders and Thomas E. Moran, as

Trustees of the New York Marine Towing and Transporta-

tion Industry Pension Fund and Insurance Fund,

Plaintiffs,

GENERAL MARINE TRANSPORT CORPORATION,

Defendant.

com

BERMAN ENTERPRISES, INC., Standard Tank Cleaning Corp.,

and General Marine Transport Corp.,

Plaintiffs,

Vv.

LOCAL 333, UNITED MARINE DIVISION, ILA, et al.,

Defendants.

OPINION

SWEET, District Judge.

Plaintiff trustees of the New York Marine Towing and

Transportation Industry Pension Fund and Insurance Fund

27a

(“the Trustees” or “the Funds”) are seeking a partial summary

judgment against defendant General Marine Transport Corpo-

ration (“General Marine”) on the issue of liability for contri-

butions allegedly due the Funds pursuant to a collective

bargaining agreement between Local 333, United Marine Divi-

sion, International Longshoreman’s Association, AFL-CIO

(“Local 333”), and the Marine Towing and Transportation

Employers’ Association (“the Association”), an association

representing companies in the multi-employer bargaining unit

of which General Marine is alleged to be a member. General

Marine has also moved for summary judgment and seeks

dismissal of the complaint. For the reasons stated below,

which constitute the findings of fact and conclusions of law,

the motion of the Trustees will be granted, and the motion of

General Marine will be denied.

Certain issues involving these, or related parties, have been

the subject of extensive litigation before the Second Circuit,

the NLRB, and this court. Familiarity with General Marine

Transport Corp. v. NLRB, 619 F.2d 180 (2d Cir. 1980) Berman

Enterprises, Inc. v. Local 333, United Marine Division, Inter-

national Longshoreman’s Assoc., 644 F.2d 930 (2d Cir. 1981)

and their underlying facts is assumed. The undisputed facts set

forth by both the Trustees and General Marine with respect to

the instant motion are briefly set forth below.

General Marine is a wholly owned subsidiary of a holding

company owned by various members of the Berman family. It

operates sludge vessels used for dumping sewage sludge out at

sea. From 1973 through 1976 General Marine, as a member of

the Association, was a party to a collective bargaining agree-

ment with Local 333. Shortly before the agreement expired,

General Marine completed an authorization form authorizing

the Association to negotiate on its behalf. During the negotia-

tions the question of resignation by General Marine from the

Association arose, as well as a proposed contract provision

binding General Marine and its “affiliates.” General Marine

was given the opportunity to resign from the Association, but

refused to do so. On March 26, 1976, the Association and

Local 333 executed a new three-year collective bargaining

28a

agreement (“the contract”). Although substantially renewing

the basic provisions of the prior agreement, it purported to

cover all employers as well as a “subsidiary company, an

affiliated company or a company division in the Port of New

York and vicinity.”

On April 13, 1976 Peter Frank, Vice President of General

Marine (“Frank”) wrote to Local 333 stating the refusal of

General Marine to be bound by the contract, claiming that its

scope exceeded the Association’s authority. Between April and

August, 1976, Local 333 filed several unfair labor practice

charges with the Board against Genera! Marine and Berman.

The first complaint was denied by the Board. In the second

complaint, Berman and the Board agreed in a settlement that

Berman would not recognize the Marine Engineers’ Beneficial

Association (“MEBA”) until representation proceedings were

completed. The third charge was withdrawn by Local 333 in

light of the representation proceedings. On December 10, 1976

in the representation proceedings the Regional Director deter-

mined that General Marine was bound by the contract and

therefore barred from having election proceedings and that

Berman and its other affiliates should have elections to deter-

mine the proper bargaining agent. Local 333 alone requested

review of this decision which was denied by the Board. After

an election MEBA was certified as the bargaining agent for

ships owned by Berman and its affiliates other than the two

ships operated by General Marine, the Susan Frank and the

Rebecca K.

Between January and March, 1977, with the representation

question settled, Local 333 demanded that General Marine

honor the terms of the contract. On February 28, 1977, Local

333 filed an unfair labor practice charge with the Board. The

Administration Law Judge (“ALJ”), relying on the report

from the representation proceedings pursuant to § 102.67(f) of

the Board’s Rules and Regulations, found that General Marine

was bound by the contract and had committed an unfair labor

practice. The Board affirmed the decision on October 24,

1978. The Second Circuit set aside the Board’s decision hold-

29a

ing that the unfair labor practice was time-barred by the

six-month filing provision of § 10(b) of the National Labor

Relations Act (““NLRA”), 29 U.S.C. § 160(b). General Marine

Transport Corp. v. NLRB, 619 F.2d 180 (2d Cir. 1980).

After the April 13, 1976 notice of termination by General

Marine, referred to above, the members of Local 333 struck

the two General Marine barges for two days on April 28, 1976.

General Marine contends that the strike was a response to

implementation of the wage rates under the new contract. The

Trustees asserted that the strike was due to unauthorized

manning changes on the vessels. Frank, by letter dated April

30, 1981, claimed that, because of the strike, General Marine

would no longer be bound by the contract pursuant to Article

I, Section 8 of the contract which provides in part that “[u]pon

the violation of this [no strike] Section by the Union or any of

the Employees, this Agreement may be terminated with respect

to and by all and any of the Employers.” The strike ended that

day after discussions between Frank and union representatives.

The Trustees contend that the termination was rescinded, and

General Marine contends that the termination remained in

effect with Local 333 agreeing to work under the emergency

health situation then existing. There is a factual issue therefore

as to the basis of the strike and its resolution.

This action by the Trustees seeking recovery of pension fund

contributions under the contract initially was brought as a

counterclaim in the anti-trust case brought by Berman against

Local 333 and the Association, referred to earlier. After the

Trustees were dropped as defendants in that action, the coun-

terclaim was severed from the anti-trust suit and asserted

through an independent complaint. It is the only contract

violation presently being asserted against General Marine that

is before the court.

Jurisdiction for this action is properly predicated on § 301 of

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

U.S.C. § 185, and the Employee Retirement and Income Se-

curity Act of 1974 (“ERISA”), 29 U.S.C. § 1001 ef seq; see

Lewis v. Benedict Coal Corp., 361 U.S. 459, 80 S.Ct. 489, 4

L.Ed.2d 442 (1960); American Ben. Plan Admin., Inc. v. D &

30a

E Corp., 90 CCH Labor Cases 4 12,428 (C.D.Cal.1980); Hann

v. Harlow, 271 F.Supp. 674 (D.Or.1967).

Although the facts that give rise to a § 301 claim may well

have been actionable as an unfair labor practice within the

proper jurisdiction of the National Labor Relations Board

(“NLRB”), § 8 of the National Labor Relations Act (“NLRA”)

28 U.S.C. § 158, the board’s jurisdiction is not exclusive:

The authority of the Board to deal with an unfair labor

practice which also violates a collective bargaining con-

tract is not displaced by § 301, but it is not exclusive and

it does not destroy the jurisdiction of the court under

§ 301.

Smith v. Evening News Ass’n, 371 U.S. 195, 197, 83 S.Ct.

267, 268, 9 L.Ed.2d 246 (1962); see also Amalgamated Ass’n

of Street, Electric Railway, & Motor Coach Employees v.

Lockridge, 403 U.S. 274, 277-301, 91 S.Ct. 1909, 1913-1925,

29 L.Ed.2d 473 (1971); Orange Belt District Council of Pain-

ters No. 48 v. Maloney Specialties, Inc., 639 F.2d 487, 490 (9th

Cir. 1980). Therefore this court properly has jurisdiction over

this action.

In General Marine Transport Corp. v. NLRB, 619 F.2d 180,

the Second Circuit determined that Local 333’s unfair labor

practice charge brought by the board against General Marine

was time-barred by the six-month filing provision of § 10(b) of

the NLRA, 29 U.S.C. § 160(b). Thus the court granted

General Marine’s petition to set aside an NLRB order in favor

of Local 333. This decision does not present a res judicata bar

l Wm. Chalson & Co. v. Amalgamated Jewelry, Diamond & Watchcase

Workers Union, 478 F.Supp. 1103, 1108 (S.D.N.Y. 1979), does not suggest

that the court lacks jurisdiction. There the court refused to compel an

employer to arbitrate under a collective bargaining agreement reached after

his withdrawal from the industry bargaining association despite the claim of

an unfair labor practice resulting from such withdrawal. Despite its unwill-

ingness to enforce the contract, the association’s agency having been termi-

nated, the court deferred to a pending NLRB unfair labor practice

proceeding to determine the validity of the contract and the effect of the

withdrawal. The court did not hold that it lacked jurisdiction to consider the

validity of the contract.

3la

to this case nor collaterally estop the determination of the

issues relevant to this case since the causes of action differ and

the issues relevant to the instant action were not necessarily

previously determined.

The judicially developed doctrine of res judicata evolved

primarily to avoid repetitious litigation of the same causes of

action. Commissioner of Internal Revenue v. Sunnen, 333 U.S.

591, 597, 68 S.Ct. 715, 719, 92 L.Ed. 898 (1933). Through its

operation parties to an action or their privies are barred from

relitigating a cause of action where a judgment on the merits

has already been rendered, Baltimore S.S. Co. v. Phillips, 274

U.S. 316, 319, 47 S.Ct. 600, 601, 71 L.Ed. 1069 (1927), and

there is an identity of parties and issues between the two

actions. Expert Electric, Inc. v. Levine, 554 F.2d 1227, 1232-33

(2d Cir., cert. denied, 434 U.S. 903, 98 S.Ct. 300, 54 L.Ed.2d

190 (1977). The doctrine of collateral estoppel renders a prior

judgment conclusive as to matters necessarily determined and

litigated in the prior action. Commissioner of Internal Revenue

v. Sunnen, 333 U.S. at 597-98, 68 S.Ct. at 719; Expert Electric,

Inc. v. Levine, 554 F.2d at 1233.

A “cause of action” for res judicata purposes “is not a

matter of precision nor subject to the application of any

mechanical formula.” /d. at 1234. The facts surrounding the

transaction or occurrence, rather than the legal theory upon

which a litigant relies, is generally stated to constitute the cause

of action and entails considering whether the rights determined

in the prior action would be impaired by the subsequent action.

Id.; Moreno v. Marbil Productions, Inc., 296 F.2d 543, 545 (2d

Cir. 1961).

Here although the legal theory for this action differs from

the NLRB cause, both arose from the same core of operative

facts and the prior action charging an unfair labor practice

sought compliance with the contract which would have resulted

in the payment of the amount claimed to be due in the current

action. Since a ruling based on a statute of limitation is

generally deemed a decision on the merits, Mathis v. Laird, 457

F.2d 926, 927 (Sth Cir.), cert. denied, 409 U.S. 871, 93 S.Ct.

32a

201, 34 L.Ed.2d 122 (1972), National Ben. Fund for Hospital

& Health Care Employees v. Presbyterian Hospital in New

York, Inc., 448 F.Supp. 136, 138 (S.D.N.Y.1978), the instant

action may initially appear to be barred by the Court of

Appeals decision in 1980.

Under the circumstances of this type of action, however, res

judicata should not apply both as a matier of equity and law.

As noted above, the NLRB and the district court have concur-

rent jurisdiction over two actions arising from the same set of

facts and circumstances when the two claims asserted are for

an unfair labor practice and for breach of a collective bargain-

ing agreement. Smith v. Evening News Ass’n, 371 U.S. at 197,

83 S.Ct. at 268. Since jurisdiction for a § 301 claim for the

funds to be paid under the contract is vested in the district

court and not in the NLRB, a § 301 action could not have been

brought in the prior proceeding before the NLRB. The present

claim for relief sought, the payment of funds due under the

agreement based on a breach of contract, though stemming

from a common nucleus of facts, should not be barred by res

judicata if it never could have been achieved in the prior

proceeding. The issues are thus not identical and neither are

the parties.

Thus the pertinent inquiry addresses the collateral estoppel

effect that results from the Second Circuit’s decision after the

NLRB proceeding. The issues of the validity, repudiation and

breach of the contract were not addressed in the prior action

by the Circuit Court. The Second Circuit’s decision considered

the date of the repudiation and whether a continuing repudia-

tion could be considered a continuing unfair labor practice

starting the six-month NLRB limitation period anew. 619 F.2d

at 186-87; see Local Lodge 1424 International Assoc. of

Machinists v. NLRB, 362 U.S. 411, 422, 80 S.Ct. 822, 829, 4

L.Ed.2d 832 (1960). The repudiation occurred on April 13,

1976, no subsequent actions were found to estop General

Marine from asserting the statute of limitations defense, and

the continuing violation theory was rejected. Genera! Marine

Transport Corp, v. NLRB, 619 F.2d at 188. The validity of the

33a

contract and the effect of repudiation were not considered.

Although these issues were litigated, their resolution was not

necessary to the determination of the prior action by the

Second Circuit, hence no collateral estoppel. Commissioner of

Internal Revenue v. Sunnen, 333 U.S. at 597-98, 68 S.Ct. at

719.

Furthermore, the rights established in the Second Circuit’s

decision will not be impaired by this holding. Since the unfair

labor practice charge was dismissed on statute of limitations

grounds, resort to the administrative procedures of the NLRB,

and a hearing before an administrative law judge to redress an

unfair labor practice was precluded by the delay in filing.

Section 10(b) addresses the administrative remedies provided

by Congress to resolve unfair labor practices, cf. United Parcel

Services, Inc. v. Mitchell, 451 U.S. 56, 68 n.4, 101 S.Ct. 1559,

1567 n.4, 67 L.Ed.2d 732 (1981) (Stewart, J., concurring),

while the definition of unfair labor practices is contained in

another section. These administrative remedies do not address

the availability of money damages as relief before a district

court based on a breach of contract. Moreover, the NLRB’s

jurisdiction over unfair labor practices does not preclude a

district court from exercising jurisdiction over an action “even

where such award presents a potential conflict with an NLRB

decision.” Orange Belt District Council of Painters No. 48 v.

Maloney Specialties, Inc., 639 F.2d at 490. The district court

properly retains jurisdiction to the extent the § 301 action is

governed by the collective bargaining agreement. Motor Coach

Employees v. Lockridge, 403 U.S. at 300-01, 91 S.Ct. at

1924-25; Waggoner v. R. McGray, Inc., 607 F.2d 1229, 1234-35

(9th Cir. 1979).

In addition the initiation of the unfair labor practice claim

by the union before the NLRB did not constitute a waiver of

§ 301 claims by the trustee in the district court. Before the

NLRB Local 333 sought to redress an unfair labor practice

claiming that General Marine breached the contract. In the

instant action the trustees seek to recover for payments al-

legedly due based on the contract. Both claims have indepen-

34a

dent and concurrent sources of jurisdiction and could not have

been asserted in tl.e same forum. The assertion of one by the

union does not bar assertion of the other by the trustees.

National Benefit Fund for Hospital & Health Care Employees

v. Presbyterian Hospital, 448 F.Supp. 136, is not to the

contrary. In National Benefit, the plaintiff Fund, although not

required to, agreed to submit a dispute to arbitration where it

was determined that the claim was barred by laches. The Fund

then sought to assert a claim again based on the collective

bargaining agreement in district court under ERISA. The court

held that res judicata from the arbitration award barred the

district court action. In that case the parties voluntarily sub-

mitted the dispute to arbitration for resolution, and then the

losing party sought to assert the same basis for recovery in the

district court as had been asserted in the arbitration proceed-

ing. In the instant case, although both actions ultimately could

turn on the validity of the collective bargaining agreement,

independent and concurrent sources of jurisdiction are asserted

as the basis for recovery.

Since the prior and the instant claims are separate causes of

action, they invoke separate and distinct statutes of limita-

tions. As discussed and applied by the Second Circuit, the

statute of limitations applicable to an unfair labor practice

charge before the NLRB is six months. 29 U.S.C. § 160(b).

Under § 301 the applicable statute of limitations is generally

that of the state in which the cause of action arose with due

regard for the federal policies involved. Jnternational Union,

United Automobile, Aerospace & Agricultural Implement

Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 705-07, 86

S.Ct. 1107, 1113-14, 16 L.Ed.2d 192 (1966); cf. United Parcel

Service, Inc. v. Mitchell, 451 U.S. at 60 & n.2, 65-71, 101 S.Ct.

at 1562 & n.2, 1565-1568 (Stewart J., concurring). The appro-

priate statute of limitations period for breach of contract

actions in New York is six years und is applicable to the instant

action. N.Y.Civ.Prac. Law and Rules § 213(2); Abrams v.

Carrier Corp, 434 F.2d 1234, 1252-53 (2d Cir. 1970), cert.

denied, 401 U.S. 1009, 91 S.Ct. 1253, 28 L.Ed.2d 545 (1971);

35a

see also Savoretti v. Hotel & Restaurant Employees & Bar-

tenders International Union Pension Fund, 470 F.Supp. 1286,

1289 (S.D.N.Y. 1979). Nor has the defendant submitted or this

court found another New York statute of limitations that

would be more appropriate. United Parcel Service v. Mitchell,

451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981). Thus this

§ 301 action is timely filed, properly before this court and not

barred or decided by res judicata or collateral estoppel.

The final asserted jurisdictional defect, that this action

should be dismissed because of a failure to pursue arbitration

procedures, see United Steelworkers of America v. American

Manufacturing Co., 363 U.S. 564, 80 S.Ct. 1343 4 L.Ed.2d,

1403 (1960); United Steelworkers of America v. Warrior &

Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d

1409 (1960), is also without merit. The duty of a party to

arbitrate before pursuing judicial proceedings is to be resolved

by analysis of the collective bargaining agreement as it applies

to the pension funds in accordance with applicable substantive

federal law. Textile Workers Union vy. Lincoln Mills of Ala-

bama, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957);

Rochdale Village, Inc. v. Public Service Employees Union,

Local No. 80, 605 F.2d 1290, 1294 (2d Cir. 1979); Moruzzi v.

Dynamics Corp. of America, 443 F.Supp. 332, 333

(S.D.N.Y.1977). Such analysis is properly before the court.

John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 547, 84

S.Ct. 909, 913, 11 L.Ed.2d 898 (1964). Although in construing

an arbitration clause, the duty to arbitrate is generally favored,

United Steelworkers of America v. Warrior & Gulf Navigation,

363 U.S. 574, 582-83, 80 S.Ct. 1347, 1352-53, 4 L.Ed.2d 1409

(1960), none the less the duty must be enunciated in the

contract. Gateway Coal Co. v. United Mine Workers, 414 U.S.

368, 374, 94 S.Ct. 629, 635, 38 L.Ed.2d 583 (1974). In the

instant case the Funds were only beneficiaries and not parties

to the collective bargaining agreement and indeed are indepen-

dent of Local 333. The general arbitration provision in Article

II of the collective bargaining agreement does not explicitly or

implicitly apply to the Trustees. It explicitly refers to claims

36a

brought by an employer, the union or the association and

provides for the proper procedures for initiating arbitration.

Since the Funds are otherwise mentioned in regard to arbitra-

tion, their exclusion from the general provision combined with

the specific mention of other parties indicates that the section

is inapplicable to the Funds without reference to another

section of the collective bargaining agreement. General Marine

has not argued to the contrary.

Article I, Section 16(d) of the contract deals with employer

delinquencies in insurance and pension payments.’ This provi-

sion refers to the union’s right to strike a delinquent employer

without violating the “No Strike” clause of the contract. The

section also specifically refers to the Trustees’ right to recover

legal fees incurred in enforcing payment under the contract.

One exception to the right to strike occurs when the employer

‘questions’ the amount due, in which case a bond shall be

posted and the dispute shall be resolved through arbitration.

Resort to arbitration occurs when the amount due is ques-

tioned. In this case liability itself is contested, which is clearly

beyond the scope of this narrow duty of the Trustees to

arbitrate, particularly in light of the fact that the Trustees were

2 Section 16(d) of the contract provides in pertinent part:

Nothing contained herein, huwever, shall prevent the Union from

immediately striking the said delinquent Employer until all monies

owed hereunder by the delinquent Employer are paid . . . and if the

Trustees incur legal expense in enforcing payment of such delinquent

amount, the Trustees shall also be entitled to recover their reasonable

counsel fees and other expense incurred in effecting collection. Such

strike shall not violate the “no strike clause” and shall not be subject to

the grievance and arbitration machinery of this contract.

In the event that the amount of delinquency alleged to be due by the

Funds’ Administrator is questioned by the Employer, the Employer

may post a surety company bond in a form satisfactory to the

Administrator or in lieu thereof, a cash deposit, for the amount

certified by the Administrator of the Funds, in which event the Union

shall not strike the delinquent Employer before the date of termination

set forth in the aforesaid notice and the amount in dispute shall be

resolved in accordance with the grievance and arbitration machinery of

this contract.

Se EES MOM irae talio asia lacs e

RARE IER |

eS aay Se AED

37a

not signatories to the collective bargaining agreement. See

Lewis v. Benedict Coal Corp., 361 U.S. at 468-70, 80 S.Ct. at

494-95; Todd v. Casemakers, Inc., 425 F.Supp. 1375, 1378

(N.D.i11.1977); Wishnick v. One Stop Food & Liquor Store,

Inc., 359 F.Supp. 239, 242-43 (N.D.III.1973). Under the cir-

cumstances of this case and the terms of the collective bargain-

ing agreement there was no duty to arbitrate on the part of the

Trustees, and therefore no jurisdictional defect for their failure

to do so.

Next General Marine contends that it is not bound by the

agreement because it purported to bind all affiliates of General

Marine, and therefore under traditional agency law the con-

tract was beyond the scope of the Association’s authority.

Scientific Holding Co. v. Plessey, Inc., 510 F.2d 15 (2d Cir.

1974). Although the contract did purport to bind General

Marine’s affiliates, these actions do not indicate that the

Association exceeded its authority as to General Marine. The

only parties that can contest their inclusion in the agreement on

that basis are the affiliates of General Marine since the Asso-

ciation never had any authority to bargain on the affiliates

behalf. Indeed, as a result of the representation proceedings

elections were held and another union was established as the

proper bargaining agent for workers aboard the affiliates’

vessels. However, this in no way affected the ability of the

Association to bargain on behalf of General Marine, a separate

entity, as the Association properly did. Therefore, the April 13

repudiation was an ineffective termination of the agreement

for collective bargaining purposes and General Marine, as of

that point, remained bound by the agreement. In the instant

action General Marine was well aware of the Association’s

intention to include the “affiliates’ clause” in the agreement,

and was given ample opportunity to withdraw from the Asso-

ciation prior to completion of the collective bargaining agree-

ment but expressly refused to do so. The April 13 Frank leiter

after the contract had been agreed upon, was untimely and also

ineffective under federal labor law and policies.

In construing collective bargaining agreements, it has been

established that § 301 of the LMRA is more than a jurisdic-

38a

tional statute, and “authorized federal courts to fashion a

body of federal laws for the enforcement of these collective

bargaining agreements.” Textile Workers Union v. Lincoln

Mills, 353 U.S. 448, 451, 77 S.Ct. 912, 915, 1 L.Ed.2d 972;

Smith v. Evening News Ass’n, 371 U.S. at 199, 83 S.Ct. at 269.

The substantive law to be applied under § 301 is federal which

must be fashioned from the policy of the national labor laws.

Textile Workers Union v. Lincoln Mills, 353 U.S. at 456, 77

S.Ct. at 917.

Here, General Marine’s claims conflict with the rule that

absent an impass in negotiations or unusual circumstances, an

employer may not unilaterally withdraw from a multiple em-

ployer bargaining agreement after negotiations have com-

menced for to do so would be an unfair labor practice. NLRB

v. Paskesz, 405 F.2d 1201, 1202 (2d Cir. 1969); NLRB v.

Sheridan Creations, Inc., 357 F.2d 245 (2d Cir. 1966), cert.

denied, 385 U.S. 1005, 87 S.Ct. 711, 17 L.Ed.2d 544 (1967).

Paul v. Lindgren, 375 F.Supp. 843, 851 (N.D.III.1974).

General Marine further contends that the contract was not in

effect after the repudiation of the contract on April 30, 1976

pursuant to its terms as a consequence of the April 28, 1976

strike of Local 333 members and that it had not received the

benefit of the contract.

The Trustees assert that General Marine breached the collec-

tive bargaining agreement by failing to make the payments

required under the contract. General Marine does not deny

failing to make the payments but instead contends that there

are material issues of disputed fact which indicate that the

contract may indeed be invalid and unenforceable. The Trus-

tees claim that the strike was in response to unilateral manning

changes on the sludge vessels made by General Marine, but

that Frank and Union representatives agreed that the contract

would remain in effect, that manning changes would be made

only after consultation among the parties, and that the ter-

mination letter was to be deemed rescinded. General Marine

claims that the strike resulted from the payment of wages

specified as in the contract and denies an agreement to consult

39a

before manning changes were made or to terminate the rescis-

sion and claims that the agreement was only to get the workers

back on the job to remedy the emergency health situation.

Despite these issues relating to the motivation for the strike

and the reasons for its termination, there remain no issues of

material fact necessary to the resolution here.

For the purposes of this motion it will be assumed that the

April 30, 1976 termination was not rescinded. Notwithstand-

ing, it was not effective. In Lewis v. Benedict Coal Corp., 361

U.S. 459, 80 S.Ct. 489, 4 L.Ed.2d 442 (1959), the Supreme

Court addressed the independent nature of labor union welfare

funds, and the inability of an employer to assert a unions’

breach of the collective bargaining agreement as a defense to

payment due to funds. After indicating that a funds’ rights

under a collective bargaining agreement were not typical third

party beneficiary rights, the court found as a matter of sub-

stantive federal labor law that the parties to the contract must

unequivocally express an agreement that a union’s breaches of

the agreement will give rise to a defense to the employer’s duty

to contribute to the Trustees. This was based on the fact that

the Trustees are independent of the union and serve benefi-

ciaries who are not necessarily still members of the union and

was thus held to promote national labor policies. Thus the

union’s wrongful action should not be held against the benefi-

ciaries of the trust. Thus the court denied a defense or set-off

to payments due under the contract based on the union’s

breach of the contract. Similarly in the instant action General

Marine’s right to terminate the agreement for an unauthorized

strike does not specifically mention the trustees as subject to

the right of termination. In this case, as there were Local 333

members continuing to work on General Marine’s barges, the

trustees’ rights to funds for these employees should not be

divested by a termination as a matter of federal law under

§ 301.

Denying the Trustees’ claims would have the effect of con-

doning action thus prohibited by Section 8(d) of the NLRA,

the termination of the contract without including adequate

notice, offers to meet and confer with the opposition as well as

40a

compliance with other provisions and be in direct conflict with

national labor law and policy. Although the collective bargain-

ing agreement may indicate that the employer has the authority

to terminate the agreement if the conditions were as asserted by

General Marine, the effect of such termination should be

construed in light of the national labor policy and law with

which General Marine was quite familiar. 29 U.S.C. § 158(d).

As the First Circuit stated:

If the continued validity of a collective bargaining agree-

ment which is the subject of suit under § 301 depends on

the effectiveness of a notice of termination, this must be

determined by the federal court upon an application of

the rules laid down in § 8(d) of the act...

International Brotherhood of Teamsters, Chauffers, Ware-

housemen & Helpers, Local Union No. 25 v. W. L. Mead, Inc.,

230 F.2d 576, 582 (lst Cir.), cert. dismissed, 352 U.S. 802, 77

S.Ct. 21, 1 L.Ed.2d 37 (1956). Concededly, none of these

measures has been complied with and therefore the purported

repudiation was ineffectively made under provisions of the

national labor law as formulated in the NLRA whether or not

the union’s two-day strike also violated the appropriate ter-

mination procedures. General Marine Transportation Corp. &

United Marine Division, Local 333, 228 NLRB No. 128 (1977).

Therefore, given the independent status of the Trustees and

General Marine’s failure to abide by lawful termination proce-

dures, the termination by the company as to the working Local

333 members was not effective.

Although some of the factors discussed in the preceding

analysis entail consideration of unfair labor practices as they

relate to defenses to enforcement of a collective bargaining

agreement, such factors are not beyond the scope of this

court’s review and can be considered in determining federal

law and whether a contract is valid and in effect because such

provisions are clear statements of the national labor policy. In

Todd Shipyards Corp. v. Industrial Union of Marine & Ship-

building Workers, Local 39, 344 F.2d 107 (2d Cir. 1965),

although it denied recovery, a district court was found to have

4la

properly considered an action seeking a declaratory judgment

that a clause of a collective bargaining agreement was unen-

forceable based on an unfair labor practice under § 8(e) of the

NLRA, 29 U.S.C. § 158(e). See also International Brother-

hood of Teamsters, Chauffers, Warehousemen & Helpers,

Local Union No. 25 v. W. L. Mead, Inc., 230 F.2d at 582; In

Paul v. Lindgren, 375 F.Supp. at 851, an untimely withdrawal

from a multiple employer agreement was analyzed under the

role stated in NLRB v. Paskesz, 2 Cir., 405 F.2d 1201, and

NLRB v. Sheridan Creations, 2 Cir., 357 F.2d 245. Also in an

analogous situation the court held in Perma-Line Corp. v. Sign

Pictorial & Display Union, Local 230, 639 F.2d 890, 894-95 (2d

Cir. 1981), that a provision of collective bargaining agreement

that violated unfair labor practice sections of federal labor

laws, §§ 8(a)(3) and (b)(2) of the NLRA 29 U.S.C. §§ 158(a)(3)

and (b)(2), is void and unenforceable and cannot be the basis

for an arbitration award. Thus, these policies and considera-

tions are properly before the court in determining the relevant

federal law.

Based on the foregoing discussion, General Marine has

raised no genuine issue of material fact challenging the validity

of the collective bargaining agreement or sufficiently establish-

ing a valid termination. Since the payments were due under the

collective bargaining agreement but have not been made, and

General Marine has raised no genuine issue as to a defense,

General Marine has breached the agreement as to the Trustees.

Consequently General Marine’s motion for summary judgment

is denied, and the Trustee’s motion for partial summary judg-

ment on the issue of liability for any payments proven to be

due is granted. Final judgment will be entered upon a deter-

mination of :he amount of the Trustees’ claim following a

hearing to be scheduled within ten (10) days in the event that

the parties cannot reach agreement on the amounts involved.

IT Is SO ORDERED.

42a

Opinion of the District Court dated March 31, 1983

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT NEW YORK

March 31, 1983

No. 78 Civ. 6277 (RWS)

JOSEPH O’HARE, Albert M. Cornette, Peter Gale, Bruce A.

McAllister, Robert W. Sanders and Thomas E. Moran, as

Trustees of the New York Marine Towing and Transporta-

tion Industry Pension Fund and Insurance Fund,

Plaintiffs,

—_—vV.—

GENERAL MARINE TRANSPORT CORPORATION,

Defendant.

OPINION

SWEET, District Judge.

Here is yet another chapter in the annals of the conflict

between the Berman family and Local 333, United Marine

Division, International Longshoreman’s Association, AFL-

CIO (“Local 333”). The dispute started in the 1970’s and gives

every sign of continued vitality. The parties presently before

the court are the plaintiff trustees of the New York Marine

Towing and Transportation Industry Pension Fund and Insur-

ance Fund (the “Trustees” or “Funds”) and defendant General

Marine Transport Corporation (“General Marine”), a subsidi-

ary of the holding company owned by members of the Berman

family.

The Trustees seek a determination of the amounts owed in

accordance with the summary judgment granted by this court

43a

on December 4, 1981 which required General Marine to make

payments for its employees for the period from 1976 to 1979.

Both parties seek summary judgment on General Marine’s

counterclaim. Final judgment in favor of the Trustees and

dismissing the counterclaim of General Marine will be entered

in accordance with this opinion which constitutes findings of

fact and conclusions of law.

Familiarity with the court’s earlier opinion in this action and

the opinions in related actions is assumed. After the December

4, 1981, 534 FSupp. 120 opinion was filed, the Trustees

discovered the books and records of General Marine, and after

considerable delay, a one-day hearing was finally held on

September 7, 1982 to resolve the amounts due in accordance

with the earlier grant of summary judgment. Testimony was

given by Eugene O’Connor (“O’Connor”), the Administrator

of the Funds, Richard Siemerling (“Siemerling”), the auditor

for the Funds, and Susan Frank (“Frank“), controller of

General Marine. This was then followed on November 19,

1982 by argument on General Marine’s motion for summary

judgment on its counterclaim. By agreement of the parties,

briefing was finally completed on or about February 18, 1983.

Despite the wealth of past findings, certain facts should be

restated as directly relevant to the present disposition.

In the mid-1970’s Berman operated tugs, barges and tankers,

and General Marine, a subsidiary of the family holding com-

pany, operated sludge vessels. Local 333 had unsuccessfully

sought to organize Berman, but it was agreed prior to 1973

that the employees of General Marine would be covered by the

collective bargaining agreement between Local 333 and the

Marine Towing and Transportation Employers’ Association

(the “Association”). Berman used its employees interchange-

ably on all of its vessels including the sludge vessels during the

period covered by the 1973-76 industry-wide collective bargain-

ing agreement and payments were made to the Pension Fund

of $124,286.44 and to the Insurance Fund of $75,918.33

covering all Berman employees. General Marine was a party to

the agreement. All the General Marine and Berman employees

[oo oO!!! aaaoooOOOOOOooOOOEOEOEOEO EO

44a

received whatever benefits accrued to them as a consequence of

these payments.

In 1976 the Association and Local 333 entered into negotia-

tions and an agreement was reached which purported to cover

a “subsidiary company, an affiliated company or a company

division in the Port of New York and vicinity.” This provision

and related events gave rise ultimately to Berman’s antitrust

litigation, Berman Enterprises, Inc. v. Local 333, 644 F.2d 930

(2d Cir.), cert. denied, 454 U.S. 965, 102 S.Ct. 506, 70 L.Ed.2d

381 (1981), and more immediately, to General Marine’s repu-

diation of the 1976-79 collective bargaining agreement (the

“Agreement”) between the Association and Local 333. General

Marine was struck, the strike was terminated, and on May 13,

1976 General Marine wrote to the Administrator of the Funds

as follows:

Dear Mr. O’Connor:

In August, 1975, as Administrator of the Pension and

Welfare Funds, you took the position that the benefits of

Local 333 members employed by this company under the

plans terminated because of a dispute about the effective-

ness of the Association’s contract with Local 333 and

General Marine.

The effectiveness of the Association’s contract with Local

333 upon General Marine Transport Corp. is again the

subject of disputes and litigation between Local 333 and

General Marine. General Marine wants to make pension

and welfare payments for the Local 333 members em-

ployed by it, but in order to do so, we want the Trustees

of the Pension and Welfare Funds to authorize the receipt

of payments pending resolution of the disputes.

Very truly yours,

Peter M. Frank

Vice President

No reply was forthcoming.

In the fullness of time the NLRB concluded that Berman was

entitled to a separate bargaining unit, Case No. 2-RM-1774,

45a

December 10, 1976, an election was held, and the Marine

Engineers Beneficial Association (“MEBA”) was elected as the

bargaining representative for employees on Berman vessels.

Local 333 then expelled the Berman employees. Berman and

General Marine made no payments to the “unds and obtained

coverage for their employees elsewhere. Local 333 complained

to the NLRB of an unfair labor practice, the NLRB issued a

complaint which the Second Circuit held on appeal to have

been barred by the statute of limitations. General Marine

Transport Corp. v. NLRB, 619 F.2d 180 (2d Cir.,1980).

This action by the Trustees seeking recovery of pension fund

contributions under the contract initially was brought as a

counterclaim in the Berman antitrust suit. After the Trustees

were dropped as defendants in that action, the counterclaim

was severed from the antitrust suit and asserted through an

independent complaint filed on December 29, 1978. Jurisdic-

tion is predicated on section 301 of the Labor Management

Relations Act of 1947 (“LMRA”), 29 U.S.C. § 185, and Em-

ployee Retirement and Income Security Act of 1974

(“ERISA”), 29 U.S.C. § 1001 et seq.

The 1976-79 Agreement provided in Article I, Section 16 for

payment by the Employer to the Insurance Fund and Pension

Fund “for each of his Employees in the bargaining unit” and

also provided in subparagraph (d) as follows:

d. Delinquent Employer. If an Employer is delinquent

for thirty (30) days in the payment of the contributions

required of it under paragraphs “a” and/or “b” of this

Section 16, the Administrator shall certify in writing to

the delinquent Employer and to the Union the estimated

delinquency due according to his records and the Union

may terminate this agreement as to the delinquent Em-

ployer by mailing such Employer a notice to that effect by

certified mail, which notice shall specify the date as of

which the contract shall be so terminated. The Union will

give such notice as its counsel may determine is required

by law, if any, and if no notice is required by law,

sufficient notice for the Employer to tie up its vessels in

safety.

46a

Thereupon, the contract shall terminate as to such

delinquent Employer with the same force and effect as

though the termination date set forth in the Union’s

notice was the date upon which this contract is to termi-

nate with the said delinquent Employer.

Nothing contained herein, however, shall prevent the

Union from immediately striking the said delinquent Em-

ployer until all monies owed hereunder by the delinquent

Employer are paid together with interest at 2% above the

prevailing rate charged by CITICORP BANK to its prime

customers from the date on which the contribution should

have been paid; and if the Trustees incur legal expense in

enforcing payment of such delinquent amount, the Trus-

tees shall also be entitled to recover their reasonable

counsel fees and other expense incurred in effecting col-

lection. Such strike shall not violate the “no strike clause”

and shall not be subject to the grievance and arbitration

machinery of this contract.

In the event that the amount of delinquency alleged to

be due by the Funds’ Administrator is questioned by the

Employer, the Employer may post a surety company bond

in a form satisfactory to the Administrator or in lieu

thereof, a cash deposit, for the amount certified by the

Administrator of the Funds, in which event the Union

shall not strike the delinquent Employer before the date

of termination set forth in the aforesaid notice and the

amount in dispute shall be resolved in accordance with the

grievance and arbitration machinery of this contract.

The Agreement provides that it “applies only to all licensed

and unlicensed Employees, employed on tugboats and self-pro-

pelled lighters owned or operated by the Employers...”

General Marine contends that no damages are due because

the Trustees have not complied with the notice provisions of

the Agreement. Alternatively, General Marine asserts that the

Trustees have overcharged General Marine in four major areas:

(1) contributions to the insurance fund; (2) calculation of the

hours paid; (3) the participation of captains; and (4) interest

penalties.

47a

The liability of General Marine for contributions to the

Funds has already been determined by the prior opinion.

However, that liability is now resisted on the ground that the

notice required by Section 16 of the Agreement was never

given. Overlooking the propriety of considering the issue at

this time, I note that there is evidence that some notice was in

fact given. The decision of the Administrative Law Judge,

affirmed by the NLRB, stated:

On January 19, 1977, Local 333 wrote Respondent:

As you know, the U.S. Labor Board ruling effec-

tively determined that this Union is the bargaining

representative for the men employed on board your

sludge vessels.

You have withheld pension insurance payments for

these employees since last April during the pendency

of the Labor Board case. We herewith demand that

said payments be reinstituted, including all arrears

with interest from their due date.

On February 11, 1977, Local 333’s attorney wrote Ber-

man and Respondent concerning delinquent pension plan

contributions relating to the two companies stating:

As I advised you in today’s telephone conversation,

this letter is to make formal demand on behalf of the

United Marine Divison, Local 333, ILA, AFL-CIO

and the New York Marine Towing and Transporta-

tion Industry Pension Fund for delinquent pension

plan contributions for non-union members of the

bargaining unit as well as bargaining unit employees

from 1970 to date. An immediate response from

your clients is requested.

In addition, the filing of the counterclaim by the Trustees in

the antitrust action certainly alerted General Marine to the

Trustees’ position.

General Marine elected to stand on its effort to terminate the

Agreement entered by the Association on its behalf, and under

such circumstances tie Trustees were entitled to have the

48a

termination determined without notice setting forth the precise

delinquency asserted. As the Administrator put it, “General

Marine had ceased to be a contributing employer.” The notice

under such circumstances was a useless formality and indeed

the Trustees had no basis upon which the delinquency could be

stated. In the face of General Marine’s attempted withdrawal

from the Association, the notice of deficiency was not a

necessary condition to this action or the Trustees’ recovery. To

hold otherwise would be to ignore the realities of the posture

of the parties during the period in question.

Further, regardless of the sufficiency of these acts to consti-

tute notice under Section 16, when a party to a contract has

both repudiated the agreement and purported to terminate it,

without justification, then the other party need no longer

satisfy the conditions that might otherwise be required of it.

See Cradlock v. Greenhut Construction Co., 423 F.2d 111 (Sth

Cir.1970); Allegheny Valley Brick Co. v. C.W. Raymond Co.,

219 F. 477 (2d Cir.1914); Commercial Metals Co. v. Interna-

tional Union Marine Corp., 294 F.Supp. 570(S.D.N.Y. 1968); 4

Corbin on Contracts § 977 (1951 and Supp.1982); 5 Williston

on Contracts § 699 (1961); Restatement (2d) Contracts, § 255.

Under the 1976-79 Agreement establishing the Funds, the

Trustees are granted the authority “to prescribe rules governing

the amount to be contributed for Employees who do not work

a full month, provided that such rules may not obligate an

Employer to contribute more than a full monthly contribution

... ” Under this authority the Trustees calculated the pay-

ments due by reason of persons employed on sludge vessels for

less than 96 hours a month by totalling the hours of all

employees who were paid for less than 96 hours in a particular

month and dividing the aggregate figure by 96. The resulting

number was added to the number of employees paid for over

96 hours to yield the total number of full contributions

required to be made for that month.

The evidence adduced at the hearing established that General

Marine had received communications from the Funds “to all

contributing Employers” setting forth this method of calcula-

49a

tion. The evidence also demonstrated that under the method

utilized by Frank for General Marine, there were unjustifiable ?

exclusions of employment hours. The Trustees were empow-

ered to prescribe regulations for employees paid for less than

96 hours a month, they exercised this power and communi-

cated the procedures to all participating employers, and

General Marine was aware of them. Under these circum-

stances, the Trustees’ method of calculation for those having

less than 96 paid hours in a month is proper.

The Trustees also adopted rules calling for payments on the

basis of “hours paid for,” rather than hours worked, a dif-

ference which is significant because of the General Marine

practice of paying their employees for each hour on the boat,

whether or not on duty. The General Marine employees worked

one week on, one off and received no overtime or weekend

benefits. General Marine urges that a calculation on the basis

of a 12-hour day, which would reduce the monies owed by

General Marine by $2,054.52, is the appropriate measure since

it accords with the treatment given other members of the

Association. However, this position overlooks certain dif-

ferences between General Marine’s operations and those of

other Association members. Again, a uniform procedure is

prescribed by the Trustees and that procedure requires contri-

butions for all hours paid for. General Marine’s alleged mis-

calculation in the past is no justification for miscalculating the

contributions presently due.

General Marine asserts that it should not be required to

make contributions for captains. Its argument is as follows:

section 302(c)(5) of the LMRA, 29 U.S.C. § 186(c)(5), requires

that the contributions be used for the “sole and exclusive

benefit of the employees”; the term “employee” in LMRA

§ 302(c)(5) is defined by LMRA § 501(3), 29 U.S.C. § 142(3),

which refers to the definition in section 2(3) of the National

Labor Relations Acts (“NLRA”), 29 U.S.C. § 152(3); NLRA

§ 2(3) defines “employee” as excluding “any individual em-

ployed as a supervisor”; captains are “supervisors” within

NLRA § 2(11), 29 U.S.C. § 152(11); therefore, “employees”

50a

under LMRA § 302(c)(5) does not include “supervisors,” or in

this case, captains.

Courts have rejected such a literalistic and automatic appli-

cation of the NLRA definitional provisions to the various

provisions of the LMRA. See, e.g., Allied Chemical & Alkali

Workers v. Pittsburgh Plate Glass, 404 U.S. 157, 92 S.Ct. 383,

30 L.Ed.2d 341 (1971); United States v. Ryan, 350 U.S. 299, 76

S.Ct. 400, 100 L.Ed. 335 (1956); Crilly v. Southeastern Pa.

Transp. Authority, 529 F.2d 1355 (3d Cir.1976); United States

v. National Marine Engineers’ Beneficial Ass’n, 294 F.2d 385

(2d Cir.1961). Specifically, several courts have held that the

“supervisor exclusion” of NLRA § 2(3) is inapplicable to other

provisions of the LMRA, see, e.g., Reiherzer v. Shannon, 581

F.2d 1266 (7th Cir.1978), and that the exclusion was meant to

apply only to proyisions of the NLRA, see e.g., District 2,

Marine Engineers Beneficial Ass’n v. Amoco Oil Co., 554 F.2d

774 (6th Cir.1977); Isbrandtsen Co. v. District 2, Marine

Engineers Beneficial Ass’n, 256 F.Supp. 68 (E.D.N.Y.1966).

Based on these authorities, I conclude that the payments due

include contributions for captains. It should be noted that

Frank testified that over the many years that General Marine

made payments to the Funds until April 1, 1976, it always paid

for captains. General Marine clearly understood that payments

for captains were required under the collective agreements to

which it was a party.

Pursuant to section 502(g) of ERISA, 29 U.S.C.

§ 1132(g)(2), the Trustees are also entitled to double interest on

defendant’s delinquent contributions. 29 U.S.C. § 1132(g)(2)

provides:

(g)(2) In any action under this subchapter by a fiduciary

for or on behalf of a plan to enforce section 1145 of this

title in which a judgment in favor of the plan is awarded,

the court shall award the plan—

(aA) the unpaid contributions,

(B) interest on the unpaid contributions

Sla

(i) interest on the unpaid contributions, or

(ii) 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 unpaid contri-

butions shall be determined by using the rate provided

under the plan, or, if none, the rate prescribed under

Section 6621 of Title 26.

29 U.S.C. § 1145 provides:

§ 1145. Delinquent contributions. Every employer who

is obligated to make contributions to a multiemployer

plan under the terms of the plan or under the terms of a

collectively bargained agreement shall, to the extent not

inconsistent with law, make such contributions in accord-

ance with the terms and conditions of such a plan or such

agreement.

The so-called “double-interest” remedy derives from the

combination of subsections (B) and (C)(i) of 29 U.S.C.

§ 1132(g)(2). Central States, Southeast and Southwest Areas

Pension v. C.J. Rogers Transportation Co., 544 F.Supp. 308,

313 (E.D.Mich.1982); Central States, Southeast and Southwest

Areas Pension Fund v. Alco Express Co., 522 F.Supp. 919, 921

n. 2 (E.D.Mich.1981). The rate specified in section 16(d) of the

Agreement quoted above is 2% above the Citicorp prime rate.

General Marine’s argument that the interest provis’on in the

Agreement is limited to those situations in which the union

chooses to exercise its right to strike is unpersuasive. The entire

paragraph deals with the remedies available in the case of

employer delinquency, including interest.

52a

Several cases have held the interest and attorneys’ fees

requirements of the ERISA amendments of 1980 to section

502(g), Pub.L. No. 96-364, § 306(b)(2), 94 Stat. 1295 (amend-

ing 29 U.S.C. § 1132(g) (1976), applicable to payments of

contribution delinquencies which preceded enactment of the

statute. In Alco, the first case to fully treat the question, the

trustees sought the double interest and attorneys’ fees mandat-

ed by section 502(g), following a summary judgment adjudicat-

ing the employer’s liability for unpaid contributions in the

period April 1, 1976 to March 31, 1978. As in the instant

action, during the pendency of the suit for contributions, the

1980 amendments to ERISA became effective. The trustees

urged that the provisions of section 502(g) applied and the

court, after well-reasoned analysis, agreed. The court held:

The double interest proviso of the 1980 amendments must

likewise be given retroactive effect, making it applicable

to cases pending on its effective date. As the Court has

already described, Congress clearly intended this provi-

sion to be remedial; it arose out of an acute concern over

the adverse impact of delinquencies on employee benefit

plans and was intended to discourage failure to make

payments when due. Congress was aware that in some

instances there might be a legitimate dispute over the

exact amount currently owing, but determined in all

instances of delinquencies to require payment of double

interest as compensation for the damage occasioned by

the failure of a trust to receive paymei *~ as due. Impor-

tantby, Congress did not arbitrarily choose double interest

as the amount due but rather listed it as an alternative:

Section 502(a) requires that the court award the greater of

double interest on the amount specified in the agreement

of the parties up to 20% of the amount of delinquent

contributions.

522 F.Supp. at 930-931 (citations omitted).

The Alco approach to section 502’s remedial provisions has

been followed in San Pedro Fishermen’s Welfare Trust Fund

Local 33 v. DiBernardo, 664 F.2d 1344 (9th Cir.1982), Central

53a

States, Southeast and Southwest Areas Pension v. C.J. Rogers

Transportation Co., 554 F.Supp. 308, 312 (D.Mich.1982), and

Peick v. Pension Benefit Guaranty Corp., 539 F.Supp. 1025,

1045 n. 37 (D.II1.1982). General Marine relies on Hammond v.

James W. Griffin Co., Inc., 520 F.Supp. 162 (N.D.Ga.1981), in

which the court declined to apply the 1980 amendments to a

case commenced prior to their enactment. Jd. at 168. In light

of the dearth of analysis in that decision and based on the

authorities set forth above, I conclude that retroactive applica-

tion is appropriate here and that General Marine has not

demonstrated that application of the double-interest provision

will work a “manifest injustice.”

Parenthetically, it should be noted that General Marine

asserts that the penalty interest rate provision under ERISA

may not be considered because the provision was not cited in

the Trustees’ complaint and because its application was not

anticipated by General Marine. However, this action was

brought under the LMRA and ERISA, and in connection with

the liability and damages issues, both parties have based a

number of arguments on ERISA. The Trustees specifically

cited section 502 of ERISA, 29 U.S.C. § 1132, in their motion

papers on the liability question, pointing out that the section

“deals with defaults in employer contributions to employee

benefit funds.” In its motion for summary judgment against

the Trustees on liability, General Marine itself requested relief

pursuant to 29 U.S.C. § 1132(g). As was the case in Central

States, Southeast and Southwest Areas Pension v. C.J. Rogers

Transportation Co., 544 F.Supp. 308, 309 (E.D.Mich.1982),

the Funds have sued to collect unpaid contributions under

ERISA, 29 U.S.C. § 1001 et seg., and having previously found

that the Funds are entitled to the contributions, I must award

the remedy sought for General Marine’s failure to make

payments, a remedy authorized by § 1132(g)(2) of ERISA. See

id. at 312.

No authority has been advanced by General Marine to

support its proposition that a collective bargaining agreement

should not be enforced because it would require the non-con-

tributing employer to pay twice—as indeed General Marine

54a

will be required to do here. In a period when choices were

difficult and conflicting, General Marine in this court’s view

made the wrong choice and must now suffer the penalty for its

ineffective withdrawal from the Association. The undeniable

windfall to the Trustees results from the terms of the Agree-

ment and the authorities as they are understood by the court,

see Brogan vy. Swanson Painting Co., 682 F.2d 807 (9th

Cir.1982); Audit Services, Inc. v. Rolfson, 641 F.2d 757 (9th

Cir.1981); Local 9, International Union of Operating Engineers

v. Siegrist Construction Co., 458 F.2d 1313 (10th Cir.1972).

General Marine’s contractual obligations to the fund cannot be

extinguished by its own unilateral arrangements for other

forms of insurance coverage or even the payment of claims

under that coverage. Indeed, as the Trustees point out, such a

defense would render the Act and collective bargaining agree-

ments toothless.

The General Marine counterclaim seeks repayment from the

Trustees for the contributions made for Berman employees

during the 1973-76 period. There is no question but that

payments were made and the parties do not dispute the amount

of the payments. The only question is whether they were

properly made by General Marine and accepted by the Funds.

General Marine relies on Moglia v. Geoghegan, 403 F.2d 110

(2d Cir.1968), cert denied, 394 U.S. 919, 89 S.Ct. 1193, 22

L.Ed.2d 453 (1969), and subsequent decisions applying Mog-

lia, which hold that under section 302 of the LMRA, 29 U.S.C.

§ 186(c)(5)(B),' an employee benefit fund may not accept

l 29 U.S.C. § 186(c)(5S) states in relevant part:

respect 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 empioyer, and their families and dependents (or

of such employees, families, and dependents jointly with the employees

of other employers making similar payments, and their families and

dependents): Provided, 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 dependents, for medical or

hospital care, pensions on retirement or death of employees, compen-

wa eee

5Sa

contributions from an employer unless that employer is party

to a written document specifying the basis of contributions.

General Marine argues that it is entitled to restitution under

Moglia because the Regional Director found that the employ-

ees on Berman vessels constituted a separate bargaining unit

and because Berman was not a party to the 1973-76 collective

bargaining agreement.

The Regional Director determined that there was no contract

bar to an election among the tug and barge employees. The

“contract bar” doctrine is used by the NLRB for representa-

tion election purposes and General Marine has not presented

authority for extending its application to issues concerning

section 302 of the LMRA.

Moreover, General Marine’s payment for the Berman em-

ployees and the Fund’s acceptance of the contributions at issue

do not contravene the principles set forth in Moglia. Moglia

sation for injuries or illness resulting from occupational activity or

insurance to provide any of the foregoing, or unemployment benefits

or life insurance, disability and sickness insurance, or accident insur-

ance; (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 adminstration of such fund,

together with such neutral persons as the representatives of the em-

ployers and the representatives of employees may agree upon and in

the event the employer and employee groups deadlock on the adminis-

tration 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 the

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 resuits 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 intended to be used for the purpose of providing

pensions or annuities for employees are made to a separate trust which

provides that the fund held therein cannot be used for any purpose

other than paying such pensions or annuities; . .

56a

involved a claim to a pension trust fund by the widow of an

employee of an employer who had for many years contributed

to the fund on behalf of its employees. The trustees of the fund

denied the claim and attempted to return those contributions

made by the employer, the trustees having discovered that the

employer had never entered into a collective bargaining agree-

ment or pension trust with the union.

This is not a suit arising out of a denial of benefits by the

trustees. Here contributions were made by General Marine, a

party to the collective bargaining agreement, those contribu-

tions were accepted, benefits were provided, and pension

credits were earned even to the point of vesting. Every month,

General Marine submitted written, signed reports to the Trus-

tees, showing the employees for whom employment contribu-

tions were made. All such employees were on the General

Marine payroll, not the payroll of any other company. The

work performed by these employees aboard tugs and barges

was the very work covered by the collective bargaining agree-

ment which provided coverage to employees on vessels “owned

or operated by the Employers” in the Port of New York and

vicinity. To the extent that General Marine employees worked

aboard the tugs and barges, General Marine may be said to

have “operated” the vessels for collective bargaining agreement

purposes. Berman and General Marine interchanged moneys,

vessels and employees. See Berman Enterprises, Inc. v. Local

333, 644 F.2d 930, 936 (2d Cir.), cert. denied, 454 U.S. 965, 102

S.Ct. 506, 70 L.Ed.2d 381 (1981), (“there was in reality but a

single employer, with interrelated operations, common

management, and centralized control of labor relations. . .”).

Under these circumstances, Moglia is satisfied by the 1973-76

collective bargaining agreement.

General Marine also argues that the retention by the Funds

of contributions made on behalf of the employees on Berman

vessels contravenes section 302(c)(5) of the LMRA, 29 U.S.C.

§ 186(c)(5), which provides that moneys paid to a trust fund by

an employer must be “for the sole and exclusive benefit of the

employees of such employer.” General Marine contends that

section 302(c)(5) requires that a voluntarily departing group be

57a

permitted to take a portion of the fund with them, either

through direct repayment of contributions or through segrega-

tion of assets to be administered under a new set of eligibility

rules tailored to that particular group.

General Marine relies primarily upon Alvares v. Erickson,

514 F.2d 156 (9th Cir.), cert. denied, 423 U.S. 874, 96 S.Ct.

143, 46 L.Ed.2d 106 (1975), in which employers together with

their employees withdrew from a bargaining unit and trust

fund. The suit was brought as a class action by members of the

local, seeking an allocation or transfer of that portion of

uncommitted reserves attributable to contributions mtade by

employees on behalf of the local’s members prior to with-

drawal. The district court dismissed the case for lack of

jurisdiction and the Ninth Circuit reversed, holding that there

was jurisdiction under sections 30l(a) and 302(e) of the

LMRA, 29 U.S.C. §§ 185(a)*> and 186(e)’. The court

“express[ed] no opinion as to the merits of plaintiff’s

claim[s].” 514 F.2d at 167. However, the Ninth Circuit noted

that jurisdiction under section 302(e) had been found by courts

in actions involving “structural” deficiencies in the relevant

trust, deficiencies which caused the trusts to violate the “sole

and exclusive benefit” provision of section 302(c)(5), and not

in cases involving only questions of day-to-day fiduciary ad-

minstration of welfare and pension funds. The A/vares court

went on to find that the claim before it was a “structural”

matter and therefore that jurisdiction existed.

2 29 U.S.C. § 185(a) reads as follows:

Suits for violation of contracts between an employer and a labor

organization representing employees in an industry affecting commerce

as defined in this chapter, or between any such labor organizations,

may be brought in any district court of the United States having

jurisdiction of the parties, without respect to the amount in con-

troversy or without regard to the citizenship of the parties.

3 29 U.S.C. § 186(e) states in relevant part:

The district courts of the United States . . . shall have jurisdiction, for

cause shown, . . . to restrain violations of this section. . .

58a

Even if I were to interpret the A/vares decision as one going

beyond the jurisdictional question, that is, as suggesting that

the plaintiffs’ claim was meritorious, the facts there are distin-

guishable from those in the case at bar. In A/vares, a substan-

tial number of the employer parties to the trust had withdrawn.

Those employers and their employees agreed to set up a new

trust. There was some indication that the trustees of the prior

trust had forfeited certain credits of the employees who left.

The Ninth Circuit concluded that these changes and others

involved “a rather drastic change in [the prior trust’s] struc-

ture.” Jd. at 165.

Here, General Marine was not one of the many employers

who with their employees withdrew and agreed to set up a new

trust. After March 31, 1976, the employees in question elected

a new bargaining representative, but General Marine itself, as

previously found by this court, did not cease to be a covered

employer. When the contrivutions by General Marine for

sludge boat employees through March, 1979 are made, the

Trustees assert that the employees whose employment gener-

ated such payments will receive appropriate pension credit for

the 1976-79 period.

General Marine has not demo

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