Amicus Curiae Brief — Rawl Sales & Processing Co. v. United Mine Workers of America 1974 Pension Trust

‘Mine phe

|

No. 92-1775 | |

}

, 9E OF THE CAatknA

IN THE ae | al

Supreme Court of the United States

OCTOBER TERM, 1992

RAWL SALES AND PROCESSING COMPANY,

Petitioner,

V.

TRUSTEES, UNITED MINE WORKERS OF

AMERICA 1950 PENSION TRUST, et ai.

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The District Of Columbia Circuit

BRIEF OF AMICI CURIAE AGIPCOAL USA, INC., ALOE COAL

COMPANY, BEILCHICK BROTHERS, BENTLEY COAL COMPANY,

INC., BIG TRACK COAL CO., INC., CANTERBURY COAL

COMPANY, TANOMA MINING COMPANY, INC., VALLEY COAL

COMPANY, DOUBLE R TRUCKING COMPANY, OLD RALPH

MINING COMPANY, INC., SOURWOOD ENTERPRISES, INC., DOSS

FORK COAL CORPORATION, INC., MCKINNEY TRUCKING COM

PANY, INC., PATTY CHANDLER TRUCKING, INC., SAN-WEST

COAL COMPANY, SPRING RIDGE COAL CO., INC., COLEMAN &

YATES COAL COMPANY, INC., and MULLINS & STANLEY

TRUCKING COMPANY, INC..,

[IN SUPPORT OF PETITION FOR WRIT OF CERTIORARI

DANNIE B. FOGLEMAN

(Counsel of Record)

WILLIAM B. COWEN

Coleman, Coxson, Penello,

Fogleman & Cowen, P.C.

1000 Vermont Avenue, N.W

Suite 600

Washington, D.C. 20005

202/842-2900

June 7, 1993 Attorneys for Amicus Curiae

Agipcoal, USA, Inc.

EST AVAILABLE COPY

Balmar Legal Publishing Services, Washington, D.C., (202) 682-9800

tt

MARY LOU SMITH

Howe, Anderson

& Steyer, P.C.

1747 Pennsylvania Ave., N.W.

Suite 1050

Washington, D.C. 20006

202/296-5680

Attorneys for Amici Curiae

Aloe Coal Co,

Beilchick Brothers,

Bentley Coal Co., Inc.,

Tanoma Mining Co., Inc.,

Valley Coal Co.

and Canterbury Coal Co.

CARL E. McAFEE

McAfee, Bledsoe, Lovell

& Lee

P.O. Box 656

Norton, Virginia 24275

Attorneys for Amici Curiae

Spring Ridge Coal Co.,

Coleman & Yates Coal, Inc.,

and Mullins & Stanley

Trucking Co., Inc.

DONALD E. EARLS, ESQ.

P.O. Box 710

Norton, Virginia 24273

Attorney for Amicus Curiae

Double R Trucking Co.

LOUIS DENE, ESQ.

Dene & Dene

P.O. Box 1135

Abingdon, Virginia 24210

Attorneys for Amicus Curiae

Big Track Coal Co., Inc.,

Old Ralph Mining Co., Inc.

and Sourwood Enterprises, Inc.

MARK M.LAWSON, ESQ.

and STEVEN M. MINOR

White, Elliott & Bundy

P.O. Box 8400

Bristol, Virginia 24205

Attorneys for Amici Curiae

Doss Fork Coal Co., Inc.,

McKinney Trucking Co.., Inc.

Patty Chandler Trucking, Inc.

San-West Coal Company, Inc.

DAVID J. LAURENT

Polito & Smock, P.C.

Suite 400

Four Gateway Center

Pittsburgh, Pennsylvania 15222

412/394-3333

Attorneys for Amici Curiae

Aloe Coal Co., Beilchick Brothers,

Bentley Coal Co., Inc.,

Tanoma Mining Co. Inc.,

Valley Coal Co., and

Canterbury Coal Co.

ill

QUESTIONS PRESENTED

Amici adopt the Questions Presented set forth in the Peti-

tion for Writ of Certiorari.

iV

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ............. ili

TABLE OF AUTHORITIES ............. v1

INTEREST OF THE AMICICURIAE ....... l

STATEMENT OF THECASE ............. 3

SUMMARY OF ARGUMENT ........... 6

a 7

I. A PERPETUAL WAIVER OF AN EM-

PLOYER’S RIGHT TO ENGAGE IN

COLLECTIVE BARGAINING ON ITS

OWN BEHALF VIOLATES FEDERAL

eG 8 Fy 7

A. The Permanent Designation Of

BCOA As A Former Signatory’s

Collective Bargaining Represen-

tative As Required by the

“Evergreen” Clause Impermissibly

Assigns Permanent Authority To

The BCOA To Negotiate New

Terms And Conditions Of Employ-

ment On Behalf Of The Former

LS ee a, 8

B. The Court Of Appeals’ Decision

Will Undermine Multi-Employer

Collective Bargaining, Since Few

Employers Will Join A Collective

Bargaining Association If That

Association Can Obtain Perpetual

Negotiating Rights. ......... 15

ee

Vv

O

Under The Respondents’ “Evergreen”’

Theory, The Former Signatories’

Employees Have Perpetually Waived

Their Right To Choose Their Exclusive

Bargaining Representative. ..... 16

I]. THE COURT OF APPEALS’ DECISION

WOULD COMPEL EMPLOYERS WHO ARE

NO LONGER SIGNATORIES TO MAKE

PAYMENTS WHICH ARE ILLEGAL

UNDER SECTION 302(A) OF THE

LABOR MANAGEMENT RELATIONS

MR ste eh hee aa eS eS 17

Ree de sa ee ke aw oe ee ee ees 20

aa

Cases

vi

TABLE OF AUTHORITIES

Bonanno Linen Services Inc. v. NLRB, 454 U.S.

404,412 (1982) ..

Demisay v. Local 144 Nursing Home Pension

Fund, 935 F.2d 528, 533 (2d Cir. 1991)

cert. granted, 112 S. Ct. 2990 (June 22,

1992)(No. 91-610)

Falkowski Grocery, 236 NLRB 473, 475 (1978) . .

International Ladies’ Garment Workers’ Union,

AFL-CIO v. NLRB, 366 U.S. 731, 737

(1961)

ay ee ae a ok er oe ee ee, ee: Me, ee, Je

ae a oe ae ee ee ee ee se

Laborers’ Local Union No. 652 (Thoner Develop

ment Co.), 238 NLRB 1456, 1462

(1978)

Local 50, Bakery and Confectionery Workers’ Union

a «2 a@ue. © 2 6... 2. 2 6. 6, F' 4

v. Local 3, Bakery and Confectionery Workers’

Union, 733 F.2d 229, 233 (2d Cir. 1984)

Metropolitan Edison Company v. NLRB, 460 U.S.

693, 705-706 (1983)

Moglia v. Goeghegan, 403 F.2d 110, 116

(2nd Cir. 1968), cert. denied, 394 U.S. 919

(1969)

“a i ae ae ok or er ee ee, ee ee

NLRB v. Amax Coal, 453 U.S. at 334-45 ......-

NLRB v. Magnavox Co. of Tennessee, 415 U.S. 322

(1974)

- eo kee... & @

Retail Clerks Union, Local 770 (Fine’s Food Co.),

9228 NLRB 1166, 1167-1168 (1977) .....

United Mine Workers of America v. Pennington,

381 U.S. 657, 666 (1965) .......-.--.--

Page

18

15

9

16

Vil

UMWA Health & Retirement Funds v. Robinson,

455 U.S. 562 (1982)

STATUTES

29 U.S.C. § 157

29 U.S.C. § 158(a)(2)

29 U.S.C. § 158(b)(1)(B

29 U.S.C. § 186(a)

29 U.S.C. 186(c)(5)

OTHER AUTHORITIES

S. Rep. No. 105, 80th Cong., Ist Sess. 53 (1947)

93 Cong. Rec. 4875-76 (daily ed. May 8, 1947

No. 92-1775

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992

RAWL SALES AND PROCESSING COMPANY,

Petitioner,

V.

TRUSTEES, UNITED MINE WORKERS

AMERICA 1950 PENSION TRUST, et al.

Respondents.

On Petition For A Writ Of Certiorari

ToThe United States Court Of Appeals

For The District Of Columbia Circuit

BRIEF OF AMICI CURIAE AGIPCOAL USA, INC., ALOE COAL

COMPANY, BEILCHICK BROTHERS, BENTLEY COAL COMPANY,

INC., BIG TRACK COAL CO., INC., CANTERBURY COAL

COMPANY, TANOMA MINING COMPANY, INC., VALLEY COAL

COMPANY, DOUBLE R TRUCKING COMPANY, OLD RALPH MINI-

NG COMPANY, INC., SOURWOOD ENTERPRISES, INC., DOSS

FORK COAL CORPORATION, INC., MCKINNEY TRUCKING COM-

PANY, INC., PATTY CHANDLER TRUCKING, INC., SAN-WEST

COAL COMPANY, SPRING RIDGE COAL CO., INC., COLEMAN &

YATES COAL COMPANY, INC., and MULLINS & STANLEY

TRUCKING COMPANY, INC.

IN SUPPORT OF PETITION FOR WRIT OF CERTIORARI

INTEREST OF THE AMICI CURIAE

This brief amicus curiae is filed in support of the petition

for writ of certiorari.! Each of the amici are companies which

were formerly signatory to collective bargaining agreements

| Pursuant to Supreme Court Rule 37.2, this brief is filed with the written

consents of the parties which are filed concurrently herewith.

5

with the United Mine Workers of America (“‘UMWA”’) which

called for them to contribute to the United Mine Workers of

America 1974 Pension Trust, United Mine Workers of America

1950 Pension Trust, United Mine Workers of America 1974

Benefit Plan and Trust or the United Mine Workers of America

1950 Benefit Plan and Trust (“Trusts”). They either are no

longer signatory to a collective bargaining agreement with the

UMWA or signed agreements that called for contributions under

terms different from the National Bituminous Coal Wage Agree-

ment (““NBCWA”’) negotiated between the UMWA and the

Bituminous Coal Operators Association (“BCOA”’). Some

amici are former members of the BCOA. Others signed so-

called “me too”’ agreements, which are short-form documents

adopting the NBCWA in toto. Still others have negotiated

separate agreements which called for contributions to the trusts

on a basis differing from that of the NBCWA. Each of the amici

are defendants in cases which raise issues similar to those raised

in the petition.

The issues presented in the petition directly impact upon

the amici as well as potentially hundreds of other coal com-

panies, since the court of appeals’ decision has made the BCOA

the permanent bargaining representative for pension and benefit

purposes of every coal company which has at any time since

* UMWA 1974 Pension Trust et al. v. A&E Coal Company, et al., CA

No. 88-1126 (D.D.C.) (Agipcoal); UMWA 1974 Pension Trust et al. v

Canterbury Coal Company, CA No. 92-1856(D.D.C.), UMWA 1974 Pension

Trust et al. v. Aloe Coal Company, et al., CA No. 91-0207 (D.D.C.) (Aloe,

Beilchick, Bentley, Tanoma and Valley); and UMWA 1974 Pension Trust et

al. v. Big Star Coal Co., et al., CA No. 9300031-A (W.D.Va.) (Double R.

Trucking, Big Track Coal, Old Ralph Mining, Sourdough Enterprises, Doss

Fork, McKinney Trucking, Patty Chandler Trucking, San-West, Spring

Ridge, Coleman & Yates, and Mullins & Stanley).

3

1978 participated in the Trusts. Indeed, the Trusts have indi-

cated that there are numerous other potential defendants who

may be the subject of future lawsuits if the decision of the court

of appeals is allowed to stand.

STATEMENT OF THE CASE

The respondents contend, and the court of appeals found,

that the trust documents which have been incorporated by

reference in each NBCWA since 1978 contain a clause which

requires any employer that ever contributed to the Trusts to

continue to be bound by the terms of the trust agreements

negotiated (and later amended) by the BCOA and UMWA, even

after the expiration of the NBCWA to which that employer was

signatory.> Thus, for example, if an employer was a signatory

to the 1978 agreement, (which terminated on March 27, 1981)

even today that employer must abide by the terms of the Trusts,

as amended to date, including making contributions to the Funds

at the rates negotiated by the BCOA and UMWA in subsequent

NBCWA’s. According to this theory, this is so even if that

employer has no current collective bargaining agreement calling

for such contributions, has negotiated a different arrangement

with the UMWA, or its employees are no longer even repre-

sented by the UMWA.

There are four Trusts at issue in this case. The 1950 and

1974 Pension Trusts, as their names imply, provide pension

benefits to UMWA retirees. The 1950 and 1974 Benefit Plans

and Trusts were created to provide health and other non-pension

benefits to these same retirees and their dependents. Both 1950

This clause came to be referred to by respondents’ counsel as the

“evergreen” clause sometime after respondents filed the first of these law-

suits. The respondents only arrived at their current interpretation in March

1988, ten years after the clause was negotiated. Amici have disputed the

meaning of this clause, but will refer to it as the “evergreen” clause for the

sake of convenience. In doing so, amici do not concede that the interpretanon

placed on the clause by the Trustees or the court of appeals is correct

4

plans are limited to employees who retired prior to January 1,

1976 and their dependents. The 1974 plans were designed to

cover employees who retired after December 31, 1975 and their

dependents. Many of the amici have no former employees who

retired prior to 1976. Thus, they have no employees who have

participated or ever will participate in the 1950 plans. Never-

theless, under the respondents’ theory, they would be required

to contribute to these funds as long as the UMWA and BCOA

agree that such contributions are required.

The “evergreen” clause is not merely limited to an obliga-

tion to make future contributions to the Trusts. Rather, it

purports to require employers to comply with all “terms and

conditions” of the Trusts, as modified from time to time by the

BCOA and the UMWA. The BCOA and the UMWA can and

do routinely alter not only such terms as the rate of contributions

and the method of computing such contributions, but also the

level of benefits provided, vesting requirements, and even basic

requirements for benefit eligibility. Given the scope of the

settlors’ authority and the range of terms they can determine, the

clause constitutes a permanent designation of the BCOA as the

collective bargaining representative for purposes of negotiating

pension and health benefits for all employers who have at any

time since 1978 participated in the Trusts.

Unlike the NBCWA’s negotiated periodically since 1950,

each of which expired after a designated date, the Trusts are

perpetual. Since the terms of the Trusts are perpetual, they can

only be changed by agreement of both setilors, the UMWA and

the BCOA. Thus, unlike the terms and conditions of the

NBCWA itself, which can be modified by either party at its

expiration by that party simply refusing to enter into a new

agreement containing an objectionable provision, each settlor

has a virtual veto as to changes in the trust documents. Thus, if

the court of appeals’ decision is correct, the BCOA 1s placed in

a position where it can keep its competitors in the Funds so long

5

as the BCOA deems it to be in its own best interest.4 Even if

the UMWA wished to negotiate different terms with other

employers, it could not do so without the BCOA’s consent.

Thus, while the former signatories would be required to con-

tribute indefinitely to the Trusts regardless of their individual

needs, there is no reciprocal requirement on the part of the

BCOA. The BCOA is free to stop all payments into the Funds

at the expiration of an NBCWA simply by exercising its discre-

tion not to agree to new contributions.

This case presents questions of law which will have a

wide-ranging effect on the entire coal! industry. The amici will

be directly affected by the court of appeals’ decision as will

every coal company which was at any time signatory to a

contract calling for contributions to the Funds. That this case is

of extreme importance to the coal industry and to federal labor

policy was recognized by the district court when it stated:

The interpretation of the evergreen clause has such

far-reaching consequences for the coal industry, the

Union, and federal labor law, that an expedited and

final resolution of its meaning is imperative.

Petition App. 70

The impact of the court of appeals’ decision on federal

labor law and national labor policy will be unprecedented. Not

4 The BCOA is effectively controlled by its largest members, who have

traditionally compromised or controlled its negotiating committee. There-

fore, it might be more accurate to say that the BCOA negotiates whatever is

in the best interest of these companies.

Approximately 30% of all bituminous coal produced in the United

States is produced by members of the BCOA or companies who have

contracts identical to the NBCWA. This figure does not include the former

signatories who are the so-called “evergreen” defendants. In addition, many

of the larger BCOA companies have extensive non-union operations. Thus,

the clause affects hundreds of companies which constitute an extensive

portion of the coal industry.

6

only are the respondents, as in the instant case, seeking to subject

former BCOA members perpetually to the terms of the Trusts,

they are seeking to impose the Trust requirements negotiated by

the BCOA and UMWA on former signatories who have no

contract with the UMWA. Under the respondents’ theory, even

those employers whose employees have decertified the UMWA

as their bargaining representative are still subject to the terms of

the Trusts and all their subsequent modifications. If the court

of appeals’ decision is permitted to stand, it will encourage other

multi-employer collective bargaining associations to perpetuate

their status by negotiating similar provisions binding companies

to the results of future negotiations even after those companies

no longer wish to be members of those associations. The

petition should be granted in order that this Court may consider

the full implications of the court of appeals’ decision, which, if

allowed to stand, would undermine the well-established federal

structure of multi-employer collective bargaining.

SUMMARY OF ARGUMENT

Petitioners have more than adequately set forth the reasons

why a perpetual waiver of a statutory right to bargain collective-

ly violates federal labor policy. Amici will not repeat those

arguments here. Instead, amici will demonstrate why such

waivers should be prohibited given their impact upon employers

who are no longer signatories or whose employees are no longer

represented by the UMWA. In its attempts to waive the future

bargaining rights of its members and other signatory companies,

BCOA’s purpose was to reserve those nights to itself, through

the so-called “evergreen” clause. This attempt violates federal

labor policy for several reasons.

First, it constitutes an unlawful permanent assignment of

the former signatories’ bargaining rights to the BCOA in viola-

tion of section 8(b)(1)(B) of the National Labor Relations Act.

29 U.S.C. § 158(b)(1)(B). It permits the BCOA to negotiate

terms and conditions of employment solely in its own members’

7

best interest, while perpetually binding non-members to the

results of those negotiations. If the court of appeals’ decision 1S

allowed to stand, it will discourage employers from joining

multi-employer bargain associations.

Second, the “evergreen” clause would unlawfully interfere

with the former signatories’ employees’ right to choose their

own collective bargaining representative as guaranteed in sec-

tion 7 of the NLRA. 29 U.S.C. § 157.

Third, the clause would compel non-signatory employers

to make payments to the funds which violate section 302(a) of

the Labor Management Relations Act. 29 U.S.C. § 186(a).

Former signatories would be required to make payments in-

definitely into funds from which their employees receive no

benefit. This violates the requirement that such contributions

be made for the sole and exclusive benefit of the employer’s

employees.

ARGUMENT

I APERPETUAL WAIVER OF AN EMPLOYER’S

RIGHT TO ENGAGE IN COLLECTIVE BAR-

GAINING ON ITS OWN BEHALF VIOLATES

FEDERAL LABOR POLICY.

Petitioners correctly state that this is a waiver case. If the

court of appeals’ interpretation is correct, in negotiating the

“evergreen” clause BCOA sought to perpetually waive the rights

of signatories to bargain individually regarding pension and

retiree benefits. The court of appeals refused to assign the label

“waiver” to the case, but regardless of how it is denominated,

the BCOA’s permanent assignment to itself of the individual

employers’ bargaining rights is unlawful.

8

A. The Permanent Designation Of BCOA As

A Former Signatory’s Collective Bargaining

Representative, As Required By The

“Evergreen” Clause, Impermissibly Assigns

Permanent Authority To The BCOA To

Negotiate New Terms And Conditions Of

Employment On Behalf Of The Former

Signatory.

The nature of multi-employer bargaining is that it is purely

voluntary. Bonanno Linen Services Inc. v. NLRB, 454 U.S. 404,

412 (1982). Section 8(b)(1)(B) of the National Labor Relations

Act (“NLRA”), 29 U.S.C. §158(b)(1)(B), provides that an in-

dividual employer may not be forced to join a multi-employer

bargaining unit such as the BCOA. NLRB vy. Amax Coal, 453

U.S. 322, 334-35 (1981).© It is well settled that an agreement

© While this Court in Amax distinguished efforts by a union to compel

an employer to contribute to a multi-employer trust fund from efforts to

compel an employer to engage in multi-employer collective bargaining, that

case did not address the question presented here. Amax was concerned with

whether the funds’ trustees were collective bargaining representatives within

the meaning of Section 8(b)(1)(B). The Court held that they were not.

It is significant to note that the trust funds at issue in Amax did not

contain the “evergreen” clause. That clause was not included in the trust

documents until approximately three years after the events which lead to the

unfair labor practice charges in Amax. Amax had participated in the funds in

the past and the labor dispute centered on its decision not to participate any

longer. Amax was in fact bargaining for itself concerning whether it would

continue participating in the funds and the terms of its participation. Its

complaint was that it would not have a representative on the funds’ board of

trustees, not, as is here, that the BCOA was in fact negotiating on its behalf

concerning the terms of its participation.

This case presents the question of whether it is lawful to permit the

BCOA and the UMWA to agree between themselves to permanently desig-

nate the BCOA as the collective bargaining representative of all companies

who contributed to the funds. There is no question that BCOA is a collective

bargaining representative within the meaning of Section 8(b)(1)(B). The only

reason for its existence is to represent its members in collective bargaining.

9

to be bound by the results of future negotiations between an

employer association and a union is tantamount to a designation

of that employer association as a collective bargaining repre-

sentative. In cases where a union has attempted to compel an

employer to enter into such an agreement, the National Labor

Relations Board has found that such pressure constitutes an

unlawful interference with the employer’s right to select its

collective bargaining representative. See, e.g. Laborers’ Local

Union No. 652 (Thoner Development Co.), 238 NLRB 1456,

1462 (1978); Retail Clerks Union, Local 770 (Fine’s Food Co.),

228 NLRB 1166, 1167-1168 (1977).

It is equally well settled that while an employer and union

can bargain over wages, hours and working conditions of that

employer’s own employees, they cannot bargain over working

conditions of employees outside the bargaining unit.’ That is

exactly what the court of appeals’ decision would allow the

BCOA and UMWA to do. Not only would BCOA have

unilateral authority to bargain over benefits covering employees

of other employers represented by the UMWA, it would have

the same authority to bargain with employers whose employees

are not represented by the UMWA. Thus, under the

respondents’ interpretation, as adopted by the court of appeals,

the UMWA would continue to represent employees for benefit

purposes even if it were decertified. Absent support by a

majority of the employees in an appropriate bargaining unit,

however, a union is prohibited from bargaining on those

employees’ behalf.®

: “(T}here is nothing in [national] labor policy indicating that the union

and the employers in one bargaining unit are free to bargain about the wages,

hours and working conditions of other bargaining units or to attempt to settle

these matters for the entire industry.” United Mine Workers of America Vv.

Pennington, 381 U.S. 657, 666 (1965).

8 «There could be no clearer abridgement of § 7 of the Act, assuring

employees the ‘right to bargain collectively through representatives of their

own choosing” or ‘to refrain from’ such activity.” International Ladies’

Garment Workers’ Union, AFL-CIO v. NLRB, 366 U.S. 731, 737 (1961).

10

As stated above the “evergreen” clause does not merely

purport to bind former signatories to make ongoing contribu-

tions to the Funds at a fixed rate or to fund defined obligations

agreed upon during a time when they were members of the

BCOA. Instead, the “evergreen” clause, as interpreted by the

court of appeals, confers a right upon BCOA to bind former

signatories to new or modified terms or conditions of employ-

ment, without those companies having any right to participate

in the negotiation of, or consent to the acceptance of, such terms.

Thus, the “evergreen” clause serves only to perpetuate the

BCOA in its status as a collective bargaining representative.

As interpreted by the court of appeals, the “evergreen”

clause obligates a former signatory on a perpetual basis? to

participate fully in the Trusts under whatever terms and condi-

tions the UMWA and BCOA establish without regard to whether

that company is a member of BCOA or even whether its

employees continue to be represented by the UMWA. Indeed,

under such an interpretation, BCOA may use that authority in a

manner directly adverse to the interests of the former signatory.

Since the so-called “evergreen” companies have no voice

in the negotiations, the UMWA and BCOA would have the

ability to increase benefits and to alter the contribution formulae

in a manner that advances the competitive interests of certain

BCOA members. They would have the ability to discriminate

in the delivery of benefits from the Trust’s resources against

companies that have withdrawn from BCOA. They could per-

mit new beneficiaries to join the Funds, to be paid for by former

9

Respondents have disputed the characterization of the obligation as

“perpetual”, arguing that it is not perpetual since it lasts only so long as the

UMWA and BCOA agree to subsequent NBCWA’s. Such an argument

misses the point. It is precisely because the BCOA is the only employer party

who decides how long the obligation will exist, and in what form it will take,

that the clause constitutes an unlawful reservation of bargaining rights to the

BCOA. What is undoubtedly perpetual under the “evergreen” clause is the

BCOA’s authority to bargain on behalf of the former signatories.

11

signatories. Such actions by BCOA are not theoretical or

speculative. Since 1978, BCOA has undertaken each and every

of the described activities.

1. The BCOA and UMWA Can Increase and

Have Increased Benefits Without The

Consent of Former Signatories.

Since 1978, there have been numerous important substan-

tive changes in benefits provided by the various Trusts. Pension

benefits have been increased substantially. For example, in the

1988 NBCWA, the BCOA agreed to apension change that could

boost benefits by more than 40% from the prior agreement. The

surviving spouse benefit also has been increased from 50% (J.A.

714) to 75% (J.A. 725). The death benefit has been increased

and the responsibility for payment thereof has been transferred

from certain signatory companies to the Funds (J.A. 194). In

1988, the level of reambursement to providers was substantially

increased, thereby greatly increasing the cost to the Trusts of

providing benefits, without any offsetting benefit to participants

and beneficiaries.!9 The so-called “evergreen” companies had

no input in these decisions.

2. The BCOA and UMWA Can Modify and

Have Modified the Contribution Formula

To Benefit BCOA’s Larger Members, To

The Corresponding Disadvantage of

Small Members and Former Signatories.

Prior to 1988, the formula for contributions to the 1950

Benefit Trust was based solely upon tons of coal produced by a

signatory. Under the 1984 NBCWA the contribution formula

for the 1950 Benefit Fund was 61 cents/ton (J.A. 710).

10 ~The increase served to help equalize the amounts paid to providers by

the Trusts and amounts paid by BCOA companies to providers who served

BCOA companies’ active employees.

?

“a

The 1988 NBCWA dramatically altered this formula. For

the first time contributions to all the Funds were based solely

upon classified hours worked.!! The initial contribution rate to

the 1950 Benefit Fund was $1.83 per/hour (J.A. 722). This

change in the funding formula altered the competitive balance

among employers.

Coal is generally sold in the market on a dollar per ton or

cents per million btu basis. Therefore, with due regard for

quality differentials, competition is based upon a head-to-head

price-per-ton comparison. The changed formula favors the

large producers which control BCOA. They are able to mine

large amounts of coal while using fewer workers through the

use of long walls and large draglines. For example, at a con-

tribution rate of $1.83 per hour, a company able to produce six

(6) tons per manhour pays a contribution of approximately thirty

cents ($.30) per ton whereas a company producing two (2) tons

per manhour pays a contribution of approximately ninety-one

cents ($.91) per ton.

When the combined rates of all the Trusts is taken into

account, the differential between a mine producing six tons per

hour versus a mine producing two tons per hour reach addition-

ally adverse levels. In a market where prices for spot coal have

declined to approximately $20 per ton, this is a significant

competitive factor.

The impact of this change is particularly stark with respect

to a company which only cleans or transports coal. Because

contributions to the 1950 Benefit Trust under the 1984 NBCWA

were based solely upon tons mined, such a company did not have

any tonnage to report, and thus was not required to make any

contributions whatsoever to the 1950 Benefit Trust. In the 1988

NBCWA however, the contribution formula was changed to a

| The only exception was a royalty applied to coal purchased or

acquired by the signatory company from non-signatory sources.

13

dollar/hour formula. Therefore, under the court of appeals’

interpretation, even if such a company withdrew from BCOA

upon the expiration of the 1984 NBCWA. and even though it

had not been required to make contributions to the 1950 Benefit

Fund while it was a member of BCOA, it now finds itself faced

with a contribution obligation under a formula negotiated after

it lawfully withdrew from BCOA.

3. The BCOA and UMWA Have Negotiated

Terms Which Discriminate in Favor of

Signatory Companies, and Would Have

the Power to Do So in the Future.

As executed, the 1988 NBCWA required signatory

employers to pay a life insurance benefit of $3,500 upon the

death of a 1974 Plan pensioner of the signatory employer (J.A.

726). In 1991, however, the BCOA executed a Reopener Agree-

ment with the UMWA under which the death benefit payment

obligation was increased to $5,000 and the obligation to make

the payment was shifted from the companies to the 1974 Pension

Trust (J.A. 194). Of course, the former Signatories were not

entitled to participate in the negotiations over the Reopener

Agreement.

The benefit of the Reopener Agreement did not flow to

every signatory employer. Instead, the Reopener Agreement

provided that non-BCOA signatory employers could obtain the

transfer of this payment obligation only if they were already

signatory to a standard NBCWA and the 199] Wage and Pen-

sion Reopener Agreement with the UMWA. So-called

“evergreen” companies that had reached separate agreements

with the UMWA, were still bargaining with the UMWA, or

which no longer had any bargaining relationship with the

UMWA could not conceivably receive any benefit from this

transfer.!* Yet, under the court of appeals’ decision that the

2 » . .

os Respondents argue that “any’ contnbuting employer could take ad-

vantage of this provision simply by signing the Reopener Agreement. Op-

14

“evergreen” clause requires such companies to be bound to

contribution rates to the 1974 Pension Fund identical to BCOA

companies, the non-signatory companies must help pay for the

UMWA-BCOA agreement transferring the BCOA companies’

death benefit obligation to the 1974 Pension Fund.

The foregoing examples illustrate the permanent competi-

tive advantage which the court of appeals’ decision would

confer on the BCOA. There is no legitimate labor policy

objective served by allowing the BCOA to assign to itself the

power to make such changes on a permanent basis. Neither the

Trustees, the UMWA, nor the BCOA have a legitimate interest

in controlling who will represent the “evergreen” employers for

the purposes of addressing such ongoing collective bargaining

issues. To the extent that the “evergreen” clause purports to

permit the UMWA and BCOA to change such terms and condi-

tions for the former signatories, it serves only to perpetuate the

BCOA in its status as the collective bargaining représentative

for the “evergreen companies’’.

position at 9 n.12. However, the respondents’ argument itself demonstrates

that the “evergreen” clause would force employers to use the BCOA as their

bargaining representative. In negotiating the Reopener, BCOA has said, in

effect: “We have agreed with the UMWA that you must financially support

this new arrangement, whether you receive any benefit or not. If, however,

you want to receive any benefit for the money we have agreed that you will

pay, you must sign the Reopener with the UMWA.” Further, the

respondents’ argument is certainly not true for employers whose employees

have decertified the UMWA. Signing such a collective bargaining agree-

ment in those circumstances would violate Section 8(a)(2) of the NLRA. 29

U.S. 158(a)(2). Under the petitioners’ theory, these employers must still pay

money to the funds, part of which will go to pay the death benefit obligations

of BCOA members.

15

B. The Court Of Appeals’ Decision Will Undermine

Multi-employer Collective Bargaining, Since

Few Employers Will Join A Collective Bargaining

Association If That Association Can Obtain

Perpetual Negotiating Rights.

It is well settled that once bargaining has commenced

employers are not free to withdraw from multi-employer bar-

gaining absent mutual consent or other “unusual circumstan-

ces”. Bonanno Linen Service v. NLRB, 454 U.S. 404 (1982).

Such “unusual circumstances” will be found only where an

employer is subject to extreme financial pressures or where a

bargaining unit has become substantially fragmented. Jd. at

411. An employer may not reject a multi-employer contract

merely because it does not agree with its terms. 13 On the other

hand, the employer is free to withdraw from the multi-employer

bargaining unit upon proper notice prior to bargaining and

bargain for a new, individual contract after the expiration of the

multi-employer agreement. /d. at 412. In adopting the rule that

an employer could not withdraw after bargaining had begun,

neither the NLRB nor this Court could have intended that the

employer could be bound by a provision negotiated by its agent

which arrogated to that agent the authority to bargain for the

employer in perpetuity.

In view of these considerations, it would be a manifest

injustice to bind an employer to an association agreement which

creates a perpetual obligation to comply with the results of future

negotiations. Such an agreement extends well beyond the scope

of legitimate multi-employer bargaining and serves no

legitimate policy of labor law. To find that an employer, having

See, e.g. Falkowski Grocery, 236 NLRB 473, 475 (1978) (“It is well

established Board law that an employer who enters a multi-employer bar-

gaining group is not free to examine the product of such negotiations to decide

whether to accept those terms but must abide by the terms of that agreement

negotiated on a group basis.”).

16

once joined multi-employer bargaining, could be compelled to

remain bound in perpetuity to future negotiations, threatens the

basic concept of multi-employer bargaining. No employer

would ever join multi-employer bargaining if it knew that it was

risking a permanent loss of its bargaining authority.

C. Under The Respondents’ “Evergreen” Theory,

The Former Signatories’ Employees Have

Perpetually Waived Their Right To Choose

Their Exclusive Bargaining Representative.

Section 7 of the NLRA guarantees employees the right to

engage in collective bargaining through an exclusive repre-

sentative, as well as the concurrent right to refrain from engaging

in collective bargaining. 29 U.S.C. § 157. A trust fund’s

retention of contributions for employees no longer represented

by the relevant union “strikes at the very core of collective

representation” by forcing the employees into a “devil’s alter-

native” of either forfeiting their right to contributions or retain-

ing a collective bargaining representative with whom they are

less than satisfied. Local 50, Bakery and Confectionery

Workers’ Union v. Local 3, Bakery and Confectionery Workers’

Union, 733 F.2d 229, 233 (2d Cir. 1984). If the “evergreen”

clause imposes continuing obligations on non-signatories, the

UMWA retains the exclusive right to negotiate regarding pen-

sion and retiree health benefits regardless of whether the af-

fected employees continue to be represented by the UMWA for

purposes of collective bargaining. By retaining this right, the

UMWA has waived the employees’ nght to select another

representative.

This waiver can result in a detriment to those employees

who are no longer represented by the UMWA for purposes of

collective bargaining. A perfect example of this is the Reopener

Agreement discussed above. An employer whose employees

are no longer represented by the UMWA cannot obtain the

17

increased death benefits whiich were provided by 1974 Pension

Trust under the Reopener A greement.

Thus, the “evergreen” clause, as interpreted by the court of

appeals and applied by the respondents, induces employees to

retain the UMWA as their representative, and waives their right

to withdraw the UMWA’ s authority to act as their representative

with respect to pension and health benefits. Such agreements,

however, are prohibited by the National Labor Relations Act.

In NLRB v. Magnavox Co. of Tennessee, 415 U.S. 322 (1974).

this Court held that a union may not waive employee’s rights

relating to their choice of a bargaining representative. As this

Court explained in Metropolitan Edison C ompany v. NLRB, 460

U.S. 693, 705-706 (1983), a “union may bargain away its

members economic rights, but it may not surrender rights that

impair the employees’ choice of their bargaining repre-

sentative.”

Accordingly, under the respondents’ theory, not only does

the “evergreen” clause waive the employer’s right to withdraw

from multi-employer bargaining, it waives their employees’

right to have a free choice in their selection of an exclusive

collective bargaining representative as well.

II. THE COURT OF APPEALS’ DECISION WOULD

COMPEL EMPLOYERS WHO ARE NO LONGER

SIGNATORIES TO MAKE PAYMENTS TO THE

TRUSTS WHICH ARE ILLEGAL UNDER SEC-

TION 302(A) OF THE LABOR MANAGEMENT

RELATIONS ACT.

Section 302(a) of the Labor Management Relations Act

(“LMRA”), 29 U.S.C. § 186(a), generally prohibits an employer

from paying money or any other thing of value to any “repre-

sentative” of the employer’s employees. Trustees of union

affiliated trust funds are “representatives” within the meaning

of section 302(a) and, thus, are subject to the prohibition of

LS

section 302(a). See, e.g., Moglia v. Goeghegan, 403 F.2d 110,

116 (2nd Cir. 1968), cert. denied, 394 U.S. 919 (1969).

The legislative history of the Taft-Hartley Act is replete

with Congressional concerns about former UMWA President

John L. Lewis using employer fringe benefit contributions to

create a war chest for the United Mine Workers. See, e.g. S.

Rep. No. 105, 80th Cong., Ist Sess. 53 (1947); 93 Cong. Rec.

4875-76 (daily ed. May 8, 1947). To address these concerns,

the Congress enacted, inter alia, LMRA section 302(c)(5). 29

U.S.C. § 186(c)(5). From that time on, for a period of over forty

years, the UMWA Funds have been required to comply with

section 302(c)(5). See UMWA Health & Retirement Funds v.

Robinson, 455 U.S. 562 (1982). The court of appeals’ decision

undermines that forty-year history of the Trusts’ compliance.

Employers with no current contract with the UMWA are

precluded by section 302(c)(5) from making the payments

which petitioners seek under the continuing contributions

theory, because such payments would violate the requirement

that contributions must be for the “sole and exclusive benefit”

of the employees. The “sole and exclusive benefit” provision

ensures that, like wages, payments to a trust fund which are in

exchange for employees’ labor are protected, so that employees

may enjoy the “sole and exclusive benefit” of their efforts.

Demisay v. Local 144 Nursing Home Pension Fund, 935 F.2d

528, 533 (2d Cir. 1991) cert. granted, 112 S. Ct. 2990 (June 22,

1992)(No. 91-610).!4 Employees who will never receive any

benefit from a trust fund, for example because they have chosen

14 ; : ; : :

This case raises an issue which is one step beyond Demisay. There,

the Court has been asked to determine whether or not contributions already

paid in to a fund must be transferred to a new fund to cover employees of

employers who have withdrawn from the original multi-employer plan. This

case involves the question of whether the employer can be compelled to pay

future contributions after it has withdrawn from a plan from which its

employees will not receive any benefit.

19

a different collective bargaining representative, do not receive

the “sole and exclusive benefit” envisioned in Section 302(c)(5).

Id. at 534. Thus, coal industry employees whose current

employers have no contract with the UMWA would gain no

benefit from the payments which the respondents seek.!> Pay-

ment of those contributions would violate section 302(c)(5).

Although respondents have been providing benefits to retirees of

some “evergreen” employers since approximately 1990, this contrasts with

their practice between 1978 and 1990, which was to deny benefits to

employees for time worked for an employer that was not then a signatory to

an agreement with the UMWA. Amici submit that this earlier. pre-litigation

practice is the only practice which reasonably comports with the language of

the trust documents.

20

CONCLUSION

The petition raises issues of critical importance for the coal

industry in particular and the future of multi-employer collective

bargaining in general. If the court of appeals’ decision is

allowed to stand, few if any, employers will agree to join

multi-employer collective bargaining associations since they

cannot do so without the fear that the association and union will

permanently waive the individual employer’s and his

employees’ rights to negotiate on their own behalf. This con-

stitutes an important question of federal labor policy which must

be addressed by this Court.

For these reasons, we urge the Court to grant the Petition

for Writ of Certiorari.

Dated: June 7, 1993

Respectfully submitted,

DANNIE B. FOGLEMAN

(Counsel of Record)

WILLIAM B. COWEN

Coleman, Coxson, Penello,

Fogleman & Cowen, P.C.

1000 Vermont Avenue, N.W.

Suite 600

Washington, D.C. 20005

202/842-2900

Attorneys for Amicus Curiae

Agipcoal, USA, Inc.