UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK
May 28, 1958
Alfredo MOSES, Irene Joseph, Blanche Black, on behalf of themselves and all other former members of Department and Varieties Stores Union, Local 1115A, R.C.I.A., a/k/a Warehouse Production and Sales Employees Union Local 1115A, R.C.I.A., similarly situated, Plaintiff,
Fred A. AMMOND, as Vice President of Retail Clerks International Association, AFL-CIO and Fred A. Ammond, as Trustee for Department and Varieties Stores Union, Local 1115A, R.C.I.A., a/k/a Warehouse Production and Sales Employees Union Local 115A, R.C.I.A., Arthur Katz, as President of Warehouse Production and Sales Employees Union Local 1115A-Ind., Arthur Katz, Frank Gold and Charles Schimmel, as Trustees of Local 115A, Health, Welfare and Service Fund, and Fred A. Ammond and William Maguire, purportedly acting as successor trustees of Local 1115A, Health Welfare and Service Fund, Defendants
The opinion of the court was delivered by: PALMIERI
Plaintiffs are former members of Department and Varieties Stores Union, Local 1115A, Retail Clerks International Association (Local 1115A). Defendants are (1) trustees and successor trustees of a Welfare Fund which was established by Local 1115A and the employers of the Local's members; (2) the President of the International Association; and (3) the trustee of Local 1115A.
The complaint alleges, upon information and belief, that 'in or about March or April of 1957 * * * Local 1115A, disaffiliated from the International, whereupon the plaintiffs and others similarly situated, resigned their membership in Local 1115A.' It appears from other papers on file in this case that an independent union was established at the time of the disaffiliation and that the International Association appointed a trustee for Local 1115A and that the trustee appointed himself and another as successor trustees for the Welfare Fund.
Article VI of the Declaration of Trust under which the Welfare Fund was administered is set forth in the complaint.
The complaint then alleges that, since the disaffiliation, the Welfare Fund has received no contributions 'from the employers with whom said Local had collective bargaining agreements;' that there are not, presently, any employers who are required, under a collective bargaining agreement with Local 1115A, to contribute to the Welfare Fund;
and that the Fund should terminate and its proceeds be distributed to the plaintiffs and others similarly situated
The complaint also alleges that a number of actions are pending in which each of the defendants seeks possession of the Welfare Fund. Plaintiffs allege that the defendants' claims are violative of Section 302 of the Labor Management Relations Act of 1947, 61 Stat. 157, 29 U.S.C.A. § 186. It is also alleged that, if defendants are successful in obtaining possession of the Welfare Fund, the plaintiffs will be denied benefits to which they are entitled under the terms of the Declaration of Trust. It appears, from other papers on file on this case, that the actions referred to above are pending in the New York State courts; that the actions seek to determine the rights to the Welfare Fund as between the officers of Local 1115A and the independent union; that the present plaintiffs are not parties to those actions; and that those actions do not seek distribution of the corpus of the Welfare Fund to the ex-members of Local 1115A.
The complaint seeks both declaratory and injunctive relief. The declaration of rights sought is that, 'by reason of the occurrence of the conditions set forth in said Declaration of Trust,' the trust has been terminated; that 'under the terms of the Declaration of Trust' the plaintiffs are entitled to a pro rata distribution of the corpus; that the defendants have no right to the corpus of the trust; and that the defendants' retention of the corpus or obtaining the corpus, is prohibited by 29 U.S.C.A. § 186.
The injunction sought would restrain defendants from dealing with the assets of the Welfare Fund; restrain them from proceeding with any action to recover or retain possession of the Welfare Fund; and restrain them from interfering with plaintiffs' rights to 'claim, use and enjoy' the corpus of the Welfare Fund. An accounting is also sought, as well as a direction that the Welfare Fund be distributed pro rata among plaintiffs and all others similarly situated.
Two of the defendants move for an order dismissing the complaint on the ground that this Court is without jurisdiction over the subject matter of the suit. Plaintiffs allege that this Court has jurisdiction under the Federal Declaratory Judgments Act, 28 U.S.C. 2201, 2202 (1952 and Supp. V); and under Section 302 of the Labor Management Relations Act of 1947, 61 Stat. 157, 29 U.S.C.A. § 186.
The Declaratory Judgments Act, however, applies only to cases within the jurisdiction of the courts of the United States, 28 U.S.C. § 2201 (Supp. V). It 'did not extend their jurisdiction.' Skelly Oil Co. v. Phillips Petroleum Co., 1950, 339 U.S. 667, 671, 70 S. Ct. 876, 879, 94 L. Ed. 1194. Accordingly, I turn to a consideration of whether such jurisdiction is otherwise conferred upon this Court.
Jurisdiction Under 29 U.S.C.A. § 186.
Plaintiffs rely upon subsection (e) of 29 U.S.C.A. § 186,
and cite five federal cases for the proposition that that subsection vests the federal courts with broad equity jurisdiction over welfare funds established in industries affecting interstate commerce. Copra v. Suro, 1 Cir., 1956, 236 F.2d 107; Hobbs v. Lewis, D.C.D.C.1958, 159 F.Supp. 282; Wilkens v. De Koning, D.C.E.D.N.Y.1957, 152 F.Supp. 306; Conditioned Air and Refrigeration Co. v. Plumbing and Pipe Fitting Labor-Management Relations Trust, D.C.S.D.Cal.1956, 159 F.Supp. 887; and American Bakeries Co. v. Barrick, D.C.N.D.Ohio 1958, 162 F.Supp. 882. With the exception of the Copra case, however, it appears that the jurisdictional issue was not raised in any of these cases, or that the relief sought was that particularly provided in 29 U.S.C.A. § 186(e), i.e., an injunction to restrain the defendants from accepting payments alleged to be in violation of 29 U.S.C.A. § 186(a) and (b).
Part III of this opinion contains a discussion of whether this suit presents a problem 'arising under' these subsections. The same reasoning which leads to a negative answer to that question leads to the conclusion that the relief sought here is not that provided for in subsection (e), and that, therefore, that subsection is of no avail to plaintiffs here even if it does confer jurisdiction on this Court
Copra v. Suro, supra,
is, not surprisingly, cited by both plaintiffs and defendants in support of their respective positions. For the Court, in Copra, stated that 'the legislative history suggests to some extent * * * that Congress intended in (29 U.S.C.A. § 186(e)) to create a broad equity jurisdiction that * * * would also authorize (the District Courts) to exercise a more general equity power over the welfare funds * * *' 1 Cir., 1956, 236 F.2d 107, 115. But the holding, in Copra, was that the District Court did not err in denying plaintiffs' motion for an interlocutory injunction. The Court came to this conclusion because it felt that the District Court had not erred in finding that there were 'serious doubts' as to its jurisdiction under 29 U.S.C.A. § 186(e). Id. at loc. cit.
I do not believe that 29 U.S.C.A. § 186(e), in itself, vests any jurisdiction in the District Courts. Such an interpretation would be possible if the subsection, quoted in footnote 3, supra, ended after the words 'restrain violations of this section.' But the subsection as a whole indicates, I believe, that its purpose was to remove the bar of sections 6 and 20 of the Clayton Act, 38 Stat. 731, 738 (1914), 15 U.S.C.A. § 17, 29 U.S.C.A. § 52, and the bar of the Norris-La Guardia Act, 47 Stat. 70 (1932), as amended, 29 U.S.C.A. §§ 101-110, 113-115, so as to permit the courts of the United States, in cases in which jurisdiction was otherwise present, to enjoin violations of subsections (a) and (b) of 29 U.S.C.A. § 186. This conclusion is buttressed by a comparison of the language of this subsection with the language Congress employed in Section 301(a) of the Labor Management Relations Act of 1947, 61 Stat. 156, 29 U.S.C.A. § 185(a).
That subsection provides jurisdiction in the federal courts for 'suits for violation of (labor-management) contracts.' Interpreting that broad language, the Supreme Court has held that Congress had power to regulate labor-management controversies, that 185(a) directed the federal courts to fashion federal law to regulate those controversies, and that jurisdiction to decide these controversies was present because they would 'arise under' the federal law which the federal courts were to fashion. Textile Workers Union of America v. Lincoln Mills of Alabama, 1957, 353 U.S. 448, 456-457, 77 S. Ct. 912, 1 L. Ed. 2d 972. I find, from the language of 186(e), no Congressional mandate to the federal courts to fashion federal law for the administration of union welfare trusts. In my opinion, that subsection does no more than clear the way for permitting federal courts to enjoin violations of § 186(a) and (b).
My interpretation of 29 U.S.C.A. § 186(e) is further buttressed by the legislative history of the Act,
and by a dictum in a recent decision of the Court of Appeals for this Circuit.
Nor does my reading of the statute render it without meaning or purpose. Jurisdiction to restrain violations of 29 U.S.C.A. § 186(a) and (b) arises from 28 U.S.C. § 1337 (1952).
The provisions of 29 U.S.C.A. § 186(e) are necessary, however, to remove the bars of the Norris-LaGuardia and Clayton Acts. Conversely, a proper understanding of the jurisdictional basis for action by the federal courts is not merely a hollow exercise in dialectics. For, when the limited function of 29 U.S.C.A. § 186(e) is understood, and resolution of the jurisdictional problem is focused on 28 U.S.C. § 1337 (1952), it becomes clear that the question is not one of any 'general equity' power in the Court, but whether the case is an 'action or proceeding arising under any Act of Congress regulating commerce.' 28 U.S.C. § 1337 (1952). Ultimately, therefore, and since I hold that 29 U.S.C.A. § 186(e) does not direct the federal courts to fashion a federal law for the administration of union welfare funds, jurisdiction of this Court over this suit depends on whether it raises a question arising under 29 U.S.C.A. § 186(a) or (b)
Jurisdiction Under 28 U.S.C. § 1337 (1952).
Plaintiffs allege that the 'welfare Fund was established in compliance with the provisions of' 29 U.S.C.A. § 186(c)(5).
But, just as it is a mistake to think that subsection (e) directs the federal courts to fashion a federal law of trusts to govern the administration of union welfare funds, it is a mistake to think that § 186 established such a law.
While paragraph (c)(5) is, physically, the lengthiest portion of 186, it is, grammatically, only an exception from the prohibitions of subsections (a) and (b). The purpose of § 186 was considered by the Supreme Court in United States v. Ryan, 1956, 350 U.S. 299, 305, 76 S. Ct. 400, 404, 100 L. Ed. 335:
'Nor can it be contended that in this legislation Congress was aiming solely at the welfare fund problem. Such a suggestion is supported neither by the legislative history nor the structure of the section. The arrangement of § 302 is such that the only reference to welfare funds is contained in § 302(c)(5).
If Congress intended to deal with that problem alone, it could have done so directly, without writing a broad prohibition in subsections (a) and (b) and five specific exceptions thereto in subsection (c), only the last of which covers welfare funds. As the statute reads, it appears to be a criminal provision, malum prohibitum, which outlaws all payments, with stated exceptions, between employer and representative.'
Thus, it may be seen that the extent of the federal law established by § 186 is that certain payments to employee representatives, i.e., all payments not excepted by subsection (c), are prohibited. Accordingly, 28 U.S.C. § 1337 (1952) vests jurisdiction in the federal courts over any suit in which it 'is essential to plaintiff's success' that a payment to an employee representative be deemed forbidden by § 186. See the Opinion of Mr. Justice Frankfurter in Association of Westinghouse Salaried Employees v. Westinghouse Electric Corp., 1955, 348 U.S. 437, 450, 75 S. Ct. 489, 99 L. Ed. 510. Thus, in such a suit, § 186(e) permits the federal courts to enjoin such a payment;
and, for instance, a suit for recovery of payments alleged to be illegal under § 186 would lie in the federal courts.
Does this Case Present a Question 'Arising Under' 29 U.S.C.A. § 186(a) or (b)?
While the exegesis has been (necessarily, I think) somewhat long, the question dispositive of this case may now be put and, I believe, rather readily answered. The question is: Do the plaintiffs here seek relief, their entitlement to which depends on a finding that payments have been received by the trustees of the Welfare Fund,
or made by the employers, in violation of § 186(a) or (b)? The answer must be in the negative.
The complaint nowhere alleges that payments have been made by an employer to his employees' representatives in violation of § 186. Indeed, as set forth supra at page 871 of 162 F.Supp. the complaint alleges that the trust was established in conformity with § 186(c)(5), in which case the payments made would have been excepted from the ban of § 186(a) of (b). Nor is there any allegation that there is presently existing any agreement to make payments which could be enjoined as violative of § 186(a) or (b). In fact, as set forth supra at page 868 of 162 F.Supp., the complaint alleges that there are no employers who are presently required to contribute to the Welfare Fund.
To the extent that the complaint seeks a declaration of plaintiffs' rights to have the fund distributed to them, and a mandatory injunction seeking such distribution, no issue under § 186 is raised. The complaint seeks such relief because of trust 'has been terminated by reason of the occurrence of the conditions set forth in said Declaration of Trust for its termination;' and because plaintiffs 'are entitled under the terms of the Declaration of Trust to have the trust corpus distributed to them pro rata.'
Whether distribution of the trust corpus to these plaintiffs is required, presents a question calling for the interpretation of the trust agreement and, perhaps, the applicable state law of trusts. No issue is presented, in so far as distribution to these plaintiffs is concerned, calling for an interpretation of § 186, and this Court is, therefore, without jurisdiction to declare or mandate such relief.
Much of the same can be said concerning the prayer for a declaration that defendants have no right to the corpus of the fund and for an injunction restraining them from prosecuting the State court actions. I repeat that there is no allegation that the payments made to the Welfare Fund were illegal; and that the complaint affirmatively indicates to the contrary. Again, the complaint also alleges that there are no further payments to be made to the Welfare Fund.
The complaint does allege that the defendants' claims in the pending State court actions are 'violative' of § 186. But the face of the complaint also shows that there is no merit to this contention. The entire sweep of § 186 is to prohibit certain payments which, the allegations of the complaint show, were not prohibited here.
Whether the officers of the independent union or the trustee of Local 1115A are now entitled to the corpus of the trust fund is a question of interpretation of the trust agreement (a question of state law) and, perhaps, of the applicable state law of trusts. Section 186 offers no guidance to the solution of this problem. Since the rights of the various defendants to the corpus also do not 'arise under' § 186, this Court is also without jurisdiction to grant the relief sought on this branch of the complaint. For this Court to interfere with the orderly disposition of that issue in the State courts would, in any event, be 'uneconomical as well as vexatious,' Brillhart v. Excess Ins. Co. of America, 1942, 316 U.S. 491, 495, 62 S. Ct. 1173, 1175, 86 L. Ed. 1620; see also National Cancer Hospital of America v. Webster, 2 Cir., 1958, 251 F.2d 466; and I would be inclined, as a matter of discretion, to deny this relief even if the Court had jurisdiction under the diversity statute
In sum, since no violations of § 186(a) (b) are involved, there is no basis for invoking the powers of the United States courts. Those powers rest squarely upon the presence of such violations. To read into this statute, as plaintiffs urge, a broad bestowal of jurisdiction over all disputes relating to union welfare funds is not consonant with the architecture of the law or with its purpose.
Although the motion for dismissal has been made by only two of the defendants, the complaint will be dismissed as against all. Fed.R.Civ.P. 12(h)(2), 28 U.S.C.; Hacknar v. Guaranty Trust Co. of New York, 2 Cir., 117 F.2d 95, 97, certiorari denied 1941, 313 U.S. 559, 61 S. Ct. 835, 85 L. Ed. 1520.
It is so ordered.