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IN RE BARRETT

October 16, 1958

In the Matter of the Arbitration of Controversies between Frank G. BARRETT, Bertram A. Powers and James A. McCann, Union-Appointed Trustees of Typo-Publishers' Welfare Fund, Petitioners,
v.
A. V. MILLER, William Mapel and C. Raymond Hulsart, Association-Appointed Trustees of Typo-Publishers' Welfare Fund, Respondents



The opinion of the court was delivered by: BRYAN

Petitioners, who are the three Unionappointed trustees of the Typo-Publishers' Welfare Fund, apply to this court for the appointment of an impartial umpire to resolve a deadlock between themselves and the three trustees appointed by the employers' Association.

The Typo-Publishers' Welfare Fund was established in 1953 by New York Typographical Union No. 6 and the Publishers' Association of New York City representing principal New York City newspapers. It took the form of a trust agreement dated February 27, 1953 between these two parties and six named trustees, three of whom were designated by the Union and three by the employers' Association. Like the many similar plans now in operation, the agreement was the fruit of collective bargaining between Union and employers and stemmed from Section 302(c)(5) of the Labor Management Relations Act, 29 U.S.C.A. § 186(c)(5).

 The purposes of the fund are to provide welfare benefits to the typographical employees covered by the Union's collective bargaining agreements with the Association and its members, and with other employers not members of the Association who choose to join the plan under its terms. These benefits include life, disability, surgical and hospitalization coverage.

 The funds in the hands of the trustees consist largely of contributions from the employers who now pay over to the fund 73 cents per shift worked per employee, to a maximum of five shifts in a week. Benefits are provided to approximately 3,500 employees, dependents and beneficiaries and for the fiscal year ended February 28, 1957 total contributions amounted to approximately $ 620,000.

 The deadlock between the two groups of trustees arises from a proposal by the Union group that life and disability coverages under the trust be underwritten by the fund itself on a selfinsurance basis rather than through group policies purchased from insurance carriers as has been done up to now. The employer trustees have opposed such a course.

 On April 29, 1957, by unanimous action of the trustees, Martin Siegal & Company, Inc., who are specialists in the field of employee welfare funds, were engaged to survey the possibilities of self-insurance for this fund. They reported to the trustees that some twelve to fourteen thousand dollars annually could be saved if life insurance, disability and surgical benefits were provided through appropriate self-insurance by the fund itself. They also reported that it was not feasible to provide hospitalization benefits on a self-insurance basis.

 At the trustees' meeting on November 19, 1957 the Union trustees, on the basis of the Siegal report, proposed a resolution which would have transferred the fund on March 1, 1958 to a self-insurance basis for life and disability insurance which are now covered by a group policy expiring on February 28, 1958.

 The three Union trustees voted in favor of the resolution and the three employer trustees voted against it, thus creating the deadlock.

 Article 10(e) of the trust agreement provides that in the event of a deadlock 'upon any question coming before the trustees for decision', and the failure of the trustees to agree on an impartial umpire, such an umpire shall be appointed by this court.

 This is in accord with Section 302(c) of the Labor Management Relations Act, 29 U.S.C.A. § 186(c), permitting agreements of this nature, if, among other things,

 '* * * in the event the employer and employee groups deadlock on the administration of such fund and there are no neutral persons empowered to break such deadlock, such agreement provides that the two groups shall agree on an impartial umpire to decide such dispute, or in event of their failure to agree within a reasonable length of time, an impartial umpire to decide such dispute shall, on petition of either group, be appointed by the district court of the United states for the district where the trust fund has its principal office, * * *.'

 The trust agreement also provides that the trust was 'created and accepted by the Trustees' in New York and that 'all questions pertaining to its validity, construction and administration' shall be determined in accordance with the laws of New York.

 The petition contains no jurisdictional allegations and there is no diversity jurisdiction. However, jurisdiction is derived directly from Section 302(c)(5) of the Labor Management Relations Act and the application is properly before me. See Copra v. Suro, 1 Cir., 236 F.2d 107.

 The collective bargaining agreement pursuant to which the fund was created provided that the parties 'shall negotiate a trust agreement * * * in accordance with the provisions of Section 302 of the Labor Management Relations Act of 1947 * * *'. The resulting trust agreement refers in turn to the collective bargaining agreement and derives therefrom. The provision in the trust agreement for the appointment of an impartial umpire by this court is expressly authorized and, indeed, made mandatory by Section 302(c)(5). Congress plainly vested that jurisdiction over this phase of the controversy in the federal courts, and had the ...


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