Before LUMBARD, Chief Judge, WATERMAN and FRIENDLY, Circuit Judges.
WATERMAN, C.J.: The present case relates to the management of a "welfare fund" created pursuant to a collective bargaining agreement between Publishers' Association of New York City, representing the publishers of the principal daily newspapers in New York City, and the New York Typographical Union Number 6, representing employees in the composing rooms of these newspapers. The terms under which the fund is to be administered are set forth in a trust agreement dated February 27, 1953. The agreement closely follows the requirements of Section 302(c)(5) of the Labor Management Relations Act, 1947, 29 U.S.C. 186(c)(5). It provides, inter alia, that management of the fund, which consists exclusively of annual contributions by the publishers, shall be in the hands of six trustees, of whom three are to be appointed by the Association and three by the Union. The fund was initially established in 1953. The welfare benefits payable under the trust agreement have been provided for by the purchase of contracts for insurance companies, the premiums therefor being paid from the fund. In 1957 the three Union trustees proposed that the trustees investigate the possibility of adopting a self-insurance program rather than continuing to pay premiums to independent insurance companies. The trustees authorized a consulting firm to make the investigation. The firm reported, stating that, as to many of the benefits the fund was intended to provide, self-insurance would be feasible and would achieve a small annual saving. At a meeting on November 19, 1957 the Union trustees proposed that the fund become a self-insurer in those areas in which the report had indicated such a program would be feasible. The Association trustees voted against the proposal. A deadlock thereby having been created the Union trustees, pursuant to paragraph 10.E. of the trust agreement, petitioned the district court for the appointment of an impartial umpire to resolve the deadlock, a power expressly conferred upon the district court by Section 302(c)(5)(B) of the Labor Management Relations Act.*fn1 The court below, Bryan, J., 166 F. Supp. 929, granted the petition, and the Association trustees have appealed.
Appellants' argument is quite simple. The parties agree that paragraph 10.E. of the trust agreement should be regarded as an arbitration clause. The parties further agree that if an umpire were appointed he would have only those powers conferred in paragraph 10.E. Paragraph 10.E. gives the umpire power over "* * * a deadlock upon any question coming before the Trustees for decision." Appellants contend that since the scope of the trustees' power is limited to the functions provided for in the trust agreement, the above-quoted language should be construed so as to limit the umpire's power to the same functions. Appellants maintain that the proposal for self-insurance was beyond the scope of the trust agreement and that, since there could be no issue for the umpire to arbitrate, they conclude that the district court erred in granting appellees' petition that an umpire be appointed.
In American Federation of Technical Engineers v. General Electric Co ., 250 F.2d 922 (1 Cir. 1957), cert. denied, 356 U.S. 938 (1958), it was aptly said by Judge Magruder that when a party to a collective bargaining agreement seeks a federal decree compelling arbitration under § 301 of the Labor Management Relations Act, the court "has the inescapable obligation to determine as a preliminary matter that the defendant has contracted to refer such issue to arbitration, and has broken this promise." See also Brass & Copper Workers Federal Labor Union v. American Brass Co ., 272 F.2d 849, 853 (7 Cir. 1959). The parties have pointed out no reason why a district court should restrict itself more severely when asked to appoint an umpire under § 302(c)(5). The promise of the parties was to agree on an umpire "in the event of a deadlock upon any questions coming before the Trustees for decision." Decision implies choice; in no real sense does a question come before the trustees for decision if the answer sought by the proponent would require action plainly beyond the powers conferred upon the trustees. In other words, while a trustee petitioning for the appointment of an umpire need not demonstrate that his interpretation that the issue was one the trustees could decide is the correct one, see Engineers Association v. Sperry Gyroscope Co ., 251 F.2d 133, 137 (2 Cir. 1957), cert. denied, 356 U.S. 932 (1958), he must at least establish that it is a possible one. As Chief Judge Murrah suggested in Local 1912, International Ass'n of Machinists v. United States Potash Co ., 270 F.2d 496, 498 (10 Cir. 1959), a court need not order arbitration when it is prepared to say "with positive assurance that the contract is not susceptible to an interpretation to cover the asserted dispute."
Having examined the agreement, the relevant portions of which are set forth in the footnote,*fn2 we conclude that appellees' interpretation that self-insurance is a permissible alternative to the purchase of insurance policies from independent insurance companies is not fairly arguable. In addition to the overall tenor of the agreement, we are particularly drawn to this conclusion by consideration of Paragraph 5, commencing, "The Trustees shall use and apply the Trust Fund for the following purposes, and none other," going on to list three specific purposes, of which the purchase of insurance policies is one. Since the trustees were plainly without power to approve the proposal that the fund become self-insuring, any deadlock on this subject was not upon a "question coming before the Trustees for decision," and appellants' promise to agree upon an umpire in such event did not become operative.
Judgment reversed with directions to dismiss the ...