The opinion of the court was delivered by: RYAN
In this suit filed to recover moneys paid into a Health and Welfare and Retirement Fund, and for injunctive relief, defendants have moved for summary judgment. Recovery of these payments and the prayer for injunctive relief to restrain further collections are predicated on an alleged violation of Section 302(a)(b)(c) of the Taft-Hartley Act, 29 U.S.C.A. 186(a)(b)(c).
The pertinent portions of this anti-bribery statute
'(a) It shall be unlawful for any employer to pay or deliver, or to agree to pay or deliver, any money or other thing of value to any representative of any of his employees who are employed in an industry affecting commerce.
'(b) It shall be unlawful for any representative of any employees who are employed in an industry affecting commerce to receive or accept, or to agree to receive or accept, from the employer of such employees any money or other thing of value.
'(c) The provisions of this section shall not be applicable * * * (2) with respect to the payment or delivery of any money or other thing of value in satisfaction of a judgment of any court or a decision or award of an arbitrator or impartial chairman or in compromise, adjustment, settlement or release of any claim, complaint, grievance, or dispute in the absence of fraud or duress; * * * or (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, 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); * * *'.
It is further provided with respect to this quoted subdivision (5) that this exemption shall not apply unless the following standards are met: (A) the payments are held in trust 'for the purpose of paying, * * * for the benefit of employees, their families and dependents' certain stated benefits, such as retirement and welfare benefits; (B) the detailed basis on which payments are made is set forth in a written instrument, and employers and employees are equally represented in the administration of the trust, together with a neutral person empowered to break deadlocks; and (C) the payments used for retirement purposes are held in trust.
It is plaintiff's claim that the statute has been violated in that the payments in suit were not for 'the sole and exclusive benefit of the employees of such employer' as required under (5) of the section, because they were made on behalf of non-union employees.
Plaintiff, a New York corporation, is a designer, manufacturer and distributor of dresses in the retail trade and is called a jobber. For more than twenty years and up to January 31, 1958, plaintiff was a member of the defendant The Popular Priced Dress Manufacturers' Group, Inc. (hereafter, Popular Association), a membership organization which represents employers in the negotiation of collective bargaining agreements with defendants The International Ladies' Garment Workers' Union, AFL-CIO (hereafter, ILGWU), and the Joint Board of Dress and Waistmakers' Union of Greater New York (hereafter, joint Board).
The defendant Joint Board is an unincorporated association -- affiliated as a separate group with the ILGWU, a national labor organization organized into locals on the basis of and a recognition of certain craft, industrial, language and geographical factors. It is composed of delegates elected from the several locals. It transacts business of common interest for each local (including negotiating, administering and enforcing the respective collective agreements). During the period in suit, the Joint Board represented four locals of the ILGWU: Local 22, composed of operators, samplemakers, drapers, finishers, cleaners, etc.; Local 10, composed of cutters; Local 60, composed of pressers; and Local 89, composed of dressmakers of all crafts except cutters. The Joint Board also represents affiliates located outside New York City but involved in the production of dresses for manufacturers or jobbers located in New York City. The remaining defendants, Charles S. Zimmerman, Nathaniel M. Minkoff, and Leon Namenwirth are joined individually and as General Manager, Secretary-Treasurer and President, respectively, of the Joint Board.
The payments, recovery of which is sought in the total sum of $ 61,480.97, were made during the period March, 1954 through January, 1958, under two collective agreements between Popular Association and ILGWU and Joint Board -- the first dated February 1, 1951 and modified and extended by agreement dated July 15, 1953 to January 31, 1955; the second dated February 1, 1955 effective to January 31, 1958.
Plaintiff as a member of Popular Association was bound by these agreements until its resignation from the Association on January 31, 1958.
Under the agreements, plaintiff undertook to maintain a union shop for the manufacture of garments on its premises and, in the event that its garments were manufactured by contractors, that it would deal only with those who maintained union shops and were designated and registered; and, further, that, if it dealt with non-union, or non-registered, or non-designated contractors, it would withdraw such work or forfeit all its rights under the agreement while continuing to be bound by its obligation to pay damages for each violation. It also agreed to distribute its work equally among its inside shop and the contractors with whom it dealt.
The Health and Welfare Fund was first established under a collective agreement as early as 1944 and the Retirement Fund in 1947.
The funds were continued in each succeeding agreement (including the two agreements with Popular Association of February 1, 1951 and February 1, 1955) and are found provided for in paragraph '28' of the agreements.
Under paragraph '28', plaintiff as a member of Popular Association bound itself to pay to Joint Board for and on behalf of the Health and Welfare and Retirement Funds a stated percentage of the weekly wages of all the workers covered by the agreement employed in its inside shop -- if it maintains one -- and in the shops of its contractors. The payments are to be computed, reported and made in the manner promulgated by an Impartial Chairman and a specific portion of the payments is allocated to each Fund. It is provided, further, that the payments are not to constitute or be deemed wages due to workers. Payments of the amounts due are to be enforced only by the Joint Board on behalf of the Funds. The Funds are pooled for the joint benefit of all the workers and not for the benefit of any ...