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DOYLE v. SHORTMAN

March 2, 1970

Willard L. Doyle et al., Plaintiffs,
v.
Thomas Shortman et al., Defendants


Lasker, District Judge


The opinion of the court was delivered by: LASKER

LASKER, District Judge.

We are called upon here to determine whether pension and welfare trusts providing benefits for both unionized employees covered by a collective bargaining agreement and non-unionized employees not so covered are valid under the provisions of Section 302 of the Labor Management Relations Act of 1947, 29 U.S.C. § 186.

 Plaintiffs move, pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, for summary judgment in an action to confirm two arbitration awards construing the trust instruments and holding them valid. Defendants oppose the motion and move to dismiss the complaint and to vacate both arbitration awards. Jurisdiction exists under 28 U.S.C. §§ 1331 and 1337 and 29 U.S.C. §§ 185 and 186. There being no genuine issue as to any material fact and the awards having been made in accordance with the requirements of the Federal Arbitration Statute (Title 9, U.S.C. § 1 ff) and within the scope of the arbitrator's jurisdiction, plaintiffs' motion is granted and defendants' motion is denied.

 Plaintiffs are the employer-designated trustees and deputy trustees of the Building Service Pension Fund and the Building Service Welfare Fund, while defendants are the union-designated trustees and deputy trustees of these same funds. The trusts were established by Locals 32B and 164 of the Building Service Employees International Union, AFL-CIO, and two employer associations, Realty Advisory Board on Labor Relations, Incorporated ("RAB") and Midtown Realty Owners Association, Inc. ("Midtown"), to provide pension and welfare benefits for employees and former employees of employers in the building service and maintenance industry in New York City.

 In accordance with Section 302(c)(5) of the Act, the agreements under which the funds operate provide for equal representation in the administration of the funds. Each trust is jointly administered by three representatives of the employers in the industry and certain deputy employer trustees and three representatives of the union and certain deputy union trustees.

 In December 1968, the trustees of both the Pension and Welfare Funds could not agree as to whether pension and welfare benefits should continue to be paid to non-union employees and former employees who were members of the Funds. This dispute resulted from opposing interpretations of the recent opinion of the Court of Appeals for this Circuit in Moglia v. Geoghegan, 403 F.2d 110 (2d Cir. 1968), cert. denied 394 U.S. 919, 22 L. Ed. 2d 453, 89 S. Ct. 1193 (1969).

 On advice of counsel, the union-designated trustees took the position that the Moglia decision might preclude the continued payment of pension and welfare benefits to non-union employees who were members of the respective Funds. On the other hand, the employer-designated trustees, also on advice of counsel, concluded that the decision had no application to the non-union members of these particular Funds.

 Having deadlocked on the question of whether, under the Act as interpreted in Moglia, payments and benefits should be continued to non-union employees, the trustees of both Funds, acting pursuant to the applicable provisions of the respective Trust Agreements, adopted resolutions providing for arbitration of the deadlocks. The distinguished labor arbitrator, Peter Seitz, Esq., was jointly selected to arbitrate the controversies. He held full hearings on the issues and rendered detailed and scholarly opinions and awards. Upon exhaustive analysis of the arguments, he concluded that the payment of pension and welfare benefits to non-union employees and former employees was not precluded by the Moglia decision, thereby sustaining the position of the plaintiffs, employer-designated trustees, in this litigation.

 The plaintiffs contend that the provisions of the Trust Agreements are valid under the Act and the interpretation of the Act set forth in Moglia, and consequently that the arbitrator's award which made a holding to that effect is valid and should be enforced.

 The defendants admit that the arbitrator had jurisdiction and that his decision was correct in holding that the trust instruments authorized the coverage of the non-union employees, but the defendants argue that the questions to be determined by this court are not solely whether the documents authorized the coverage of non-union employees, but whether such coverage, if it does exist, satisfies the requirements of the Act as construed by Moglia. As the defendants put it, the arbitrator cannot command the trustees to violate the Act.

 There is no doubt that an arbitrator's award cannot compel an illegal act. Minkoff v. Scranton Frocks, Inc., 181 F. Supp. 542, 547 (S.D.N.Y. 1960), Metzner, J. Indeed, plaintiffs do not appear to quarrel with this proposition, but merely to consider it irrelevant since they view the matter as one in which the arbitrator has correctly determined the law.

 Finding, as I do, that the arbitrator has correctly concluded that non-union employees are covered by the written trust agreements and written correlative plans, and that this conclusion is not in dispute, the sole question before me is the determination of whether such coverage is legal under the Act as interpreted by the Court of Appeals in Moglia.

 The Facts

 The Building Service Pension and Welfare Funds in question presently provide pension benefits and hospitalization, surgical and life insurance benefits for some 40,000 building service employees in some 5,000 commercial and residential buildings in four boroughs of New York City. From the start it was clearly the intention of both Funds to provide industry-wide coverage for all employees in or connected with the industry, whether or not they were covered by a collective bargaining agreement. Three earlier welfare funds dating back to 1951 were merged into the Building Service Welfare Fund by a 1964 Trust Agreement which, in pertinent part, permitted any employer who belonged to an employer association to contribute to the Welfare Fund for employees not covered by a collective bargaining agreement. The Trust Agreement also allowed non-members of the associations to participate for such employees under certain prescribed circumstances. As for the Building Service Pension Fund, it was established in 1958 when the two unions and the two employer associations constituted committees to write a Pension Plan and Trust Agreement. These instruments, like the Welfare Trust Agreement, contemplated a broadly industrial program, including pension coverage for certain building service employees who were not covered by collective bargaining agreements requiring contributions to the Pension Fund. In view of these specific provisions in the Trust Agreements and Pension Plan authorizing coverage of non-union employees, the trustees of the Funds, confident of their full compliance with requirements of the statute, have permitted pension and welfare coverage of such employees for many years. Not until the Second Circuit's decision in Moglia did the trustees have any reason to question the propriety of their action.

 Now, however, in reliance on Moglia, defendants raise the question of the legality of the coverage of non-union employees, primarily as it relates to two classes of such employees. First, there are some employers, members of the RAB and Midtown employer associations, who do not have collective bargaining agreements with the unions requiring contributions on behalf of their employees, but who nevertheless voluntarily make payments to the two Funds for employees in their buildings. In addition, there are other employers, some of whom belong to the employer associations and some of whom do not (in which case they are required to enter into individual contracts with the unions), who do have collective bargaining agreements with the unions covering employees under the locals' jurisdiction, but who voluntarily contribute for those of their employees not covered by such agreements - i.e., those employees who either are members of other building trade and craft unions or are in unorganized job classifications such as supervisors or clericals.

 The question presented is whether the inclusion of these non-union employees in the Pension and Welfare Funds established by the specific documents herein described in any ...


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