in Collective Bargaining, 45 Colum. L. Rev. 556 (1945).
Although significant areas of local autonomy are important to permit grass roots participation in the affairs of any organization, vesting corrective supervisory authority in a larger entity, as chosen by the Constitution of the International Union here, has legitimate advantages in curbing the impact of local factionalism, as described in the public sector context in The Federalist No 10 (Madison).
Such authority also permits those not directly involved to negotiate jurisdictional matters with other unions with greater impartiality, a particularly important advantage in the building industry with its multiple unions and multiple crafts. See 29 U.S.C. 185 (enforcement of agreements between labor organizations); 29 U.S.C. 160(k) (resolution of jurisdictional disputes); Drywall Tapers v. Local 530, 954 F.2d 69 (2d Cir. 1992); Newspaper Printing Corp. v. NLRB, 692 F.2d 615 (6th Cir. 1982); Old Country Iron Works v. Iron Workers Locals 40, 842 F. Supp. 75, 78 (S.D.N.Y. 1993)); Goldstein, "Electronic Journalism and Union Rivalry," 29 Labor LJ 137 (1978).
While ERISA fund trustees act as fiduciaries for the beneficiaries of the fund, they are appointed by employer and union representatives pursuant to 29 U.S.C. 186. They act as do representatives in the public sector, who must exercise their conscience
but cannot extend their terms once recalled by their electorate. See Levy v. Local Union No. 810, 20 F.3d 516, 519 (2d Cir. 1994).
To permit ERISA fund trustees to remain in office contrary to the wishes of the highest authority in their appointing organization would turn ERISA funds into potentially independent sources of power, contrary to the objectives of both ERISA and §§ 301 and 302 of the Taft-Hartley Act (29 U.S.C. 185, 186). Levy, supra; Dept of Labor, Pension & Benefit Welfare Programs Opinion 85-41A, Dec. 5, 1985 (1985 ERISA LEXIS 3).
To permit such holding over would enable such trustees to form coalitions within boards of trustees
to utilize ERISA funds at their disposal, and ability to accept or reject collective bargaining agreements insofar as they seek to interface with the funds as means to impose their own views - not those of their appointing authorities - on unions and employers in an industry. Similarly, whether or not ERISA funds may properly be used in connection with leveraged buyouts, hostile corporate takeovers or other actions affecting an industry rather than merely prudent investments for the sake of the beneficiaries, such events in fact occur.
Insofar as these or related events do occur, properly or otherwise, the underlying employer and employee interests, not independent interests of any of the trustees, should control the use of such power.
The current controversy arises because a trustee appointed prior to the above events had declined to accept replacement by Mr. Parietti. This was initially attempted on a date prior to March 31, 1994 based on events which need not be canvassed here. It is undisputed that for reasons which are irrelevant here, cooperation between the International Union's designated President of Local 5 and one of the two Union representatives on ERISA trust funds within the area covered by the former Hudson Valley District Council, has broken down.
By virtue of the holding over of a previously appointed labor representative who has declined to step aside to date, Local 5 as reconstituted by the International Union has only one of four rather than the authorized two out of four of the trustees of ERISA funds collecting contributions required under collective bargaining agreements within its territory. This in turn jeopardizes cooperation between the ERISA funds and the President of Local 5 as designated by the International Union.
While the parties have disputed the question of who could validly appoint union trustees to trust funds prior to March 31, 1994 and the procedures for such appointments, this controversy appears to be of secondary importance given the reality that Mr. Parietti currently has the authority to replace any union trustees within the scope of the Hudson Valley District Council of the International Union.
Continuance of any trustees serving contrary to the wishes and governing documents of the appointing authority inherently causes irreparable injury. To the extent that plaintiffs seek placement of Mr. Parietti's designee as an ERISA fund trustee in lieu of one not so designated, probability of success is clear. Even were it less clear, there would be at minimum fair ground for litigation and equities tilting strongly in favor of plaintiffs. The public interest also favors seating of the ERISA trustee designated by the International Union's selectee. Accordingly, the requirements for a preliminary injunction to that effect are satisfied. As set forth in Bridgeport Coalition for Fair Representation v. City of Bridgeport, F.3d , 1994 WL 247075 *3 (2d Cir. 1994):
The standard in the Second Circuit for injunctive relief clearly calls for a showing of (a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.
See also Paddington Corp. v. Attiki Importers, 996 F.2d 577 (2d Cir. 1993); Plaza Health Laboratories v. Perales, 878 F.2d 577, 580 (2d Cir. 1989); Jackson Dairy v. HP Hood & Sons, 596 F.2d 70, 72 (2d Cir. 1979).
The determination called for by Bridgeport Coalition can be made here based upon those aspects of the facts which are not in dispute, so that no evidentiary hearing is necessary. Drywall Tapers v. Local 530, 954 F.2d 69 (2d Cir. 1992).
Plaintiffs, however, have instead moved for a preliminary injunction barring defendants from taking various steps in connection with ERISA funds administered under trustees some of whom were appointed by now-superseded units of the International Union. This would involve the court in enforcement of complex and ambiguous matters while perpetuating rather than resolving the controversy and the litigation.
On the other hand, the injunction which would be appropriate as outlined above has not specifically been requested, and for that reason defendants have not had explicit notice that such relief may be granted.
The parties are directed to meet expeditiously to seek to settle this matter in light of the observations made in this memorandum order. Unless the matter is adjourned by consent of the parties with the approval of the court, defendants shall show cause within fifteen working days of the date of this memorandum order why a preliminary injunction of the kind referred to above should not be entered.
In view of this disposition, it appears unnecessary to rule on other contentions of the parties, which are denied without prejudice at this time. Once the proper union trustees are sitting, they can determine what steps, if any, taken prior to the change in union representation they wish to seek to alter or challenge.
Dated: White Plains, New York
June 21, 1994
/s/ Gerard L. Goettel, U.S.D.J.
in the absence of
VINCENT L. BRODERICK, U.S.D.J.