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September 3, 1958

LOCAL UNION 420, Local Union 428, and Local Union 690 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada AFL-CIO

The opinion of the court was delivered by: LEAHY

This is an action under the Labor Management Relations Act of 1947 as amended, particularly 301, 302, 29 U.S.C.A. 185, 186.

Plaintiff Mechanical Contractors Association of Philadelphia, Inc., is a nonprofit corporation consisting of 50 of the larger mechanical contractors of the greater Philadelphia area. Employees of these contractors are represented by defendants, Local Unions No. 690, 428 and 420 of the 'United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada AFL-CIO.' For about 20 years plaintiff on management's behalf has bargained collectively with the three unions as the recognized collective bargaining agents of the employees in the defined geographical area, covering the counties of Philadelphia, Montgomery, Bucks, Chester and Delaware. Collective bargaining agreements negotiated have been adopted by all mechanical contractors engaged in the industry in this area as the pattern governing wages, hours, and working conditions. Plaintiff association on behalf of management for the industry bears the costs and provides the service for management's participation in Health and Welfare Funds, Apprentice Training Programs, Joint Arbitration procedures and Joint Conference Committees dealing with the industry's problems. This also calls for the interpretation and construction of the various collective bargaining agreements and the resolution of disputes which arise as a result of technological and new situations.

 The present problem arises as to the balance of the contribution -- 2 1/2 cents per man hour worked -- which has been called the Industry Fund. Purposes and operation of this Fund were treated in the clarifying supplemental agreements -- the purpose was to pay for management's costs of engaging labor relations on an industry wide basis. Each employer was to pay his share based on the number of man hours he employed each year. Some of the expenditures from the Fund were to be public relations and public education as applied to the industry; costs of promoting stability of relations between labor and management; costs for arbitration and adjustment of grievances; costs for administering jointly with labor Health and Welfare Funds, Joint Apprenticeship Training Funds, etc., and costs of purchasing surety bond coverage that each employer would pay his contributions into the various industry programs. The employer contributions were retained by the depository in escrow. Plaintiff asked the Department of Justice on September 21, 1956 for an opinion on the legality of the Industry Fund. Defendant Local Union 690 (at argument Local Union 428 took the same position) joined with plaintiff that the purposes of the Industry Fund were lawful and the collection of the Fund could be enforced, but that joint administration of the Industry Fund by labor and management was unlawful. Defendant Local Union No. 420 then and presently contends that joint administration is lawful. The Department of Justice said it could give no formal opinion because the application of the statute involved criminal sanctions, but it did state 'we can advise you that if the Fund were under the exclusive management and control of the employers, who maintained it by their contributions, no question would arise of the validity of the trust under the (A) proviso of Section 302(c)(5). The reason for this is, of course, that the payments to the trustees would not be payments to 'representatives' of the employees within the meaning of Section 302(a) and (b), and hence not within the prohibitions of those subsections.' The Department of Justice also stated as the trust was not created for any purpose specified under Section 302(c)(5) (A) it could not be jointly administered. Local Union 420 says the Department of Justice did not decide joint administration was unlawful. They refused to enter into a trust unless it provided for joint administration and refused to permit the First Pennsylvania Banking and Trust Company to disburse any of the contributions.

 Locals 690 and 428 agree to administration solely by plaintiff; but as it was the understanding of the three defendants the Industry Fund would be a single Fund, they desired agreements among all three unions. The depository has about $ 47,569.65 which is blocked by the position still taken by Local 420.

 Plaintiff seeks a decree the Industry Fund is lawful and can be enforced; that joint administration of labor and management is unlawful; and may only be administered by the employer contributors. Local 420 is sought to be ordered to execute a declaration of trust. There are no factual disputes. Plaintiff, therefore, moved for judgment upon the pleadings.

 2. There is no question as to the propriety and objectives of the Industry Fund. True, multi-employer bargaining aids employers in collective bargaining power but it is also beneficial to the unions and the public. Such was the view of Judge Waterman (dissenting) in Truck Drivers Local Union No. 449, Intern. Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. N.L.R.B., 2 Cir., 231 F.2d 110, and adopted by Justice Brennan in reversing the majority. See 353 U.S. 87, 77 S. Ct. 643, 1 L. Ed. 2d 676. Industry wide bargaining has been recognized of importance to both labor and management and the public. Kerr and Randall: Multiple Employer Bargaining in the Pacific Coast Pulp and Paper Industry, Univ. of Penn. Press (1948) pp. 9, 27-31; Hall: Impact of the Bargaining Unit of Labor Management Relations (2nd Annual Conference on Labor N.Y.U.1949) p. 44; Kerr and Fisher: Multiple Employer Bargaining: the San Francisco Experience, Univ. of Cal. Press, 1948, p. 40; Bahre, The San Francisco Employers Council Univ. of Penn. Press, 1948, pp. 37-9; McDonald, Bob & Sheifer: Labor Relations in Milk Distribution in the New York Metropolitan Area (M. Bender & Co. 1951) pp. 575-77; Hill: Teamsters and Transportation (American Council on Public Affairs, 1942) p. 202; 65 Harv.L.Rev. 353-55.

 3. The arguments are persuasive the Industry Fund has a lawful objective and purpose. It has been decided joint administration of such Funds by representatives of labor and management is unlawful. Sole administration by management or employers who contribute to the Fund is lawful. In the instant case, under the agreement executed by the parties it was agreed if the Fund could not be administered jointly because of the Act, it would then be administered by management alone. The agreements, here, were voluntary and they are lawful.

 4. Plaintiff should have the prayers of its complaint -- the purposes of the Industry Fund are lawful; collection of the employer contributions may be enforced; joint administration is unlawful; sole administration by representatives of employer-contributors is lawful; defendants should execute an agreement and declaration of trust, and comply with the terms and provisions of their collective bargaining agreements and the supplements relating to the Industry Fund.

 Let a proposed decree be submitted.


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