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Employer Trustees of Western Pennsylvania Teamsters v. Union Trustees of Western Pennsylvania Teamsters

United States Court of Appeals, Third Circuit

August 31, 2017

EMPLOYER TRUSTEES OF WESTERN PENNSYLVANIA TEAMSTERS; EMPLOYERS WELFARE FUND, Appellants
v.
UNION TRUSTEES OF WESTERN PENNSYLVANIA TEAMSTERS; THOMAS N. HEIDER; JOSEPH A. MOLINERO; JAMES W. MCCLELLAND, JR.; ALBERT J. RUSH; THOMAS HUCKUNION TRUSTEES OF WESTERN PENNSYLVANIA TEAMSTERS, EMPLOYERS WELFARE FUND; THOMAS N. HEIDER; JOSEPH A. MOLINERO; JAMES W. MCCLELLAND, JR.; ALBERT J. RUSH; THOMAS HUCK, Appellants
v.
EMPLOYEES OF WESTERN PENNSYLVANIA TEAMSTERS AND EMPLOYERS WELFARE FUND; WILLIAM J. DILLNER; M. E. DOUTT; ROBERT JACKSON; RAYMOND MILLER; STEPHAN SPOLAR

          Argued January 18, 2017

         On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil Nos. 2-15-cv-1417 & 2-16-cv-00084) District Judge: Honorable Terrence F. McVerry _

          Robert F. Prorok, Esq. [Argued] Carsen N. Ruperto, Esq. COHEN & GRIGSBY Counsel for Employer Trustees of Western Pennsylvania Teamsters and Employers Welfare Fund, William J. Dillner, Jr., M.E. Doutt, Robert Jackson, Raymond Miller, Stephan Spolar

          Joseph J. Pass, Esq. [Argued] JUBELIRER PASS & INTRIERI Counsel for Union Trustees of Western Pennsylvania Teamsters, Thomas N. Heider, Joseph A. Molinero, James W. McClelland, Jr., Albert J. Rush, and Thomas Huck

          Before: AMBRO, VANASKIE, and SCIRICA, Circuit Judges

          OPINION

          VANASKIE, Circuit Judge

         Arbitration has long played an integral role in settling labor disputes arising between employees and employers. Recognizing the effectiveness of arbitration in this context, § 302(c)(5) of the Labor Management Relations Act ("LMRA") explicitly requires employee benefit trust funds to include a mechanism for arbitrating deadlocks amongst trustees that develop in the course of fund administration. This appeal features two such deadlocks, each involving a faction of trustees petitioning the District Court to appoint an arbitrator to break the stalemate despite objections from the other members. The District Court declined to send either conflict to arbitration, finding that the trust agreement did not permit such an appointment. We disagree, finding that both disputes were within the purview of the parties' agreement to arbitrate. Accordingly, we will remand for appointment of an arbitrator in each action.

         I.

         The Western Pennsylvania Teamsters and Employees Welfare Fund ("the Fund") is a multi-employer benefit plan established under § 302(c)(5) of the LMRA, 29 U.S.C. § 186(c)(5). Section 302 aims to "deal with problems peculiar to collective bargaining" such as "corruption . . . through bribery of employee representatives by employers, . . . extortion by employee representatives, and . . . possible abuse by union officers of the power which they might achieve if welfare funds were left to their sole control." Arroyo v. United States, 359 U.S. 419, 425-26 (1959). To accomplish this end, the section broadly prohibits employers from providing payments of money or other items of value to employee representatives. Associated Contractors of Essex Cty., Inc. v. Laborers Int'l Union of N. Am., 559 F.2d 222, 225 (3d Cir. 1977), abrogated by Local 144 Nursing Home Pension Fund v. Demisay, 508 U.S. 581 (1993). The provision, however, does incorporate an exception for employee benefit trust funds that comply with certain statutory requirements, including mandatory administration by a board of trustees composed of an equal number of employee and employer representatives. Associated Contractors, 559 F.2d at 225.

         In compliance with § 302's equal representation requirement, the Fund is overseen by ten trustees (collectively, the "Trustees"): five union-designated trustees (the "Union Trustees") and five employer-designated trustees (the "Employer Trustees"). While this arrangement assures that both blocks of Trustees maintain equal voting power, it also results in deadlocks where the Employer and Union Trustees uniformly disagree. Anticipating this dilemma, § 302(c)(5) of the LMRA requires such benefit trust funds to install a mechanism allowing a federal district court to appoint a neutral party to resolve any impasse. Accordingly, the Fund's Trust Agreement specifies that "[i]n the event of a deadlock, " the Trustees "may agree upon an impartial umpire to break such deadlock by deciding the dispute in question." (Case No. 16-1699 App. at 162-63, Trust Agreement, § 3.15(a).) If the Trustees cannot agree on an "impartial umpire within a reasonable period of time, then, either group of Trustees . . . may petition the United States District Court for the Western District of Pennsylvania to appoint such impartial umpire." (Id.)

         The Trustees now find themselves deadlocked on two motions: one seeking to approve payment of compensation to eligible Trustees for attendance at Fund meetings and the other seeking to clarify and confirm the eligibility requirements for Employer Trustees. In each case, one half of the board petitioned the District Court to appoint an arbitrator to settle the dispute, and the opposing half of the board sought to prevent the requested appointment.

         A.

         The Trustees' first deadlock centers on an Employer Trustee's motion to pay compensation to eligible Trustees in "the amount of $600.00 per Trustee Sub-Committee Meeting and the amount of $600.00 per monthly Trustee Meeting, to be paid upon the Trustee's attendance at [the] meetings." (Case No. 16-1699 App. at 130, ¶ 17.) The Trustees have unanimously voted to approve similar compensation on three previous occasions since 1989. This time, however, all of the Employer Trustees united behind the measure while all of the Union Trustees voted against it, creating a deadlock. The Employer Trustees sought to refer the dispute to arbitration, but the Union Trustees initially refused, arguing that two of the Employer Trustees who voted for the measure were invalidly appointed. After fund counsel affirmed the validity of the disputed appointments, the Union Trustees agreed to arbitrate the compensation dispute.[1]

         As the scheduled arbitration drew near, another argument ignited over whether the Employer Trustees should be required to turn over income tax returns and other financial information pertaining to Trustees who might be eligible to receive the contested compensation. The Employer Trustees ultimately declined to provide these records, and the Union Trustees responded by again refusing to arbitrate the compensation dispute, arguing that the Trust Agreement does not authorize compensation for meeting attendance.

         The Employer Trustees initiated this action to petition the District Court for the appointment of an arbitrator to untangle the compensation stalemate. The Union Trustees sought dismissal, asserting that the Trust Agreement does not authorize the payment of compensation to Trustees, and so any decision by an arbitrator would exceed his or her authority under § 3.15(b) of the Trust Agreement. The Employer Trustees followed with a motion for partial summary judgment contending that the Trust Agreement can be read to allow such payments, and that an arbitrator should break the impasse. Upon consideration, the ...


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