The opinion of the court was delivered by: GESELL
This is a derivative class action brought on behalf of coal miners who have a present or future right to benefits as provided by the United Mine Workers of America Welfare and Retirement Fund of 1950. Plaintiffs have qualified under Rule 23.2 of the Federal Rules of Civil Procedure. Jurisdiction is founded on diversity and on the general jurisdiction of this Court, 11 D.C. Code § 521, in effect at the time suit was filed.
Defendants are the Fund and its present and certain past trustees; the United Mine Workers of America; and the National Bank of Washington and a former president of that Bank.
Plaintiffs seek substantial equitable relief and compensatory and punitive damages for various alleged breaches of trust and conspiracy. Defendants oppose these claims on the merits and in addition interpose defenses of laches and the statute of limitations. The issues were specified at pretrial conferences, and after extensive discovery the case was tried to the Court without a jury. Following trial, the case was fully argued and detailed briefs were exchanged. This Opinion constitutes the Court's findings of fact and conclusions of law on the issues of liability and equitable relief.
A. Organization and Purpose of the Welfare Fund
The Fund is administered by three trustees: one designated by the Union, one designated by the coal operators, and the third a "neutral party designated by the other two." The Union representative is named Chairman of the Board of Trustees by the terms of the trust. Each trustee, once selected, serves for the term of the Agreement subject only to resignation, death, or an inability or unwillingness to serve. The original trustees named in the Agreement were Charles A. Owen for the Operators, now deceased; John L. Lewis for the Union, now deceased; and Miss Josephine Roche. The present trustees are W.A. (Tony) Boyle, representing the Union; C.W. Davis, representing the Operators; and Roche, who still serves.
Each coal operator signatory to the Agreement (there are approximately fifty-five operator signatories) is required to pay a royalty (originally thirty cents, and now forty cents per ton of coal mined) into the Fund. These royalty payments represent in excess of ninety-seven percent of the total receipts of the Fund, the remainder being income from investments. In the year ending June 30, 1968, royalty receipts totalled $163.1 million and investment income totalled $4.7 million. Total benefit expenditures amounted to $152 million.
In general, the purpose of the Fund is to pay various benefits, "from principal or income or both," to employees of coal operators, their families and dependents. These benefits cover medical and hospital care, pensions, compensation for work-related injuries or illness, death or disability, wage losses, etc. The trustees have considerable discretion to determine the types and levels of benefits that will be recognized. While prior or present membership in the Union is not a prerequisite to receiving welfare payments, more than ninety-five percent of the beneficiaries were or are Union members.
The Fund has maintained a large staff based mainly in Washington, D.C., which carries out the day-to-day work under policies set by the trustees. Roche, the neutral trustee, is also Administrator of the Fund serving at an additional salary in this full-time position. Thomas Ryan, the Fund's Comptroller, is the senior staff member next in line.
The trustees hold irregular meetings, usually at the Fund's offices. Formal minutes are prepared and circulated for approval. In the past, a more detailed and revealing record of discussions among the trustees has been prepared and maintained in the files of the Fund by the Fund's counsel, who attended all meetings. The Fund is regularly audited, and a printed annual report summarizing the audit and other developments was published and widely disseminated to beneficiaries, Union representatives, and coal operators, as well as to interested persons in public life.
From the outset the trustees contemplated that the Fund would operate on a "pay-as-you-go" basis -- that is, that the various benefits would be paid out largely from royalty receipts rather than solely from income earned on accumulated capital. Always extremely liquid, the Fund invested some of its growing funds in United States Government securities and purchased certificates of deposit. It also purchased a few public utility common stocks, and in very recent years invested some amounts in tax-free municipal securities. The ...