concedes that ICEBAC was established as a response to MCAA's decision to allow non-union contractors membership in MCAA since ICEBAC's founders anticipated that MCAA could not represent and advance the interests of union and non-union contractors at the same time.
Membership in ICEBAC is restricted to masonry contractors who have entered into collective bargaining agreements requiring the contractor to contribute to IMI a specified amount of money for each hour worked by any of the contractor's employees covered by the collective bargaining agreement.
Membership is automatic for eligible employers and there is no application process. To date, ICEBAC has never held a membership meeting. Board of Director meetings are held, but the director participants are not elected by the membership. They are elected by other directors.
George has no recollection of how ICEBAC's first directors
were chosen. The By-Laws of ICEBAC specifically preclude members from voting on the election of officers and directors. In turn, the Directors of ICEBAC appoint management trustees to IMI. When ICEBAC'S directors meet, they meet at the same locations at which the IMI Board meetings are held. Joyce and Carlisle, both union officials and IMI Union-appointed trustees, have attended ICEBAC's board meetings "for the limited purpose required to enable them to give the union's perspective on specific subjects of mutual interest." Joyce and Carlisle maintain that they attend only for the period of time necessary to make their presentations.
In addition, ICEBAC members pay no dues to support ICEBAC. All of ICEBAC's funding and the legal fees necessary to form ICEBAC originated with IMI.
The initial decision to finance the legal fees necessary to establish ICEBAC was made by IMI at the time in 1987 when all but two MCAA-appointed trustees (defendant George and plaintiff Miller) had resigned.
Since the formation of ICEBAC, ICEBAC's expenses are included as an item in IMI's yearly budget.
In June 1987, George became the first President of ICEBAC. George had previously been a "regular member" of MCAA. At the time George became President of ICEBAC, he was a U.S. Employer Trustee of the Pension Fund, appointed by MCAA. George also became a management trustee of IMI and co-chairman with Joyce of IMI's joint board of trustees. He continues to hold these IMI positions to date.
F. The Dispute
On March 29, 1993, written notice was sent to the Board of Trustees of the Pension Fund scheduling a meeting in Washington, D.C. on May 26, 1993. A meeting of the Administrative Committee
of the Pension Fund took place on May 24th and May 25th. According to plaintiffs, it was the practice of the Board of Trustees not to consider at a Board of Trustees meeting, any major business items that had not previously been discussed by the Administrative Committee and placed on the agenda for that meeting. Nonetheless, there is no requirement in the Trust Agreement that all proposals be discussed by the Administrative Committee prior to a board meeting.
On May 25th, prior to the Board of Trustees Meeting, Joyce and Miller met in the lobby of a Washington, D.C. hotel. In that meeting, according to Miller, Joyce advised that because the Trust Agreement allowed up to eight U.S. Employee Trustees and eight U.S. Employer Trustees, the Union would propose that Flynn be added as an additional U.S. Employee Trustee and requested that Miller have MCAA consider appointing Kardy as an additional U.S. Employer Trustee. Miller advised that he could not speak for the other U.S. Employer Trustees with respect to naming Kardy. Joyce contends that he asked Miller if ICEBAC could appoint the additional U.S. Management Trustee and Miller stated that he did not believe that MCAA would agree to that.
While Miller insists Joyce did not mention ICEBAC to him, nonetheless, he states that had Joyce proposed that ICEBAC be permitted to nominate the sixth management trustee, he would not have agreed.
The Board of Trustees meeting began the morning of May 26th. After all the items listed on the agenda had been discussed, Joyce made an oral motion to delete any reference to MCAA in the Trust Agreement and to name ICEBAC in MCAA's place.
There had been no discussion of this proposal at the Administrative Committee meeting the day before and the U.S. Employer Trustees had not been advised of the proposal.
It was Joyce's opinion that prior notice of the amendments was unnecessary. The motion to amend the Trust Agreement to insert ICEBAC as the U.S. Management Trustee-appointing body instead of MCAA was not revealed at the beginning of the meeting when "New Business" was announced.
The motion to remove MCAA passed by a vote of six to three with the TCAA-appointed U.S. Employer Trustee abstaining. Plaintiffs Szabo, Tubesing and Miller, all MCAA-appointed U.S. Employer Trustees, voted against the change. Defendants Joyce, Carlisle, Strickland, Uzzalino, and Weir, all U.S. Employee Trustees appointed by the Union, voted in favor of the measure. Defendant George, a MCAA-appointed U.S. Employer Trustee, then the President of ICEBAC, voted for the motion.
In addition, the Trustees voted to expand the number of U.S. Employer Trustees and U.S. Employee Trustees from five each to six each. After the vote, Joyce proposed that the Union appoint Flynn as the sixth U.S. Employee Trustee and that motion was approved. The meeting was adjourned without any discussion regarding the addition of a sixth U.S. Employer Trustee. However, in the 1992 Annual Report of the Pension Fund issued on July 31, 1993, Kardy was identified as the sixth U.S. Employer Trustee.
When asked why he proposed substituting ICEBAC for MCAA, Joyce replied that he no longer had confidence in MCAA because it had begun to admit members who were not parties to collective bargaining agreements with the Union. However, because seven years had elapsed since MCAA first starting allowing non-union contractors to become members, plaintiffs contend that Joyce decided to replace MCAA with ICEBAC due to two 1993 incidents. In the first, Joyce formed the false belief that the son of MCAA's then-president, Richard C. Matthews, was a non-union contractor; Joyce alluded to this belief at the May 26th board meeting. It is a fact that Matthews' son does belong to a union and works for his father, a union contractor. The second reason cited by plaintiffs is the fact that Adelizzi, formerly president of an association of primarily non-union contractors, was appointed MCAA's Executive Director.
On September 20, 1993, by a vote of its Executive Board, MCAA attempted to remove George as a U.S. Employer Trustee, appointing Richard Felice ("Felice"), as a successor Trustee.
Because of the disputed amendment installing ICEBAC in MCAA's stead, George contends that the removal by MCAA is ineffective because only ICEBAC has the authority to appoint or remove U.S. Employer Trustees. On October 19, the Executive Board of the MCAA appointed Matthews as the sixth U.S. Employer Trustee.
Written notice had earlier been sent to the Pension Fund's Board of Trustees scheduling a Board of Trustees meeting in Puerto Rico for November 1. That meeting was later rescheduled. On October 21, Joyce, as Secretary of the Pension Fund Board of Trustees, advised Matthews and Felice by letter that they would not be seated at the upcoming Board Meeting because they had been appointed by MCAA, a body without the authority to appoint them to their positions.
As a general matter, under the LMRA, employers are prohibited from making any payments to employee representatives. See 29 U.S.C. § 186(a). Section 302 of the LMRA was enacted to prevent "the possible abuse by union officials 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, 3 L. Ed. 2d 915, 79 S. Ct. 864 (1959). However, § 302 provides an exception for employer contributions made to trusts meeting certain specified requirements. 29 U.S.C. § 186(c)(5). Among the requirements of § 302(c)(5), is the condition that the "employees and employers are equally represented in the administration of such fund. . . ." Id. It is this equal representation requirement that is at issue here.
Before addressing whether § 302(c)(5) has been violated, it is first necessary to ascertain whether, pursuant to § 302(e), this Court has jurisdiction to review the alleged violation. In light of the Supreme Court's most recent discussion of the scope of § 302(e), it is clear this Court does not have jurisdiction.
In Local 144 Nursing home Pension Fund v. Demisay, 124 L. Ed. 2d 522, 113 S. Ct. 2252 (1992), the Supreme Court sharply curtailed an expanded interpretation of § 302's jurisdictional provision. Section 302(e) provides that the district courts have jurisdiction to "restrain violations of this section. . . ." 29 U.S.C. § 186(e). Addressing the use of § 302(e) to enforce the strictures of § 302(c)(5), the Supreme Court held
that § 302(e) does not provide authority for a federal court to issue injunctions against a trust fund or its trustees requiring the trust funds to be administered in the manner described in § 302(c)(5).
Demisay, 113 S. Ct. at 2257. Specifically discussing alleged § 302(c)(5) violations, the Court stated:
By its unmistakable language, § 302(e) provides district courts with jurisdiction "to restrain violations of this section." A "violation" of § 302 occurs when the substantive restrictions in §§ 302(a) and (b) are disobeyed, which happens, not when funds are administered by the trust fund, but when they are paid, lent, or deliver[ed]" to the trust fund, § 302(a), or when they are "receive[d], or accept[ed]" by the trust fund, or "request[ed], [or] demand[ed]" for the trust fund, § 302(b)(1). And the exception to violation set forth in paragraph (c)(5) relates, not to the purpose for which the trust fund is in fact used . . . but rather to the purpose for which the trust fund is "established," § 302(c)(5), and for which the payments are "held in trust," § 302(c)(5)(A). The trustees' failure to comply with these latter purposes may be a breach of their contractual or fiduciary obligations and may subject them to suit for such breach; but it is no violation of § 302.
Id. at 2257 (footnotes omitted).
To evade the reach of Demisay, plaintiffs contend that § 302(e) is properly invoked because the trust fund at issue is a nonqualifying trust fund due to the structural defect of unequal representation. In other words, payments made by employers and received by the Pension Fund violate §§ 302(a) and (b) because the fund no longer satisfies § 302(c). That argument fails. Rephrasing the issue in this regard in order to come within Demisay is merely an exercise in semantics. Although the same argument could have been made in Demisay, the Supreme Court rejected jurisdiction over the matter. For example, in Demisay, plaintiffs argued that their fund suffered from a structural defect because two of § 302(c)(5)'s provisions had allegedly not been satisfied, thereby creating a structural defect. Thus, any future payments to that fund would be considered payments made to a nonqualifying fund. Section 302(e) did not extend to the plaintiffs in Demisay and it cannot be used here to provide the jurisdiction plaintiffs invoke. An alleged violation of the provision at issue here, that employers and employees be equally represented in the "administration " of the fund, occurs "when funds are administered by the trust fund," an occurrence not redressable under § 302(e). See id. at 2257.
the text of § 302 requires that, if payments are to be exempt from its prohibition, they must be [made to a plan administered by an equal number of employer and employee representatives]. There is nothing to suggest that this had the ambitious purpose of establishing an entire body of federal trust law, rather than merely describing the character of the trust to which payments are allowed, leaving it to state law to determine when breaches of that trust have occurred and how they may be remedied.