Legality of a Certain Proposed Composition of a Multiemployer Pension Fund Board of Trustees ( 1977 )

January 27, 1977
77-2 MEMORANDUM OPINION FOR THE
SECRETARY OF LABOR
Legality of a Certain Proposed Composition of a
Multiemployer Pension Fund Board of Trustees
This Office has been asked to respond to your predecessor’s request
for an opinion as to the legality of a certain proposed composition of a
multiemployer pension fund board of trustees. Specifically, the question
is w hether a board composed of an equal number of labor and manage­
ment trustees, but with a majority of neutral trustees chosen jointly by
the union and employer representatives, would comport with Section
302(c)(5) o f the Labor Management Relations Act (LMRA), 29 U.S.C.
§ 186(c)(5) (Supp. V). For the reasons that follow, we conclude that it
would.
In broad outline, Section 302(a) of the LM RA prohibits payments or
loans by an employer to any representative of any of his employees. It
may be that, under the reasoning set forth in Independent Association o f
M utuel Employees v. New York Racing Association, 398 F.2d 587 (2d
Cir. 1968), Section 302 would not even be applicable to the contemplat­
ed l^oard. However, we proceed on the basis that Section 302 does
apply here, and our opinion rests on the ground that the proposal falls
within the exception provided in Section 302(c)(5). That provision
exempts from Section 302(a)’s broad prohibition certain trust funds
complying with specified requirements; the requirements relevant in
this situation are set out in Section 302(c)(5)(B), reading as follows:
Provided That . . . (B) the detailed basis on which such [trust
fund] payments are to be made is specified in a written agreement
with the employer, and employees and employers are equally rep­
resented in the administration o f such fund, together with such
neutral persons as the representatives of the employers and the
representatives of employees may agree upon and in the event the
employer and employee group deadlock on the administration of
such fund and there are no neutral persons empowered to break
such deadlock, such agreement provides that the two groups shall
agree on an impartial umpire to decide such dispute, or in event of
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their failure to agree within a reasonable length of time, an impar­
tial umpire to decide such dispute shall, on petition of either group,
be appointed by the district court of the United States for the
district where the trust fund has its principal office, and shall also
contain provisions for an annual audit of the trust fund, a statement
of the results of which shall be available for inspection by interest­
ed persons at the principal office of the trust fund and at such
other places as may be designated in such written agreement.
In our opinion the proposed board of trustees would not contravene
any of the above specified requirements. The provision sets forth no
requirement that the employee and employer representatives must to­
gether remain in control of the board, or that the neutral trustees
cannot constitute a majority. Instead, the statute itself, in its language
referring to “neutral persons,” explicitly allows for more than one
neutral person on the board; it also explicitly contemplates that the
neutral parties may often control the course the board takes, as may be
the case under the Labor Department’s proposal.
The core of the problem here is whether the statute allows neutral
parties to be in control of the fund at all times (presuming they agree)
or only in instances where the employers and employees deadlock. The
statute, in its reference to the language “in the event that employer and
employee group deadlock on the administration of such fund and there
are no neutral persons empowered to break such deadlock,” might be
taken to suggest that the role of neutral parties is to break deadlock.
We think, however, that this interpretation would elevate the quoted
language from what it is—i.e., a specification o f a contingency—into a
requirement that is simply not within the statute. The statute, for
present purposes, requires only two things: (1) a written agreement
specifying the basis on which payments are to be make; and (2) employ­
ees and employers must be equally represented in the administration of
the fund. The requirement that the parties must agree as to the detailed
basis on which payments are to be made, while directed at mandating a
specification of the terms of employee benefits, See 92 Cong. Rec.
5345-46 (1946) (remarks of Senator Ball), nonetheless seems broad
enough to sanction an agreement on the composition of the board that
is to be in overall administration of the trust. The provision allowing
the employee and employer representatives to “agree upon” neutral
trustees more directly addresses this issue; it appears sufficiently open-
ended to support any agreement as to the specification of “neutral
persons” even to the extent of allowing them to come into control of
the fund.
Nor do we find that the legislative history of the provision under­
mines this conclusion. To be sure, there are references in the debates to
the fact that the funds under the new law would be under the “joint
administration” of employers and employees. See, e.g., 93 Cong. Rec.
4747 (1947) (remarks of Senators Revercomb and Taft), 93 Cong. Rec.
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4749 (1947) (remarks of Senator Murray). While these statements could
suggest that Congress contemplated that the employers and employees
together would control the operation of the trust, we do not believe
such to be necessarily the case. In our view, it is also reasonable to
suppose that the statements were made with reference to what Con­
gress assumed would be the normal, but not mandatory, situation; the
fact that there is no reference in the statute to joint control supports this
view. In addition, references in other parts of the debates indicate that
the legislation was designed to secure employer “participation,” See 93
Cong. Rec. 4748, 4751-52 (1947) (remarks of Senators Taft and Morse)
or “voice,” 92 Cong. Rec. 4892, 5180-81 (1946) (remarks of Senators
Byrd and Overton) in the administration o f the funds. These remarks
suggest that the employer (and the employees, by virtue of the equal
representation requirement) need not necessarily be one of the fund’s
controlling forces, but might take a lesser part in the administration of
the fund.
M ore importantly, the “jo int administration” o f the fund was by no
means an underlying purpose of the legislation; rather, it was a means
to secure Congress’ ultimate goal. 93 Cong. Rec. 4747 (1947) (remarks
of Senator Taft), 92 Cong. Rec. 5337 (1946) (remarks of Senator Tyd-
ings). This goal was to ensure that the trust funds would be used for
the purposes for which they were established, 93 Cong. Rec. 4678
(1947) (remarks o f Senator Ball), 92 Cong. Rec. 5336, 5346 (1946)
(remarks of Senators Knowland and Ball); we are informed that the
D epartm ent’s proposal is designed to accomplish this same result. As
such, we do not believe that the proposal here should be barred by
vague references in the legislative history to methods that Congress did
not see fit to include within the statutory language.
F o r the foregoing reasons, we conclude that the proposed board of
trustees wpuld comply with the requirements set forth in Section
302(c)(5).
L eon U lm a n
Deputy Assistant Attorney General
Office o f Legal Counsel
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