Employer Trustees of Western P v. Union Trustees of Western Penn , 870 F.3d 235 ( 2017 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 16-1699
_____________
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 HUCK
_____________
No. 16-3359
_____________
UNION 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
_____________
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
______________
Argued January 18, 2017
______________
Before: AMBRO, VANASKIE, and SCIRICA, Circuit
Judges
(Opinion Filed: August 31, 2017)
Robert F. Prorok, Esq. [Argued]
Carsen N. Ruperto, Esq.
COHEN & GRIGSBY
625 Liberty Avenue
Pittsburgh, PA 15222
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
2
Joseph J. Pass, Esq. [Argued]
JUBELIRER PASS & INTRIERI
219 Fort Pitt Boulevard
1st Floor
Pittsburgh, PA 15222
Counsel for Union Trustees of Western Pennsylvania
Teamsters, Thomas N. Heider, Joseph A. Molinero, James W.
McClelland, Jr., Albert J. Rush, and Thomas Huck
________________
OPINION OF THE COURT
________________
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.
3
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
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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,
5
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 District Court
agreed that the Trust Agreement did not authorize payment of
compensation and ordered the action dismissed with
prejudice. A timely appeal followed.
1
This dispute plays a central role in the second
deadlock, described below.
6
B.
The second deadlock arises tangentially from the
compensation dispute. As mentioned, the Union Trustees
initially refused to arbitrate the compensation conflict on the
ground that two of the Employer Trustees who voted on the
compensation motion were invalidly appointed. A
disagreement ensued over whether an Employer Trustee
“must be a full-time employee of a contributing employer to
the fund.” (Case No. 16-3359 App. at 307.) One of the
Union Trustees moved to “clarify and amend” the Trust
Agreement to provide this requirement. (Id.) As expected,
the vote on this motion deadlocked, and the Employer
Trustees refused to arbitrate because § 3.15(b) of the Trust
Agreement prohibits an arbitrator from “chang[ing] or
modify[ing]” the Agreement.
Several months later, the same Union Trustee raised a
very similar motion, seeking “to clarify and confirm that the
Trust Agreement requires that all Employer Trustees must be
a full time employee of a contributing employer to the Fund
in order to serve on the Board of Trustees.” (Case No. 16-
3359 App. at 421 (emphasis added).) This new motion stood
in contrast to the original motion to “clarify and amend” the
Trust Agreement. The vote again deadlocked.
The Union Trustees brought this action after the
parties failed to agree to arbitration. The Trustees submitted
cross-motions for summary judgment, and the District Court
ruled in favor of the Employer Trustees, finding that the Trust
Agreement did not permit the Union Trustees’ interpretation
of the Employer Trustee eligibility requirements. The Union
Trustees now appeal this decision. Both disputes have been
consolidated on appeal.
7
II.
The District Court had jurisdiction under 28 U.S.C. §
1331. We have appellate jurisdiction over the final orders of
the District Court under 28 U.S.C. § 1291. We review both
memorandum opinions and orders under a plenary standard.
United Steelworkers of Am., AFL-CIO-CLC v. Rohm & Haas
Co., 522 F.3d 324, 330 (3d Cir. 2008); see also Harris v.
Green Tree Fin. Corp., 183 F.3d 173, 176 (3d Cir. 1999)
(holding standard of review is plenary where appeal “presents
a legal question concerning the applicability and scope of an
arbitration agreement”).
III.
Section 302(c)(5)(B) of the LMRA, 29 U.S.C. §
186(c)(5)(B), serves the important function of ensuring that a
mechanism is available to break any deadlocks that arise
between competing factions of trustees in the course of
administering an employee benefit trust fund. As we have
explained, the boards that oversee these trust funds must
maintain equal representation of employers and employees,
and frequent deadlocks between the two factions are a
foreseeable result. To address potential stalemates, § 302
requires the two groups to agree on an impartial umpire to
decide such dispute. 29 U.S.C. § 186(c)(5)(B). If they fail to
agree within a reasonable period of time, either party may
petition a federal district court for the appointment of such an
impartial umpire. Id. Incorporating these requirements, the
Trust Agreement at issue permits “either group of Trustees
. . . [to] petition the United States District Court for the
Western District of Pennsylvania to appoint such impartial
umpire.” (Case No. 16-1699 App. at 162–63, Trust
Agreement, § 3.15(a).)
8
In both of the deadlocked motions before us on appeal,
arbitrability is the key issue. In analyzing the arbitrability of
a dispute, we are guided by several long established
principles:
First, “‘arbitration is a matter of contract and a
party cannot be required to submit to arbitration
any dispute which he [or she] has not agreed so
to submit.’”
Second, “[u]nless the parties clearly and
unmistakably provide otherwise, the question of
whether the parties agreed to arbitrate is to be
decided by the court, not the arbitrator.”
Third, “in deciding whether the parties have
agreed to submit a particular grievance to
arbitration, a court is not to rule on the potential
merits of the underlying claims.”
Fourth, . . . “where the contract contains an
arbitration clause, there is a presumption of
arbitrability in the sense that ‘[a]n order to
arbitrate the particular grievance should not be
denied unless it may be said with positive
assurance that the arbitration clause is not
susceptible of an interpretation that covers the
asserted dispute. Doubts should be resolved in
favor of coverage.’”
United Steelworkers of Am., AFL-CIO-CLC v. Lukens Steel
Co., Div. of Lukens, 969 F.2d 1468, 1473–74 (3d Cir. 1992)
(citations omitted) (reformatted); see AT & T Techs., Inc. v.
Commc’ns Workers of Am., 475 U.S. 643, 648 (1986). With
9
these principles in mind, we examine the disputed motions
individually.
A.
We begin with the compensation impasse. The Union
Trustees argue that the Trust Agreement does not permit the
Trustees to authorize payment of compensation to eligible
members for meeting attendance. In their view, a decision by
an arbitrator to allow such compensation would be
tantamount to an amendment of the Trust Agreement—an
action explicitly prohibited by the terms of the document.
(Case No. 16-1699 App. at 163, Trust Agreement, § 3.15(b)
(“The impartial umpire shall have no jurisdiction or authority
to change or modify the provisions of th[e] Trust
Agreement . . . .”).) The District Court did not believe the
power to authorize such compensation existed within the
framework of the Trust Agreement and declined to appoint an
arbitrator on that basis. We disagree and find that the District
Court viewed this dispute from the wrong angle.
1.
At its core, the compensation deadlock is a dispute
over proper interpretation of the Trust Agreement. The
Employer Trustees’ motion specifically sought 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 Union Trustees assert that no such
compensation is authorized under the terms of the Trust
Agreement.
10
The Trust Agreement provides the Trustees with the
“power and authority to use and apply the Trust Fund” for the
enumerated purposes, including
[t]o pay or provide for the payment of all
reasonable and necessary expenses . . . (ii) of
administering the affairs of this Health and
Welfare Fund, including the employment of
such administrative, legal, expert and clerical
assistance, the purchase of such premises,
materials, supplies and equipment and the
performance of such other acts, as the Trustees,
in their sole discretion, find necessary or
appropriate in the performance of their duties;
and (iii) of reimbursement for expenses and the
payment of allowances properly and actually
incurred in the performance of their duties with
the Health and Welfare Fund, as permitted by
law including, without limitation, attendance at
meetings and other functions of the Board of
Trustees or its committees or while on the
business of the Board of Trustees, and
attendance at institutes, seminars, conferences
or workshops for or on behalf of the Health and
Welfare Fund.
(Case No. 16-1699 App. at 61–62, Trust Agreement, § 4.2.)
The District Court waded into the weeds of the parties’
competing interpretations on its way to determining that the
Trust Agreement did not permit payment of compensation for
meeting attendance. But the District Court did not need to go
so far in its reasoning because the presumption in favor of
arbitration prevails here.
11
Arbitration is a creature of contract, and “a party
cannot be required to submit to arbitration any dispute which
he has not agreed so to submit.” AT & T Techs., 475 U.S. at
648 (1986) (quoting United Steelworkers of Am. v. Warrior &
Gulf Nav. Co., 363 U.S. 574, 582 (1960)). But where the
parties “have agreed to arbitrate some matters pursuant to an
arbitration clause, the ‘law’s permissive policies in respect to
arbitration’ counsel that ‘any doubts concerning the scope of
arbitral issues should be resolved in favor of arbitration.’”
Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287,
298 (2010) (quoting First Options of Chi., Inc. v. Kaplan, 514
U.S. 938, 945 (1995)) (emphasis in original). Thus, “in the
absence of any express provision excluding a particular
grievance from arbitration,” the Supreme Court has explained
that “only the most forceful evidence of a purpose to exclude
the claim from arbitration can prevail.” AT & T Techs., Inc.,
475 U.S. at 650.
The Trust Agreement specifically provides that “the
Trustees shall have full and exclusive authority to determine
all questions or controversies . . . arising . . . in connection
with [the Fund] or the operation thereof” including questions
of “construction of the provisions of this Trust Agreement
and the terms used herein.” (Case No. 16-3359 App. at 69–
70.) This dispute over the proper interpretation of the Trust
Agreement is well-within the power of the Trustees to decide,
and because the presumption of arbitrability applies, we
presume it is also within the mandate of the arbitrator to break
this deadlock. Any concern that such a decision by the
arbitrator would be equivalent to an amendment is misplaced,
as interpretation of the language of an agreement is not an
amendment of that agreement.
12
2.
The Union Trustees assert that the deadlock must also
fall within the scope of the LMRA. The jurisdiction of a
district court to appoint an impartial umpire under the LMRA
is restricted to matters involving deadlocks in the
“administration” of the trust fund. 29 U.S.C. § 186(c)(5)(B);
Farmer v. Fisher, 586 F.2d 1226, 1229 (8th Cir. 1978). The
Union Trustees argue that the compensation dispute does not
concern the administration of the Fund and thus the District
Court lacked jurisdiction.
While we have not yet ruled on what matters constitute
fund administration under § 302,2 we need not reach the
2
Our sister circuits that have considered the issue have
taken varying approaches. The Second Circuit has interpreted
“administration” to encompass all issues that the trust
agreement empowers the trustees to decide. Mahoney v.
Fisher, 277 F.2d 5, 6 (2d Cir. 1960); Barrett v. Miller, 276
F.2d 429, 431 (2d Cir. 1960). The only dispute that would
not fall within this broad definition of administration is one
which exceeds the powers of the trustees under the
agreement.
By contrast, the Eighth Circuit in Farmer v. Fisher,
viewed administration as those decisions which relate to day-
to-day management of a trust, but not to extraordinary
matters. 586 F.2d at 1229. The Tenth Circuit has similarly
distinguished between ordinary and extraordinary matters in
the course of determining that a deadlock involving a
resolution to amend a trust agreement was not a matter of
administration. See Ader v. Hughes, 570 F.2d 303 (10th Cir.
1978).
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question here. We have stated before in a similar context
that “the Trust Agreement may expand the jurisdiction of the
Umpire beyond that required by section 302.” Struble v. N.J.
Brewery Employees’ Welfare Trust Fund, 732 F.2d 325, 335
(3d Cir. 1984). Because we find that the parties agreed to
arbitrate such deadlocks over the proper interpretation of the
terms of the agreement, there is no need to look to the LMRA
for jurisdiction.
B.
The parties also find themselves deadlocked over a
motion by the Union Trustees to “clarify and confirm”
whether the Trust Agreement requires Employer Trustees to
be full-time employees of an employer. In what appears to
have been an attempt to have two or more of the Employer
Trustees who voted for the compensation measure
disqualified as invalidly appointed, the Union Trustees
initially proposed a motion to “clarify and amend” the Trust
Agreement to encompass its theory of Employer Trustee
eligibility requirements. The motion deadlocked, and the
Employer Trustees refused to arbitrate. But the motion for
which the Union Trustees now seek the appointment of an
____________________
The approaches of the Eighth and Tenth Circuits are
narrower than that of the Second Circuit because there may
be actions deemed “extraordinary” that would nonetheless fall
within the trustees’ powers under the trust agreement.2 See,
e.g., Farmer, 506 F.2d at 1230 n.5 (“rights and powers of the
trustees unrelated to day-to-day management of the trust
funds are not commensurate with ‘administration’ as used in
§ 302(c)(5)(B)”).
14
arbitrator seeks to “clarify and confirm” the Employer
Trustee eligibility requirements rather than to “clarify and
amend.” Specifically, the Union Trustees’ motion aims “to
clarify and confirm that the trust document requires that all
Employer Trustees must be a full time employee of a
contributing employer to the Fund.” (Case No. 16-3359 App.
at 97, 208.)
The District Court set out to determine whether the
Union Trustees’ interpretation of the Employer Trustee
eligibility requirements was tenable under the Trust
Agreement, ultimately concluding that the contract could not
support such an interpretation. The District Court also found
that the Union Trustees’ initial motion to “clarify and amend”
the Trust Agreement essentially acknowledged that the
Agreement, as drafted, does not require Employer Trustees to
be employed by a contributing employer. Because the Trust
Agreement, in the District Court’s view, did not support the
requirements that the Union Trustees suggested, it concluded
that an arbitrator would be required to amend the agreement
in order to find in the Union Trustees’ favor, in derogation of
the Trust Agreement’s explicit prohibition that the arbitrator
may not amend its terms.
We find, however, that the District Court misconstrued
the effect of this motion to “clarify and confirm” the
eligibility requirements for Employer Trustees. The
deadlocked vote seeks to confirm whether the Union
Trustees’ theory that Employer Trustees must be full-time
employees of a contributing employer is a proper
interpretation of the terms of the Trust Agreement. This is a
matter of contractual interpretation, and as we explained with
regard to the compensation deadlock, the Trust Agreement
specifically provides that “the Trustees shall have full and
15
exclusive authority to determine all questions or controversies
. . . arising . . . in connection with [the Fund] or the operation
thereof” including questions of “construction of the
provisions of this Trust Agreement and the terms used
herein.” (Case No. 16-3359 App. at 69–70.) Thus, the
presumption in favor of arbitration counsels the appointment
of an arbitrator.
The motion to “clarify and confirm” is not equivalent
to a motion to “clarify and amend.” A motion to “clarify and
confirm,” as we understand it, seeks to have an arbitrator
construe the agreement to determine whether the Union
Trustees’ interpretation is correct. A motion to “clarify and
amend” takes the added step of asking the arbitrator to amend
the agreement to reflect the Union Trustees’ proposed
interpretation. Contrary to the holding of the District Court,
no decision by an arbitrator on this motion to “clarify and
confirm” would lead to the amendment of the Trust
Agreement. The arbitrator will either agree or disagree that
the Union Trustees’ interpretation is proper and supported by
the text of the Trust Agreement. Put succinctly, the arbitrator
will construe the language of the agreement—a power
provided to the Trustees in the Trust Agreement—and will go
no further. Interpretation is not amendment. It is not the
District Court’s place to determine the outcome of an issue
that the parties agreed to arbitrate when the parties merely
seek to appoint an arbitrator.
V.
For the foregoing reasons, the District Court’s Order
dated March 1, 2016, in the compensation dispute will be
reversed and remanded with the instruction that the District
Court appoint an arbitrator. The District Court’s Order dated
16
July 15, 2016, in the Employer Trustees eligibility
requirements dispute will also be reversed and remanded with
the same instruction.
17