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SCHNEIDER MOVING & STORAGE V. ROBBINS, 466 U. S. 364 (1984) - US SUPREME COURT DECISIONS ON-LINE
US Supreme Court Decisions On-Line> Volume 466 > SCHNEIDER MOVING & STORAGE V. ROBBINS, 466 U. S. 364 (1984)
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(a) The presumption that a promisor may assert against a third-party beneficiary any defense that he could assert against the promisee if the promisee were suing on the contract should not be applied so inflexibly chanroblesvirtualawlibrary
The issue presented in these two cases is whether the trustees of two multiemployer trust funds may seek judicial enforcement of the trust terms against a participating employer without first submitting to arbitration an underlying dispute over the meaning of a term in the employer's collective bargaining agreement. chanroblesvirtualawlibrary
Respondents are the trustees of two multiemployer trust funds, the Central States, Southeast and Southwest Areas Pension Fund and the Central States, Southeast and Southwest Areas Health and Welfare Fund (Trust Funds). [Footnote 1] Petitioners are two employers -- Prosser's Moving & Storage Co. (Prosser's) and Schneider Moving & Storage Co. (Schneider) -- who have agreed to participate in the trust funds. Respondents filed separate complaints against petitioners in the United States District Court for the Eastern District of Missouri, claiming that petitioners had failed to meet their contribution requirements and had refused to allow an audit of their payroll records. Respondents requested the District Court to order an accounting and immediate payment of all sums thereby determined to be due. They alleged federal subject matter jurisdiction under § 301(a) of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a), and § 502 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132. [Footnote 2] Petitioners defended on the ground that respondents' complaints raised disputed interpretations under the collective bargaining agreements that first must be submitted to the applicable arbitration procedures. [Footnote 3] The District Court agreed with petitioners and chanroblesvirtualawlibrary
A three-judge panel for the Court of Appeals for the Eighth Circuit reversed, and held that arbitration was not a prerequisite to federal suit in these two cases. Robbins v. Prosser's Moving & Storage and Schneider Moving & Storage, Nos. 80-2116, 80-2117 (CA8, Mar. 24, 1982) (per curiam). An en banc court of the Eighth Circuit agreed with the panel. After examining competing considerations under the federal labor laws and under the federal laws governing employee trust funds, the court held that the relevant agreements indicated no intent on the part of the parties to require the arbitration of contractual disputes between the trustees and the employers, and thus that failure to arbitrate could not bar respondents' suits. The en banc court therefore reversed the decision of the District Court and remanded for further proceedings. 700 F.2d 433 (1983). We granted certiorari in view of an apparent conflict among the Circuits on this issue. [Footnote 4] 464 U.S. 813 (1983). We now affirm. chanroblesvirtualawlibrary
Petitioners entered into collective bargaining agreements with Local 610 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America chanroblesvirtualawlibrary
Petitioners argue that, as third-party beneficiaries of the collective bargaining agreements, the trustees are bound by the arbitration clauses provided therein to the same extent the Union would be if it were seeking judicial enforcement of those agreements. They rely on the general rule that the promisor may assert against the beneficiary any defense that he could assert against the promisee if the promisee were suing on the contract. See Restatement (Second) of Contracts § 309, Comment b (1981); S. Williston, Contracts § 395 (3d ed.1959); 4 A. Corbin, Contracts § 819 (1951). That rule, however, is merely a rule of construction useful in determining contractual intent. It should not be applied so inflexibly chanroblesvirtualawlibrary
Before attempting to ascertain the parties' intent from the relevant agreements, we must determine whether the presumption in favor of arbitrability applied in the Steelworkers Trilogy [Footnote 12] is applicable here. That presumption is an accepted rule of construction in determining the applicability of an arbitration clause to disputes between the union and the employer. Such a presumption furthers the national labor policy of peaceful resolution of labor disputes, and thus best accords with the parties' presumed objectives in pursuing chanroblesvirtualawlibrary
Without the presumption of arbitrability, the agreements at issue here evidence no intent on the part of the parties to require arbitration of disputes between the trustees and the employers. Neither the terms of the trust agreements nor those of the collective bargaining agreements contain any such requirement, and the circumstances surrounding the chanroblesvirtualawlibrary
Nowhere in the trust agreements is the exercise of that authority expressly conditioned on the exhaustion of any contractual remedies that might be found in the collective bargaining agreements of individual employers. Nor have petitioners successfully identified any evidence that supports their argument that the parties nevertheless intended such a condition. This is not surprising. These are multiemployer trust funds. [Footnote 16] Each of the participating unions and employers has an interest in the prompt collection of the proper contributions from each employer. Any diminution of the fund caused by the arbitration requirements of a particular employer's collective bargaining agreement would have an adverse effect on the other participants. [Footnote 17] The enforcement mechanisms established in the trust agreements protect the collective interests of the parties from the delinquency of individual employers by allowing the trustees to seek prompt judicial enforcement of the contribution requirements. It chanroblesvirtualawlibrary
App. 55 (emphasis added). Although petitioners concede that neither clause expressly requires the arbitration of disputes between the trustees and the employers, they argue that we should infer such a requirement. We see no justification for doing so. chanroblesvirtualawlibrary
As petitioners concede, the collective bargaining agreements permit only the Union or the employer to invoke the arbitration process. It is unreasonable to infer that the parties to these agreements, or to the trust agreements, intended the trustees to rely on the Union to arbitrate their disputes with the employer. Because arbitration may be expensive, [Footnote 19] there is no reason to assume, without more persuasive evidence than is presented here, that the Union intended to incur such expenses at the request of the trustees and without any requirement that the trustees provide reimbursement. It is even less likely that the parties to the trust agreements intended to agree to such complete reliance on the Union. [Footnote 20] If the Union disagreed with the trustees' construction of the agreement, it could refuse to arbitrate the claim, or compromise the trustees' position in arbitration. The outcome of any subsequent judicial proceeding could be predetermined by the outcome of arbitration. [Footnote 21] We find particularly implausible petitioners' further argument that a duty of fair representation may be implied, and that this should compel the Union to pursue the trustees' uncompromised chanroblesvirtualawlibrary
700 F.2d 435.