Opinion ID: 744809
Heading Depth: 3
Heading Rank: 1

Heading: Contravention of Law

Text: 64 In its cross-appeal, the Union argues that 29 U.S.C. § 186(c) (1994) prohibits plan administrators from distributing a plan's residual assets to employers. Hence, the Union concludes that distribution of residual Plan assets to one or more Plan employers would contravene § 186(c) as well as § 1344(d)(1)(B). 65 To understand § 186(c), we must first consider 29 U.S.C. § 186(a) (1994). Section 186(a) widely proscribes the transfer of money or other items of value from employers to labor organizations, see 29 U.S.C. § 186(a), and § 186(c) provides certain exceptions to the general proscription found in § 186(a). In particular, as relevant here, § 186(c) provides that: 66 The provisions of [§ 186] shall not be applicable ... (5) with respect to money or other thing of value paid to a trust fund established by such [labor union] representative, for the sole and exclusive benefit of the employees of such employer, and their families and dependents ... Provided, [t]hat ... such payments are held in trust for the purpose of paying ... for the benefit of employees, their families and dependents, for ... pensions on retirement or death of employees ... and ... such payments as are intended to be used for the purpose of providing pensions or annuities for employees are made to a separate trust which provides that the funds held therein cannot be used for any purpose other than paying such pensions or annuities.... 67 29 U.S.C. § 186(c) (emphasis in original). 68 The Union seizes on the last phrase of the excerpted portion of § 186(c) to argue that residual assets of the Plan cannot be distributed to one or more Plan employers. The Union argues that, because the funds held [in a pension plan] cannot be used for any purpose other than paying such pensions or annuities, 29 U.S.C. § 186(c)(5) (emphasis added), the Plan's residual assets must be distributed to Plan participants. 69 Section 186(c)(5), however, was never intended to prohibit a plan administrator from distributing residual plan assets to an employer. Instead, § 186(a) and § 186(c) serve an entirely different purpose. Congress carefully crafted § 186(a) and § 186(c) to allow employers to contribute to pension plans yet, at the same time, prevent employers from unduly influencing labor organizations or their representatives. Congress wanted to insure that employers did not exert undue influence on labor unions by using plan assets to bribe labor representatives or by funneling money to labor organizations through pension plans. See Toyota Landscaping Co. v. Southern Cal. Dist. Council of Laborers, 11 F.3d 114, 117-18 (9th Cir.1993); Roark v. Boyle, 439 F.2d 497, 501 (D.C.Cir.1970). 70 In the instant case, Hawkeye does not intend to transfer assets to a labor organization or its representatives but instead intends merely to distribute residual Plan assets to one or more Plan employers. Such a transfer in no way raises the concern that § 186 was designed to address--the potential that an employer will use pension funds to unduly influence labor organizations. For this reason, we hold that § 186(c)(5) does not apply to Hawkeye's intended distribution of residual assets to one or more Plan employers. Accordingly, we reject the Union's argument that distribution of the Plan's residual assets to one or more Plan employers violates § 186(c) as well as § 1344(d)(1)(B).