Court Opinion

ID: 8908549
Source: CourtListenerOpinion
Date Created: 2022-11-27 02:17:19.190152+00
Date Added: 2024-06-11T17:08:22.267055
License: Public Domain

ROSENN, Circuit Judge,
dissenting.
I respectfully dissent from the opinions of the majority.
Although those opinions briefly set forth the facts of this controversy, I believe that further amplification will help to put the case in perspective. The district court found as a fact that since 1962 the employees of Long’s Hauling Company, Inc., (“Long”) have been represented in collective bargaining by the United Mine Workers of America (“UMW”) and by District 5 of that union (sometimes jointly referred to herein as the “Union”). During this period, Long and District 5 have negotiated several collective bargaining agreements. As the district court found, “[cjonsistently, these agreements have been based on the National Agreement, but have contained a clause rendering, inter alia, the ‘Welfare Retirement Clause’ of the National Agreement inapplicable.”
In 1973 Long and the UMW and District 5, representing the employees, negotiated and signed the last of these renewal contracts, which extended from 1974 into 1976 (the “1973 contract”). Under that contract, as under the previous contracts between Long and the Union, Long contributed to the private health and pension fund rather than to the UMW’s national fund. In January 1975, Long’s drivers were hauling coal from a mine in Indiana, Pennsylvania, for the Barnes and Tucker Coal Company. In the latter part of that month, these drivers were accosted and stopped on a public road outside the mine by UMW representatives and were forceably prevented from hauling coal from the mine unless Long signed the national agreement with the UMW. Long alleges that the UMW took this action in order to compel it also to make payments into the UMW National Health and Retirement Fund. The trustees of that fund now claim amounts from Long varying from $.90 per hour for each hour of classified work done by each of Long’s employees from February to December 1975, $1.40 per hour for their work period from December 6, 1975, to December 5, 1976, and $1.54 per hour for the period from December 1976 to the present. The last renewal agreement, which was still in force at the time the Union compelled Long to sign the national agreement, required sixty days’ notice by any party desiring termination. The district court found as a fact that Long never received any notice of termination from the UMW.
Article II of the national agreement, to which Barnes and Tucker is a signatory, provides:
The transportation of coal may be contracted out only to a contractor employing members of the [United Mine Workers of America] under this Agreement. (Emphasis supplied.)
Long asserts that the UMW representatives allegedly were enforcing this agreement when they stopped Long’s trucks. According to the district court, it was “[d]ue to the intransigence of the UMW and the weight of economic pressure” that Long signed the national agreement. Long, however, continued to pay into the private health and welfare fund under the 1973 agreement with the Union and made no payments into the UMW National Health and Retirement Fund. Two years after Long executed the national agreement, the trustees instituted this suit.
In my judgment, this case presents the issue whether, in a suit by trustees of a union’s pension fund, an employer who is already under an obligation to contribute, and who does contribute, to a private pension fund for his employees may raise de*467fenses showing that he has no duty also to pay the trustees for the same employees. I dissent because I believe that such defenses would be good against the trustees. I would vacate the preliminary injunction ordering Long to pay the trustees and would remand for the district court to consider the defenses.1
I.
Long’s attempt to interpose an antitrust defense raises important issues of policy. Considerations of policy, in my view, favor allowing the defense under the unique facts of this case. As Chief Judge Seitz notes, the Supreme Court, for reasons of policy, has been reluctant to entertain any contract defense based on alleged violation of the antitrust laws. In Kelly v. Kosuga, 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959), on which the trustees rely, a merchant had contracted to buy fifty cars of onions. Having taken possession of thirteen cars, and having made some payments to the seller, the purchaser repudiated the contract. The seller then sold the remaining cars for the purchaser’s account and sued the purchaser for a deficiency caused by a decline in the price of onions. The purchaser raised as a defense that the seller had imposed the contract through a violation of the antitrust laws. The Court barred this defense, but in advancing the reasons for its decision, it chose grounds that, I believe, exclude the instant case. Judge Adams, too, reaches the conclusion “that the policies articulated in Kosuga do not appear to preclude consideration of Long’s antitrust defense.” Conc.Op. at n. 1.
First, the Supreme Court cautioned against judicial additions to the express remedies of the Sherman Act. Id. at 519, 79 S.Ct. 429. But since the Court reserved a contract defense when “the judgment of the Court would itself be enforcing the precise conduct made unlawful by the [Sherman] Act,” id. at 520, 79 S.Ct. at 432, this warning should not be interpreted as a prohibition. The warning should be seen in the light of the policies that it serves. Ordinarily, if treble damages are the exclusive remedy for an antitrust violation and the violation cannot serve as a contractual defense, a party with an antitrust claim will resort to court before others detrimentally rely on the party’s contractual obligations. In the instant case, however, the district court wrote that “[t]he national agreement was ignored by everyone until this action was filed by the Trustees.” The trustees initiated this suit two years after Long and the UMW signed the contested agreement. The argument based on reliance does not fit the facts of the case.
These considerations mesh with the Court’s second reason for the result in Kosuga. The Court disapproved of allowing a party to benefit from a contract that it later renounced as illegal. Id. at 519-21, 79 S.Ct. 429. By renouncing the contract, a party could take the benefits of the contract while escaping from its burdens. The purchaser in Kosuga accepted some of the onions and later repudiated the contract only when repudiation became convenient.2 Here, however, Long does not seek to obtain a benefit without offering a return. Long has continued to pay into a private pension fund, as it had agreed in the 1973 and earlier contracts.
Even if Long might otherwise be able to assert an antitrust defense, the trustees argue that Long cannot raise the defense against them. They base this argument on Lewis v. Benedict Coal Corp., 361 U.S. 459, 80 S.Ct. 489, 4 L.Ed.2d 442 (1960), and Lewis v. Seanor Coal Co., 382 F.2d 437 (3d Cir. 1967), cert. denied, 390 U.S. 947, 88 S.Ct. 1035, 19 L.Ed.2d 1137 (1968). But Long does not come within the rationale of either case.
*468In Benedict the trastees of a retirement fund sued a coal company for payments owed to the fund, which was the third-party beneficiary of a contract between the company and the UMW. In defense, the company interposed breaches of that very contract by the UMW. The company argued “that in- an amount equal to the amount of the damages sustained from the union’s breaches, no fund property came into existence.” 361 U.S. at 465, 80 S.Ct. at 493. The argument, noted the Court, depended upon “whether the agreement is to be construed as making performance by the union of its promises a condition precedent to Benedict’s promise to pay royalty to the trustees.” Id. Construing the contract, the court found no such condition precedent. The instant case is quite different. Here, Long maintains not that the 1975 national contract with the UMW should be construed differently from the one in Benedict, but that the instrument itself is invalid as a contract. The construction of the contract in Benedict does not govern this case for there is no valid contract for this court to construe.
Recognizing the distinction between the construction of an admittedly valid contract (as in Benedict) and the non-existence of a valid contract, this court has permitted an employer to raise against trustees of a third-party beneficiary pension fund a defense that an ineffective acceptance prevented a contract from coming into existence. Lewis v. Mears, 297 F.2d 101 (3d Cir.), cert. denied, 369 U.S. 873, 82 S.Ct. 1142, 8 L.Ed.2d 276 (1962). In the fourth circuit, Judge Haynsworth has written:
The rights of the trustees . . . are entirely derivative. Their right to recover contributions from the mine operator is dependent entirely upon the real agreement between the operator and the union. The trustees have no independent right to insist that an operator make any contribution to the fund, or that it do so on the same basis and under the same formula that other operators contribute. The trustees are the third party beneficiaries of the real agreement between the union and operator, which they may enforce in accordance with its terms, but the fact that the suit is brought for the benefit of the third party beneficiaries would not foreclose a defense that there was no contract ....
Lewis v. Lowry, 295 F.2d 197, 199 (4th Cir. 1961), cert. denied, 368 U.S. 977, 82 S.Ct. 478, 7 L.Ed.2d 438 (1962). But see Pennington v. UMW, 325 F.2d 804, 819 (6th Cir. 1963) (dictum that Benedict forbids defense of union’s duress if raised against trustees for retirement fund), rev’d as to other portions, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965).
It is of equal importance that Long’s success on this defense would not permit it to secure the benefits of a labor'agreement while circumventing the burdens. If the set-off claimed by the company in Benedict had been granted against the trustees, the company would have avoided, to that extent, paying a part of its employees’ agreed compensation. The employees had bargained for the payments, which the company had withheld in response to the union’s conduct. 361 U.S. at 469, 85 S.Ct. 1585. Long, however, has paid into the private pension fund in accordance with the requirements of its own employees. It does not seek to avoid compensation owed to its employees; it strives only to save itself from paying twice — once to the private fund, once to the national.
Nor does Seanor govern the instant case. Under the UMW agreement involved in Seanor, an employer had contracted to pay into a pension fund a royalty of forty cents for each ton of coal mined. The same agreement required an eighty-cent royalty for coal acquired by a signatory from a producer that had not signed the national agreement. It was the imposition of the eighty-cent royalty that allegedly violated the antitrust laws, but the employer raised the alleged antitrust violation as a defense to the trustees’ suit for the forty-cent royalties. Unlike Long, the employer had no plausible argument that the whole contract was invalid. In suing only for the forty-cent royalties, the trustees did not open themselves to a possible antitrust defense. *469Moreover, the court in Seanor noted that the employer’s defense, if successful, would deprive employees of compensation for which they had rendered services. Again, it should be noted that in this case Long has compensated its employees by paying into the private pension fund.
II.
Because Long challenges the validity of the whole contract, and because it has contributed to a private pension fund, it should be permitted to offer a defense that the Union has violated the antitrust laws. To allow an antitrust defense under these narrow circumstances, I believe, will not subvert the protections that Benedict extends to the trustees of union pension funds when they sue as third-party beneficiaries. Employees are not likely to suffer privation from the successful interposition of the defense, as is urged by the concurrence, since the employer will have contributed to a private fund, as negotiated by the union, to which the employees have given their approval in a valid contract. And the configuration of the facts present in the instant ease is not likely to recur so as to deplete, by legal fees, the resources of pension funds across the country.
It is true, as Judge Adams observes, that the dispute on which the antitrust defense turns arises out of a purported contract between Long and the UMW, and not between Long and the trustees. But the Union, as the representative of the employees, could protect its interests by intervention in the suit.
If Long proves its antitrust defense, the 1975 contract is unenforceable. Farbenfabriken Bayer, A. G. v. Sterling Drug, Inc., 307 F.2d 207 (3d Cir. 1962), cert. denied, 372 U.S. 929, 83 S.Ct. 872, 9 L.Ed.2d 733 (1963). Accordingly, I would remand for the district court to consider Long’s proof of the defense.
III.
Long also urges that the UMW has violated sections 8(d) and 8(e) of the National Labor Relations Act (“NLRA”) and that the UMW breached its obligations under the 1973 contract. The basis for the defense under section 8(d) is the Union’s failure to give sixty days’ notice of its intention to terminate the contract. This failure, Long contends, made the national agreement invalid as to it. There is a parallel contractual argument in that the 1973 contract demanded sixty days’ notice of termination. Although the outlines of Long’s defense under section 8(e) are somewhat unclear, Long evidently argues that because the national agreement contained a “hot cargo” clause, the whole agreement was unlawful.3
The district court held that it had no jurisdiction over the labor law defenses and that the contractual defense of the failure to give termination notice was without merit. Like the district court, I believe that the contractual defense is outside the primary jurisdiction of the NLRB and within the jurisdiction of the district court. The trustees sued under section 301 of the NLRA, and in a, suit under that section the district court had jurisdiction to consider even allegations that would, if brought before the Board, establish an unfair labor practice. Smith v. Evening News Association, 371 U.S. 195, 197, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962). Here, according to Long, the UMW breached its obligations under the 1973 contract in such a way as to make the 1975 contract invalid. Even if that allegation would make out an unfair labor practice, the district court did not lose its jurisdiction.4 On the other hand, I disa*470gree with the district court’s conclusion that even if the UMW breached its contractual duties concerning termination, Long waived its rights against the UMW by not asserting the breach until this suit was begun. Because the district court also observed that everyone ignored the 1975 contract until the trustees filed suit, I believe that the facts do not support the theory of waiver. Long had no reason to assert the UMW’s breach because before this suit was filed, all of the interested parties treated the second contract as if it did not exist.
Jurisdiction over the NLRA defenses is more problematic, since the district court would need to pass not upon a contractual claim that could also have formed a complaint of an unfair labor practice but upon the argument that an unfair labor practice had in fact been committed. Nonetheless, I would hold that these contentions, raised by way of defense in section 301 suit, are among “labor law questions that emerge as collateral issues in suits brought under independent federal remedies” and come within the jurisdiction of the district court. Connell Co. v. Plumbers & Steamfitters Local No. 100, 421 U.S. 616, 626, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975).5
Since the contractual and section 8(d) defenses go to whether Long owes any obligation at all to the trustees, and since Long has been contributing to a private pension fund, the interposition of these defenses against trustees of a third-party beneficiary union pension fund should be permitted for the same reasons that support the allowance of an antitrust defense in these circumstances. I would therefore remand for the district court to consider whether the Union has breached its contractual obligations or violated section 8(d), so as to make the 1975 contract invalid.

. In the absence of factual findings concerning the substance of these defenses, it is unnecessary to reach the interesting question whether the UMW has indeed breached its contractual obligations or violated the antitrust or labor laws.

. That the price of onions was dropping, 358 U.S. at 519, 79 S.Ct. 429, may explain the repudiation.

. Long appears not to argue that the national agreement was imposed by virtue of a violation of section 8(e).

. The trustees have tried to invoke the statute of limitations contained in section 10(b) of the NLRA, 29 U.S.C. § 160(b) (1970), which forbids the issuance of a complaint “based upon any unfair labor practice occurring more than six months before the filing of the charge with the Board.” This limitation, argue the trustees, ought also to bar defenses in section 301 suits, even though the limitation refers only to complaints brought before the Board. But the Supreme Court has allowed a litigant to bring a section 301 suit upon allegations that would have constituted an unfair labor practice occur*470ring more than six months before suit. Smith v. Evening News Association, 371 U.S. 195, 197 n. 5, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962). Since the purpose of a statute of limitations is to bring possible plaintiffs into court without undue delay and to guarantee the repose of possible defendants, there is even better reason to permit a defense based upon allegations that might otherwise make out an unfair labor practice occurring more than six months before suit was filed.

. Nor does the statute of limitations contained in section 10(b) of the NLRA, 29 U.S.C. § 160(b) (1970), bar this defense. By its own terms, that bar applies to complaints issued by the Board and not to defenses in a section 301 suit. See also n. 4 supra.