Court Opinion

ID: 8917994
Source: CourtListenerOpinion
Date Created: 2022-11-27 05:54:44.490062+00
Date Added: 2024-06-11T17:09:10.386724
License: Public Domain

SEITZ, Chief Judge,
concurring:
I agree with the majority that under the circumstances of this case the Trustees may file suit to attempt to collect the increased contribution despite the existence of the arbitration provision. I write separately, however, because in my view permitting the trustees to sue independently is not the inevitable result in a situation where contributions are provided for in a collective bargaining agreement containing an arbitration clause, and a trust agreement gives the trustees the right to sue for delinquent contributions. Rather, I believe that only where a conflict of interest makes it unlikely that the trustees’ claim to increased contributions will be arbitrated in good faith are they free to initiate their action in the courts in the first instance.
The dispute in this case is over the provision in the collective bargaining agreement governing contributions, and how that provision is to be read in light of the accompanying rider in which the Employer pledged to match contribution increases by other industry employers. Whether a collective bargaining agreement binds an employer to pay given wages or benefits is a classic example of an arbitrable issue. Congress has already determined that disputes arising under a collective bargaining agreement containing an arbitration clause ordi*459narily must go to arbitration. The importance of this policy has been repeatedly confirmed by the Supreme Court. United Steelworkers v. American Manufacturing Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960).
The policy of arbitration, however, is not paramount in every instance. Where it would be futile for a party to request that a union arbitrate his grievance against an employer, the existence of the arbitration clause will be no defense to a suit filed in the district court. Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 567, 96 S.Ct. 1048, 1057, 47 L.Ed.2d 231 (1976); Vaca v. Sipes, 386 U.S. 171, 184-87, 87 S.Ct. 903, 913-15, 17 L.Ed.2d 842 (1967); Drake Bakeries, Inc. v. Local 50, American Bakery & Confectionery Workers International, 370 U.S. 254, 261-63, 82 S.Ct. 1346, 1350-51, 8 L.Ed.2d 474 (1962). One example of a situation where arbitration is excused is where a conflict of interest exists between the party seeking relief and the union arbitrating his claim, because of the possibility that in arbitration the union would work with the party’s employer to defeat his claim. Cf. Hiller v. Liquor Salesmen’s Union Local No. 2, 338 F.2d 778, 779 (2d Cir.1964).
It is clear that in this case there is a conflict of interest between the Union and the Trustees which raises a possibility that the Employer and the Union would agree that the Employer need not pay the increased contribution rather than arbitrate the issue in good faith. The Trustees want the increased pension fund contribution and are indifferent to whether the Employer pays it out of, or in addition to, the wage increase included in the collective bargaining agreement. The Union, seeking to maximize the wages paid its members, opposes having the contribution paid out of the wage increase. In fact, the Union has already refused the Employer’s offer to pay the increased contribution out of the wage increase.
The Supreme Court has warned of the conflict of interest which arises when a union has control over pension fund contributions, since the union will always have the incentive to trade higher wages for lower contributions. United Mine Workers Health & Retirement Funds v. Robinson, 455 U.S. 562, 574-75, 102 S.Ct. 1226, 1233-34, 71 L.Ed.2d 419 (1982); Allied Chemical & Alkali Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 173, 92 S.Ct. 383, 394, 30 L.Ed.2d 341 (1971). The conflict of interest in this case between the Trustees and the Union raises the danger that the Union, considering only its interests rather than those of the Trustees, might agree with the Employer to deny the Trustees’ claim to any increased contribution. An award denying the Trustees’ claim is clearly the outcome which the Employer would prefer. From the standpoint of the Union, such an award would also be desirable because it would ensure that the wage increase not be reduced in order to fund increased pension contributions.
The majority in this case has adopted a rule that, notwithstanding the existence of an arbitration clause and an arbitrable issue, the trustees of a pension fund may sue in the district court for contributions which they believe are owing. This case does not call for the adoption of so broad a rule. I believe that restraint is dictated when attempting to fashion a new body of law to fit in the interstice between two important federal policies, those of promoting resort to arbitration in collective bargaining disputes and of preserving the independence of pension funds. At this juncture the position I espouse, that where a conflict of interest exists the trustees may bring their own suit, protects the purposes of ERISA to the extent required by this case without, as the majority does, carving a broad exception from the policy of promoting arbitration.
One implication of the bright-line approach taken by the majority is that the union would not have standing in the trustees’ action, either to demonstrate that ar*460bitration would not impugn the trustees’ rights under the pension trust or to assert its interest in the subject of the dispute. I believe that the union should have standing to assert either or both of these positions in the trustees’ action, and I agree with the majority that my approach would give this right to the union. In my view such a result is required not only by principles of fairness but also in order to accord a proper deference to the arbitration provision of the collective bargaining agreement.
My approach would normally dictate that I dissent in a case, such as this one, where the trustees have failed to join the union as a defendant, because the failure to join the union deprives the union of the opportunity to assert in the district court that arbitration would not jeopardize the pension fund’s interest. In this case, however, the Union was joined by the Employer as a third-party defendant. Under Rule 14(a) of the Federal Rules of Civil Procedure, the Union could have asserted that the district court lacked subject matter jurisdiction because of the arbitration clause. The Employer actually asserted this, however, and in response the Trustees argued to the district court and in their brief on appeal that the conflict of interest between the Trustees and the Union made arbitration impermissible. The Employer thus raised the same arbitration defense that the Union could have raised. Furthermore, the Trustees argued that the conflict of interest made arbitration impossible, the same response it would have given had it been the Union raising the arbitration defense. Under these circumstances, I conclude that the Union is not prejudiced by my reaching the conflict of interest issue and concluding that the existence of the conflict precludes arbitration of this dispute over the pension fund contribution. While I believe that the rule adopted by the majority is broader than necessary, I concur with the majority that the circumstances of this case justify allowing the Trustees to sue directly.