The Supreme Court/The Supreme Court.iso/pc/ascii/1991/91_610/91_610.zc

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SUPREME COURT OF THE UNITED STATES
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No. 91-610
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LOCAL 144 NURSING HOME PENSION FUND,
et al., PETITIONERS v. NICHOLAS
DEMISAY et al.
on writ of certiorari to the united states court
of appeals for the second circuit
[June 14, 1993]

  Justice Stevens, with whom Justice White and
Justice Blackmun join, concurring in the judgment.
  The judgment of the Court of Appeals should be re-
versed because petitioners' failure to transfer assets to
respondents' Southern Funds did not violate 302(c)(5) of
the Labor Management Relations Act, 1947 (LMRA), 29
U. S. C. 186(c)(5) (1988 ed., Supp. III).  Because the
Court unnecessarily decides that 302(e) of the LMRA
would not authorize injunctive relief even had petitioners
violated the specific standards of 302(c)(5), I do not join
its opinion.
  As the Court explains, see ante, at 1-3, this case arose
when respondent employers withdrew from the Greater
Funds, a multiemployer trust fund, and negotiated an
independent union agreement establishing the Southern
Funds.  Respondents then sought a transfer to the South-
ern Funds of that portion of the Greater Funds' assets
representing respondents' past contributions on behalf of
their employees.  935 F. 2d 528, 531 (CA2 1991).  The
Court of Appeals agreed that a transfer was necessary,
reasoning that retention by the Greater Funds of the
assets contributed by respondents would violate the -sole
and exclusive benefit- provision of 302(c)(5).  Id., at
533-534; see ante, at 4-5.  We granted certiorari to
review that holding.  See Pet. for Cert. i.
  I would decide this case on the narrow ground pre-
sented:  that the refusal to make the transfer at issue did
not violate 302(c)(5), 29 U. S. C. 186(c)(5) (1988 ed.,
Supp. III).  That provision allows payments into trusts not
only -for the sole and exclusive benefit of the employees
of [the contributing] employer,- but also for the benefit of
-such employees, families, and dependents jointly with the
employees of other employers making similar payments,
and their families and dependents.-  To the extent re-
spondents' previous contributions to the Greater Funds
have not been used already to benefit respondents' own
employees, they now will be used for the benefit of
-employees of other employers making similar payments,
and their families and dependents.-  Ibid.  Hence, the
Greater Funds continue to operate within the constraints
of 302(c)(5), and no transfer is required.
  That some portion of respondents' contributions will go
to benefit the employees of other contributors is, of course,
in the nature of a multiemployer plan.  Such plans
operate precisely as suggested by the language of
302(c)(5), by pooling employer contributions for the joint
benefit of all participating employees.  Segregation of
funds by an employer is neither feasible nor contemplated.
-An employer's contributions are not solely for the benefit
of its employees or employees who have worked for it
alone.-  Concrete Pipe and Products of California, Inc. v.
Construction Laborers Pension Trust for Southern Califor-
nia, post, at ___ (slip op., at 35).  See also Stinson v.
Ironworkers Dist. Council of Southern Ohio and Vicinity
Benefit Trust, 869 F. 2d 1014, 1021-1022 (CA7 1989) (use
of employer's contributions for benefit of other than own
employees does not violate -sole and exclusive benefit-
requirement); British Motor Car Distributors, Ltd. v. San
Francisco Automotive Industries Welfare Fund, 882 F. 2d
371, 377-378 (CA9 1989) (same).
  In short, I agree with the United States, appearing as
amicus curiae, that petitioners did not violate 302(c)(5)
when they refused to transfer some proportional share of
assets to the Southern Funds.  The Court eschews this
straightforward rule of decision, however, in favor of a far
broader approach, quite unanticipated by the submissions
of the parties.  Without the benefit of argument on the
point by either litigant, the Court reaches out to overrule
decades of case law by deciding that 302(e) does not
authorize a civil remedy for violations of 302(c)(5).  In
my view, this reinvention of 302 of the LMRA is as
unwise as it is uninvited.
  Section 302(c)(5) performs two distinct functions in the
statutory scheme.  First, as an exception to the criminal
prohibitions of 302(a) and (b), 302(c)(5) provides a
-safe harbor- for contributions to legitimate pension funds.
See ante, at 4.  Second, 302(c)(5) sets forth certain
standards that must be observed in the on-going adminis-
tration of such funds.  The importance of both these
functions is illustrated by our decision in Arroyo v. United
States, 359 U. S. 419 (1959), which involved a contribution
lawful when made and thereafter diverted to an unlawful
use.  Because the payment was to a legitimate trust fund,
we held, the transaction fell within 302(c)(5)'s exception,
so that receipt of the payment was not a criminal viola-
tion of 302(b).  Id., at 423-424.  At the same time,
however, 302(e) was available to provide a civil remedy
for the violation of 302(c)(5) that occurred when the
funds subsequently were diverted.  Id., at 426-427.
  The majority repudiates this understanding of
302(c)(5)'s operation, reflected also in NLRB v. Amax
Coal Co., 453 U. S. 322, 331 (1981), and Mine Workers
Health and Retirement Funds v. Robinson, 455 U. S. 562,
570-572 (1982), as -pure dictum.-  Ante, at 10.  But the
reasoning that led us to our conclusion in Arroyo is not
so easily dismissed.  As we explained in that case,
302(c)(5) was enacted not merely to exempt specified
conduct from the prohibitions of 302(a) and (b), but also
to ensure that union trust funds, once established, would
continue to benefit the designated employees.  359 U. S.,
at 424-427.
      -Congress believed that if welfare funds were estab-
lished which did not define with specificity the bene-
fits payable thereunder, a substantial danger existed
that such funds might be employed to perpetuate
control of union officers, for political purposes, or even
for personal gain.  See 92 Cong. Rec. 4892-4894,
4899, 5181, 5345-5346; S. Rep. No. 105, 80th Cong.,
1st Sess., at 52; 93 Cong. Rec. 4678, 4746-4747.  To
remove these dangers, specific standards were estab-
lished to assure that welfare funds would be estab-
lished only for purposes which Congress considered
proper and expended only for the purposes for which
they were established.  See Cox, Some Aspects of the
Labor Management Relations Act, [61 Harv. L. Rev.
274, 290 (1947)].  Continuing compliance with these
standards in the administration of welfare funds was
made explicitly enforceable in federal district courts
by civil proceedings under 302(e).  The legislative
history is devoid of any suggestion that defalcating
trustees were to be held accountable under federal
law, except by way of the injunctive remedy provided
in that subsection.-  Id., at 426-427. (footnote
omitted).
  We made the same point in Robinson, stating that -`the
sole purpose of 302(c)(5) is to ensure that employee
benefit trust funds are legitimate trust funds, used
actually for the specified benefits to the employees of the
employers who contribute to them . . . .'-  455 U. S., at
570 (quoting Amax Coal, 453 U. S., at 331) (internal
quotation marks omitted).  Our view that 302(c)(5)
imposed continuing obligations on the actual use of trust
funds, we found, was -amply supported by the legislative
history,- 453 U. S., at 571, which reflected a concern that
-funds contributed by their employers for the benefit of
the employees and their families might be diverted to
other union purposes or even to the private benefit of
faithless union leaders,- id., at 572.  See also id., at
570-572, and nn. 8-10, and sources cited therein.  To
prevent trust funds once legitimate from turning into
vehicles for kick-backs and racketeering, 302(c)(5) re-
quires not only that trust funds be -established- for proper
purposes, but also that -employer contributions be admin-
istered for the sole and exclusive benefit of employees.-
Id., at 572 (emphasis added).
  The proposition that 302(c)(5)'s specific statutory
standards are enforceable on a continuing basis has never
been questioned before today, by this Court or by any
Court of Appeals.  It is true, as the majority notes, ante,
at 6, that the precise scope of the civil remedy authorized
by 302(e) has been the subject of controversy.  Some
courts have read 302(e) quite broadly, to authorize relief
in cases of -unreasonable- or -arbitrary and capricious-
trust administration.  See, e.g., Phillips v. Alaska Hotel
and Restaurant Employees Pension Fund, 944 F. 2d 509,
515 (CA9 1991); Stinson v. Ironworkers District Council
of Southern Ohio and Vicinity Benefit Trust, 869 F. 2d at,
1019.  Others have read 302(e) more narrowly, as
limited to remedying -violations of basic structure, as
determined by the Congress, not violations of fiduciary
obligations or standards of prudence in the administration
of the trust fund.-  Bowers v. Ulpiano Casal, Inc., 393
F. 2d 421, 424 (CA1 1968).  For present purposes, how-
ever, the important point is that every Court of Appeals
has assumed that the federal courts may, at a minimum,
enforce compliance with 302(c)(5)'s express commands.
  Our unanimous opinion in Robinson is consistent with
this well-established body of case law.  In Robinson, we
considered and rejected one of the broader views of
302(c)(5), holding that the provision does not empower
the federal courts to impose a nonstatutory -reasonable-
ness- requirement on trust fund eligibility criteria estab-
lished by collective-bargaining agreement.  455 U. S., at
574.  We also left open the question whether 302(e)
authorizes enforcement of the traditional fiduciary duties
of trustees.  Id., at 573, n. 12.  The question with which
we had no difficulty, however, is the one that the Court
reaches out to answer today.  We unequivocally stated:
-It is, of course, clear that compliance with the spe-
cific standards of 302(c)(5) in the administration of
welfare funds is enforceable in federal district courts
under 302(e) of the LMRA.-  Ibid.
  The Court now seems to assume that it is confronted
with a choice between -establishing an entire body of
federal trust law,- ante, at 9, on the one hand, and
limiting the scope of 302(e) to injunctions against the
making or acceptance of prohibited payments, on the
other.  As Robinson makes clear, however, there is no
need to go so far in either direction; our understanding
that 302(e) provides a remedy for violations of
302(c)(5)'s specific standards is independent of any view
as to whether 302(e) makes general fiduciary duties
enforceable in federal court.
  In my view, if a trust fund is not complying with the
standards of 302(c)(5)-if, for instance, it is making
annual contributions to the Red Cross-then a federal
court is authorized by 302(e) to enjoin the improper
diversion of funds.  There is no sensible reason why the
court should instead be restricted to enjoining future
payments to the fund, or receipt of those payments, as
violations of 302(a) and (b).  Congress intended
302(c)(5) to operate as a guarantee against diversion of
trust funds, and this purpose is effectuated by the reading
we have always before given 302.  Today's departure
from this understanding seriously undermines the func-
tioning of the statute.  The Court's action is not only
uninvited and unnecessary; it is a radical departure from
the doctrine of judicial restraint.