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INTERNATIONAL UNION OF ELEC.

August 25, 1964

INTERNATIONAL UNION OF ELECTRICAL, RADIO AND MACHINE WORKERS, Affiliated with the American Federation of Labor and the Congress of Industrial Organizations, Plaintiff,
v.
ITT FEDERAL LABORATORIES, a Division of International Telephone and Telegraph Corporation, a Maryland corp., Defendant



The opinion of the court was delivered by: WORTENDYKE

This is a Declaratory Judgment action under 28 U.S.C. 2201 et seq. The complaint alleges that a justiciable controversy exists between the parties. Jurisdiction is predicated upon 29 U.S.C. 185. The plaintiff is an International Labor Union with its principal office in Washington, D.C. Affiliated therewith are Union Locals numbered 400, 447 and 1703, representing employees of the defendant. The defendant is a corporation of the State of Maryland and has principal places of business in the City of New York and in the Town of Nutley, the latter being in the State of New Jersey. The defendant is a party to collective bargaining agreements with each of the Union Locals aforesaid.

The complaint alleges that on October 3, 1961 Local 400 called a strike against the defendant and in the negotiations for settlement of the strike, the plaintiff participated. Those negotiations resulted in a written agreement, dated November 19, 1961, between the plaintiff and Local 400 on the one hand and the defendant on the other, by the terms of which 'the collective bargaining agreements between (the parties) * * * which expired September 25, 1961' were extended to September 9, 1964, and the differences between the parties were composed. Upon ratification of the agreement by Local 400 on November 20, 1961, the strike was settled.

 Paragraph XIV of the Strike Settlement Agreement reads as follows:

 'XIV. The Wage Rates for employees other than Engineers shall be increased by an amount equal to seven cents (7 cents) per hour effective the date of ratification and on the nearest Monday to the anniversary dates in 1962 and 1963. The Engineers shall receive increases in salaries equal to eleven cents (11 cents) per hour effective on the same dates as the increases for the other employees.

 'In addition, the Company shall establish a fund equal to two cents 2 cents) per hour based on the average number of employees in the five bargaining units during the week following the week in which this agreement is ratified. This fund shall be subject to application by the Company and the International Union for the purpose of equalizing rates as between comparable job classifications in the three bargaining units. These sums shall be applied to wages.'

 The complaint charges that the defendant failed to establish the fund referred to in the Agreement in accordance with its undertaking therein expressed. Plaintiff accordingly seeks a declaration of its rights under the Agreement and a judgment requiring the defendant to establish the fund provided for therein.

 The defendant has not answered in this case, but its previous motions (a) to dismiss the action under Rule 12(b) for failure to join Local 400 as an indispensible party plaintiff; and (b) for an order under Rule 19(b) requiring the joinder of Locals 447 and 1703 as necessary parties, were denied. Defendant now moves (a) for an order pursuant to Rule 12(b)(6) dismissing the action upon the ground that the complaint fails to state a claim against defendant upon which relief can be granted, and (b) for an order pursuant to Rule 56 for summary judgment in favor of defendant upon the ground that there is no genuine issue as to any material fact and that defendant is entitled to judgment as a matter of law.

 In connection with the previous motions under Rules 12(b) and 19(b), affidavits were filed in behalf of the respective parties and the averments contained in those affidavits are relied upon for the purposes of the pending motion for summary judgment.

 In its brief in opposition to defendant's pending motions, the plaintiff argues that it is entitled to summary judgment against the defendant.

 Defendant urges five grounds in support of its pending motions, viz.: (1) the establishment of the fund required by the agreement would be violative of Section 302 of the Labor-Management Relations Act, 1947, 29 U.S.C. § 186; (2) the undertaking to establish a fund mentioned in the agreement is unenforcible for (a) indefiniteness, and (b) lack of mutuality of remedy; (3) the contract is unenforcible by reason of the Statute of Frauds, N.J.S.A. 25:1-3, because not to be performed within a year; (4) plaintiff lacks standing to enforce the provisions of the agreement; (5) the action is premature and therefore fails to state a justiciable controversy under 28 U.S.C. § 2201.

 Concededly plaintiff, through its affiliated locals, is a representative of employees of defendant, who are employed in industry affecting commerce. See also Conditioned Air & Refrigeration Co. v. Plumbing and Pipe Fitting Labor etc., Trust, D.C.Cal.1956, 159 F.Supp. 887, affd. 9 Cir. 1958, 253 F.2d 457. 29 U.S.C. § 186(a) declares unlawful payment or delivery or agreement to pay or deliver by any employer, or person acting in the interest of an employer, of any money or other thing of value (1) to any representative of any of his employees who are employed in an industry affecting commerce; (2) to any labor organization or any officer or employee thereof, which represents, seeks to represent, or would admit to membership any of the employees of the employer who are employed in an industry affecting commerce. Subsection (b) renders unlawful the receipt or acceptance, or agreement to receive of accept any money or other thing of value prohibited by subsection (a). Subsection (c) renders the provisions of the section inapplicable '(1) with respect to any money or other thing of value payable by an employer to any representative who is an employee or former employee of such employer, as compensation for, or by reason of, his services as an employee of such employer; (2) with respect to the payment or delivery of any money or other thing of value in satisfaction of a judgment of any court or a decision or award of an arbitrator or impartial chairman or in compromise, adjustment, settlement or release of any claim, complaint, grievance, or dispute in the absence of fraud or duress; (3) with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business; (4) with respect to money deducted from the wages of employees in payment of membership dues in a labor organization: * * *; or (5) with respect to money or other thing of value paid to a trust fund established by such representative, for the sole and exclusive benefit of the employees of such employer, and their families and dependents * * *.' Subdivision (d) of that section provides penalties for violation of the provisions of the section; subdivision (e) invests the United States District Courts with jurisdiction to restrain violations thereof; and subdivisions (f) and (g) are irrelevant here.

 Defendant (hereafter ITT) argues that the Strike Settlement Argeement in suit, which is between an employer and a labor organization representing the employer's employees, invests the labor organization with veto power over the disbursement of the 2 cents equalization fund provided for in Paragraph XIV of the Agreement, and that the establishment of the fund is prohibited by Section 302 of the Act, 29 U.S.C. § 186(a)(2).

 In United States v. Ryan, 1956, 350 U.S. 299, 76 S. Ct. 400, 100 L. Ed. 335, relied on by ITT, a member of a wage scale committee of an international union which, with its affiliated groups, were recognized collective-bargaining agents, was held to be a 'representative' of the employees within the meaning of Section 302(b) of the Labor-Management Relations Act, 1947, 29 U.S.C. § 141 et seq. The defendants' receipt of periodic payments from the employer was held to violate the proscription by the Section. More recently (1964), the Second Circuit Court of Appeals held in International Longshoremen's Association v. Seatrain Lines, Inc., et al., 326 F.2d 916, followed Ryan, supra, in holding that receipt of moneys from the defendant employers by the plaintiff labor organization representing defendants' employees, would violate Section 302 of the Act. The Seatrain case also held that a declaratory judgment might appropriately be sought by the I.L.A. as to its right to receive such moneys under an agreement entered into between the labor organization and the employer. The employers had agreed to pay to I.L.A. 28 cents per gross ton of 'containerized' freight handled by the employees, into a fund to be administered by trustees appointed by I.L.A. and the employers. I.L.A. had demanded that part of the fund be paid to it as compensation for its loss of revenue. The employers rejected this demand upon the ground that it would violate Section 302. As a compromise, the parties agreed that 10% Of the moneys to be paid to the trustee would be deposited in escrow pending a determination of the legality of I.L.A.'s demand. The form of action under the Declaratory Judgments Act was held appropriate, but the agreement was declared violative of Section 302(b) of the Labor-Management Relations Act because it was 'for the payment of a sum of money by the employer to the I.L.A.'

 In Mechanical Association, etc. v. Local Union 420, etc., 3 Cir. 1959, 265 F.2d 607, an association of employers entered into collective bargaining agreements with certain local unions. Those agreements provided that each employer member of the association should contribute 19 cents for each hour worked by each of its employees, to a fund which was deposited in a bank and was to be administered by a joint board of trustees comprised of six members, three appointed by the association and three by the union. The agreements further provided that a declaration of trust would be executed by the parties, but a dispute over the legality of the joint board provisions prevented the execution of the declaration of trust. Thereupon the parties entered into a supplemental agreement which provided that the bank in which the fund was deposited should turn over to the trustees of other existing funds 16 1/2 cents out of the 19 cents contribution, to be administered in accordance with preexisting trust agreements. The remaining 2 1/2 cents was to be held in escrow pending a determination of the legality of the joint administration of the fund. It was agreed that if the establishment of the fund was per se unlawful, the money was to be returned to the contributors. The Court of Appeals affirmed the District Court (167 F.Supp. 35) in ...


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