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decided: January 13, 1982.



White, J., delivered the opinion of the Court, in which Burger, C. J., and Powell, Rehnquist, Stevens, and O'connor, JJ., joined. Brennan, J., filed a dissenting opinion, in which Marshall and Blackmun, JJ., joined, post, p. 89.

Author: White

[ 455 U.S. Page 74]

 JUSTICE WHITE delivered the opinion of the Court.

The issue here is whether a coal producer, when it is sued on its promise to contribute to union welfare funds based on its purchases of coal from producers not under contract with the union, is entitled to plead and have adjudicated a defense that the promise is illegal under the antitrust and labor laws.


The National Bituminous Coal Wage Agreement of 1974 is a collective-bargaining agreement between the United Mine Workers of America (UMW) and hundreds of coal producers, including steel companies such as petitioner Kaiser Steel Corp. The agreement required signatory employers to contribute to specified employee health and retirement funds. Section (d)(1) of Article XX required employers to pay specified amounts for each ton of coal produced and for each hour worked by covered employees. In addition, the section included a purchased-coal clause requiring employers to contribute to the trust specified amounts on "each ton of two thousand (2,000) pounds of bituminous coal after production by another operator, procured or acquired by [the employer]

[ 455 U.S. Page 75]

     for use or for sale on which contributions to the appropriate Trusts as provided for in this Article have not been made. . . ."*fn1 Section (d) also provided that employers would furnish the trustees with monthly statements showing the full amounts due the trust funds as well as the tons of coal produced, procured, or acquired for use or for sale. The parties agreed that if the clause requiring contributions based on purchased coal was held illegal by any court or agency, the union could demand negotiations with respect to a replacement for the invalidated provision.*fn2

Kaiser operates a steel mill in California and coal mines in Utah and New Mexico. Its mines produce only high-volatile coal, so it must purchase mid-volatile coal used in steel manufacturing from another producer. Since 1959, Kaiser has purchased virtually all of its mid-volatile coal requirements from Mid-Continent Coal and Coke Co. Mid-Continent's employees are represented by the Redstone Workers' Association, and their wages and benefits during the period covered by the 1974 Agreement were equal or superior to those required by the UMW contract. Nevertheless, the UMW has repeatedly attempted to become the collective-bargaining representative for Mid-Continent's employees. According to affidavits submitted by Kaiser, the purchased-coal clause was not taken into account in calculating the needs and

[ 455 U.S. Page 76]

     revenues of the various UMW trust funds during the negotiation of the 1974 Agreement.*fn3

Kaiser complied with its obligation under the 1974 contract to make contributions based on the coal it produced and the hours worked by its miners. It did not, however, report the coal that it acquired from others or make contributions based on such purchased coal. After the expiration of the 1974 contract, the trustees of the UMW Health and Retirement Funds, respondents here, sued Kaiser seeking to enforce the latter's obligation to report and contribute with respect to coal not produced by Kaiser but acquired from others. Jurisdiction was asserted under § 301 of the Labor Management Relations Act, 1947 (LMRA), 61 Stat. 156, 29 U. S. C. § 185, and § 502 of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 891, 29 U. S. C. § 1132. Kaiser admitted its failure to report and contribute but defended on the ground, among others, that the agreement in these respects was void and unenforceable as violative of §§ 1 and 2 of the Sherman Act, 26 Stat. 209, 15 U. S. C. §§ 1 and 2, and § 8(e) of the NLRA, 73 Stat. 543, 29 U. S. C. § 158(e). The District Court did not pass on the legality of the purchased-coal agreement under either the Sherman Act or the NLRA. It nevertheless rejected Kaiser's defense of illegality and granted the trustees' motion for summary judgment. 466 F.Supp. 911 (1979). The Court of Appeals affirmed, 206 U. S. App. D.C. 334, 642 F.2d 1302 (1980), also rejecting Kaiser's defense without adjudicating the legality of the purchased-coal clause.

We granted Kaiser's petition for certiorari raising the question, among others, whether the Court of Appeals had

[ 455 U.S. Page 77]

     properly foreclosed its defense based on the illegality of its promise to report and contribute in connection with coal purchased from other producers. 451 U.S. 969 (1981). We now reverse.


There is no statutory code of federal contract law, but our cases leave no doubt that illegal promises will not be enforced in cases controlled by the federal law. In McMullen v. Hoffman, 174 U.S. 639 (1899), two bidders for public work submitted separate bids without revealing that they had agreed to share the work equally if one of them were awarded the contract. One of the parties secured the work and the other sued to enforce the agreement to share. The Court found the undertaking illegal and refused to enforce it, saying:

"The authorities from the earliest time to the present unanimously hold that no court will lend its assistance in any way towards carrying out the terms of an illegal contract. In case any action is brought in which it is necessary to prove the illegal contract in order to maintain the action, courts will not enforce it . . . ." Id., at 654.

"[To] permit a recovery in this case is in substance to enforce an illegal contract, and one which is illegal because it is against public policy to permit it to stand. The court refuses to enforce such a contract and it permits defendant to set up its illegality, not out of any regard for the defendant who sets it up, but only on account of the public interest." Id., at 669.

The rule was confirmed in Continental Wall Paper Co. v. Louis Voight & Sons Co., 212 U.S. 227 (1909), where the Court refused to enforce a buyer's promise to pay for purchased goods on the ground that the promise to pay was itself part of a bargain that was illegal under the antitrust laws. "In such cases the aid of the court is denied, not for the benefit of the defendant, but because public policy demands that it

[ 455 U.S. Page 78]

     should be denied without regard to the interests of individual parties." Id., at 262.*fn4

Kaiser's position is that to require it to make contributions based on purchased coal would be to enforce a bargain that violates two different federal statutes, the Sherman Act and the NLRA. Sections 1 and 2 of the Sherman Act prohibit contracts, combinations, and conspiracies in restraint of trade, as well as monopolization and attempts to monopolize. Kaiser urges that the purchased-coal clause is illegal under these sections because it puts non-UMW producers at a disadvantage in competing for sales to concerns like Kaiser and because it penalizes Kaiser for shopping among sellers for the lowest available price.*fn5

Section 8(e) of the NLRA forbids contracts between a union and an employer whereby the employer agrees to cease doing business with or to cease handling the products of another employer. Kaiser submits that being forced to contribute based on its purchases of coal from other employers violates § 8(e), the hot-cargo provision, because it penalizes Kaiser for dealing with other employers who do not have a contract with the union and because the major purpose of prohibiting hot-cargo agreements is to protect employers like Kaiser from being coerced into aiding the union in its organizational or other objectives with respect to other employers.

The Court of Appeals, like the District Court, declined to pass on the legality of the purchased-coal clause under either the Sherman Act or the NLRA. It was apparently of the

[ 455 U.S. Page 79]

     view that even if the agreement was unlawful, the illegality defenses should not be sustained in this case. We disagree. None of the grounds offered by the Court of Appeals or by the respondents for rejecting Kaiser's defenses are persuasive.

We do not agree, in the first place, that if Kaiser's agreement to contribute based on purchased coal is assumed to be illegal under either the Sherman Act or the NLRA, its promise to contribute could be enforced without commanding unlawful conduct. The argument is that employers' contributions to union welfare funds are not, in themselves and standing alone, illegal acts and that ordering Kaiser to pay would therefore not demand conduct that is inherently contrary to public policy. Kaiser, however, did not make a naked promise to pay money to the union funds. The purchased-coal provision obligated it to pay only if it purchased coal from other employers and then only if contributions to the UMW funds had not been made with respect to that coal. Kaiser's obligation arose from and was measured by its purchases from other producers. If Kaiser's undertaking is illegal under the antitrust or the labor laws, it is because of the financial burden which the agreement attached to purchases of coal from non-UMW producers, even though they may have contributed to other employee welfare funds. It is plain enough that to order Kaiser to pay would command conduct that assertedly renders the promise an illegal undertaking under the federal statutes.

We do not agree that Kelly v. Kosuga, 358 U.S. 516 (1959), compels or even supports a contrary result. In that case, both petitioner and respondent were engaged in marketing onions. Petitioner agreed to buy a substantial portion of the onions owned by respondent. Petitioner and respondent mutually agreed that neither would deliver any onions to the futures market for the balance of the trading season. The agreement was for the purpose of fixing the price and limiting the amount of onions sold in the State of

[ 455 U.S. Page 80]

     Illinois, thereby "creating a false and a fictitious market" for that produce. Id., at 517. After petitioner defaulted on the payments due under the contract, respondent sued for the balance of the purchase price and was awarded summary judgment. Both the District Court and the Court of Appeals rejected petitioner's claim that his undertaking was unenforceable because part of the agreement violated the Sherman Act. This Court affirmed. The Court said that "[as] a defense to an action based on contract, the plea of illegality based on violation of the Sherman Act has not met with much favor," id., at 518, particularly where the plea is made by a purchaser in an action to recover from him the agreed price for goods sold. Various cases in this Court were cited to support the observation, and Continental Wall Paper Co. v. Louis Voight & Sons Co., 212 U.S. 227 (1909), where the defense was sustained, was distinguished as a case where a judgment for an excessive purchase price "would be to make the courts a party to the carrying out of one of the very restraints forbidden by the Sherman Act." Kelly v. Kosuga, supra, at 520. The Court went on to say that "[past] the point where the judgment of the Court would itself be enforcing the precise conduct made unlawful by the Act, the courts are to be guided by the overriding general policy . . . 'of preventing people from getting other people's property for nothing when they purport to be buying it.'" 358 U.S., at 520-521 (quoting Continental Wall Paper Co. v. Louis Voight & Sons Co., supra, at 271). Applying this approach to the facts before it, the Court observed:

"[While] the non-delivery agreement between the parties could not be enforced by a court, if its unlawful character under the Sherman Act be assumed, it can hardly be said to enforce a violation of the Act to give legal effect to a completed sale of onions at a fair price. . . . [Where,] as here, a lawful sale for a fair consideration constitutes an intelligible economic transaction in itself, we do not think it inappropriate or violative of the intent

[ 455 U.S. Page 81]

     of the parties to give it effect even though it furnished the occasion for a restrictive agreement of the sort here in question." 358 U.S., at 521.

Respondents construe Kosuga as standing for two general propositions: first, that when a contract is wholly performed on one side, the defense of illegality to enforcing performance on the other side will not be entertained;*fn6 and second, that the express remedies provided by the Sherman Act are not to be added to by including the avoidance of contracts as a sanction.*fn7 It is apparent from the opinion in that case, however, that both propositions were subject to the limitation that the illegality defense should be entertained in those circumstances

[ 455 U.S. Page 82]

     where its rejection would be to enforce conduct that the antitrust laws forbid. In Kosuga, there were two promises, one to pay for purchased onions and the other to withhold onions from the market. The former was legal and could be enforced, the latter illegal and unenforceable.

Kosuga thus contemplated that the defense of illegality would be entertained in a case such as this. If the purchased-coal agreement is illegal, it is precisely because the promised contributions are linked to purchased coal and are a penalty for dealing with producers not under contract with the UMW. In Kosuga, withholding onions from the market was not in itself illegal and could have been done unilaterally. But the agreement to do so, as the Court recognized, was unenforceable. Here, employer contributions to union welfare funds may be quite legal more often than not, but an agreement linking contributions to purchased coal, if illegal, is subject to the defense of illegality.

Respondents' reliance on Lewis v. Benedict Coal Corp., 361 U.S. 459 (1960), is no more persuasive. There, as here, a collective-bargaining contract bound the coal company to contribute to an employee trust fund. When sued by the trustees for delinquent contributions, the employers defended on the ground that the union had violated the no-strike clause contained in the contract. Although the strikes were illegal, the Court held that the company's promise to contribute to the fund was independent of and not conditioned on the union's performance of its promise not to strike. Furthermore, the company was not entitled to a setoff

[ 455 U.S. Page 83]

     against the trustees, who were innocent third parties, at least in the absence of some indication in the contract that the parties had intended to permit the employer to reduce its contributions by the amount of his damages caused by the striking unions. Just as in Kosuga, however, the promise that was enforced was not an illegal undertaking. Aside from the defense based on the union's default, there was no claim that the employer's promise to pay was illegal and unenforceable. The decision in no respect suggests that trustees could collect payments pursuant to a promise that itself violates the antitrust laws or the NLRA.*fn8


We also do not agree that the question of the legality of the purchased-coal clause under § 8(e) of the NLRA was within the exclusive jurisdiction of the National Labor Relations Board and that the District Court was therefore without authority to adjudicate Kaiser's defense in this respect. The Board is vested with primary jurisdiction to determine what is or is not an unfair labor practice. As a general rule, federal courts do not have jurisdiction over activity which "is arguably subject to § 7 or § 8 of the [NLRA]," and they "must defer to the exclusive competence of the National Labor Relations Board." San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245 (1959). See also Garner v. Teamsters, 346 U.S. 485, 490-491 (1953). It is also well established, however, that a federal court has a duty to determine whether a contract violates federal law before enforcing it. "The power of the federal courts to enforce the terms of private agreements is at all times exercised subject to the restrictions

[ 455 U.S. Page 84]

     and limitations of the public policy of the United States as manifested in . . . federal statutes. . . . Where the enforcement of private agreements would be violative of that policy, it is the obligation of courts to refrain from such exertions of judicial power." Hurd v. Hodge, 334 U.S. 24, 34-35 (1948) (footnotes omitted).

The "touchstone" and "central theme" of § 8(e) is the protection of neutral employers, such as Kaiser, which are caught in the middle of a union's dispute with a third party. National Woodwork Manufacturers Assn. v. NLRB, 386 U.S. 612, 624-626, 645 (1967). Section 8(e) provides not only that "it shall be an unfair labor practice" to enter an agreement containing a hot-cargo clause, but also that "any contract or agreement entered into heretofore or hereafter containing [a hot-cargo clause] shall be to such extent unenforcible [sic] and void." This strongly implies that a court must reach the merits of an illegality defense in order to determine whether the contract clause at issue has any legal effect in the first place.

That § 8(e) renders hot-cargo clauses void at their inception and at all times unenforceable by federal courts is also evident from its legislative history. It was enacted to close a loophole created by Carpenters v. NLRB, 357 U.S. 93 (1958) (Sand Door). There the Court held that the existence of a hot-cargo clause was not a defense to an unfair labor practice charge brought by a union against an employer, emphasizing that observance of the clause was not unlawful. "Section 8(e) was designed to plug this gap in the legislation by making the 'hot cargo' clause itself unlawful. The Sand Door decision was believed by Congress . . . to create the possibility of damage actions against employers for breaches of 'hot cargo' clauses . . . ." National Woodwork Manufacturers Assn. v. NLRB, supra, at 634. If a union may not maintain a damages action for violation of a hot-cargo clause, it also may not enforce a hot-cargo clause in an action for specific performance.

[ 455 U.S. Page 85]

     That a federal court may determine the merits of Kaiser's § 8(e) defense is further supported by Connell Construction Co. v. Plumbers & Steamfitters, 421 U.S. 616 (1975). There the petitioner filed suit claiming that an agreement between it and the respondent union violated §§ 1 and 2 of the Sherman Act. Respondent contended that the agreement was exempt from the antitrust laws because it was authorized by § 8(e). The Court of Appeals refused to decide whether § 8(e) permitted the agreement or whether the agreement constituted an unfair labor practice under § 8(e), holding that the NLRB "has exclusive jurisdiction to decide in the first instance what Congress meant in 8(e) and 8(b)(4)." Connell Construction Co. v. Plumbers and Steamfitters Local Union No. 100, 483 F.2d 1154, 1174 (CA5 1973) (footnote omitted). This Court reversed on the ground that "the federal courts may decide labor law questions that emerge as collateral issues in suits brought under independent federal remedies, including the antitrust laws." 421 U.S., at 626 (footnote omitted). See also Meat Cutters v. Jewel Tea Co., 381 U.S. 676, 684-688 (1965). The Court then addressed the § 8(e) issue on the merits and found that § 8(e) did not allow the agreement at issue. 421 U.S., at 633. As a result, the agreement was subject to the antitrust laws, for the majority was persuaded that the legislative history did not suggest "labor-law remedies for § 8(e) violations were intended to be exclusive, or that Congress thought allowing antitrust remedies in cases like the present one would be inconsistent with the remedial scheme of the NLRA." Id., at 634 (footnote omitted).

In Connell, we decided the § 8(e) issue in the first instance. It was necessary to do so to determine whether the agreement was immune from the antitrust laws. Here a court must decide whether the purchased-coal clause violates § 8(e) in order to determine whether to enforce the clause. As the Court recently stated with respect to a statute which also provides that contracts which violate it are "void," "[at] the

[ 455 U.S. Page 86]

     very least Congress must have assumed that [the statute] could be raised defensively in private litigation to preclude the enforcement of . . . [a] contract." Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 18 (1979). Therefore, where a § 8(e) defense is raised by a party which § 8(e) was designed to protect, and where the defense is not directed to a collateral matter but to the portion of the contract for which enforcement is sought, a court must entertain the defense. While only the Board may provide affirmative remedies for unfair labor practices, a court may not enforce a contract provision which violates § 8(e). Were the rule otherwise, parties could be compelled to comply with contract clauses, the lawfulness of which would be insulated from review by any court.


On September 26, 1980, nine days after the Court of Appeals issued the decision under review, Congress enacted legislation which respondents argue established a special rule governing the availability of illegality defenses in actions for delinquent contributions brought by pension fund trustees. It is urged that Congress intended to preclude employers from raising defenses such as those Kaiser has attempted to raise here. Section 306(a) of the Multiemployer Pension Plan Amendments Act of 1980, Pub. L. 96-364, 94 Stat. 1295, added § 515 to ERISA, which provides:

"Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement." 29 U. S. C. § 1145 (1976 ed., Supp. V).*fn9

[ 455 U.S. Page 87]

     The provision which was eventually enacted as § 306(a) was added to S. 1076 by the Senate Committee on Labor and Human Resources. The Committee explained that the provision was added because "simple collection actions brought by plan trustees have been converted into lengthy, costly and complex litigation concerning claims and defenses unrelated to the employer's promise and the plans' entitlement to the contributions," and steps must be taken to "simplify delinquency collection." Senate Committee on Labor and Human Resources, S. 1076 -- The Multiemployer Pension Plan Amendments Act of 1980: Summary and Analysis of Consideration, 96th Cong., 2d Sess., 44 (Comm. Print, Apr. 1980) (1980 Senate Labor Committee Print) (emphasis added). During floor debate, Senator Williams and Representative Thompson*fn10 explained the purpose and meaning of § 306(a) in the same language used in the Senate Labor Committee Print. Both legislators also stated that they endorsed cases such as Lewis v. Benedict Coal Corp., 361 U.S. 459 (1960); Huge v. Long's Hauling Co., 590 F.2d 457 (CA3 1978), cert. denied, 442 U.S. 918 (1979); Lewis v. Mill Ridge Coals, Inc., 298 F.2d 552 (CA6 1962); and disapproved cases such as Washington Area Carpenters' Welfare Fund v. Overhead Door Co., 488 F.Supp. 816 (DC 1980), appeal pending, No. 80-1501 (CADC), and Western Washington Laborers-Employers Health and Security Trust Fund v. McDowell, 103 LRRM 2219 (WD Wash. 1979), appeal pending, No. 80-3024 (CA9).*fn11

Assuming, arguendo, that the 1980 Amendments are applicable to this case, they do not alter the result. Far from abolishing illegality defenses, § 306(a) explicitly requires employers to contribute to pension funds only where doing so

[ 455 U.S. Page 88]

     would not be "inconsistent with law." Even if § 306(a) were construed as completely embracing the views expressed by Senator Williams and Representative Thompson, the statute would not require prohibiting Kaiser from raising defenses to the purchased-coal clause. The legislators did not say that employers should be prevented from raising all defenses; rather they spoke in terms of "unrelated" and "extraneous" defenses.*fn12 As the United States points out in its brief, none of the cases the legislators endorsed "involved the enforcement of a contribution clause that itself was alleged to violate the law." Brief for United States as Amicus Curiae 28 (footnote omitted). Neither Lewis v. Benedict Coal Corp., supra, Huge v. Long's Hauling Co., supra, nor Lewis v. Mill Ridge Coals, Inc., supra, involved a defense based on the illegality of the very promise sought to be enforced.

Respondents' contention that § 306(a) permits only one defense to be raised in suits to recover delinquent contributions -- that the making of the payment itself violates § 302(a) of the LMRA -- must be rejected for another reason. Respondents' argument necessarily assumes that in enacting § 306(a), Congress implicitly repealed the antitrust laws, the labor laws, and any other statute which might be raised as a defense to a provision in a collective-bargaining agreement requiring an employer to contribute to a pension fund. Since "repeals by implication are disfavored," Allen v. McCurry, 449 U.S. 90, 99 (1980), "'the intention of the legislature to repeal must be clear and manifest.'" TVA v. Hill, 437 U.S. 153, 189 (1978), quoting Posadas v. National City Bank, 296 U.S. 497, 503 (1936). The statutory language provides no basis for implying such a repeal, and nowhere in the legislative history is there any mention that § 306(a) might conflict with other laws.*fn13

[ 455 U.S. Page 89]

     The judgment of the Court of Appeals is reversed,*fn14 and the case is remanded for further proceedings consistent with this opinion.

So ordered.


206 U. S. App. D.C. 334, 642 F.2d 1302, reversed and remanded.


The salient facts of this case are not sufficiently stressed in the Court's opinion, and thus bear repeating. Kaiser Steel Corporation and the United Mine Workers (UMW) entered into a collective-bargaining agreement in 1974. As a part of that agreement, Kaiser promised to make contributions to certain UMW-designated employee health and retirement plan funds, based in part upon the amount of coal purchased by Kaiser from non-UMW mines. This purchased-coal

[ 455 U.S. Page 90]

     clause obviously had value to Kaiser's UMW employees, because the agreement provided that if that clause were adjudged illegal, then the union could demand renegotiation of the contract in order to secure a quid pro quo for the invalidated clause. During the life of the contract, from 1974 to 1977, Kaiser's UMW employees fully performed their obligations under the contract. Kaiser, in contrast, did not pay a penny of the money that it had promised to pay under the purchased-coal clause. Instead, Kaiser failed to disclose the fact that it had purchased outside coal to which the clause applied, in plain violation of the reporting requirements of the 1974 agreement. In 1978 -- after Kaiser's UMW employees had lost their opportunity to renegotiate the 1974 agreement, and after they had fully performed their part of that bargain -- Kaiser for the first time interposed its claim of illegality as a defense to respondent trustees' suit to recover the moneys promised to their plan under the purchased-coal clause.

"'It has been often stated in similar cases that the defence [of illegality] is a very dishonest one, and it lies ill in the mouth of the defendant to allege it . . . .'" Kelly v. Kosuga, 358 U.S. 516, 519 (1959), quoting McMullen v. Hoffman, 174 U.S. 639, 669 (1899). This observation is peculiarly apt in the present case. The defense of illegality lies ill indeed in the mouth of the Kaiser Steel Corporation. In my view, this case exemplifies the very sort of abuse that Congress intended to stop with the enactment of § 306(a) of the Multiemployer Pension Plan Amendments Act of 1980.*fn1

[ 455 U.S. Page 91]


Section 306(a) of the 1980 Amendments reads as follows:


"Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement." Pub. L. 96-364, 94 Stat. 1295.

[ 455 U.S. Page 92]

     The statutory language evinces an unmistakable congressional intention that obligatory payments shall be made, except when those payments are inconsistent with law. It is upon the construction of the phrase, "inconsistent with law," that the application of § 306(a), and the outcome of this case, obviously depend. The Court construes cases decided before the enactment of § 306(a) as suggesting that courts would not enforce collectively bargained payment obligations tainted by "consequential" illegality -- payments that would "lead to" situations condemned by law, or that would allow a party to "reap the fruits" of illegal collective-bargaining provisions. Ante, at 81-83. Thus Kelly v. Kosuga, supra, is read to require that an illegality defense should be entertained when "its rejection would be to enforce conduct that the antitrust laws forbid." Ante, at 82. In the Court's view, § 306(a) constitutes no more than a statutory endorsement of these earlier cases, calling for a broad construction of the "inconsistent with law" phrase that would comport with those cases.

The Court's view is plausible only if the legislative history of § 306(a) is ignored. That history demonstrates beyond dispute that Congress was deeply concerned about the pre-1980 financial instability of employee benefit plans, and that this undesirable state of affairs was largely attributed to delinquent contributions by employers to those plans. The legislative history also demonstrates that Congress expressly intended § 306(a) to simplify and expedite plan trustees' suits to recover contractually required but delinquent employers' contributions, and that Congress chose to do so by, inter alia, substantially narrowing the scope of illegality defenses available to employers sued by plan trustees for delinquent contributions. With the benefit of the legislative history, it is apparent that § 306(a) was designed to allow an employer to be relieved of a plan contribution obligation only when the payment at issue is inherently illegal -- for example, when the payment is in the nature of a bribe. In sum, illegality defenses, once arguably available whenever the payment in

[ 455 U.S. Page 93]

     question could be connected with illegal activities or results, are now meant by Congress to be available only when the payment in question itself constitutes an illegal act. An examination of the legislative history of § 306(a) makes this narrowing intention crystal clear.


The Court construes § 306(a) as merely declaratory of pre-existing case law. This construction implicitly assumes that Congress was on the whole satisfied with the pre-1980 condition of employee benefit plan funds. But that assumption is clearly erroneous. Congress was seriously troubled by a perception that employee benefit plans were highly vulnerable to financial instability,*fn2 and it identified employers' delinquent contributions as a principal cause of that vulnerability. The Senate Committee on Labor and Human Resources concluded:

"Recourse available under current law for collecting delinquent contributions is insufficient and unnecessarily

[ 455 U.S. Page 94]

     cumbersome and costly. Some simple collection actions brought by plan trustees have been converted into lengthy, costly and complex litigation concerning claims and defenses unrelated to the employer's promise and the plans' entitlement to the contributions. This should not be the case. Federal pension law must permit trustees of plans to recover delinquent contributions efficaciously. Sound national pension policy demands that employers who enter into agreements providing for pension contributions not be permitted to repudiate their pension promises." Senate Committee on Labor and Human Resources, 96th Cong., 2d Sess., 44 (Comm. Print 1980) (emphasis added).*fn3

Thus Congress' paramount concern in enacting § 306(a) was to expedite and simplify the collection of delinquent contributions by plan trustees -- in other words, to expedite and simplify the very kind of suit brought by respondents in the present case. To solve this problem, Congress decided, among other things, to narrow the legal defenses available to employers sued by plan trustees seeking to recover delinquent plan contributions. The comments of the sponsors of § 306(a) in both the Senate and the House bear out this interpretation.

[ 455 U.S. Page 95]

     In the House, Representative Thompson stated that "Federal pension law must permit trustees of plans to recover delinquent contributions efficaciously, and without regard to issues which might arise under labor-management relations Page 95} law -- other than 29 U. S. C. 186." 126 Cong. Rec. 23039 (1980) (emphasis added). Title 29 U. S. C. § 186, entitled "Restrictions on financial transactions," essentially prohibits an employer from paying bribes to his employees, their representatives, or their union.*fn4 In sum, the comments of Representative Thompson evince a congressional intention that employers sued by plan trustees should be able to interpose an illegality defense only if the claimed illegality resided in the payment itself.

In the Senate, Senator Williams stressed the same theme:

"It is essential to the financial health of multiemployer plans that they and their actuaries be able to rely on an employer's contribution promises. [Plan] participants for whom the employer promises to make pension contributions to the plan in exchange for their labor are entitled to rely on their employer's promises. The bill clarifies the law in this regard by providing a direct ERISA cause of action against a delinquent employer without regard to extraneous claims or defenses." 126 Cong. Rec., at 20180 (emphasis added).

[ 455 U.S. Page 96]

     Senator Williams later restated his view of the defenses available to an employer under § 306(a), and implicitly defined his understanding of the term, "extraneous," by using precisely the same words as Representative Thompson had. Id., at 23288.

The sponsors of § 306(a) thus intended to cut off all illegality defenses that an employer might previously have interposed against a plan trustee, except those that claimed an illegality falling within the prohibition of 29 U. S. C. § 186. Congress perceived that a plan trustee is merely a third-party beneficiary of the collective-bargaining agreement reached by an employer and its employees. Such a trustee does not take part in the negotiations that give rise to the employer's contribution obligation. Nor does that trustee have any influence over the performance of other aspects of the collective-bargaining agreement, which are -- as § 306(a)'s sponsors put it -- "extraneous" or "unrelated to" the employer's promise to contribute to the plan. From the trustee's point of view, the employer's promise to make contributions to the designated plan is distinct and severable from all the other clauses of the collective-bargaining agreement, and failure of the agreement in any other respect is wholly irrelevant to the employer's contribution obligation. In order to achieve its goal of expediting and simplifying delinquent-contribution suits brought by plan trustees, Congress through § 306(a) essentially adopted the trustee's point of view on this issue. To ensure the full funding of employee benefit plans, Congress provided that when an employer is sued for plan contributions due and owing under a collective-bargaining agreement, the only defenses that will be permitted are those, arising under 29 U. S. C. § 186, involving a claim of illegality inherent in the payment itself.


The Court ignores this legislative prescription, thereby rendering § 306(a) a nullity and frustrating Congress' desire

[ 455 U.S. Page 97]

     to protect the economic integrity of the retirement, health, and unemployment plans upon which so many working people rely. The majority devotes little time or effort to its analysis of § 306(a), and its conclusion that that provision was intended merely to be declaratory of pre-existing law conflicts with the legislative history of § 306(a) in significant respects.

The Court does not explain why the modest, declaratory intention that it attributes to Congress is nowhere expressed in the legislative history of § 306(a). Nor does the Court even begin to reconcile its view of the limited purpose of § 306(a) with Congress' manifest concern for the financial vulnerability of employee benefit plans, or with Congress' express desire to simplify and expedite suits brought by plan trustees. The Court's position apparently is that Congress expected a mere statutory endorsement of existing case law to remedy the serious problems to which the 1980 Amendments were explicitly addressed. But simply to state this position is to expose its incredibility. The very fact that Congress perceived difficulties in the status quo, and sought to remedy them with § 306(a), demonstrates that that provision was not intended merely to express satisfaction with existing law, but rather was designed to narrow substantially the scope of defenses available to employers.

[ 455 U.S. Page 98]

     This conclusion naturally leads to, and in turn explains, Senator Williams' and Representative Thompson's explicit limitation of the defenses available under the new provision to those arising under 29 U. S. C. § 186. The Court, however, disregards these explicit limiting statements on the ground that "repeals by implication are disfavored," and that therefore "the intention of the legislature to repeal must be clear and manifest." The Court's reasoning is not even superficially persuasive. It is obvious that the Sherman Act is not "repealed" by § 306(a). The new provision merely channels the availability of the antitrust laws into employers' suits for declaratory and injunctive relief or for damages, the remedies normally afforded by those laws. See Huge v. Long's Page 98} Hauling Co., Inc., 590 F.2d 457, 465 (CA3 1978) (concurring opinion). And -- with respect to § 8(e) of the National Labor Relations Act -- even if § 306(a) is construed as a partial repealer, the record before us presents plenty of "clear and manifest" evidence that Congress intended to effect such a repeal: if the Court would only address that evidence. There is Congress' express dissatisfaction with the current state of affairs respecting employers' contributions to employee benefit plans; there is Congress' express intention to simplify and expedite trustees' suits to recover contractually required but delinquent employers' contributions; and there is explicit legislative history, offered by the sponsors of the legislation, disclosing the limiting device -- a cross-reference to 29 U. S. C. § 186 -- actually chosen by Congress in order to effect its stated purpose. By demanding more evidence than this, the Court simply imposes its own view of the wisdom of § 306(a) upon Congress and upon respondents, in the guise of judicial restraint.


The legislative history of § 306(a) makes it plain that the judgment of the Court of Appeals below, affirming the District Court's rejection of the illegality defenses proffered by petitioner Kaiser, should be affirmed by this Court. Kaiser's defenses do not attack the legality of the delinquent plan contributions themselves. Indeed, Kaiser does not even attempt to argue that the overdue payments sought by respondent trustees are inherently illegal. Rather, Kaiser contends that the making of those payments would "lead to" an illegal restraint of trade, or would allow the trustees to "reap the fruits" of an illegal "hot cargo" clause. Whatever the merits of these contentions of consequential illegality, § 306(a) renders them quite irrelevant to Kaiser's obligation to make its promised contributions to the designated employee benefit plan funds. That was the very purpose of § 306(a).

[ 455 U.S. Page 99]

     This conclusion does not impair Kaiser's rights vis-a-vis the UMW, nor does it undercut the important national policies embodied in the Sherman Act and § 8(e) of the National Labor Relations Act. Kaiser can easily transform both of its illegality claims into causes of action brought directly against the union. "The employer may still have its claims adjudicated by bringing, in the proper forum, a timely suit against the union for rescission of the contract, antitrust damages, or a declaration that an unfair labor practice has been committed . . . ." Huge, supra, at 465 (concurring opinion).*fn5 Section 306(a) simply distinguishes Kaiser's rights against the union from its rights against respondents. In its effort to assure financial stability to employee benefit plans, § 306(a) prescribes the insulation of plan trustees -- such as respondents -- from the potentially never-ending disputes between labor and management.

Because I believe that § 306(a) of the 1980 Amendments requires affirmance of the judgment of the Court of Appeals, I dissent.


* Briefs of amici curiae urging reversal were filed by James D. Hutchinson and John M. Cannon for the Mid-America Legal Foundation; and by Steven L. Friedman and John L. Kilcullen for the Pennsylvania Coal Mining Association.

Briefs of amici curiae urging affirmance were filed by Alan M. Levy for the Central States, Southeast and Southwest Areas Pension Fund; by James P. Watson, George M. Cox, John S. Miller, Jr., and Lionel Richman for the Construction Laborers Trust Funds for Southern California et al.; by Gerald M. Feder and Denis F. Gordon for the National Coordinating Committee for Multiemployer Plans; by Wayne Jett and Julius Reich for the Operating Engineers Pension Trust et al.; and by Harrison Combs and Willard P. Owens for the United Mine Workers of America.

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