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Trustees of National Benefit Fund For Hospital and Health Care Employees v. Constant Care Community Health Center, Incorporated, 669 F.2d 213, 4th Cir. (1982)
Trustees of National Benefit Fund For Hospital and Health Care Employees v. Constant Care Community Health Center, Incorporated, 669 F.2d 213, 4th Cir. (1982)
2d 213
109 L.R.R.M. (BNA) 2504, 93 Lab.Cas. P 13,208,
2 Employee Benefits Ca 2465
The Trustees of National Benefit Fund for Hospital and Health Care Employees
sued defendant, a provider of health care services, to collect delinquent
payments owed the fund which they administer. The district court dismissed the
complaint without prejudice, ruling that plaintiffs must resort to arbitration as
provided in the collective bargaining agreement between defendant and the
union before seeking judicial relief. Although mindful of the strong federal
policy to encourage and enforce arbitration agreements, we see no justification
for requiring arbitration under the facts of this case. We therefore reverse the
dismissal of the complaint and remand the case to the district court for
Article 13
4
Section
13.1-Appeal Procedure : Any grievance concerning the interpretation,
application or alleged breach of any specific provision of this Agreement that has
been properly processed through the grievance procedure as set forth in Article 12
and has not been settled at the conclusion thereof may be appealed to arbitration by
the Union by serving written notice on the Center within fifteen (15) calendar days
after the Center's answer to step 2 of the grievance procedure. If the Union fails to
serve such notice of its intention to arbitrate within this time limitation, it shall be
deemed to have waived the arbitration and the grievance shall be considered
settled....
5....
6
Section
13.4-Arbitrator's Jurisdiction : .... The award in writing of the arbitrator
within his/her jurisdiction and authority as specified in this Agreement shall be final
and binding on the aggrieved employee(s), the Union, and the Center.
7
The district court ruled that the dispute between the parties fell within the
arbitration provision of the collective bargaining agreement and therefore
judicial intervention was barred until arbitration had taken place. Accordingly,
it granted summary judgment for defendant, dismissing the complaint without
prejudice.
II.
9
10
First, we note that plaintiffs are not parties to the collective bargaining
agreements, although they are third-party beneficiaries of the provisions which
require the defendant to contribute to the employees' benefit fund. Two cases
have held that a union's failure to arbitrate is no bar to a suit by trustees of an
independent fund seeking to recover employer contributions due under the
terms of a collective bargaining agreement. See Wishnick v. One Stop Food &
Liquor Store, Inc., 359 F.Supp. 239 (N.D.Ill.1973); Owen v. One Stop Food &
Liquor Store, Inc., 359 F.Supp. 243 (N.D.Ill.1973). Their reasoning was that
the trustees are not parties to the agreement and "not subject to each and every
duty" created by the agreement, unless the agreement specifically requires "the
Trustees to submit their claim to the arbitration procedure." 359 F.Supp. at 243.
Accord Todd v. Casemakers, Inc., 425 F.Supp. 1375 (N.D.Ill.1977); see Boyle
v. North Atlantic Coal Corp., 331 F.Supp. 1107 (W.D.Pa.1971). See also
California Trucking Association v. Corcoran, 74 F.R.D. 534, 545
(N.D.Cal.1977) (dictum); Huge v. Overly, 445 F.Supp. 946 (W.D.Pa.1978).
11
The contrary was held in IBEW Local No. 308 v. Dave's Electric Service, Inc.,
382 F.Supp. 427 (M.D.Fla.1974). There, with strong reliance on the
Steelworkers Trilogy, the court took the view that the efficiency of arbitration
procedures and the special expertise of arbitrators make the arbitration of
disputes concerning contributions between benefit funds and employers highly
desirable as a matter of policy. Id. at 431. Cf. Local No. 55, United
Automobile, Aerospace & Agricultural Implement Workers, 396 F.Supp. 667
(W.D.N.Y.1975) (in which a union, rather than trustees, sought to enforce the
employer's obligation to contribute to the fund).
12
We see no need to choose between these two lines of authority in the instant
case. Even though the trustees may not be parties to a collective bargaining
agreement, there are situations in which arbitration may well be a prerequisite
to a suit for enforcement of contributions. Central States, Southeast and
Southwest Area Pension Fund v. Howard Martin, Inc., 625 F.2d 171 (7 Cir.
1980), is a case in which arbitration served a useful purpose. We think,
moreover, that it points to the correct disposition of the present appeal.
13
In Howard Martin, the court affirmed a decision of the district court (Noland,
D.J.) requiring benefit funds seeking to recover delinquent contributions to
resort to arbitration under a collective bargaining contract as a prerequisite to
bringing suit. In that case the employer was required to make contributions with
respect to regular or extra employees, including employees who worked only
part-time, but excluding employees who worked temporarily or in cases of an
emergency. The employer contested the proper classification of certain
employees under this formula. In affirming, the court was careful to peg its
decision on the fact that there existed a genuine dispute as to the meaning of the
contract which required the payments:
14
Judge
Noland did not, nor do we, hold that collection suits must first be submitted to
arbitration. Judge Noland correctly held that the facts in this case "clearly indicate a
dispute arising out of an interpretation of the contract (and that the arbitration clause
encompassed the dispute)."
15
We agree with the Funds ... that the Funds are not required to arbitrate disputes
over delinquent payments. However, Judge Noland was correct in finding that
this is not a simple collection case....
16
17
As the quoted passage from Howard Martin discloses, the rationale of that
decision was that the case was not a simple collection matter; rather, there was
an underlying question of contractual interpretation warranting arbitration
We therefore hold that, under the facts here, arbitration is not a prerequisite to
maintaining the lawsuit. We reverse the judgment of the district court and
remand the case for further proceedings consistent with this opinion.
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