The purpose was to promote "industry betterment and industry public relations." The trustees were equally divided between the contractors and the union. (Art. III, ¶ B.) Under Article V, ¶ A, the trustees had full power to carry out, as they deemed appropriate, a program of public relations for the general welfare and advancement of the plastering industry. Under Article V, M, the trustees could employ counsel, and executive, administrative, clerical and secretarial help, and incur and pay any other expense reasonably incidental to the administration of the trust. "M. The Board of Trustees shall have power: "1. To establish and accumulate such reserve funds as may be necessary to provide for administration expenses and other proper obligations of the trust. "2. To employ such executive, administrative, clerical, secretarial and legal personnel and other employees and assistants as may be necessary in connection with the administration of the trust, and to pay or cause to be paid, out of the trust, the compensation and expenses of such personnel and assistants, the cost of office space, furnishings and supplies and other essentials required in such administration. "3. To consult with and secure the advice of legal counsel on any question of fact or law arising in connection with the administration of the trust, including, at the request of either the employer trustees or the union trustees, advice on any question from legal counsel selected by the employer trustees and legal counsel selected by the union trustees who shall be directed to confer with each other and, if possible, submit a joint opinion to the Board, and in like manner to employ legal counsel or joint legal counsel in connection with suits or claims by or against the Board of the trust with respect to the trust, and to pay the reasonable costs of such legal services from the trust. "4. To incur and pay out of the trust any other expense reasonably incidental to the establishment and administration of the trust. To carry on all its functions under the name of Southern California Plastering Institute Industry Program and to carry any and all bank accounts in a trust fund under that name. "5. To invest and reinvest such portion of the trust as is not required for current expenditures and charges in such securi Under Article V, ¶ G, the trustees had the power "to enforce the payment of contributions to the trust by individual employers under the terms of the collective bargaining agreements or under any other promise to make such payments." Under Article V, J, the trustees had the power to require employers to submit any "information, data, report or documents reasonably relevant" to the administration of the trust. Third: Under the Labor-Management Relations Trust created by the collective bargaining agreement, the functions and powers of the six trustees (three ap ties as are legal for the investment of trust funds under the laws of the State of California. "6. To adopt rules and regulations for the administration of the trust which are not inconsistent with the purpose and intent of this agreement." 6. "ARTICLE IV "FUNCTIONS AND POWERS "A. It shall be the function of the Trustees, and the Trustees shall have the power to expend the funds of the Trust for the common interest of labormanagement relations of the parties to the Collective Bargaining Agreement, for the printing of necessary forms and documents required to facilitate the said Agreement, the printing of said Agreement and any amendments and addendum thereto, for secretarial or reporter's services required for meetings of labor-management negotiating committees, for legal services and other costs incurred by management-employed counsel, such as consultation, attendance at meetings, drafting of documents and litigation related to matters pertaining to said Agreement, and for other incidental costs and expenses of labor-management relations. None of the Trust Fund shall be used for any purpose contrary to or inimical to the Union or to the Contractor parties to the Collective Bargaining Agreement. "B. The Labor Relations Trust may require payments to be made directly to it or may designate by written order an agent for deposit or collection. In the event no such agent or depository is named, said sums shall be paid to the Southern California Plastering Institute Trust for the benefit of the Labor Relations Trust. "C. The Trustees shall have the power to do all things necessary to collect and receive funds due to the Labor Relations Trust by the terms of the Labor Agreement, addendum and modifications thereto, including the right to sue to recover said payments and costs of suit. "D. Without prejudice to the rights of the parties under the Collective Bargaining Agreements with respect to their enforcement, the Board of Trustees shall have the power to enforce the payment of contributions to the Trust by individual employers under the terms of the Collective Bargaining Agreements or under any other promise to make such payments in any particular case or cases only where such action is specifically authorized by a resolution of the Board. If any individual employer defaults in the inaking of such payments and if the Board consults legal counsel with respect thereto, or files any suit or claim with respect thereto, there shall be added to the obligation of the employer who is in default, reasonable attorneys' fees, court costs and all other reasonable expenses incurred by the Board in connection with such default. "E. The Board of Trustees shall procure fidelity bonds for each Trustee or other person authorized to handle, deal with, or draw upon the moneys in the Trust for any purpose whatsoever, said bonds to be in such reasonable amount and to be obtained from such source as the Board shall determine. "F. The Board of Trustees shall have power to authorize one person to sign checks drawn on the Trust in amounts not exceeding $500. Except as covered by such authority, all checks, drafts, vouchers or other withdrawals of money from the Trust shall be authorized in writing or countersigned by at least one Trustee who is an employer representative and one Trustee who is an employee representative. "G. The Board of Trustees shall maintain suitable and adequate records of and for the administration of the Trust and all business relations thereto. The Board may require the Employers, any individual Employer, the Union, and any individual employee to submit to it any information, data, report or documents reasonably relevant and suitable for the purposes of such administration. The parties agree that they will use their best efforts to secure compliance with any reasonable request of the Board for any such infor mation, data, report or documents. "H. The Trustees shall cause to be made an annual audit of the Trust by a C.P.A. and shall make available to all interested persons a statement of the results of such audit at the principal office of the Trust, and at such other places from time to time designated by the Trustees. "I. No contractor actively engaged in the plastering business, no union official or business agent of the contracting unions, and no Trustee of the Trust shall be employed by said Trust. "J. The Board of Trustees shall have power: "1. To establish and accumulate such reserve funds as may be necessary to provide for administration expenses and other proper obligations of the Trust. "2. To employ such executive, administrative, clerical, secretarial and legal personnel and other employees and assistants as may be necessary in connection with the administration of the Trust, and to pay or cause to be paid, out of the Trust, the compensation and expenses of such personnel and assistants, the cost of office space, furnishings and supplies and other essentials required in such administration. "3. To consult with and secure the advice of legal counsel on any question of fact or law arising in connection with the administration of the Trust, including, at the request of either the Employer Trustees or the Union Trustees, advice on any question from legal counsel selected by the Employer Trustees and legal counsel selected by the Union Trustees who shall be directed to confer with each other and, if possible, submit a joint opinion to the Board, and in like manner to employ legal counsel or joint legal counsel in connection with suits or claims by or against the Board or the Trust with respect to the Trust, and to pay the reasonable costs of such legal services from the Trust. "4. To incur and pay out of the Trust any other expense reasonably incidental to the establishment and administration of the Trust. To carry on all of its functions under the name of Labor-Management Relations Trust and to carry any and all bank accounts in a trust fund under that name. "5. To invest and reinvest such portion of the Trust as is not required for current expenditures and charges in such securities as are legal for the investment of trust funds under the laws of the State of California. * per ment negotiating committees, for legal services and other costs * * taining to said [Collective Bargaining] Agreement, and for other incidental costs and expenses of labor-management relations." The Trustees had under Article IV, J, similar powers to those of the Industry Program Trustees mentioned above. It should be noted generally that in the Industry Program Trust threefourths of the trustees constituted a quorum, but a majority of all trustees (not a majority of a quorum) governed "in the determination of any matter." In the Labor-Management Relations Trust, five of the six trustees constituted a quorum, but a majority of all trustees (not a majority of a quorum) governed "in the determination of any matter." Thus both labor and management maintained an absolute veto on any proposed action. Such procedure satisfies the requirement of employees' "participation." No matter could be acted upon by either trust without “employee participation.” We have already ruled in Sheet Metal Contractors Association v. Sheet Metal Workers, supra, that the term "employee participation" must, like the term "representative," be given a broad and inclusive meaning. Such an interpretation is required of us by United States v. Ryan, supra. We note that this case was decided below largely on the written evidence "6. To adopt rules and regulatious for the administration of the Trust which are not inconsistent with the purpose and intent of this Agreement." 7. Article IV, 1 G. 8. Article III, ¶ G. produced by stipulation. Oral testimony was limited, and only addressed to the question of the amount of interstate com. merce, a question not raised on this appeal. The court below, therefore, had no better opportunity than we have to scrutinize witnesses. We conclude that the evidence in this case clearly establishes that the three trusts (Industry Program, Labor-Management Relations Trust, and the Institute Trust) as well as the succeeding corporate entity, are severally "repre sentative" of employees as that term is used in § 302(a) and (b); and that the purposes, powers and functions of the trusts and corporation here involved are not within the exemptions created by Congress, and are not permissible objects for the use of joint trust funds.9 We do not quarrel in the slightest with the laudable objectives of the trust amicably created by labor and management in this case. We sympathize with the efforts of both labor and management to solve a vexing industry problem. But like so many of such present day problems, our duty is to rule in accordance with that which the Congress (quote) in its wisdom (end of quote) has seen fit to enact. We cannot widen the door when the door sill has been carefully tailored by the representatives in Congress. The relief sought by the appellants herein must be found in congressional and not judicial action. We affirm the judgment below. 9. Nowhere has our attention been called to any attempt to comply, either in the trusts set up or the corporation, with the requirements of 29 U.S.C. § 186(c) (5) (B) with respect to the naming of neutral persons empowered to break a deadlock between trustees or directors. PREPARED STATEMENT OF S. F. RAFTERY, GENERAL PRESIDENT, BROTHERHOOD OF PAINTERS, DECORATORS & PAPERHANGERS OF AMERICA, AFL-CIO Mr. Chairman and members of the Committee, I am pleased to submit this statement to the Committee on behalf of over 200,000 members of Local Unions and District Councils affiliated with the Brotherhood of Painters, Decorators and Paperhangers of America. Section 302 of the Labor-Management Relations Act prohibits all payments by employers to employee representatives except in particular instances specified in sub-section (c). Some of the funds into which employer contributions may be made under sub-section (c) are those providing for medical or hospital care, pensions on retirement or death of employees, compensation for injuries or illness resulting from occupational activity or insurance to provide any of the foregoing, or unemployment benefits or life insurance, disability and sickness insurance or accident insurance, pooled vacations, holiday, severance or similar benefits, or apprenticeship or other training programs. Frankly, we had been of the opinion that since Section 302 was meant to eliminate bribery, extortion, "sweetheart contracts" and other corrupt practices and, further, since no intimation had been made to the Congress that such abuses had been associated with joint industry promotion funds or joint boards empowered to interpret collective bargaining agreements, Congress had never intended to prohibit employer contributions for these purposes. However, a number of court decisions have held otherwise. Thus while it is clear that product or industry promotion programs and joint boards empowered to interpret collective bargaining agreements do not in themselves contravene the law, the judicial opinion thus far has been that employer contributions to jointly administered funds having such programs as their object are proscribed by Section 302. The theory underlying the decisions is that by enumerating certain permissible funds and purposes in Section 302, the Congress impliedly branded unlawful all other funds and purposes. Accordingly, any funds not specified as permissible in Section 302 could only be made so by amendment. For that reason it was necessary to amend the Section in 1959 to legalize employer contributions to jointly administered funds for the purpose of pooled vacations, holiday, severance or similar benefits, or apprenticeship or other training programs. And for that same reason, an amendment is necessary now to expressly permit employer contributions to jointly administered programs intended to promote products or to interpret collective bargaining agreements through a joint board or committee mechanism. Congress should now make it clear that Government will not interfere with decisions of labor and management, arrived at in the process of free collective bargaining negotiations, to develop and jointly administer such programs of mutual benefit. The need for these programs has been long apparent in the painting industry. In the product and product application promotion area, our need is to combat severe loss of employment oportunities and seasonal fluctuations in employment, to advance the knowledge of our members concerning new products, tools, and methods of application, and to protect the public against fraudulent practices, unsafe procedures in painting and decorating, and unreliable contractors. All segments of our society, particularly home owners, should know-but many do not that in view of the rapid introduction of new coatings in the past decades and the technical knowledge required to paint problem surfaces, the notion that anyone can be a skilled painter is an illusion. They should know— but many do not-that by obtaining the services of reputable contractors they obtain the services of insured, properly equipped skilled craftsmen who know color, paint engineering, the proper use of tools, and proper preparation of surfaces. They should know-but many do not-that by this means they can prevent a multitude of "do-it-yourself" accidents and obtain better and more pleasing results. With respect to the Brotherhood's critical concern with the preservation and development of job opportunities, some startling conclusions were reached in a Report entitled "The State of the Art of Prefabrication in the Construction Industry" submitted to the Building and Construction Trades Department, AFLCIO, on September 29, 1967, by Battelle Memorial Institute, a non-profit research organization based in Columbus, Ohio. The Report states that due to anticipated advances in prefabrication and technology, the Painters-in comparison with other construction trades—will have the least opportunities for growth. Prefabrication, according to the Report, "will represent the greatest threat to the Painters, in terms of overall continued growth." (p. 217). Again, in summarizing the situation faced by our Brotherhood, the Report observes: ". . . advances in prefabrication and technology have and will continue to have severe adverse impacts on this affiliate. The effects will probably be a reduction in the manpower requirements and a tendency to reallocate the work from job site to factory." (p. 230). Our partial answer to these problems and objectives is a promotion program designed to educate the public on the benefits of using professionally trained craftsmen and responsible and experienced contractors, and to advance the knowledge of our contractors and working force concerning new products, tools, methods of application, and work opportunities. Such a program, to be effective, must be jointly administered. Our industry is composed, for the most part, of small contractors employing ten men or less, and most of the affiliates of our Brotherhood are relatively small Local Unions. Neither labor nor management, if forced to press on alone, could create or maintain an effective program. Indeed logic and reason compel the conclusion that a program of mutual benefit to both parties should in fact be established and administered by both parties on a joint basis. Several such programs have been successfully implemented in our industry. some of these through the operation of a jointly-administered trust fund. Particularly illuminating has been our experience in the Cleveland area, where the Painting and Decorating Institute is financed by employee and employer contributions. We have succeeded there in substantially raising industry standards and reducing loss of work due to seasonal fluctuations, using a variety of public media techniques including feature stories in newspapers and magazines, documentary films, special supplements in newspapers and magazines, billboards, bus cards, television and radio commercials, slide projector programs at women's clubs, illustrated advertisements, brochures, bank lobby displays, doorknob hangers, special painters' caps, painting and decorating awards in co-sponsorship with local newspapers, and direct mail programs. Moreover, we are anxious to effectuate a similar plan on the National level and, to that end, have held extensive discussions and conducted studies in conjunction with the Painting and Decorating Contractors Association. The Necessary Trust Agreement and other documents have been prepared, and we await the nod of Congress to begin what we consider to be a very worthy project. Some testimony before the House Special Subcommittee on Labor in connection with Bills similar to S. 3149 suggested, in criticism, that by opting for the promulgation of promotion plans Unions were encroaching upon an area at best peripheral to employee interests and normally reserved to management prerogatives. We simply cannot believe that this is so, however, with reference to a program primarily intended to increase the knowledge and skills of our members and other employees whom we represent and to preserve and increase their job opportunities. It has also been said by the few critics of the Bill that its passage would result in jurisdictional disputes. In response, I wish to point out, first, that we do not view it as the purpose of a joint industry promotion program to encroach upon the jurisdiction of sister Unions, and we do not feel that it would have that effect; second, there are laws, rules, and regulations governing jurisdictional disputes which afford ample safeguards. I refer to Sections 8(b) (4) (D), 10(k) and 303 of the Labor-Management Relations Act, the AFL-CIO Constitution, and, in the construction industry, the National Joint Board for the Settlement of Jurisdictional Disputes. There is an equally compelling need in our industry for joint boards or committees empowered to interpret collective bargaining agreements and to resolve disputes arising under such agreements. The construction industry is composed in the main of small, individual contractors operating in a number of localities, either simultaneously or from week to week, with a fluctuating work force and but few permanent employees, and subject to a variety of collective bargaining agreements. Jobs or projects are of relatively short duration. Disputes may and do ignite suddenly, and must be quickly resolved to avert serious damage to both employer and employees. What is required as an alternative to chaos in this type of industry is a permanently established body composed of representatives of both labor and management, who are intimately familiar with the characteristics, history and problems of the industry, the area, the agreements and parties involved, and who can therefore act with dispatch and resolve and render final and binding decisions that will be honored and respected by the parties to whom they are addressed. Those are the characteristics of the joint boards and committees through which the painting industry has historically |