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holding that the "policy of liberality under Rule 15 for pro se plaintiffs" means "the district court should have allowed Houghton to supplement his complaint ... on remand from the first appeal" to "allege an ‘as applied’ challenge"
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This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA9 Rule 36-3 regarding use of unpublished opinions)
Argued and Submitted July 12, 1984. Withdrawn from Submission Aug. 14, 1984.
Resubmitted Dec. 20, 1988.
E.D.Cal.
REVERSED IN PART, AFFIRMED IN PART.
Appeal from the United States District Court for the Eastern District of California; Edward Dean Price, District Judge, Presiding.
Before FLETCHER, REINHARDT and CHARLES E. WIGGINS, Circuit Judges.
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. Rule 36-3.
The International Brotherhood of Electrical Workers Union, Local 340 (Union) and the Sacramento Valley Chapter of the National Electrical Contractors Association, Inc. (NECA), created the Sacramento Valley Electrical Joint Apprenticeship Training Trust Fund (Trust) pursuant to their collective bargaining agreement. A labor dispute between the Union and NECA resulted in the termination of the collective bargaining agreement and the consequent termination of the Trust. Under the terms of the Trust, the management and labor trustees selected an arbitrator to vote on several deadlocked motions regarding the disposition of the trust funds. After allocating some trust funds for attorneys' fees incurred by the management trustees, the arbitrator divided the trust assets equally between two new apprenticeship training trust funds established separately by the Union and NECA. The labor trustees appealed the district court's decision upholding the arbitrator's award, contending that equal division of the trust assets violated ERISA, that the arbitrator's award was not final and definite, and that the arbitrator exceeded his authority by allocating trust funds to pay the management trustees' attorneys' fees. We reverse the district court's decision upholding the arbitrator's award dividing the trust assets equally, but affirm its decision upholding the arbitrator's allocation of trust funds to reimburse the management trustees' attorneys' fees.
I
BACKGROUND
In 1978, the Union and NECA, an employers' organization, entered into a collective bargaining agreement that created the Joint Apprenticeship and Training Committee (JATC) to supervise apprenticeship training and a trust to disburse funds for the training program. Under the agreement, the participating employers contributed $.10 per hour based on hours worked by each employee who was covered by the collective bargaining agreement. When this agreement expired in 1981, the Union and NECA attempted to negotiate a new agreement but were unsuccessful. The Union then terminated its relationship with NECA and signed a new agreement with another employers' organization, the Sacramento Electrical Contractors Association (SECA). NECA, in turn, entered into a collective bargaining agreement with an independent union group, the National Association of Independent Unions (NAIU). Both collective bargaining agreements separately established new apprenticeship training programs, each with its own trust funds. All the participants of the original apprenticeship program funded by the Union-NECA trust transferred to the new program created by the Union-SECA collective bargaining agreement.
In 1980, due to the Trust's financial need, members of the Union paid $.04 out of their wage package to contribute to the trust fund.
The expiration of the Union-NECA collective bargaining agreement required the labor and management trustees to dispose of the trust assets. At their meeting, the trustees voted on several motions regarding the disposition of trust funds. For each motion, the vote was deadlocked, split between the management and labor trustees. Under the terms of the trust agreement, the trustees selected an arbitrator to cast his deciding vote on each of the pending motions. The arbitrator held a hearing at which both sides presented their cases. The arbitrator cast his vote in favor of the management trustees' motion to split the trust assets equally, subject to the condition that all the trust assets would be disbursed to the Union-SECA trust if the NLRB determined that the NECA-NAIU collective bargaining agreement was invalid. The arbitrator also voted in favor of using trust funds to reimburse the management trustees for attorneys' fees expended in the SECA Apprenticeship action.
In 1982, the Union filed unfair labor practices charges and representation petitions against several employers, including NECA. Judge Pollack, an administrative law judge, rendered his decision in 1983, finding that with respect to two employers, NECA violated section 8(a)(1) and (2) of the NLRA. With respect to 6 employers against whom no petitions were filed, Judge Pollack held that NECA had not violated the NLRA. Judge Pollack's decision was appealed to the NLRB, but the complaint was subsequently withdrawn.
Hon. Charles E. Wiggins, United States Circuit Judge for the Ninth Circuit has been substituted for Hon. Harry Phillips, Senior United States Circuit Judge for the Sixth Circuit, originally a member of this panel, who is now deceased.
The plan participants (who transferred to the SECA apprenticeship program) sued the Union-NECA trust seeking a transfer of all trust assets to the new SECA fund. See Sacramento Area Electrical Workers Joint Apprenticeship Training Trust Fund, et al., No. CIV S-82-272-EDP (hereinafter "SECA Apprenticeship action").
The district court upheld the arbitrator's award. The labor trustees timely appealed.
The district court first remanded the case to the arbitrator to determine whether the arbitrator knew of the court's prior order staying all pretrial activity by the trustees when the arbitrator voted to reimburse the management trustees for their attorneys' fees. After the arbitrator clarified his order, the district court affirmed the arbitrator's decision in all respects.
II
DISTRIBUTION OF TRUST FUNDS
The labor trustees urge this court to overturn the arbitrator's award which divided the trust assets equally between the new apprenticeship training trusts separately established by the Union and NECA. Our review of the arbitrator's decision is very limited, however, in recognition that "[t]he federal policy of settling labor disputes would be undermined if courts had the final say on the merits of [arbitration] awards." United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596 (1960). Generally, we uphold an arbitrator's interpretation of the contract if it "draws its essence from the collective bargaining agreement." Id. at 597; George Day Construction Co. v. United Brotherhood of Carpenters, Local 354, 722 F.2d 1471, 1477 (9th Cir.1984); International Union of Petroleum Workers v. Western Industrial Maintenance, Inc., 707 F.2d 425, 429 (9th Cir.1983). If the arbitrator's award represents a plausible interpretation of the contract, our inquiry ceases, even where the arbitrator misinterprets the law. George Day, 722 F.2d at 1477. We are not to "second-guess" the arbitrator. W.R. Grace & Co. v. Local Union 759, International Union of the United Rubber Workers, 461 U.S. 757, 765 (1983); George Day, 722 F.2d at 1477.
However, where an award is not final and definite, the district court may vacate the award. 9 U.S.C. § 10(d). As previously noted, the arbitrator's decision to cast his vote in favor of the motion to divide the assets of the trust equally between the two succeeding trusts was subject to a condition. His vote was contingent on the collective bargaining agreement between NECA and NAIU being found valid under the National Labor Relations Act. If the agreement were later to be found invalid, his vote would be in favor of disbursing all trust assets to the Local 340/SECA trust.
Thus, at the time the award was made, it was contingent on later action by the NLRB. Although the vote of the arbitrator might appear at first blush to require nothing more than a simple "either/or" determination, the resolution is not so simple. The appellants and appellees disagreed over what effect an ALJ decision in an unfair labor practice case involving the NECA/NAIU contract had on the condition subsequent. No matter how the ALJ's decision is interpreted, it was subject to review by the NLRB, and then to review by this court. Further complicating the matter, after the ALJ's decision was appealed to the NLRB, but before the NLRB rendered its decision, the complaint was withdrawn.
In light of this subsequent history, it is clear that the award was invalid because it was contingent when entered. It left the final resolution of the disbursement of the assets up in the air for an indefinite period of time. Affirming the district court's decision to enforce the arbitrator's award would require us to speculate as to the probable response of the arbitrator to the various subsequent events surrounding the status of the NECA/NAIU agreement. This we will not do. Where an arbitration award is this unclear, the proper course of action for the district court is to vacate the award and remand to the arbitrator for entry of a new award, so that the matter can be completely, rather than only partially, resolved. Hanford Atomic Metal Trades Council v. General Electric Co., 353 F.2d 302, 308 (9th Cir.1965)
Although reversal of the district court does not require us to decide the other issues raised by appellant to challenge enforcement of the award, those issues will be squarely presented if the arbitrator again votes in favor of an equal division of the trust assets. Appellants argue that under 29 U.S.C. § 1103(c)(1), the trust assets must be distributed for the benefit of the plan's beneficiaries. This argument fails to recognize the specific exception set forth in § 1103(d)(2). That subsection provides that on termination of a welfare plan, the assets "shall be distributed in accordance with the terms of the plan." Welfare plans include funds established to provide apprenticeship programs. 29 U.S.C. § 1002(a)(A). Thus, on termination the plan need not satisfy the exclusive benefit provisions of (c)(1). In light of this determination, appellant's claims under § 1104 for breach of fiduciary duties based upon the alleged violation of § 1103 must also fail.
III
TRUST FUND REIMBURSEMENT OF ATTORNEYS FEES
The labor trustees contend that the arbitrator exceeded his authority by ordering payment of attorneys' fees from trust assets to reimburse the management trustees for attorney expenses related to an unauthorized third party complaint. The labor trustees argue that because the deadlocked motion before the arbitrator was limited to the attorneys' fees expended by the management trustees in defense of the SECA Apprenticeship action, the arbitrator had no authority to award attorneys' fees for the third party action. The labor trustees' contention is without merit.
The management trustees filed a third party complaint for damages and indemnity for Mr. Lipton's alleged breach of the attorney-client privilege, breach of his fiduciary duty, breach of the code of ethics for attorneys, and for his conflict of interest. Mr. Lipton, who had been counsel to the Union-NECA trust prior to his appointment as counsel for the Union-SECA trust, sued the Union-NECA trust on behalf of the Union-SECA trust.
Generally, courts determine the issue of arbitrability, George Day, 722 F.2d at 1474, construing agreements broadly with all doubts resolved in favor of the arbitrator's authority. Western Industrial Maintenance, 707 F.2d at 429. The parties, however, may submit the question of arbitrability to the arbitrator for decision. George Day, 722 F.2d at 1474-75. Consent to grant the arbitrator such authority may be by written agreement or implied from the parties' conduct at arbitration. Id. at 1475. Submission of the merits of the dispute to arbitration without reserving the question of arbitrability may constitute implied consent to allow the arbitrator to determine the controversy. Ficek v. Southern Pacific Co., 338 F.2d 655, 657 (9th Cir.1964), cert. denied, 380 U.S. 988 (1965), cited with approval in George Day, 722 F.2d at 1475.
In this case, the labor trustees urged the arbitrator to vote against the deadlocked motion on attorneys' fees because they objected to the portion of the expenses that related to the third party complaint. On appeal, the labor trustees seek to characterize the motion narrowly, as not including the attorneys' fees for the third party complaint. Although the language of the motion is limited to those attorneys' fees that the management trustees expended in the SECA Apprenticeship action, the labor trustees presented arguments at arbitration that broadened the motion beyond its language. By arguing the merits of whether the Trust should reimburse the management trustees for their attorneys' fees expended in the third party complaint, the labor trustees impliedly consented to allow the arbitrator to decide the issue. See Ficek, 338 F.2d at 657. The labor trustees did not reserve the question of arbitrability for initial determination by a court. See George Day, 722 F.2d at 1475. Nor did the labor trustees object to the arbitrator's authority to decide the issue. See id. "A claimant may not voluntarily submit his claim to arbitration, await the outcome, and, if the decision is unfavorable, then challenge the authority of the arbitrator to act." Ficek, 338 F.2d at 657. The labor trustees cannot therefore complain of the arbitrator's authority to decide whether to use trust funds to reimburse the attorneys' fees related to the third party complaint after they argued and submitted the issue to the arbitrator and received an unfavorable decision. See id. Having consented to his authority, they are bound by the arbitrator's decision.
IV
CONCLUSION
We reverse the arbitrator's decision to distribute the trust assets equally between the successor trust funds because it was contingent on a condition subsequent which deprived the award of the necessary finality and definiteness. We affirm the arbitrator's order to use trust funds to reimburse the management trustees for their attorneys' fees related to the third party complaint because the labor trustees consented to the arbitrator's authority to decide the issue.
REVERSED in part and AFFIRMED in part.