Local 144 NURSING HOME PENSION FUND v. DEMISAY, 508 U.S. 581 (1993)

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
No. 91-610
Argued January 11, 1993 Decided June 14, 1993

For several years, respondent employers had made contributions to two trust funds (collectively, Greater Funds) on behalf of their employees. In 1984, however, the employers ended their participation in the Greater Funds and agreed, in collective bargaining agreements with the relevant union, to establish a new set of trust funds (collectively, Southern Funds). To help finance the change between the funds, the employers and other respondents brought an action to compel petitioners, the Greater Funds and their trustees, to transfer to the Southern Funds that portion of the Greater Funds’ reserves attributable to respondents’ past contributions. Respondents asserted a right to relief under, inter alia, § 302 of the Labor Management Relations Act, 1947, which prohibits payments from employers to union representatives, §§ 302(a) and (b), but affords an exception under § 302(c)(5) for payments to an employee trust fund if certain conditions are met, including that the trust fund be “established . . . for the sole and exclusive benefit of the employees,” and that the payments be “held in trust for the purpose of paying” employee benefits. Respondents’ theory was that, unless the reserves attributable to the employers’ past contributions were transferred, the Greater Funds would fail to meet § 302(c)(5)’s conditions, and would thus suffer from a “structural defect” which could be remedied by the federal courts pursuant to the power conferred by § 302(e) to “restrain violations of this section.” The District Court granted petitioners’ motion for summary judgment, finding no such “structural defect” in the Greater Funds, but the Court of Appeals reversed and remanded for the District Court to shape an appropriate remedy.

Held: A federal court does not have authority under § 302(e) to issue injunctions against a trust fund or its trustees requiring the trust funds to be administered in the manner described in § 302(c)(5). Section 302(e) provides district courts with jurisdiction “to restrain violations of this section,” and a violation of § 302 occurs when payments prohibited by §§ 302(a) and (b) are made. The exception to violation set forth in § 302(c)(5) describes the character of the trust to which payments are allowed, leaving it originally to state trust law, and now to federal trust law under the Employee Retirement Income Security Act of 1974, to determine when breaches of that trust have

Page 582

occurred and how they may be remedied. Language in Arroyo v. United States, 359 U.S. 419, 426-427, and NLRB v. Amax Coal Co., 453 U.S. 322, 331, that is perhaps susceptible of a contrary reading is pure dicta. Pp. 587-593.

935 F.2d 528, (CA2 1991), reversed and remanded.

SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and O’CONNOR, KENNEDY, SOUTER, and THOMAS, JJ., joined. STEVENS, J., filed an opinion concurring in the judgment, in which WHITE and BLACKMUN, JJ., joined, post, p. 593.

Henry Rose argued the cause for petitioners. With him on the briefs was Linda E. Rosenzweig.

Ronald E. Richman argued the cause for respondents. With him on the brief were Mark E. Brossman and Eileen M. Fields.[*]

JUSTICE SCALIA delivered the opinion of the Court.

This case presents the question whether a federal district court may issue an injunction pursuant to § 302 of the Labor Management Relations Act, 1947 (LMRA), 61 Stat. 157, as amended, 29 U.S.C. § 186 (1988 ed. and Supp. III), requiring the trustees of a multiemployer trust fund to transfer assets from that fund to a new multiemployer trust fund established by employers who broke away from the first fund.

I
Respondents include a group of employers that, until 1981, were members of a multiemployer bargaining association, the Greater New York Health Care Facilities Association, Inc. (Greater Employer Association). Two trust funds

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— the Local 144 Nursing Home Pension Fund and the New York City Nursing Home — Local 144 Welfare Fund (collectively, Greater Funds) — were established pursuant to collective bargaining agreements between the Greater Employer Association and the relevant union, Local 144 of the Hotel, Hospital, Nursing Home and Allied Services Employees Union, Service Employees International Union, AFL-CIO (Local 144). Prior to 1981, the respondent employers made contributions to the Greater Funds on behalf of their employees in accordance with the terms of collective bargaining agreements negotiated between the Greater Employer Association and Local 144.

In 1981, the respondent employers broke away from the Greater Employer Association and executed independent collective bargaining agreements with Local 144. The initial agreements required continuing employer contributions to the Greater Funds, but those concluded in 1984 provided for establishment of a new set of trust funds, the Local 144 Southern New York Residential Health Care Facilities Association Pension Fund, and the Local 144 Southern New York Residential Health Care Facilities Association Welfare Fund (Southern Funds). At approximately the same time, the respondent employers ended their participation in the Greater Funds.

In negotiating the transfer from the Greater Funds to the Southern Funds, the “primary concern” of Local 144 was to make sure that the shift would not cause its members to lose benefits. 935 F.2d 528, 530 (CA2 1991). To address that concern, the respondent employers guaranteed in their collective bargaining agreements that the Southern Funds would recognize all credited service time earned under the Greater Funds and, more generally, that employees would not lose any benefits as a result of the withdrawal from the Greater Funds. See 710 F. Supp. 58, 60-61 (SDNY 1989). That guarantee obviously created some peculiar liabilities for the Southern Funds. For example, an employee who had earned nine years credited service time under the

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Greater Funds would, after just one more year, of service, acquire vested rights to pension benefits pursuant to the 10-year vesting requirement of the Southern Funds — even though the Southern Funds had received only one year of employer contributions for that employee. See id., at 61, n. 4. The Southern Funds’ assumption of these liabilities, however, did not alter the obligations of the Greater Funds, which were not parties to the collective bargaining agreements: they remained liable to the departing employees for all vested benefits. See id., at 61, and n. 5, 65; 935 F.2d, at 530-531.

To help cover the Southern Funds’ liabilities and in general to help finance the change from the Greater Funds to the Southern Funds, the respondent employers — joined by several of their employees and the trustees of the Southern Funds — brought this action to compel petitioners, the Greater Funds and the Greater Funds’ trustees, to transfer an appropriate fractional share of the Greater Funds’ assets to the Southern Funds. They asserted right to relief under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. (1988 ed. and Supp. III), and under § 302 of the LMRA; only the latter claim is at issue here.

The relevant portions of § 302 are set forth in the margin.[1]
To describe respondents’ claim, it is necessary to sketch the

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structure of that provision. Subsection (a) prohibits an employer (or an association of employers, such as the Greater Employer Association) from, inter alia, making payments to any representative of its employees, including the employees’ union and union officials. Paragraph (b)(1) is the “reciprocal” of subsection (a), Arroyo v. United States, 359 U.S. 419, 423 (1959), making it unlawful for employee representatives to receive the payments prohibited by subsection (a). The prohibitions of subsection (a) and paragraph (b)(1) are drawn broadly, and would prevent payments to union employee health and welfare funds such as those at issue here. See generally United States v. Ryan, 350 U.S. 299, 304-305 (1956); Goetz, Employee Benefit Trusts under

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Section 302 of Labor Management Relations Act, 59 Nw. U. L. Rev. 719, 723-731 (1965). Subsection 302(c), however, provides exceptions to the prohibitions. Most significantly for our purposes, paragraph (c)(5) excepts payments to an employee trust fund so long as certain conditions are met, including that the trust fund be “established . . . for the sole and exclusive benefit of the employees,” and that the payments be “held in trust for the purpose of paying” employee benefits.

Respondents’ theory is that the Greater Funds cannot meet those last quoted conditions unless they transfer to the Southern Funds the portion of their reserves that is attributable to the respondents’ past contributions. If they fail to do so, according to respondents, they will suffer from a “structural defect” which can be remedied by federal courts pursuant to the power conferred by § 302(e) to “restrain violations of this section.”

The District Court granted petitioners’ motion for summary judgment. Though it agreed with respondents that it had power to “review a challenge that the Greater Funds are structurally deficient under [§ 302(c)(5)’s] `sole and exclusive’ benefit standard,” 710 F. Supp., at 61, 62, it found no “structural defect,” since there was no allegation of corruption in the Greater Funds and since the transfer of assets would not further any collective bargaining policies. Id., at 64. The Court of Appeals reversed, holding that the Greater Funds “would suffer from a `structural defect'” unless the funds transferred a portion of their assets to the Southern Funds. 935 F.2d, at 534. It remanded for the District Court “to shape an appropriate remedy guided by the principle that a fair portion of the reserves reflecting contributions made to the Greater Funds on behalf of the [respondents’ employees] should be reallocated to the Southern Funds.” Ibid. We granted certiorari, 505 U.S. 1203 (1992).

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II
Both the District Court and the Court of Appeals relied on the Second Circuit’s earlier decision in Local 50, Bakery and Confectionery Workers Union, AFL-CIO v. Local 3, Bakery and Confectionery Workers Union, AFL-CIO, 733 F.2d 229 (1984), which held that federal courts have “`jurisdiction under [§ 302(e)] to enforce a trust fund’s compliance with the statutory standards set forth in subsection (c)(5) by eliminating those offensive features in the structure or operation of the trust that would cause it to fail to qualify for a (c)(5) exception.” Id., at 234 (quoting Associated Contractors of Essex Cty., Inc. v. Laborers Int’l Union of North America, 559 F.2d 222, 225 (CA3 1977)). Local 50 and the decision below are among a large body of conflicting cases bearing upon federal courts’ powers under § 302(e) to supervise the administration of § 302(c)(5) trust funds. A number of courts have held that § 302(e) confers broad supervisory powers. See, e.g., Ponce v. Construction Laborers Pension Trust for Southern California, 628 F.2d 537, 541-542 (CA9 1980); Lewis v. Mill Ridge Coals, Inc., 298 F.2d 552, 558
(CA6 1962). Others have held that it confers no supervisory powers at all. See, e.g., Ader v. Hughes, 570 F.2d 303, 306 (CA10 1978); Bowers v. Ulpiano Casal, Inc., 393 F.2d 421
(CA1 1968); Moses v. Ammond, 162 F. Supp. 866, 871-872 (SDNY 1958). Still others have acknowledged supervisory powers limited in various respects. See Riley v. MEBA Pension Trust, 570 F.2d 406, 412-413 (CA2 1977) Knauss v. Gorman, 583 F.2d 82, 86 87 (CA3 1978). Our most recent case in this area expressly reserved the question See Mine Workers Health and Retirement Funds v. Robinson, 455 U.S. 562, 573, n. 12 (1982).

We hold today that § 302(e) does not provide authority for a federal court to issue injunctions against a trust fund or its trustees requiring the trust funds to be administered in the manner described in § 302(c)(5). By its unmistakable

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language, § 302(e) provides district courts with jurisdiction “to restrain violations of this section.” A “violation” of § 302 occurs when the substantive restrictions in §§ 302(a) and (b) are disobeyed, which happens, not when funds are administered by the trust fund, but when they are “pa[id], len[t], or deliver[ed]” to the trust fund, § 302(a), or when they are “receive[d], or accept[ed]” by the trust fund, or “request[ed], [or] demand[ed]” for the trust fund, § 302(b)(1). And the exception to violation set forth in paragraph (c)(5) relates, not to the purpose for which the trust fund is in fact used (an unrestricted fund that happens to be used “for the sole and exclusive benefit of the employees” does not qualify); but rather to the purpose for which the trust fund is “established,” § 302(c)(5), and for which the payments are “held in trust,” § 302(c)(5)(A).[2]
The trustees’ failure to comply with these latter purposes may be a

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breach of their contractual or fiduciary obligations and may subject them to suit for such breach; but it is no violation of § 302.[3]

A few courts and some academic commentators have drawn an analogy between §§ 301 and 302 of the LMRA, and have suggested that, as § 301 has been held to create a federal common law governing labor contracts, see Textile Workers v. Lincoln Mills of Ala., 353 U.S. 448 (1957), so too should § 302 be viewed as authorizing the development of “a specialized body of federal common law of trust administration.” Goetz, Developing Federal Labor Law of Welfare and Pension Plans, 55 Cornell L. Rev. 911, 930 (1970). One

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court has said, quoting Lincoln Mills, supra, at 457, that “jurisdiction in a case of this kind can be found within the `penumbra of express statutory mandate’ of Section 302.”Lugo v. Employees Retirement Fund of Illumination Products Industry, 366 F. Supp. 99, 103 (EDNY 1973), quoted approvingly in Alvares v. Erickson, 514 F.2d 156, 166 (CA9)cert. denied, 423 U.S. 874 (1975). See also Nedd v. United Mine Workers of America, 556 F.2d 190, 203 (CA3 1977), cert. denied, 434 U.S. 1013 (1978). A comparison of § 302(e) with § 301(a) shows that the analogy to Lincoln Mills is inapt. The latter provides a federal cause of action for any “violation of contracts between an employer and a labor organization.” Subsection § 302(e), by contrast, provides no cause of action for a “violation of the fiduciary duties imposed pursuant to an employee benefit trust fund”; rather, it allows federal courts to “restrain violations” of § 302, which, as we have explained, occur when payments to a nonqualifying trust are made or received.

The text of § 302 requires that, if payments are to be exempt from its prohibition, they must be “held in trust for the purpose of paying” employee benefits, and the trust must be “established” for the sole and exclusive benefit of the employees. There is nothing to suggest that this had the ambitious purpose of [establishing an entire body of federal trust law], rather than merely describing the character of the trust to which payments are allowed, leaving it to state law to determine when breaches of that trust have occurred and how they may be remedied. As observed by the court in Moses v. Ammond, 162 F. Supp., at 872, n. 14, § 302(c)(5) is akin to a provision such as § 401(a) of the Internal Revenue Code, 26 U.S.C. § 401(a) (1988 ed. and Supp. III), which (in connection with 26 U.S.C. § 501 (1988 ed. and Supp. III)) provides a tax exemption for employer-created pension trust funds so long as, inter alia, they are “created . . . for the exclusive benefit of [the employer’s] employees or their beneficiaries.” No one would contend that that provision confers upon the federal courts authority

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to govern and enforce the trusts, and there is no more reason to reach such a conclusion here.

Respondents point to our statement in Arroyo v. United States, 359 U.S., at 426-427, that “[c]ontinuing compliance with [the standards of § 302(c)(5)] in the administration of welfare funds was made explicitly enforceable in federal district courts by civil proceedings under § 302(e).” See also Robinson, 455 U.S., at 573, n. 12 (referring to this passage). The statement is perhaps susceptible of the reading that “compliance” was “made . . . enforceable” by authorizing district courts to prohibit further payments to an entity that was not established, or does not hold its funds in trust, for the requisite purposes. But in any case, Arroyo was a criminal prosecution brought under § 302(d), and the statement was therefore pure dictum.[4] Also dictum was our statement in NLRB v. Amax Coal Co., 453 U.S. 322, 331 (1981), later quoted i Robinson, 455 U.S., at 570, that “the `sole purpose’ of § 302(c)(5) is to ensure that employee benefit trust funds “are legitimate trust funds used actually for the specified benefits to the employees of the employers who contribute to them. . . .'” (Emphasis added.) This obiter quotation of a line from the floor debate on the LMRA cannot convert (1) a statutory statement of trust obligations that must exist to

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obtain an exemption into (2) a statutory authorization to enforce trust obligations.[5]

Consistently with the text of § 302(c)(5) and the structure of § 302 in general, we view the “sole and exclusive benefit” and “held in trust” provisions of that paragraph as neither creating nor imposing a federal trust law standard, but rather as simply requiring a trust obligation for the specified purposes, defined and enforced originally under state law, see Restatement (Second) of Trusts § 170(1) (1959), and now under ERISA.[6] Cf. Amax Coal, supra, at 329-330. Respondents do not deny that the Greater Funds are held subject to such a trust obligation. The fiduciaries of the Greater Funds are subject to the fiduciary obligations of ERISA, including the so-called exclusive benefit requirement of 29 U.S.C. § 1104(a)(1)(i), and are liable under 29 U.S.C. § 1109(a) to legal and equitable remedies for failure in those obligations. Since the Greater Funds are entities that qualify under § 302(c)(5), equitable relief under § 302(e) restraining future payments to them would not be appropriate.

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In addition to the § 302 claim, respondents’ complaint asserted two ERISA claims, one based on ERISA’s asset transfer rules, 29 U.S.C. § 1414, and the other on ERISA’s above-mentioned fiduciary duty provision, § 1104. The District Court ruled against respondents on both claims but, because of its ruling on § 302, the Court of Appeals did not reach them. Neither do we and, on remand, the Court of Appeals will be free to consider them.

* * * *

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

It is so ordered.

JUSTICE STEVENS, with whom JUSTICE WHITE and JUSTICE BLACKMUN join, concurring in the judgment.

The judgment of the Court of Appeals should be reversed because petitioners’ failure to transfer assets to respondents’ Southern Funds did not violate § 302(c)(5) of the Labor Management Relations Act, 1947 (LMRA), 29 U.S.C. § 186(c)(5) (1988 ed., Supp. III). Because the Court unnecessarily decides that § 302(e) of the LMRA would not authorize injunctive relief even had petitioners violated the specific standards of § 302(c)(5), I do not join its opinion.

As the Court explains, see ante, at 582-584, this case arose when respondent employers withdrew from the Greater Funds, a multiemployer trust fund, and negotiated an independent union agreement establishing the Southern Funds. Respondents then sought a transfer to the Southern Funds of that portion of the Greater Funds’ assets representing respondents’ past contributions on behalf of their employees. 935 F.2d 528, 531
(CA2 1991). The Court of Appeals agreed that a transfer was necessary, reasoning that retention by the Greater Funds of the assets contributed by respondents would violate the “sole and exclusive benefit” provision

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of § 302(c)(5). Id., at 533-534; see ante, at 586. We granted certiorari to review that holding. See Pet. for Cert. i.

I would decide this case on the narrow ground presented: that the refusal to make the transfer at issue did not violate § 302(c)(5), 29 U.S.C. § 186(c)(5) (1988 ed., Supp. III). That provision allows payments into trusts not only “for the sole and exclusive benefit of the employees of [the contributing] employer,” but also for the benefit of “such employees, families, and dependents jointly with the employees of other employers making similar payments, and their families and dependents.” To the extent respondents’ previous contributions to the Greater Funds have not been used already to benefit respondents’ own employees, they now will be used for the benefit of “employees of other employers making similar payments, and their families and dependents.” Ibid. Hence, the Greater Funds continue to operate within the constraints of § 302(c)(5), and no transfer is required.

That some portion of respondents’ contributions will go to benefit the employees of other contributors is, of course, in the nature of a multiemployer plan. Such plans operate precisely as suggested by the language of § 302(c)(5), by pooling employer contributions for the joint benefit of all participating employees. Segregation of funds by an employer is neither feasible nor contemplated. “An employer’s contributions are not solely for the benefit of its employees or employees who have worked for it alone.” Concrete Pipe Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal., 508 U.S. 638 (1993). See also Stinson v. Ironworkers Dist. Council of Southern Ohio and Vicinity Benefit Trust, 869 F.2d 1014, 1021-1022 (CA7 1989) (use of employer’s contributions for benefit of other than own employees does not violate “sole and exclusive benefit” requirement); British Motor Car Distributors, Ltd. v. San Francisco Automotive Industries Welfare Fund, 882 F.2d 371, 377-378
(CA9 1989) (same).

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In short, I agree with the United States, appearing as amicus curiae, that petitioners did not violate § 302(c)(5) when they refused to transfer some proportional share of assets to the Southern Funds. The Court eschews this straightforward rule of decision, however, in favor of a far broader approach, [quite unanticipated by the submissions of the parties.] [Without the benefit of argument on the point by either litigant], the Court reaches out to overrule decades of case law by deciding that § 302(e) does not authorize a civil remedy for violations of § 302(c)(5). In my view, this reinvention of § 302 of the LMRA is as unwise as it is uninvited.

Section 302(c)(5) performs two distinct functions in the statutory scheme. First, as an exception to the criminal prohibitions of §§ 302(a) and (b), § 302(c)(5) provides a “safe harbor” for contributions to legitimate pension funds. See ante, at 586. Second, § 302(c)(5) sets forth certain standards that must be observed in the ongoing administration of such funds. The importance of both these functions is illustrated by our decision in Arroyo v. United States, 359 U.S. 419, (1959), which involved a contribution lawful when made and thereafter diverted to an unlawful use. Because the payment was to a legitimate trust fund, we held, the transaction fell within § 302(c)(5)’s exception, so that receipt of the payment was not a criminal violation of § 302(b). Id., at 423-424. At the same time, however, § 302(e) was available to provide a civil remedy for the violation of § 302(c)(5) that occurred when the funds subsequently were diverted. Id., at 426-427.[1]

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The majority repudiates this understanding of § 302(c)(5)’s operation, reflected also in NLRB v. Amax Coal Co., 453 U.S. 322, 331 (1981), and Mine Workers Health and Retirement Funds v. Robinson, 455 U.S. 562, 570-572 (1982), as “pure dictum.” Ante, at 591. But [the reasoning that led us to our conclusion in Arroyo is not so easily dismissed.] As we explained in that case, § 302(c)(5) was enacted not merely to exempt specified conduct from the prohibitions of §§ 302(a) and (b), but also to ensure that union trust funds, once established, would continue to benefit the designated employees. 359 U.S., at 424-427.

“Congress believed that, if welfare funds were established which did not define with specificity the benefits payable thereunder, a substantial danger existed that such funds might be employed to perpetuate control of union officers, for political purposes, or even for personal gain. See 92 Cong.Rec. 4892-4894, 4899, 5181, 5345-5346; S.Rep. No. 105, 80th Cong., 1st Sess., at 52; 93 Cong.Rec. 4678, 4746-4747. To remove these dangers, specific standards were established to assure that welfare funds would be established only for purposes which Congress considered proper and expended only for the purposes for which they were established. See Cox, Some Aspects of the Labor Management Relations Act, [61 Harv. L. Rev. 274, 290 (1947)]. Continuing compliance with these standards in the administration of welfare funds was made explicitly enforceable in federal district courts by civil proceedings under § 302(e). The legislative history is devoid of any suggestion that defalcating trustees were to be held accountable under federal law, except by way of the injunctive

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remedy provided in that subsection.” Id., at 426-427 (footnote omitted).[2]

We made the same point in Robinson, stating that “the sole purpose of § 302(c)(5) is to ensure that employee benefit trust funds are legitimate trust funds, used actually for the specified benefits to the employees of the employers who contribute to them. . . .” 455 U.S., at 570 (quoting Amax Coal, 453 U.S., at 331 internal quotation marks omitted). Our view that § 302(c)(5) imposed continuing obligations on the actual use of trust funds, we found, was “amply supported by the legislative history,”455 U.S., at 571, which reflected a concern that “funds contributed by their employers for the benefit of the employees and their families might be diverted to other union purposes or even to the private benefit of faithless union leaders,” id., at 572. See als id., at 570-572, and nn. 8-10, and sources cited therein. To prevent trust funds once legitimate from turning into vehicles for kickbacks and racketeering, § 302(c)(5) requires not only that trust funds be “established” for proper purposes, but also that “employer contributions be administered for the sole and exclusive benefit of employees.” Id., at 572 (emphasis added).[3]

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The proposition that § 302(c)(5)’s specific statutory standards are enforceable on a continuing basis has never been questioned before today, by this Court or by any court of appeals. It is true, as the majority notes, ante, at 587, that the precise scope of the civil remedy authorized by § 302(e) has been the subject of controversy. Some courts have read § 302(e) quite broadly to authorize relief in cases of “unreasonable” or “arbitrary and capricious” trust administration See, e.g., Phillips v. Alaska Hotel and Restaurant Employees Pension Fund, 944 F.2d 509, 515 (CA9 1991); Stinson v. Ironworkers District Council of Southern Ohio and Vicinity Benefit Trust, 869 F.2d, at 1019.[4] Others have read § 302(e) more narrowly, as limited to remedying “violations of basic structure, as determined by the Congress, not violations of fiduciary obligations or standards of prudence in the administration of the trust fund.” Bowers v. Ulpiano Casal, Inc., 393 F.2d 421, 424 (CA1 1968). For

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present purposes, however, the important point is that every Court of Appeals has assumed that the federal courts may, at a minimum, enforce compliance with § 302(c)(5)’s express commands.[5]

Our unanimous opinion in Robinson is consistent with this well-established body of case law. In Robinson, we considered and rejected one of the broader views of § 302(c)(5), holding that the provision does not empower the federal courts to impose a nonstatutory “reasonableness” requirement on trust fund eligibility criteria established by collective bargaining agreement. 455 U.S., at 574. We also left open the question whether § 302(e) authorizes enforcement of the traditional fiduciary duties of trustees. Id., at 573, n. 12.[6]
The question with which we had no difficulty, however, is the one that

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the Court reaches out to answer today. We unequivocally stated:

“It is, of course, clear that compliance with the specific standards of § 302(c)(5) in the administration of welfare funds is enforceable in federal district courts under § 302(e) of the LMRA.” Ibid.[7]

The Court now seems to assume that it is confronted with a choice between “establishing an entire body of federal trust law,” ante, at 590, on the one hand, and limiting the scope of § 302(e) to injunctions against the making or acceptance of prohibited payments, on the other. As Robinson makes clear, however, there is no need to go so far in either direction; our understanding that § 302(e) provides a remedy for violations of § 302(c)(5)’s specific standards is independent of any view as to whether § 302(e) makes general fiduciary duties enforceable in federal court.

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In my view, if a trust fund is not complying with the standards of § 302(c)(5) — if, for instance, it is making annual contributions to the Red Cross — then a federal court is authorized by § 302(e) to enjoin the improper diversion of funds. There is no sensible reason why the court should instead be restricted to enjoining future payments to the fund, or receipt of those payments, as violations of §§ 302(a) and (b). Congress intended § 302(c)(5) to operate as a guarantee against diversion of trust funds, and this purpose is effectuated by the reading we have always before given § 302. Today’s [departure from this understanding] seriously undermines the functioning of the statute. The Court’s action is not only [uninvited] and unnecessary; it is [a radical departure from the doctrine of judicial restraint.]

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