Thomas v. Honeybrook Mines, Inc.

OPINION OF THE COURT GIBBONS, Circuit Judge. The intervenors, members of the Pensioned Anthracite Coal Miners Protest Executive Committee (hereinafter the Committee), appeal from the denial of their motion to direct the payment of their counsel fees out of a fund. The fund in question represehts recoveries made by the trustees of the Anthracite Health and Welfare Fund of the United Mine Workers of America (hereinafter the Fund), from certain coal operators who were delinquent in royalty payments specified in the industry collective bargaining agreements. The lawsuit against Honeybrook Mines was filed in May of 1964 and the committee’s motion to intervene was granted in December of 1965. In addition to the Honeybrook Mines suit, thirty-five other lawsuits against delinquent mine operators were later filed by the Fund trustees. A fee application was made and denied in each case. Timely notices of appeal were filed in each case, but by agreement of counsel only the appeal in the instant case was docketed in this Court. In all, judgments in excess of $1,900,000. have been obtained, settlements in excess of $800,000. have been accepted, and agreements have been made with many delinquent coal operators for the payment of approximately $4,280,000. The committee contends that it was largely responsible for the accomplishment of these results, and that its counsel fees should be paid from the resulting fund. The district court did not agree. The essence of the decision appealed from may be found in this language of the district court: It may well be that the lawsuits against the delinquent operators would not have been started had not the pensioned miners group brought théir actions against the United Mine Workers in the Eastern District and Middle District Federal Courts, but it would be pure guesswork for me to so conclude on the basis of the evidence before me. Even if I were to so conclude, however, this would still fall far short of the findings necessary to support a conclusion that the amounts recovered by the Trustees were created by the efforts of intervenors counsel. Their efforts may have been meaningful and commendable, but they did not [983] rise to the level, in the suits before me, to justify an award of counsel fees to them out of the amounts recovered by the Trustees. (101a-102a) That court thus made (1) a finding of fact that there was no evidence that the lawsuits against the delinquent mine operators were the result of the litigation and other activities pursued by appellants, and (2) a conclusion of law that even if the lawsuits against the delinquent mine operators would not have resulted but for appellants’ activities, the expenses of those activities are not recoverable from the resulting fund. The finding of fact is clearly erroneous, and the conclusion of law is wrong. THE FACTS The Anthracite Health and Welfare Fund came into existence under the terms of the Anthracite Wage Agreement of June 7, 1946. That agreement provided that the Fund would be managed by three trustees, two appointed by the President of the United Mine Workers of America and one appointed by the Anthracite Operators, (21a). The Fund, resulting from royalty payments by coal operators on anthracite production, was intended to provide pensions to retired miners. When, in November, 1961, the pensions, which were originally to be $100. a month, were finally reduced to $30. a month, discontent in the coal regions led to the establishment of the Pensioned Anthracite Coal Miners Protest Executive Committee. Beginning in 1961, members of this committee met with Thomas Kennedy, who was concurrently chairman of the trustees of the Fund and International President of the United Mine Workers of America, and with Mart F. Brennan, who was concurrently a trustee of the Fund and President of District 7, United Mine Workers of America. The committee members were informed that the reductions in pension payments were necessitated by delinquencies in royalty payments. When, in February, 1962, the committee requested the names of coal companies which were delinquent, the Fund trustees refused to disclose this information, (33a; 86a). When the committee retained counsel and counsel, in September, October and November, 1962 sought the same information, the trustees again refused, (33a; 87a). The efforts to obtain this information continued, by requests to the trustees by interrogatories in various lawsuits, and pursuant to the Welfare and Pension Plan Disclosure Act, 29 U.S.C. § 301 et seq. (1964), (34a). A partial disclosure was made on October 11, 1965, (34a). The refusal of the Fund trustees to disclose to representatives of the cestuis of the trust the names of the delinquent operators is admitted (55a) but explained thus: * * *; that counsel for applicants were informed by the trustees that in the judgment of the trustees such information might have a serious effect on the credit of the companies involved and the future of the Fund if such information were made public, except by way of actions to collect the delinquencies. (Brennan affidavit, 55a). To us this explanation has a hollow ring. But taking it at face value, in November, 1962 the committee and counsel were confronted with this situation: (1) They knew or could learn from public records the production of each company. (2) They knew, or could learn from public records, therefore, how much in royalties should have been collected. (3) They were informed by the Fund trustees of extensive delinquencies. (4) The trustees of the Fund declined to disclose to the very beneficiaries of the trust which companies were delinquent, for fear of harm to the credit of the companies! Now it may be that for the overall health of the admittedly ailing anthracite industry, (62a), the trustees should have been cautious in permitting pres [984] sure to be put on the delinquent companies. But that is not the issue here. The pensioned miners were not interested in the health of the industry, but in payments from the Fund. Thus, the situation was analogous to a dispute between income beneficiaries looking for short term returns, and remaindermen looking for safety and possible capital appreciation. Here the record of decisions of the trustees showed consistent concern for the anthracite industry at the quite evident expense of current payments to the pensioners. That this policy of the Fund trustees may have been sounder in the long run (a matter of speculation) is irrelevant if in fact the activities of the committee and its counsel forced a change in the direction of the Fund which benefited the class of current income beneficiaries. Faced, in 1961 and 1962, with the obvious reluctance of the Fund trustees to rock the boat, the committee counsel commenced their own investigation of public records of the United States Department of Labor, the Pennsylvania Department of Internal Affairs, the Pennsylvania Department of Mines and Mineral Industries, the Corporation Bureau of the Pennsylvania Department of State, and the courthouse records of the anthracite producing counties, (87a). A comparison of the production records in the Pennsylvania Department of Mines and Mineral Industries with the Fund reports filed with the United States Department of Labor disclosed that millions of dollars in royalties remained unpaid, (88a). The collection activities by the Fund trustees disclosed in the court records (outlined in the affidavit of Charles Nedd, 25a-33a) fell far short of convincing the committee that the delinquent operators were being pursued with the diligence which might restore the pension cuts. In March, 1963, the committee commenced a class action against the United Mine Workers of America to collect for the Fund beneficiaries the amount of the delinquent payments, on the ground that the Union had failed to enforce the royalty payment provisions of the agreements. Although this suit was dismissed on jurisdictional grounds, Nedd v. United Mine Workers of America, 225 F.Supp. 750 (E.D.Pa.1963), aff’d., 332 F.2d 373 (3 Cir. 1964), it cannot be ignored for purposes of the present application, if, as we believe, the record discloses that it was instrumental in prodding the cautious trustees into more aggressive action. It was on May 18, 1964, three days before the argument in this court on the appeal from dismissal of the committee’s first lawsuit, and fourteen months after that suit had been filed, that the Fund trustees finally filed the complaint against Honeybrook Mines which resulted in recoveries here in issue. A suit against a second operator (Northwest Mining Company) was filed on December 9, 1964. On January 21, 1965 the committee filed a new lawsuit against the United Mine Workers of America, Civil Action No. 8796, in the District Court for the Middle District of Pennsylvania. Jurisdiction was based on Section 301 of the Labor-Management Relations Act (TaftHartley Act), 29 U.S.C. § 185(a) et seq. (1964), and the committee attempted to join the Fund trustees as involuntary plaintiffs. The trustees resisted being joined and the union claimed lack of jurisdiction. This court, in Nedd v. United Mine Workers, 400 F.2d 103 (3 Cir. 1968), eventually held that there was probable federal jurisdiction under 28 U.S.C. § 1337 (1964), and that the trustees of the Fund were necessary parties. On remand an amended complaint was filed and that case is still pending. The district court made reference to that lawsuit in its memorandum denying the committee’s fee application, (103a). It ignored the undisputed fact that it was not until after the second committee lawsuit was filed that the Fund trustees finally started suit against some thirty-three additional delinquent operators, many for delinquencies of long standing, (90a). In explanation of the delay between early 1962, when the committee first [985] began to exert pressure on behalf of the pensioned miners, and March, 1964, when the Honeybrook Mines action, was filed, or more precisely between 1962 and 1965 and 1966, when the bulk of the delinquency suits were filed, the Fund trustees assert their fear that the operators would plead in defense a violation of Section 302(c)(5) of the Labor-Management Relations Act of 1947 (TaftHartley Act), 29 U.S.C. § 186(c) (5) (1964). Thus, they say, on advice of counsel they delayed suit until the amendment of the welfare fund provisions in the Anthracite Wage Agreement of September 1, 1964. There is no explanation for the delay in pressing for a change in the welfare fund provisions between 1947, when Section 302(c) (5) was enacted (Act of June 23, 1947, Ch. 120, § 302(c)(5), 61 Stat. 157), and September 1, 1964, when the anthracite wage agreement was amended. In view of the fact that the Honeybrook Mines suit was filed in May of 1964, and that a number of other suits had been filed between 1954 and 1961, (23a-33a), the trustees’ explanation induces a certain degree of skepticism. Moreover, it must be contrasted with trustee Brennan’s admitted concern with the credit standing of the coal operators, (55a). But in any event the explanation is additional proof that, continuing until well into 1964 at least, the Fund trustees continued to drag their feet while the committee continued to press for prompt action. Exhibits in the record outline the history of the severe downturn of the anthracite industry over the twenty years during which the delinquencies were permitted to accumulate, and this downturn is urged by appellees as a factor that could not have been ignored by the trustees in deciding how best to approach the delinquent payment problem. True enough; and the weight which the Fund trustees could properly give to the condition of the industry, when balanced against their obligation to the present Fund beneficiaries, probably will be determined in the second committee (Middle District) lawsuit. But the issue on the fee application is not whether or not the trustees’ approach to the industry was sounder than that of the committee. It is, rather, whether or not the committee, which vehemently disagreed with that approach, by its activities helped to create a fund for the class for which it acted. The district court concluded that such a finding would be “pure guesswork.” We conclude that on the record before us any other finding is clearly erroneous. THE LAW The district court concludes that even if the delinquency lawsuits would not have been started had not the pensioned miners’ group started their actions, the Fund still could not be charged with committee counsel fees when the trustees were the actual plaintiffs. This is a far too narrow view of the applicable rule. Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157 (1881), is the seminal case, and subsequent developments are reviewed in Judge Adams’ opinion in Kahan v. Rosenstiel, 424 F.2d 161 (3 Cir. 1970). Both that case and Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970), on which it relies, indicate that the equitable rule against saddling the active representative of a class with the entire expenses of legal efforts of benefit to all should not be applied in a narrow technical manner. Powell v. Pennsylvania Railroad Co., 267 F.2d 241 (3 Cir. 1959), is directly in point, unless we accept the district court’s finding that there was insufficient evidence of a relationship between the fund and the committee activities. We have rejected that finding. We hold that committee activities forced the Fund trustees to commence the delinquency lawsuits, that these lawsuits produced the fund and that the committee’s counsel fees and expenses incurred in bringing about the delinquency lawsuits are properly payable out of the Fund. [986] The order of the district court denying intervenors’ motion to direct the payment of its counsel fees will be reversed and the case will be remanded to the district court which should make an award of counsel fees appropriate under the circumstances of the case, taking into account not only services rendered during the course of the delinquency lawsuits, but also services rendered in bringing about the change in the Fund trustees’ approach.