Caterpillar, Inc. v. International Union, United Automobile, Aerospace & Agricultural Implement Workers , 107 F.3d 1052 ( 1997 )


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  •                                                                                                                            Opinions of the United
    1997 Decisions                                                                                                             States Court of Appeals
    for the Third Circuit
    3-4-1997
    Caterpillar Inc v. Intl Union United
    Precedential or Non-Precedential:
    Docket 96-7012
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    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    No. 96-7012
    CATERPILLAR INC., a Delaware Corporation
    doing business in Pennsylvania
    v.
    INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE
    AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA; and
    its affiliated LOCAL UNION 786,
    Appellants
    ON APPEAL FROM THE UNITED STATES DISTRICT COURT
    FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
    (D.C. Civil Action No. 92-01854)
    Argued August 8, 1996
    Before:   NYGAARD, LEWIS and McKEE, Circuit Judges.
    Reargued December 2, 1996
    Before: SLOVITER, Chief Judge, and BECKER, STAPLETON, MANSMANN,
    GREENBERG, SCIRICA, COWEN, NYGAARD, ALITO,
    ROTH, LEWIS and McKEE, Circuit Judges.
    (Opinion filed   March 4, 1997)
    DAVID M. SILBERMAN, ESQUIRE
    (Argued)
    Bredhoff & Kaiser
    1000 Connecticut
    Avenue,                                                 N.W.
    Suite 1300
    Washington, DC 20036
    DANIEL W. SHERRICK, ESQUIRE
    International Union of
    United Auto Workers
    8000 East Jefferson
    Detroit, MI 48214
    WENDY L. KAHN, ESQUIRE
    Zwerdling, Paul, Leibig,
    Kahn,
    Thompson & Driesen
    1025 Connecticut Avenue,
    N.W.                              Suite 712
    Washington, DC 20036
    Attorneys for Appellants
    GERALD C. PETERSON, ESQUIRE
    COLUMBUS R. GANGEMI, Jr.,
    ESQUIRE
    (Argued)
    Winston & Strawm
    35 West Wacker Drive
    Suite 4200
    Chicago, IL 60601
    Attorneys for Appellee
    JAMES B. COPPESS, ESQUIRE
    815 16th Street, N.W.
    Washington, DC    20006
    Attorney for Amicus-Appelant,
    American Federation of Labor
    & Congress of Industrial
    Organizations (AFL-CIO)
    ALLEN H. FELDMAN, ESQUIRE
    EDWARD D. SIEGER, ESQUIRE
    United States Dep't of
    Labor                               200 Constitution
    Avenue, N.W.                              Washington, DC
    20210
    Attorneys for Amicus Curiae
    United States of America
    COUNCIL ON LABOR LAW EQUALITY
    Proposed Amicus-Appellee
    OPINION OF THE COURT
    2
    NYGAARD, Circuit Judge.
    In this appeal, we must decide whether an employer
    granting paid leaves of absence to employees who then become the
    union's full-time grievance chairmen violates § 302 of the Labor
    Management Relations Act, 29 U.S.C. § 186.      The district court
    held that this practice is illegal, relying on our decision in
    Trailways Lines, Inc. v. Trailways, Inc. Joint Council,
    Amalgamated Transit Union, 
    785 F.2d 101
    (3d Cir. 1986).      We will
    reverse, and in doing so, overrule significant portions of
    Trailways.
    I.
    The facts are stated comprehensively in the district
    court's opinion, Caterpillar, Inc. v. International Union, United
    Automobile Workers, 
    909 F. Supp. 254
    (M.D. Pa. 1995).      For our
    purposes it suffices to recount that the United Auto Workers, its
    Local 786 and Caterpillar have been parties to a collective
    bargaining agreement since 1954.      Until 1973, the agreement
    contained a "no-docking" provision allowing employees who were
    also union stewards and committeemen to devote part of their work
    days to processing employee grievances without losing pay,
    benefits or full-time status.   In 1973, this agreement was
    expanded to allow the union's full-time union committeemen and
    grievance chairmen to devote their entire work week to union
    business without losing pay.    These employees are placed on leave
    3
    of absence and are paid at the same rate as when they last worked
    on the factory floor.    They conduct that business from the union
    hall, perform no duties directly for Caterpillar, and are not
    under the control of Caterpillar except for time-reporting
    purposes.
    In 1991, a nationwide labor dispute erupted between
    Caterpillar and the union, which resulted in the employees
    returning to work without a contract.    A year later, Caterpillar
    unilaterally informed the union that it would cease paying the
    grievance chairmen and questioned the legality of such payments,
    notwithstanding that it had paid them without complaint for
    eighteen years.    The union filed an unfair labor practice charge
    with the National Labor Relations Board, alleging that, by
    unilaterally rescinding the payments, Caterpillar refused to
    bargain in good faith.    A month later, Caterpillar filed this
    suit seeking a declaratory judgment that those payments violate §
    302 of the LMRA.
    The district court stayed its proceedings pending the
    decision of the NLRB.    An administrative law judge later issued a
    recommended decision and order dismissing the union's charges,
    finding that the payments violated § 8 of the National Labor
    Relations Act.1    The district court then lifted the stay and
    1. The ALJ, while questioning the validity of the payments under
    § 302 of the LMRA, did not reach that issue in his proposed
    holding.
    4
    held that Caterpillar's payments to the union's full-time
    grievance chairmen violated § 302.   The union now appeals.
    II.
    A.
    Section 302(a) of the LMRA provides:
    It shall be unlawful for any employer . . . to pay,
    lend, deliver, or agree to pay, lend, or
    deliver, any money or other thing of value--
    (1) to any representative of any of his employees who are
    employed in an industry affecting commerce; or
    (2) to any labor organization, or any officer or employee
    thereof, which represents . . . any of the employees of
    such employer who are employed in an industry affecting
    commerce[.]
    29 U.S.C. § 186(a).   Caterpillar is an employer in an industry
    that affects commerce and the grievance chairmen are
    representatives of Caterpillar's employees.    On the face of §
    302(a), then, Caterpillar's wage payments to them would appear to
    be unlawful. Section 302(c), however, provides that
    [t]he provisions of this section shall not be applicable (1) in
    respect to any money or other thing of value payable by
    an employer . . . to any representative of his
    employees, . . . who is also an employee or former
    employee of such employer, as compensation for, or by
    reason of, his service as an employee of such
    employer[.]
    29 U.S.C. § 186(c)(1).    Thus, if the grievance chairmen receive
    their compensation "by reason of" their "service as employees,"
    then Caterpillar's wage payments are lawful.
    5
    In Trailways, the employer agreed to continue making
    contributions to a joint union-management trust fund on behalf of
    employees who had taken leaves of absence to devote their time to
    full-time union positions.2   There, the union argued that those
    payments could pass muster under § 302(c)(1), which   permits
    payments to former employees "as compensation for, or by reason
    of, [their] service as . . . employee[s.]"   The Trailways court
    rejected that possibility as a matter of statutory construction,
    opining:
    To the Union, the pension fund contributions made on
    behalf of former employees currently on leave
    to serve as union officials were earned
    solely "by reason" of their past service to
    Trailways. But for their past employment by
    Trailways, the Union contends, these
    officials would not be eligible for pension
    fund contributions; therefore, these
    payments are "by reason of their service as
    an employee of" Trailways.
    A logical reading of the statute makes clear
    that the "payments to former employees'
    exemption" of § 302(c)(1) applies solely to
    payments made as "compensation or by reason
    of" the former employees past service to the
    employer. While the Union is correct in
    asserting that had these individuals never
    been Trailways' employees they would not be
    eligible for pension contributions made on
    their behalf, it does not therefore follow
    that the pension fund contributions made by
    Trailways pursuant to the collective
    2.   One issue before the court was whether the payments were
    lawful under § 302(c)(5), which grants an exception for payments
    to pension trust funds. The Trailways court concluded, however,
    that the § 302(c)(5) exception applies only to current employees
    and held that the union officials did not fit that description
    because Trailways did not have sufficient control over their work
    and because their work was solely for the benefit of the 
    union. 785 F.2d at 104-07
    .
    6
    bargaining agreement were made "in
    compensation for, or by reason of," their
    former service to Trailways so as to fall
    within the § 302(c)(1) exception. Clearly,
    the statute contemplates payments to former
    employees for past services actually rendered
    by those former employees while they were
    employees of the company. Just as clearly,
    however, the pension fund benefits paid on
    behalf of former employees serving as union
    officials while on leave from Trailways are
    not compensation for their past service to
    Trailways.
    
    Id. at 105-06
    (emphasis in original).3
    Were we to follow Trailways, its holding would control
    our decision in this case.   The grievance chairmen cannot be
    considered current employees of Caterpillar who are being
    compensated for their current services.   The chairmen perform no
    services directly for Caterpillar.   Instead, they handle
    grievances and other labor matters for the union, a situation
    that often places them in a position adverse to Caterpillar's.
    Section 302(c)(1) legalizes payments to current or former
    employees based on their "services" as employees, not their
    "status" as such.   Thus, the mere fact that the chairmen remain
    on the Caterpillar payroll and fill out the appropriate forms and
    time sheets to get paid is legally irrelevant.
    The union argues that, unlike the situation under
    subsection (c)(5) in Trailways, under subsection (c)(1) the
    3. In a footnote, the court noted that the pension contributions
    were based on the employees' current union salary, indicating
    that the payments were "geared to their contemporaneous services
    to the Union." 
    Id. at 106
    n.5 (emphasis deleted).
    7
    chairmen can be employees of both the union and the employer.    It
    relies especially on NLRB v. Town & Country Electric, 
    116 S. Ct. 450
    , 456 (1995), in which the Supreme Court held that a paid
    union organizer who obtained a job in order to "salt" the
    workforce and organize for the union was still an employee within
    the meaning of the National Labor Relations Act.    But there, the
    Court noted that the employee still performed services for the
    benefit and under the control of the employer, even though part
    of his time was spent organizing for the union.    That situation
    is different from ours.   Here the chairmen do nothing for
    Caterpillar's benefit.
    Moreover, under Trailways we cannot conclude that the
    chairmen's salaries were payments to former employees "as
    compensation for" their past services as employees.    The chairmen
    were already compensated for their production line work long ago
    in the form of wages and vested benefits.   A fair reading of
    Trailways does not support a finding that the payments at issue
    here somehow "related back" to these former employees' services
    on the factory floor.
    B.
    Nevertheless, after careful consideration and
    reargument before the in banc court, we believe that Trailways
    was wrongly decided and tends to subject innocuous, bargained-for
    8
    and fully disclosed payments to the criminal sanctions of the
    LMRA.
    We have no difficulty with the Trailways holding
    regarding "current employee" status.    
    See 785 F.2d at 106-07
    .     We
    also believe that the salary payments to these union officials
    were not in compensation for their past services rendered as
    production employees.    Our disagreement is with the Trailways
    court's conclusion that the "by reason of" language in §
    302(c)(1) exempts only those payments for past services actually
    rendered while the former employee was still employed by the
    company.    We think that statement misinterprets the text of §
    302(c)(1) and does nothing to further the policy objectives
    Congress had when it enacted the LMRA half a century ago.
    The Trailways test would be quite appropriate if §
    302(c)(1) referred only to payments as compensation for past
    services.    It is difficult indeed to comprehend how years, even
    decades, of paid union leave can realistically be thought of as
    compensation for time spent on the factory floor.    The Trailways
    court, however, applied the same test to the statute's "by reason
    of" language; with that we can no longer agree.
    First of all, Congress chose specifically to exempt
    payments in "compensation for" or "by reason of" an employee's
    service.    By so doing, it must be presumed to have intended that
    certain payments would be legal, even though they were not, as
    Trailways recites, "for past services actually rendered by those
    9
    former employees while they were employees of the company."      
    Id. at 106
    (emphasis deleted).   Nevertheless, the Trailways court,
    without any explanation, conflated the two phrases and developed
    a unitary test for whether former employee compensation is
    permissible.
    Under the Trailways test, there are three requirements
    for a "former employee" payment to qualify for the § 302(c)(1)
    exemption:
    (1) It must be for past, not present, services;
    (2) the services must be actually rendered; and
    (3) the services must have been rendered while the
    payee was still an employee.
    Under this standard,   the chairmen's wages fail the Trailways
    test, because the payments are not for services actually rendered
    to the company while they were still employees.   Indeed, under
    Trailways, it appears that pay or continuation of benefits for
    time spent serving on a jury or in the National Guard would be
    illegal.
    Likewise, even the "no docking" provisions of many
    collective bargaining agreements, including the Caterpillar-UAW
    contract here, fail to meet the Trailways standard.   Under a no-
    docking clause, the employer agrees that shop stewards may leave
    their assigned work areas for portions of a day to process
    employee grievances without loss of pay.   By paying production
    workers for the part-time hours when they leave their regular
    duties , the company is paying for services not actually rendered
    10
    for it, since those employees are already receiving their regular
    hourly wages and benefits for their production line work.   Yet,
    no-docking arrangements have been consistently upheld by the
    courts as not in violation of § 302, see NLRB v. BASF Wyandotte
    Corp., 
    798 F.2d 849
    , 854-56 (5th Cir. 1986); BASF Wyandotte Corp.
    v. Local 227, 
    791 F.2d 1046
    (2d Cir. 1986); Herrera v.
    International Union, UAW, 
    73 F.3d 1056
    (10th Cir. 1996), aff'g &
    adopting dist. ct. analysis, 
    858 F. Supp. 1529
    , 1546 (D. Kan.
    1994); Communications Workers v. Bell Atlantic Network Servs.,
    Inc., 
    670 F. Supp. 416
    , 423-24 (D.D.C. 1987); Employees'
    Independent Union v. Wyman Gordon Co., 
    314 F. Supp. 458
    , 461
    (N.D. Ill. 1970), and Caterpillar does not even seek to have the
    contract's no-docking clause declared illegal.   Moreover, as the
    union points out, it would be strange indeed if Congress intended
    that granting four employees two hours per day of paid union
    leave is permissible, while granting a single employee eight
    hours per day of that same leave is a federal crime.
    We believe that the payments at issue here, while they
    were not compensation for hours worked in the past, certainly
    were "by reason of" that service.   We reach this conclusion
    because the payments arose, not out of some "back-door deal" with
    the union, but out of the collective bargaining agreement itself.
    Caterpillar was willing to put that costly benefit on the table,
    which strongly implies that the employees had to give up
    something in the bargaining process that they otherwise could
    11
    have received.   Thus, every employee implicitly gave up a small
    amount in current wages and benefits in exchange for a promise
    that, if he or she should someday be elected grievance
    chairperson, Caterpillar would continue to pay his or her
    salary.4 As our colleague Judge Becker pointed out, dissenting in
    Trailways:
    The collective bargaining agreement contains
    the terms of workers' employment with
    Trailways; each of the benefits the workers
    receive under that collective bargaining
    agreement are part of the consideration for
    their services at Trailways. In addition to
    the standard terms for wages, overtime pay,
    and insurance, the collective bargaining
    agreement provides that persons who take a
    leave of absence to work as union officials
    have a right to reinstatement at Trailways
    after their union service and retain their
    seniority during their absence. The
    collective bargaining agreement also provides
    that the employer will make payments into the
    union's pension fund while the employee is on
    leave. Although these contributions are made
    during the leaves of absence, the employer's
    promise to pay them is nonetheless a term of
    the collective bargaining agreement and
    therefore a part of the consideration for
    work performed as a Trailways employee.
    There is no reason for distinguishing the
    pension fund payments from any of the other
    terms of the collective bargaining agreement.
    Like wages, overtime, insurance, or accrued
    seniority, the pension fund payments are
    consideration for services rendered and, as
    such, are permissible under § 302(c)(1).
    
    Trailways, 785 F.2d at 109
    (Becker, J., dissenting).
    4. We do not mean to imply that an employee hired after a
    collective bargaining agreement could not be elected chairperson
    because he or she never "agreed" to an implicit wage reduction.
    Rather, like any other term of a labor agreement, it would be
    binding on all employees, whenever hired, until the expiration of
    the contract.
    12
    We find this line of reasoning persuasive.    Indeed, it
    has been taken by a number of decisions reached after Trailways.
    See United States v. Phillips, 
    19 F.3d 1565
    , 1575 (11th Cir.
    1994) (§ 302(c)(1) satisfied when former employee's entitlement
    to payments vests before he or she goes out on leave, but not
    after); Toth v. USX Corp., 
    883 F.2d 1297
    , 1301-04 (7th Cir. 1989)
    (criticizing Trailways and opining that "[o]ne obvious instance
    in which continuing payments constitute recompense for past
    services is when those continuing payments were bargained for and
    formed part of a collective bargaining agreement."); IBEW v.
    National Fuel Gas Dist. Corp., 16 Employee Benefits Cases 2018,
    2020-21 (W.D.N.Y. 1993) (same); Bell 
    Atlantic, 670 F. Supp. at 421-22
    (same).   We are aware of no currently valid opinion that
    follows the Trailways holding.
    Caterpillar maintains that, under the reasoning we have
    utilized, employers and unions can themselves decide what is
    legal regardless of federal law by agreeing in a labor contract
    to a particular course of conduct.    Our point, however, is not
    that a collective bargaining agreement can immunize unlawful
    conduct, but that: (1) under    § 302(c)(1), the lawfulness of the
    conduct ab initio turns on whether the payment is "owed because
    of . . . service as an employee"; and (2) what is "owed" depends
    on the terms of the contract.    Put differently, the contract does
    not immunize otherwise unlawful subjects but, by defining the
    basis for the payments, speaks directly to the question posed by
    13
    the statute as to whether the payments are "compensation for, or
    by reason of . . . service as an employee."
    We also believe that any attempt to distinguish "no
    docking" provisions from the payments at issue here is
    unpersuasive.    We perceive no distinction between union officials
    who spend part of their time (which may be quite substantial) in
    adjusting grievances from the type of employees who are involved
    here.   Instead, “the nature of the absences and the payments made
    by the employer owning them is the same.”     
    Trailways, 785 F.2d at 111
    .
    III.
    In sum, we simply do not view the payments at issue
    here as posing the kind of harm to the collective bargaining
    process that Congress contemplated when it enacted the LMRA.
    Section 302 of that statute was passed to address bribery,
    extortion and other corrupt practices conducted in secret.      See
    
    Trailways, 785 F.2d at 110
    (Becker, J., dissenting).    These
    expanded "no-docking" provisions, in contrast, are contained in
    the collective bargaining agreement on which each rank-and-file
    employee has the opportunity to vote.    Thus, the officials
    receiving the payments can be held accountable to the membership.
    See 
    Toth, 883 F.2d at 1304
    .     Without explicit statutory
    direction from Congress, we cannot condemn these payments as
    criminal.    Accordingly, we will reverse.
    14
    Circuit
    JudgeCaterpillar, Inc. v. International Union
    No. 96-7012
    MANSMANN, J., dissenting, with whom Judge Greenberg joins.
    In suggesting that "innocuous, bargained for and fully
    disclosed payments" from an employer to an employee
    representative should be lawful, the majority has placed its own
    policy objectives above plain language.    By its own terms, the
    "by reason of" exception of 29 U.S.C. § 186(c)(1) simply does not
    include payments made to an employee representative merely
    because the payment is included in a collective bargaining
    agreement and the representative worked for the employer at one
    time.   The plain language of the section 186(c)(1) exception is
    supported by the legislative history and purpose of the
    exception, and the majority's conclusion is at odds with
    important federal policy.   Because I believe that the payments at
    issue in this case do not fall within the exception of section
    186(c)(1), I respectfully dissent.
    I.
    Where statutory language is plain, we must enforce that
    language according to its terms.     Appalachian States Low-Level
    Radioactive Waste Comm'n v. O'Leary, 
    93 F.3d 103
    , 108 (3d Cir.
    1996); see also United States v. Ron Pair Enters., Inc., 
    489 U.S. 15
    235, 241, 
    109 S. Ct. 1026
    , 1030, 
    103 L. Ed. 2d 290
    (1989); New Rock
    Asset Partners, L.P. v. Preferred Entity Advancements, Inc., ___
    F.3d ___, ___, 
    1996 WL 708610
    , at *5 (3d Cir. Dec. 10, 1996)
    (unless literal application will produce absurd result, plain
    meaning is conclusive).   It is for Congress, not the courts, to
    create exceptions or qualifications at odds with the LMRA's plain
    terms.   Packard Motor Car Co. v. NLRB, 
    330 U.S. 485
    , 490, 
    67 S. Ct. 789
    , 792, 
    91 L. Ed. 1040
    (1947).
    Section 302(a) of the LMRA, 29 U.S.C. § 186(a), on its
    face, makes it unlawful for any employer to pay any money or
    thing of value to any representative of its employees.       As the
    majority recognizes, section 302(a), standing alone, prohibits
    the payments at issue in this case.     Maj. Op., at 4-5.
    Section 302(a) contains several exceptions.       Section
    302(c)(1), 29 U.S.C. § 186(c)(1), renders section 302(a)
    inapplicable in respect to any money or other thing of value
    payable by an employer "to any representative of his employees,
    who is also an employee or former employee of such employer, as
    compensation for, or by reason of, his services as an employee of
    such employer."
    The majority concedes that the payments at issue in
    this case are not payments to a current or former employee "as
    compensation for . . . his services."    Maj. Op., at 8.    The sole
    issue, then, is whether the payments to a former employee, who
    presently works as a grievance chairperson for the union, are
    16
    made "by reason of . . . his services as an employee of such
    employer."   Contrary to the position of the majority, I must
    conclude that the language of section 302(c)(1) is plain and does
    not encompass the payments at issue here.
    The "by reason of" exception of section 302(c)(1)
    simply recognizes that current and former employees might have a
    right to receive payments from their employers that arise from
    their services for their employers but that are not properly
    classified as "compensation."    The "by reason of" exception
    includes pensions, 401(k) plans, life and health insurance, sick
    pay, vacation pay, jury and military leave pay, and other fringe
    benefits to which all employees may be entitled "by reason of"
    their service.   See United States v. Phillips, 
    19 F.3d 1565
    , 1575
    (11th Cir. 1994) ("by reason of" exception applies to fringe
    benefits "such as vacation pay, sick pay, and pension benefits"),
    cert. denied, ___ U.S. ___, 
    115 S. Ct. 1312
    , 
    131 L. Ed. 2d 194
    (1995); BASF Wyandotte Corp. v. Local 227, Int'l Chem. Workers
    Union, AFL-CIO, 
    791 F.2d 1046
    , 1049 (2d Cir. 1986) ("by reason
    of" payments include "vacation pay, sick pay, paid leave for jury
    duty or military service, pension benefits, and the like"); see
    also Toth v. USX Corp., 
    883 F.2d 1297
    , 1303 n.8 (7th Cir.)
    (severance pay and payments to disabled employees are "by reason
    of" former employment), cert. denied, 
    493 U.S. 994
    , 
    110 S. Ct. 544
    , 
    107 L. Ed. 2d 541
    (1989).    Although not properly called
    17
    compensation, "by reason of" payments "arise from" the employee's
    services for the employer.
    Without the section 302(c)(1) exception, these payments
    would be illegal if paid to any employee or former employee who
    also worked for the union.   Thus, an employee who worked full
    time for the company, but who held a part-time position with the
    union (a practice permitted by the Supreme Court's decision in
    NLRB v. Town & Country Elec., Inc., ___ U.S. ___, 
    116 S. Ct. 450
    ,
    
    133 L. Ed. 2d 371
    (1995)), would be unable to be paid his salary
    and could not receive fringe benefits -- despite working full
    time.   Section 302(c)(1) plainly exists to enable company
    employees to obtain what is rightfully theirs.   In other words,
    the section 302(c)(1) exception does not entitle union
    representatives to receive payments because of their service for
    the union; the exception allows union representatives to receive
    payments in spite of their current service for the union.
    The key, however, is that the employee must receive the
    compensation or other payment because of his or her service for
    the employer.   See, e.g., 
    Phillips, 19 F.3d at 1575
    ("by reason
    of" payments "from an employer to a union official must relate to
    services actually rendered by the employee"); 
    id. (under plain
    meaning of exception, "payment given to former employee must be
    for services he rendered while he was an employee"); BASF
    Wyandotte Corp. v. Local 
    227, 791 F.2d at 1049
    ("by reason of"
    payments are those "occasioned by the fact that the employee has
    18
    performed or will perform work for the employer, but which is not
    payment directly for that work"); Reinforcing Iron Workers Local
    Union 426 v. Bechtel Power Corp., 
    634 F.2d 258
    , 261 (6th Cir.
    1981) (under "literal construction" of section 302, payment to
    industry steward who performs services for union, not employer,
    are unlawful).   The payments at issue in this case are entirely
    unrelated to the representatives' services for the employer.    I
    believe that the plain language of the section 302(c)(1)
    exception does not encompass the payments at issue here and that
    we must affirm the judgment of the district court.5
    5. The majority overstates the effect of our decision in
    Trailways Lines, Inc. v. Trailways, Inc. Joint Council,
    Amalgamated Transit Union, 
    785 F.2d 101
    (3d Cir.), cert. denied,
    
    479 U.S. 932
    , 
    107 S. Ct. 403
    , 
    93 L. Ed. 2d 356
    (1986).
    Section 302(c)(1) states that all payments made to
    union representatives -- whether they are in direct compensation
    for services (wages) or merely by reason of those services
    (vacation pay, jury pay, et cetera) -- must somehow relate to
    those individuals' services for the employer. The Trailways
    opinion did not merge "compensation for" and "by reason of" as
    the majority suggests; it does not dispute the fact that
    "compensation for" and "by reason of" complement each other and
    that the "by reason of" exception covers certain payments that
    are not truly compensation. Instead, in Trailways we recognized
    that certain payments to former employees may no longer be
    justified once the individual stops performing services for the
    employer.
    This makes sense. For example, it is apparent that
    jury-duty pay is "by reason of" an employee's services to the
    employer. It would be strange indeed if a former employee who
    retired five years ago could demand to be paid by the employer
    for his upcoming jury duty. As Trailways recognizes, payments to
    former employees, whether as compensation for or by reason of
    their former services, must be related to that former service.
    Just as former employees are no longer entitled to "by reason of"
    pay such as jury-duty pay, they should not be entitled to
    payments for performance of union work that is entirely unrelated
    to their former service. Accordingly, I see no reason to reverse
    our decision in Trailways.
    19
    II.
    Because the plain language of the "by reason of"
    exception of section 302(c)(1) does not contemplate the payments
    at issue here, I would affirm the judgment of the district court
    without further discussion.    Nonetheless, as I now digress
    briefly to relate, the legislative history and the purpose of
    section 302 support my conclusion that the payments at issue are
    unlawful.
    As the majority recognizes, section 302 is a conflict-
    of-interest statute that is designed to eliminate practices that
    have the potential for corrupting the labor movement.    Maj. Op.,
    at 13; see 
    Phillips, 19 F.3d at 1574
    .    As the majority also
    recognizes, Congress was concerned about, inter alia, bribery and
    other secret, back-room agreements between employers and employee
    representatives.    See 
    Toth, 883 F.2d at 1300
    .
    The majority does not go far enough, however.
    Recognizing that "any person in a position of trust" must not
    "enter into transactions in which self-interest may conflict with
    complete loyalty to those whom they serve," Congress stated that
    "no responsible trade union official should have a personal
    financial interest which conflicts with the full performance of
    his fiduciary duties as a workers' representative."     S. Rep. No.
    187, 86th Cong. 1st Sess., reprinted in 1959 U.S.C.C.A.N. 2318,
    2330-31 (quoting ethical practices code of American Federation of
    20
    Labor and Congress of Industrial Organizations).6    Congress
    desired to close the loopholes "which both employer
    representatives and union officials turned to advantage at the
    expense of employees."    
    Id. at 2330.
    When he introduced section 302 in 1947, Senator Ball
    expressed a concern that even negotiated payments from employers
    might "degenerate into bribes."    93 Cong. Rec. 4805 (1947),
    reprinted in II NLRB Legislative History of the Labor Management
    Relations Act, 1947, at 1305 (1948) (discussing welfare funds).
    Senator Ball stated that absent section 302, "there is a very
    grave danger that the funds will be used for the personal gain of
    union leaders."   
    Id. Senator Byrd
    echoed the concerns of Senator
    Ball, noting that funds from the employer should not be "paid
    into the treasuries of the labor unions."    
    Id. According to
    Senator Pepper, unless authorized in writing by each individual
    employee (in the form of dues check-off), "union leaders should
    not be permitted . . . to direct funds paid by the company . . .
    to the union treasury or union officers."    
    Id. (quoting committee
    report).
    6. I rely on the legislative history of the Labor-Management
    Reporting and Disclosure Act of 1959 (an act that strengthened
    section 302), instead of the official history of the Labor
    Management Relations Act of 1947 (the act that contained section
    302), because the Congressional Comments to the Labor Management
    Relations Act do not include a discussion of the provisions at
    issue here. See H.R. Conf. Rep. No. 510, 80th Cong., 1st Sess.
    66-67, reprinted in 1947 U.S.C.C.A.N. 1135, 1173. In the text, I
    include the comments of three senators made prior to the passage
    of section 302 that were not included in the official conference
    report.
    21
    Section 302 therefore exists to prohibit "all forms of
    extortion and bribery in labor-management relations."     BASF
    Wyandotte Corp. v. Local 
    227, 791 F.2d at 1053
    (emphasis
    supplied) (quoting S. Rep. No. 187, 86th Cong. 1st Sess. 13,
    reprinted in 1959 U.S.C.C.A.N. 2318, 2329).   Congress was
    concerned with corruption through both (1) bribery of employee
    representatives by employers and (2) extortion by those
    representatives.   
    Toth, 883 F.2d at 1300
    (citing legislative
    history and cases). Congress explained:
    The national labor policy is founded upon collective
    bargaining through strong and vigorous
    unions. Playing both sides of the street,
    using union office for personal financial
    advantage, undercover deals, and other
    conflicts of interest corrupt, and thereby
    undermine and weaken the labor movement. . .
    . The Government . . . must make sure that
    the power [to act as exclusive bargaining
    representative] is used for the benefit of
    workers and not for personal profit.
    S. Rep. No. 187, 86th Cong. 1st Sess., reprinted in 1959
    U.S.C.C.A.N. 2318, 2331.
    Thus, Congress was not merely concerned about secret,
    back-room deals.   Congress was concerned about any form of
    payment that could upset the balance between labor and
    management.   The payments at issue in this case do exactly that.
    They create a conflict of interest for union negotiators who may
    agree to reduced benefits for the employees in exchange for
    financial support for the union.
    22
    For example, let us assume that ABC Corporation and the
    union are engaged in difficult negotiations over a pension plan.
    Also assume that the employer was stonewalling on this issue,
    that the union had the "correct" position, and that the company
    could have accepted the union's proposal without suffering
    noticeable financial impact.   Assume ABC said to the union
    negotiator: "I know your local is having financial trouble.    We
    will pay the salaries of the grievance chairmen if you stop
    pushing for this pension plan."    The negotiator, who knows that
    her local can no longer pay the full salaries of all the
    grievance chairmen, agrees, and the pension plan is dropped in
    favor of the financial security of the union.   The agreement is
    included in the bargaining agreement, and both the union and ABC
    effectively "sell" the agreement to the employees, who ratify it
    (not aware that the pension plan was sacrificed in this way).
    According to the majority, this scenario is perfectly lawful
    because it was included in the agreement.   According to the
    language, legislative history and purpose of section 302,
    however, this scenario represents just what Congress sought to
    avoid.
    III.
    As the majority concedes, the grievance chairmen in
    this case do not perform any services whatsoever for Caterpillar.
    Maj. Op., at 7.   Instead, the chairmen perform services
    23
    exclusively for the union.   The majority concludes, however, that
    payments to such union employees are "by reason of" the
    employees' services to the employer.    First, the majority reasons
    that such payments were negotiated and appear in the collective
    bargaining agreement.   Second, the majority states that, because
    each employee must "give up something" in negotiations with the
    employer so that these payments may be included in the agreement,
    such payments are somehow "by reason of" the employees' service
    for the employer.   Finally, the majority contends that the
    payments at issue in this case are no different than so-called
    "no-docking" payments made to current employees who process
    employee grievances during working hours.    I do not believe that
    the majority's reasoning withstands scrutiny.
    The majority first relies on the fact that the payments
    were negotiated and included in the collective bargaining
    agreement.   Maj. Op., at 11-13.    Simply including a payment
    provision in a collective bargaining agreement does not, however,
    make the payment "by reason of" an employee's prior service.
    Section 302(a)(1) provides that it shall be unlawful
    for any employer to "agree to pay" any money to any
    representative of any of his employees.    29 U.S.C. § 186(a)(1).
    Thus, actual payments to union representatives are prohibited,
    but so are agreements to pay union representatives.     The majority
    places special emphasis on the fact that the payments in this
    case were negotiated and were not, in effect, secret agreements.
    24
    Congress, on the other hand, was not concerned about the secrecy
    of these agreements.     If an agreement to pay is unlawful under
    section 302(a)(1), it is illogical to use that same agreement as
    a basis for finding that the resultant payment is lawful under
    section 302(c)(1).     Congress could easily have written an
    exception for payments by employers to union representatives
    pursuant to a collective bargaining agreement.     Instead, Congress
    limited its section 302(c)(1) exception to payments in
    compensation for or by reason of a representative's services for
    the employer.7
    The majority does not find support in the statute (and
    indeed there is none) for its conclusion that bargained-for
    payments should be any more legal than secret agreements.
    Without support, the majority asserts that an open agreement
    makes a payment "by reason of" services for the employer.      In so
    doing, the majority expands the exception such that the rule is
    rendered a nullity.8
    7. Senator Ball stated that the section 302(c)(1) exception
    allows payment of "money due a representative who is an employee
    or a former employee of the employer, on account of wages
    actually earned by him." 93 Cong. Rec. 4805 (1947), reprinted in
    II NLRB Legislative History of the Labor Management Relations
    Act, 1947, at 1304 (1948) (emphasis supplied). It is apparent
    that Senator Ball did not contemplate that the narrow exception
    of section 302(c)(1) would someday encompass payments to a former
    employee that are entirely unrelated to the employee's services.
    8. I am also concerned that by placing so much emphasis on the
    fact that the payments were negotiated and included in the
    collective bargaining agreement, the majority effectively permits
    employers and unions to negotiate over otherwise unlawful
    subjects of bargaining. It is beyond dispute that employers and
    unions cannot bargain over illegal subjects of bargaining.
    25
    The majority next reasons that since current employees
    must surely "give up something" during negotiations in exchange
    for an agreement by the employer to pay former employees to
    perform union work, then those payments must be "by reason of"
    their services.   Maj. Op., at 11.   The majority contends that
    "the employees had to give up something in the bargaining process
    that they otherwise could have received . . . in exchange for a
    promise that, if he or she should someday be elected grievance
    chairperson, Caterpillar would continue to pay his or her
    salary."   
    Id. Under the
    majority's reasoning, the union and the
    company could also agree to have the employer pay the salary of
    the international union's president and subsidize the pension
    fund of the union's permanent staff -- all because the company's
    employees might "give up something" during negotiations in the
    hopes that they too might someday receive those payments if
    elected to serve the union in the proper capacity.    In deciding
    that "giv[ing] up something" is sufficient to bring the payments
    at issue in this case within the "by reason of" exception
    contained in section 302(c)(1), the majority has embarked on a
    slippery slope that will legitimize virtually any type of payment
    from the employer to the union so long as the payment is
    negotiated and included in the collective bargaining agreement.
    (..continued)
    Nonetheless, the majority uses the bargaining process to
    legitimize a payment that is otherwise prohibited by statute.
    26
    The majority's reasoning violates the plain language of
    section 302(c)(1) in yet another way.     This section allows an
    employer to make payments to a current or former employee by
    reason of "his" services as an employee.      29 U.S.C. § 186(c)(1).
    The majority reasons that the payments at issue in this case are
    lawful by reason of all of the employees' collective service.
    This is contrary to the plain meaning of the statute.     If a union
    official is to be paid by the employer, it must be by reason of
    that official's service to the employer -- not because of the
    service of others who might aspire to his position.     Indeed, if
    the collective bargaining agreement allowed, but did not require,
    that the grievance chairperson be a former employee of the
    company, then the company might find itself paying an individual
    who was never an employee of the company by reason of other
    employees' services for the company -- a result clearly not
    permitted by section 302(c)(1).    By relying on the collective
    service of the employees, the majority ignores the plain language
    of the statute.
    I also fear that the majority's reasoning could be
    construed to apply to several situations which would defy logic.
    For example, let us assume that an individual applies for (and
    obtains) a job with the employer.      One day after beginning work,
    the individual is elected grievance chairperson.     For the next
    thirty years,9 the individual serves as grievance chairperson and
    9. While the agreement in this case may contain a time
    restriction, that restriction did not play any part in the
    27
    performs no services for the employer.   Thus, the individual
    performed eight hours' worth of services for the employer, but
    was paid by the employer for thirty years.   The majority's claim
    that this individual is being paid for thirty years "by reason
    of" his one-day service for the employer is illogical.
    In another example, let us assume that two grievance
    chairpersons are elected on the same day.    One ("Michael") worked
    for the employer for twenty years.   The other ("Mary") was active
    in the union but never worked for the employer.   Under the
    collective bargaining agreement in this case, the employer is
    required to pay Michael, but is prohibited from paying Mary.    At
    present, both Michael and Mary perform exactly the same services,
    but Michael's prior employment (for which he was already fully
    compensated) entitles him to continued payment from the
    employer.10
    The majority's reasoning also fails as a matter of
    logic in "open shops."   In an open shop, not all employees
    (..continued)
    majority's reasoning. Therefore, I presume that an agreement
    that does not contain a time restriction will not be unlawful
    under the majority's decision.
    10. Altering this example somewhat, let us assume that Michael
    worked for twenty years before being elected grievance
    chairperson, but that Mary worked one day. In this situation,
    the employer would be required to pay both Michael and Mary.
    Michael, however, "gave up" significantly more than Mary, as
    Michael worked for twenty years at reduced wages, while Mary only
    worked one day. The employer does not take into account what
    each individual gave up -- the employer considers what the
    collective group gave up. I contend that the employer may not do
    that under the plain terms of section 302(c)(1).
    28
    governed by the collective bargaining agreement will necessarily
    be members of the union.    An employee who is not a member of the
    union (and who therefore cannot aspire to become a grievance
    chairperson) will nonetheless be forced to endure a lower salary
    or reduced benefits due to his co-workers' decision to "give up
    something."    In addition, unions will be able to circumvent the
    problems that arise when some employees elect not to join the
    union or pay union dues -- they will seek agreements from the
    employer to subsidize representatives' salaries in exchange for
    reductions in pay or benefits.    These agreements will be
    negotiated and ratified without the input of the non-union
    employees.    Thus, an employee who elects not to pay union dues
    may nonetheless face reductions in salary or benefits so that the
    union (which he or she does not support) may prosper.   The
    payments at issue here are surely not "by reason of" the non-
    union employees' services -- yet those same payments are made
    possible by the non-union employees' reduced salary and benefits.
    IV.
    Finally, the majority contends that since no-docking
    provisions are lawful under section 302, the payments at issue
    here should also be lawful.    The majority writes that "it would
    be strange indeed if Congress intended that granting four
    employees two hours per day of paid union leave is permissible,
    29
    while granting a single employee eight hours per day of that same
    leave is a federal crime."    Maj. Op., at 10-11.
    In reasoning that the payments at issue here are
    analogous to no-docking payments, the majority assumes (without
    deciding) that no-docking provisions are lawful.    While some
    courts have so held, we have not yet addressed the lawfulness of
    no-docking payments.   Until we do so (and until we explain our
    reasons for finding such payments lawful), the majority should
    not analogize such payments to those at issue here.
    Assuming that no-docking provisions are lawful,
    however, we are still not required to reach the conclusion that
    the payments at issue in this case must also be lawful.    Indeed,
    there are substantial differences between no-docking payments and
    the payments at issue here.   The primary difference is that no-
    docking payments are made to individuals who are current
    employees of the company currently performing services for the
    company.   In contrast, the payments at issue here are made to
    former employees of the company not performing any services for
    the company.
    In BASF Wyandotte Corp. v. Local 227, 
    791 F.2d 1046
    ,
    the Second Circuit observed that payments made to current
    employees for short absences (such as vacation pay, sick pay, or
    military leave pay) are all made to current employees "by reason
    of" their current, ongoing services for their employer.    The
    court then reasoned that payment to current employees for short
    30
    absences to perform union work is no different from vacation pay,
    sick pay, and military leave pay.     
    Id. at 1049.
      Thus, no-docking
    payments made to current employees who occasionally performed
    union work during working hours should be treated the same as
    other payments for short term absences.
    Importantly, the court recognized that each of these
    payments were made to persons whose entitlement to the payments
    was "by reason of" current service.      As the court noted, "no-
    docking provisions have relevance only to persons who are
    currently serving as employees."      
    Id. at 1049
    n.1.   The common
    element linking sick pay and no-docking pay "is simply that the
    person to whom the employer makes payment is one who performs
    services as an employee."   
    Id. at 1049
    (footnote omitted).       If we
    assume that no-docking payments are analogous to sick pay, we
    must conclude that they can only be made to current employees who
    perform services to their employers.     This makes sense -- former
    employees do not accrue sick pay or vacation pay.        Likewise, they
    should not accrue "union-work-time pay."     See also 
    Phillips, 19 F.3d at 1575
    n.18 (recognizing difference between no-docking
    provision and payments to non-employees who perform no work for
    company).
    The majority cites several cases from our sister courts
    of appeals where courts concluded that no-docking provisions are
    lawful.   In several of those cases, however, the courts carefully
    distinguished no-docking payments from payments made to union
    31
    officials who did not perform work for the company.     In BASF
    Wyandotte Corp. v. Local 227, Int'l Chem. Workers Union, AFL-CIO,
    
    791 F.2d 1046
    (2d Cir. 1986), for example, the court stated:
    [W]e do not suggest that section [302(c)(1)] would
    allow an employer simply to put a union
    official on its payroll while assigning him
    no work. . . . [A] union official who,
    though on an employer's payroll, performed no
    service as an employee, would not be within §
    302(c)(1)'s exception.
    
    Id. at 1050.
        In another case cited by the majority, the court
    agreed that payments to a union official put on an employee
    payroll but not assigned any meaningful work would violate
    section 302.     NLRB v. BASF Wyandotte Corp., 
    798 F.2d 849
    , 856 n.4
    (5th Cir. 1986).
    The majority also cites Toth v. USX Corp., 
    883 F.2d 1297
    (7th Cir.), cert. denied, 
    493 U.S. 994
    , 
    110 S. Ct. 544
    , 
    107 L. Ed. 2d 541
    (1989). There the court of appeals stated:
    At some point, it is conceivable that a bargain struck
    by the union and the employer might yet
    violate section 302 -- if, for example, the
    terms of compensation for former employment
    were clearly so incommensurate with that
    former employment as not to qualify as
    payments "in compensation for or by reason
    of" that employment . . . .
    
    Id. at 1305.
        As an example of a case that would violate section
    302, the court stated that "fulltime pay for no service cannot
    reasonably be said to be compensation 'by reason of' service as
    an employee."    
    Id. (citing BASF
    Wyandotte Corp. v. Local 
    227, 791 F.2d at 1050
    ).
    32
    Indeed, the distinction between no-docking payments and
    the payments at issue here is reinforced elsewhere in the labor
    laws.   For example, 29 U.S.C. § 158(a)(2) provides that it shall
    be an unfair labor practice for an employer to contribute
    financial support to any labor organization.   This rule contains
    one exception: "an employer shall not be prohibited from
    permitting employees to confer with him during working hours
    without loss of time or pay."   
    Id. Thus, while
    employers may
    allow employees to confer with their employer during working
    hours without loss of pay, the employer may not contribute
    financial support to the labor organization.   The rule bans the
    payments at issue here; the exception allows no-docking
    provisions.
    Other realities dictate that no-docking payments are
    simply not analogous to the payments at issue here.   For example,
    employees subject to no-docking payments are more likely to do
    union work on an "as needed" basis.   They are also more likely to
    be able to schedule grievance meetings and other union work at
    the mutual convenience of the employees and the employer.    In
    contrast, the grievance chairmen in this case are paid full time
    regardless of whether there is any union work to be done.    They
    are never available to perform services for the employer.    Thus,
    the four individuals who spend two hours per day performing union
    work (from the majority's hypothetical) are less of a burden for
    the employer than one employee's absence all day every day.
    33
    V.
    While the majority emphasizes its policy determination
    that bargained-for payments should not be unlawful, it does not
    discuss several compelling policy reasons why we should affirm
    the judgment of the district court.     These policy considerations
    go far beyond the need to avoid conflict of interest among union
    negotiators, a policy that is clear on the face of the statute
    and in the legislative history.
    Initially, as the majority recognizes, the grievance
    chairperson will often take a position at odds with the position
    of management.   Maj. Op., at 7.    Indeed, the grievance
    chairperson is most needed when the employee's position is
    adverse to the employer's.   In order to be effective, the
    grievance chairperson often will fight zealously for the
    aggrieved employee and against the employer.     Meanwhile, the
    employer must pay the chairperson's salary.     It seems illogical
    to me to force the employer to pay the salary of an individual
    whose sole function is to oppose the employer.11
    11. I recognize that the word "force" may be strong since the
    employer need not agree to pay the grievance chairperson during
    negotiations. Assuming that this pay practice is not unlawful,
    however, the practice undoubtedly constitutes a mandatory subject
    of bargaining. NLRB v. BASF Wyandotte Corp., 
    798 F.2d 849
    , 852-
    54 (5th Cir. 1986). Thus, if the employer refused to accede to
    such a pay provision, the employees could strike over this issue.
    Indeed, those employees who may have the most influence
    in swaying other employees' opinions regarding strike decisions
    are probably the same individuals who are most likely to be
    elected to the position of grievance chairmen. I envision the
    situation where an employee who seeks the position of grievance
    34
    Next, by sanctioning an agreement whereby the company
    pays grievance chairmen to perform services for the union, the
    majority unnecessarily creates uncertainty over whether the
    chairmen are employees of the union or employees of the company.
    In NLRB v. Town & Country Elec., Inc., ___ U.S. ___, 
    116 S. Ct. 450
    , 
    133 L. Ed. 2d 371
    (1995), the Supreme Court addressed the
    question of who is an employee under the NLRA.      The Court
    favorably cited several common definitions of "employee" --
    including "person in the service of another . . . where the
    employer has the power or right to control and direct the
    employee . . . ."    Id. at ___, 116 S.Ct. at 454 (citation
    omitted).   Under this definition, a grievance chairperson appears
    to be an employee of the union.    Citing an excerpt from the
    NLRA's legislative history, however, the Court noted that
    "employee" includes "every man on a payroll."      Id. at ___, 116
    S.Ct. at 454 (citation omitted).       Since grievance chairmen remain
    on the company's payroll, perhaps they remain employees of the
    company.    The majority does not decide whether the company or the
    union is the chairmen's employer.12
    (..continued)
    chairperson may seek to insure that his or her desired position
    is fully funded by the employer before he or she accepts the
    position -- even if that means encouraging a strike. Even the
    possibility that this might occur demonstrates the conflict of
    interest that will surely arise among those individuals who may
    seek the funded positions.
    12.       This uncertainty will extend beyond cases arising under
    the NLRA. The Supreme Court recently held that, under Title VII
    of the Civil Rights Act of 1964, the test for deciding whether an
    employer "has" a particular employee is whether the employer has
    "an employment relationship" with the individual. Walters v.
    35
    The failure of the majority to decide whether the
    grievance chairmen are employees of the union or the employer may
    lead to numerous problems:    Is a grievance chairperson considered
    part of the bargaining unit while on leave?    Who will be liable
    if a grievance chairperson injures a third party while performing
    union work?    Who will be responsible for providing a reasonable
    accommodation to a grievance chairperson with a disability who
    needs assistance performing her union job on the employer's
    premises?   What if a grievance chairperson decides to take FMLA
    leave -- will his eligibility depend on whether the union is an
    (..continued)
    Metropolitan Educ. Enters., Inc., ___ U.S. ___, 
    117 S. Ct. 660
    ,
    ___ (1997). The Court noted, however, that "the employment
    relationship is most readily demonstrated by the individual's
    appearance on the employer's payroll." Id. at ___, 117 S.Ct. at
    ___; see also Equal Employment Opportunity Commission Notice No.
    N-915-052, Policy Guidance: Whether Part-Time Employees Are
    Employees (Apr. 1990), at 24, reprinted in 3 EEOC Compl. Man.
    (BNA), at N:3311 (interpreting both Title VII and ADEA; while
    one's status as an employee is defined by examining the
    employment relationship, "[t]he payroll is a reliable indicator
    of those individuals who have an employment relationship with the
    employer and therefore are employees."). While grievance
    chairmen have an employment relationship with the union
    (indicating that the employer is the union), their relationship
    with the company is not completely severed, and they continue to
    appear on the company's payroll (indicating that the employer is
    the company).
    I would note also that this is not a traditional dual-
    employer case where both the union and the company may be
    considered employers of the grievance chairmen. In the
    traditional dual-employer case, the individual performs services
    for both the company and the union and is paid by both the
    company and the union for the services performed for the
    respective payor. In this case, in contrast, the individuals
    perform services exclusively for one entity and are paid
    exclusively by another.
    36
    FMLA employer or whether the company is an FMLA employer?13    If a
    grievance chairperson is injured while performing union duties,
    will she nevertheless be entitled to disability or workers'
    compensation from the company?    May the company terminate,
    suspend or discipline a grievance chairperson if he engages in
    activity that would qualify for termination, suspension or
    discipline for other employees?    These questions are admittedly
    outside the scope of the narrow issue before us, but the
    majority's decision will assuredly lead to innumerable disputes
    about the proper classification of individuals who remain on the
    company's payroll without performing any services for the
    company.   If we affirm the judgment of the district court,
    however, it is clear that individuals who leave the company to
    work for the union are union employees, and the above questions
    resolve themselves.
    The final and most important policy consideration not
    addressed by the majority is that federal labor policy demands
    that labor organizations and employers remain separate and
    13.       The Senate Report accompanying the Family and Medical
    Leave Act of 1993 states that the term "employ" means "maintain
    on the payroll." S. Rep. No. 103-3, 103d Cong. 1st Sess. 22,
    reprinted in 1993 U.S.C.C.A.N. 3, 24 (individuals on leaves of
    absence are considered employees "so long as they are on the
    employer's payroll."). It would seem, therefore, that grievance
    chairmen are employees of the company for purposes of the FMLA.
    The Report also states, however, that Congress desired that
    "employ" under the FMLA mean the same as "employ" under Title
    VII. As noted supra note 8, it is not clear whether the union or
    the company employs grievance chairmen for the purposes of Title
    VII.
    37
    distinct from one another.   The majority would sanction a pay
    practice that violates this important policy.
    By enacting the labor laws as written, Congress
    insisted that the NLRB and the courts observe a sharp line
    between management and labor.   NLRB v. Hendricks County Rural
    Elec. Membership Corp., 
    454 U.S. 170
    , 192-93, 
    102 S. Ct. 216
    , 230,
    
    70 L. Ed. 2d 323
    (1981) (Powell, J., concurring in part and
    dissenting in part).   Indeed, the dividing line between
    management and labor is "fundamental to the industrial philosophy
    of the labor laws in this country."   
    Id. at 193,
    102 S.Ct. at
    230; see also NLRB v. Bell Aerospace Co., Div. of Textron, Inc.,
    
    416 U.S. 267
    , 284-85 n.13, 
    94 S. Ct. 1757
    , 1767 n.13, 
    40 L. Ed. 2d 134
    (1974) (recognizing "traditional distinction between labor
    and management"); Packard Motor Car Co. v. NLRB, 
    330 U.S. 485
    ,
    494-95, 
    67 S. Ct. 789
    , 794-95, 
    91 L. Ed. 2d 1040
    (1947) (Douglas,
    J., dissenting) ("industrial philosophy" recognizes that
    management and labor are "basic opposing forces"); Cedars-Sinai
    Medical Center v. Cedars-Sinai Housestaff Assoc., 
    223 N.L.R.B. 251
    ,
    254 (1976) (Fanning, member, dissenting) ("underlying Federal
    labor policy . . . seeks to draw a line between labor and
    management").   Congress' desire to preserve the distinction
    between labor and management is evinced throughout the labor
    laws.   See, e.g., 29 U.S.C. § 158(a).   I believe that allowing an
    employer to provide financial support to a union, as the majority
    does here, blurs the important line between labor and management
    38
    and creates the potential for conflict that our labor laws do not
    tolerate.
    VI.
    I recognize that labor organizations and employers have
    begun to embrace a more cooperative method of negotiating and
    dispute resolution, and I applaud labor-management efforts to
    retreat from the adversarial approach that has often marred the
    labor landscape in this country.      I believe, however, that the
    payments sanctioned by the majority go too far.      The financial
    support sought by the United Auto Workers in this case
    contravenes the longstanding tradition of separation of labor and
    management.   I accept and encourage arm's length cooperation
    between labor and management.    I cannot condone payments that
    threaten the independence of labor, create conflicts of interest
    for union negotiators, and violate the plain language of our
    laws.   It is for Congress, not the courts, to determine if and
    when to permit labor organizations and employers to blur the line
    between them.
    Accordingly, I respectfully dissent.
    Caterpillar, Inc. v. International Union, et al.
    No. 96-7012
    ALITO, Circuit Judge, dissenting:
    If I were a legislator, I would not vote to criminalize
    the payments to grievance chairmen that are at issue here.     I
    39
    agree with the majority that these payments differ from the
    corrupt practices that usually figure in prosecutions under
    Section 302 of the Labor Management Relations Act, 29 U.S.C. §
    186.   Moreover, I am not certain that the Congress that enacted
    Section 302 would have chosen to outlaw such payments if it had
    focused specifically on that question.
    Our job, however, is to interpret Section 302 as it is
    written.   "The plain meaning of legislation should be conclusive,
    except in the ``rare cases [in which] the literal application of a
    statute will produce a result demonstrably at odds with the
    intentions of its drafters.'"     United States v. Ron Pair Enters.,
    Inc., 
    489 U.S. 235
    , 242 (1989) (quoting Griffin v. Oceanic
    Contractors, Inc., 
    458 U.S. 564
    , 571 (1982)).     Here, the majority
    has not heeded the plain meaning of Section 302 and has not shown
    that the literal application of the statutory language would lead
    to a result that is "demonstrably at odds" with congressional
    intent.    I therefore dissent.
    As the majority acknowledges, Section 302 prohibits
    Caterpillar from paying the grievance chairmen unless those
    payments fall within one of the exceptions set out in Section
    302(c), 29 U.S.C. §186(c).    See Maj. Op. at 4-5.   The exception
    at issue here is that contained in subsection (c)(1), which
    applies to "any money or other thing of value payable by an
    employer . . . to any representative of his employees, . . . who
    is also an employee or former employee of such employer, as
    40
    compensation for, or by reason of, his service as an employee of
    such employer."   29 U.S.C. § 186(c)(1).   The union argues that
    these payments fall within this exception for three separate
    reasons: (1) they are compensation for the grievance chairmen's
    current service as Caterpillar employees; (2) they are
    compensation for the grievance chairmen's former service as
    Caterpillar employees; and (3) they are made "by reason of" the
    grievance chairmen's former service as Caterpillar employees.      I
    briefly discuss each of these theories below.
    I.
    "As Compensation For" Current Service as a Caterpillar Employee
    Although the union's primary arguments appear to be
    that the payments are made "as compensation for" or "by reason
    of" the grievance chairmen's past service as regular Caterpillar
    employees, the union also maintains that these payments are legal
    because they may be viewed "as compensation for" the grievance
    chairmen's work as current Caterpillar employees.   The union
    contends that the grievance chairmen, who are officially on
    leaves of absence from Caterpillar, are joint employees of
    Caterpillar and the union.   Among other things, the union notes
    that Section 302(c)(1) seems to contemplate such joint
    employment, since it permits an employer, under certain
    circumstances, to make payments to "any representative of his
    employees . . . who is also an employee . . . of such employer."
    41
    And the union argues that under National Labor Relations Board
    decisions the grievance chairmen qualify as joint employees.
    I find it unnecessary to reach the question whether the
    grievance chairmen may be considered joint employees.   Assuming
    that they are, I am convinced that Caterpillar's payments to them
    are not made "as compensation for" their service as current
    Caterpillar employees.   In their capacity as grievance chairmen,
    they owe their complete loyalty to the workers they represent.
    See Dist. Ct. Op. at 14-15.    They plainly work for the union and
    not for Caterpillar, and as the majority notes, their
    representation of the workers "often places them in a position
    adverse to Caterpillar's."    Maj. Op. at 7.14
    It is noteworthy that the union's excellent brief,
    while arguing strenuously that the chairmen are joint employees,
    makes little effort to show that the pay and benefits they
    receive are compensation for services performed for Caterpillar.
    The union's brief merely states:
    Caterpillar . . . realizes substantial benefit from the
    chairman's work. As the record shows, the chairman's
    job . . . is "to make sure that contract works" and if
    he succeeds, "everyone benefits -- the workers, the
    Company and its production needs, and the Union." App.
    260.
    Appellant's Br. at 48.
    14.       I note that the union's brief acknowledges that "the
    Union certainly exercises primary control over the chairman and
    derives the primary benefit from his work." Appellant's Br. at
    45.
    42
    This argument seems to me to obliterate the
    distinction, which is surely significant in the real world,
    between services performed for an employer and services performed
    for a union.   I do not question the proposition that "everyone
    benefits" if the contract works; nor do I question the
    proposition that the grievance chairmen can help to make the
    contract work; but I do not think that it follows that the work
    that they do should be regarded under Section 302(c)(1) as
    services performed for Caterpillar.    By this reasoning, everyone
    who helps to make the contract work, including presumably the
    union officers, could be viewed as working for Caterpillar.    And
    since the union, as well as Caterpillar, benefits when the
    contract works, everyone who helps to make the contract work,
    including Caterpillar officers and supervisors, could be viewed
    as working for the union.   Thus, the union's logic leads to
    preposterous results.   Therefore, regardless of whether or not
    the chairmen may be technically considered to be joint employees
    of both Caterpillar and the union, I reject the argument that the
    payments in question here can be permitted on the theory that
    they constitute payments made to the chairmen "as compensation
    for" current services performed by them for Caterpillar.     See
    Dist. Ct. Op. at 16 n.14 (because chairmen perform no functions
    on behalf of Caterpillar, payments are not for services rendered
    by chairmen to Caterpillar whether or not they can be considered
    current Caterpillar employees).
    43
    II.
    "As Compensation For" Past Service as a Caterpillar Employee
    I agree with the majority that the payments made to a
    grievance chairman do not constitute "compensation for . . . his
    service" as a company employee prior to his selection for a
    grievance position.   This point can be demonstrated by
    considering the following situation.   Suppose that an employee
    works for a number of years in a certain job category and
    receives during that period the same wages and other benefits as
    all the other employees in the same job category with the same
    seniority.   Suppose that the employee is then selected to serve
    as a grievance chairman, and that he then entirely ceases his
    prior work and devotes his full time to grievance work, but
    continues to receive wages and benefits from the employer.     It is
    plain that the wages and benefits that this employee receives
    after becoming a grievance chairman are compensation for his
    grievance work, not for the work that he did prior to his
    selection as a grievance chairman.   If these payments were
    compensation for his prior work, then his compensation for that
    work would exceed that of the other employees with equal
    seniority who had labored in the same job category.   Moreover, if
    the payments were compensation for previously completed work (in
    other words, if the payments had been fully earned before the
    employee's selection as a grievance chairman), the employee would
    44
    presumably be entitled to receive those payments if, instead of
    serving as a grievance chairman, he went fishing.    But of course
    that is not the case.
    Accordingly, I agree with the majority that the
    payments at issue here are not compensation for a grievance
    chairman's work prior to his selection for that position.     As the
    majority states: "[t]he chairmen were already compensated for
    their production line work long ago in the form of wages and
    vested benefits."   Maj. Op. at 7-8.    "It is difficult indeed to
    comprehend how years, even decades, of paid union leave can
    realistically be thought of as compensation for time spent on the
    factory floor."   Maj. Op. at 8-9.
    III.
    "By Reason Of" Past Service as a Caterpillar Employee
    While the majority holds that the payments to the
    grievance chairmen are not "compensation" for their past service,
    the majority concludes that the payments are "payable . . . by
    reason of" the grievance chairmen's former service as Caterpillar
    employees.   In reaching this conclusion, however, the majority
    does not explain with any specificity what it understands the
    phrase "by reason of" to mean.    Nor does the majority take note
    of the clear meaning of that phrase in common parlance.      If the
    majority paid more attention to the meaning of this language, it
    would be forced to recognize that the payments in dispute here
    45
    are not made "by reason of" the grievance chairmen's past service
    as Caterpillar employees.
    A.   Dictionaries define the phrase "by reason of" to
    mean "because of" or "on account of."    See The Random House
    Dictionary of the English Language 1197 (1967); 2 The Compact
    Edition of the Oxford English Dictionary 2431 (1971).     When x is
    said to have occurred "by reason of" y, what is usually meant is
    that y was, if not the sole cause of x, at least the or a major
    cause.   If y was simply a "but-for" cause but not a major cause
    of y, x is not said to have occurred "by reason of" y.
    This pattern of usage can be demonstrated by
    constructing sentences that use the phrase "by reason of" to
    refer to weak "but-for" causes.    Such sentences invariably seem
    inapt and make it apparent that this use of the phrase "by reason
    of" is inappropriate.    Here are some examples.
    President Clinton could not have become President had
    he not reached the age of 35, but it would be ridiculous to say
    that he became President "by reason of" having attained his
    thirty-fifth birthday.
    The Green Bay Packers could not have won Super Bowl
    XXXI without defeating the San Francisco Forty-Niners in the
    first round of the playoffs.    However, it would seem quite odd to
    say that the Packers won the Super Bowl "by reason of" defeating
    the Forty-Niners.
    46
    The judges of this court almost certainly would not
    have been appointed if they had not graduated from law school.
    Yet it would seem very strange to say that the judges of this
    court were appointed "by reason of" having obtained law degrees.
    I believe that these examples show that the phrase "by
    reason of x" refers at a minimum to a major reason for x, not
    simply a relatively minor "but-for" cause, and it therefore seems
    clear that Caterpillar's payments to the grievance chairmen are
    not made "by reason of" their prior service as Caterpillar
    employees.   Such past service may be necessary for election as a
    grievance chairman (perhaps because Section 302 is thought to
    require this) and thus to the receipt of the payments at issue,
    but past service as a regular Caterpillar employee is certainly
    not the or a major cause for the payments.15   One way to see this
    is to consider the fact that Caterpillar has thousands of former
    employees, but only a very few of them are ever selected as
    grievance chairmen.   Since all have prior service for the company
    in common, yet only a handful become chairmen, factors other than
    prior service for the company must be much more important in
    influencing their selection.
    15. In Trailways Lines, Inc. v. Trailways, Inc. Joint Council,
    Amalgamated Transit Union, 
    785 F.2d 101
    , 106 (3d Cir.), cert.
    denied, 
    479 U.S. 932
    (1986), we noted that "[w]hile the Union is
    correct in asserting that had these individuals never been
    Trailways' employees they would not be eligible for pension
    contributions made on their behalf, it does not therefore follow
    that the pension fund contributions made by Trailways . . . were
    made 'in compensation for, or by reason of,' their former service
    to Trailways . . . ."
    47
    B.   It should be noted that nowhere in its briefs does
    the union urge that the phrase "by reason of" should be
    interpreted as requiring merely "but-for" causation.     In fact,
    the government's brief supporting the union agrees with my
    interpretation of "by reason of".      Gov't Br. at 12 (discussing
    "common understanding of 'by reason of,' as synonymous with
    'because,' 'on account of,' owing to,' 'due to' etc.").     See also
    Appellant's Reply to Suppl. Br. at 3 ("there is no question" that
    "an employer may pay a former employee who is also a union
    official what he is owed because of his service as an employee
    and not one cent more") (emphasis in original) (quotation
    omitted).
    Rather, the union's argument is that "the most natural
    reading [of ``by reason of'] is that this phrase refers to
    payments which an individual earns the right to receive by
    serving as an employee but which are not, strictly speaking,
    remuneration for particular hours of work."     Appellant's Br. at
    21 (emphasis added).    Accord 
    id. at 34
    ("so long as the right to
    such payments is earned by previously having performed ``service
    to the employer'"); Appellant's Reply Br. at 18-19 ("``preexisting
    wage and benefit payments' for an employee elected to a full-time
    union position qualify as ``payments by reason of' service as an
    employee, at least where the right to such payments has been
    collectively bargained and accrued as a result of the employee's
    work for the employer.") (emphasis added) (other emphasis
    48
    omitted); 
    id. at 21
    (the "by reason of" exception "leaves no room
    for payments which were not earned by prior service").      The union
    contends that the Eleventh Circuit's opinion in United States v.
    Phillips, 
    19 F.3d 1565
    (11th Cir. 1994), cert. denied, 
    115 S. Ct. 1312
    (1995), supports its position that Caterpillar's payments to
    the chairmen were "by reason of" their service as Caterpillar
    employees.   Phillips held that payments by a company to a union
    official were illegal if the union official "did not have a right
    to such payment before he severed his employment relationship
    with the company."   
    Id. at 1575.
        The union relies (Br. at 37) on
    the court's explanation that "[w]hen an employee's right to a
    benefit has fully vested before the leave of absence begins,
    there is no danger of corruption when the employer delivers the
    benefit after that employee leaves the company to work for the
    union . . . ."   
    Id. at 1576.
    I agree that a payment from Caterpillar to a former
    employee now working as a grievance chairman would be legal under
    Section 302 if the chairman's right to that payment vested before
    he became a former employee.    This interpretation of the "by
    reason of" exception has been adopted by several other courts of
    appeals.   See 
    Phillips, 19 F.3d at 1575
    ; Toth v. USX Corp., 
    883 F.2d 1297
    , 1303 n.8 (7th Cir.), cert. denied, 
    493 U.S. 994
    (1989).    Cf. BASF Wyandotte Corp. v. Local 227, Int'l Chem.
    Workers Union, 
    791 F.2d 1046
    , 1049 (2d Cir. 1986).
    49
    But the union's argument fails on its own terms here,
    because it is simply not true that the chairmen's rights to
    receive the payments at issue vested before they left
    Caterpillar's employ.    On the contrary, their rights to receive
    these payments are conditioned upon their performance of certain
    duties in their current positions as grievance chairmen.   If, as
    the union argues, the chairmen's rights to these payments were
    earned before their employment with Caterpillar terminated, then
    the chairmen could go fishing all day, every day, instead of
    processing grievances.   Here, contrary to the government's
    argument, see Gov't Br. at 16, the payments made by Caterpillar
    are measured by the chairmen's current services for another
    employer, i.e., the union; they can earn as much as 46 hours' pay
    if they perform sufficient work, but if they perform less work
    they receive less and if they perform no work -- if they just go
    fishing -- they get nothing at all.    In this respect, then, this
    case is identical to Trailways, and the union fails completely in
    its attempt to distinguish it on the ground that the chairmen are
    paid at a rate set by Caterpillar rather than by the union.
    The basic problem with the union's argument is that it
    confuses an employee's eligibility for a payment with his right
    to it.   The chairmen's prior service as employees of Caterpillar
    rendered them eligible to receive their Caterpillar salaries if
    they were elected as chairmen, but their prior service in no way
    gave them any right to receive any amount of money.   In my view,
    50
    it is obvious that their prior service is not the sole or even a
    major reason for their receipt of the disputed payments.     It thus
    cannot be said -- absent outright linguistic torture -- that the
    payments are made "by reason of" their prior service.
    C.   The majority's main argument in support of its "by
    reason of" holding is that under the collective bargaining
    agreement "every employee implicitly gave up a small amount in
    current wages and benefits in exchange for a promise that, if he
    or she should someday be elected grievance chairperson,
    Caterpillar would continue to pay his or her salary."   Maj. Op.
    at 11.   In other words, the majority views the collective
    bargaining agreement as providing each employee with the
    contingent right to receive future payments from the company
    after that employee's regular service has terminated (the
    contingencies being the employee's selection and subsequent work
    as a grievance chairperson).   Moreover, the majority appears to
    argue that a bit of each employee's work under the collective
    bargaining agreement goes to pay for this contingent right, and
    the majority therefore reasons that if an employee is later
    selected as a grievance chairman and receives salary and benefits
    from Caterpillar, those payments are received "by reason of" the
    bit of that employee's past service that went to pay for this
    contingent right.
    This argument is inventive -- but wrong.   At the
    outset, it should be noted that the majority's argument logically
    51
    leads to strange results that the majority does not seem to
    contemplate.    The majority's argument is dependent on a grievance
    chairman's having "paid," while working as a regular employee,
    for the contingent right to receive future payments from the
    employer.    Thus, the argument cannot justify the initial
    negotiation of a collective bargaining agreement containing a
    provision such as the one in question here.    Suppose that a
    particular company and union had never before agreed on an
    arrangement under which the company would pay the grievance
    chairmen but that the company and the union then enter into such
    an arrangement.    The first group of employees chosen as grievance
    chairmen would not have previously made any "payments" to the
    employer in exchange for the contingent right to receive future
    wages and benefits from the employer.    Therefore, even under the
    majority's theory, the company's payments to the initial group of
    grievance chairmen would be illegal.    In other words, the
    majority's theory leads logically to the weird result that the
    company and the initial group of grievance chairmen would have to
    commit federal felonies in order to set in motion the type of
    arrangement that the majority sanctions.16
    Moreover, although the majority postulates that regular
    employees "pay" for the contingent right to receive future
    compensation from the employer, it is by no means clear that this
    16. I would assume that the same would be true every time a new
    collective bargaining agreement took effect.
    52
    is true in most cases.    Obviously, each regular employee gives up
    wages and/or other benefits in exchange for the employer's
    payments to the grievance chairmen, but what each regular
    employee is chiefly "paying" for is not the contingent right to
    receive future payments from the employer but rather the current
    improvement in the handling of grievances that presumably results
    from the work of the grievance chairmen.    Indeed, under most
    circumstances, I suspect that virtually all, if not all, of the
    "payments" made by a regular employee in any particular year go
    to fund the employer's payments to the grievance chairmen in that
    year and not in future years when that employee might himself be
    a grievance chairman.17
    17. It makes sense that a regular employee should pay little if
    anything for the contingent right discussed in the text (as
    distinct from a current improvement in grievance handling)
    because, from the standpoint of a wealth-maximizing regular
    employee, this contingent right has little if any value. This is
    so for two reasons. First, this contingent right carries little
    prospect of financial gain. A regular employee, if selected as a
    grievance chairman, will have to make future contributions of
    labor (performing the work of a grievance chairman) that are
    fully worth the wages and benefits that the employer will
    provide. (Indeed, under the collective bargaining agreement
    before us here, a regular employee selected as a grievance
    chairman does not realize any gain in wages or benefits; he
    continues to receive the same wages and benefits as he did
    before.) Second, this contingent right probably does little to
    increase an employee's chances of obtaining whatever non-monetary
    gratification may flow from doing the work of a grievance
    chairman as opposed to the work of a regular employee. Assuming
    that employees in a particular bargaining unit who are willing to
    forgo $x per year in exchange for their employer's payments to
    the grievance chairmen would be willing to pay the same amount
    per year in increased union dues so that the union could make
    these payments, there will be approximately the same number of
    grievance chairman positions (and therefore approximately an
    equal chance of performing the work of a grievance chairman)
    whether or not the grievance chairmen are paid by the employer.
    53
    Finally and most importantly, postulating that each
    regular employee "pays" something for the contingent right to
    future compensation by the employer does not obviate the problem
    that past service as a regular employee is not the sole or even a
    major cause of this future compensation.    Assuming that each
    regular employee makes such "payments" and that the payments are
    a but-for cause of any compensation that this employee may
    receive in the future as a grievance chairman, there are two
    other, more important causes of that compensation:    selection as
    a grievance chairman and the satisfactory performance of the work
    of a grievance chairman on a daily basis.    Thus, to say that a
    grievance chairman is paid year after year after year "by reason
    of" his past service as a regular employee makes no more sense
    than to say that a regular employee is paid year after year after
    year "by reason of" his having acquired the qualifications that
    were necessary for his original hiring.
    For these reasons, it seems clear to me that the
    payments at issue in this case are made "by reason of" the
    chairmen's grievance work and not "by reason of" their prior
    service as regular employees.   Consequently, these payments
    cannot be squeezed into the "by reason of" exception in Section
    302(c)(1), 29 U.S.C. §186(c)(1), and I am therefore constrained
    to conclude that these payments are prohibited by the plain
    language of Section 302.
    54
    D.   The majority also argues that by exempting payments
    made "by reason of" a former employee's past service in addition
    to payments made "as compensation for" that service, Congress
    must have intended that the two phrases refer to different
    things.   I have no quarrel with this elementary principle of
    statutory interpretation, but I do not agree with the majority's
    application of it.     The majority fails to acknowledge that three
    courts of appeals have construed "by reason of" to refer to a
    class of payments distinct from those covered by the "as
    compensation for" exemption, and that those courts have not
    adopted anything like the interpretation espoused by the
    majority.    Because the Eleventh Circuit's discussion in Phillips
    precisely answers the majority's contention, I quote it at
    length:
    Congress, in using the alternative formulations of "as
    compensation for" and "by reason of" in that provision,
    intended to remove from the statute's prohibitions two
    general categories of payments to employees: (1) wages,
    i.e., sums paid to an employee specifically "as
    compensation for" work performed; and (2) payments not
    made specifically for work performed that are
    occasioned "by reason of" the fact that the employee
    has performed (or will perform, in the case of a
    current employee) work for the employer. The latter
    category includes employee "fringe" benefits, such as
    vacation pay, sick pay, and pension benefits. Whether
    "as compensation for" or "by reason of" service to an
    employer, all payments from an employer to a union
    official must relate to services actually rendered by
    the employee for the section 186(c)(1) exception to
    apply. * * *
    An employee's "right" to receive a "benefit" while on leave with
    the union has been upheld when it vested before the
    employee began the leave of absence . . . . In
    contrast, the section 186(c)(1) exception does not
    apply when a company pays a union official who was a
    55
    former employee, but who did not have a right to such
    payment before he severed his employment relationship
    with the 
    company. 19 F.3d at 1575
    (first and third emphases added) (citations
    omitted).    BASF Wyandotte Corp., on which Phillips principally
    relied, deemed "fring[e] benefits" such as "vacation pay, sick
    pay, paid leave for jury duty or military service, pension
    benefits, and the like" to be within the "by reason of"
    
    exception. 791 F.2d at 1049
    .   Accord 
    Toth, 883 F.2d at 1303
    n.8
    (severance payments are "by reason of" former employee's past
    service).    These decisions are consistent with Trailways' holding
    that the payments to former employees contemplated by section
    302(c)(1) are those that relate to "past services actually
    rendered by those former employees while they were employees of
    the company."    
    Trailways, 785 F.2d at 106
    (emphases in original).
    Thus, the distinction between the "alternative
    formulations" is that "compensation" refers to wages paid for
    specific work performed, while "by reason of" refers to non-wage
    payments made after an employee becomes a former employee but
    earned while he or she was still an employee.18    In contrast to
    18. In Toth, the Seventh Circuit interpreted our decision in
    Trailways as resting on the proposition that "any compensation
    continuing beyond the time of an employee's 'past' employment
    could not be 'by reason of' [that] 
    employment." 883 F.2d at 1302
    . While I am less confident than the Toth court that
    Trailways should be read so to hold, I agree with the Toth court
    that some payments made after the termination of the recipient's
    employment with the company can be made "by reason of" his or her
    prior employment. What is important is whether the recipient has
    a right to the payment before he or she leaves the company, not
    the date on which the payment is actually made or received. See
    56
    the Second, Seventh, and Eleventh Circuits, the majority here
    holds that the "by reason of" exception refers to wage payments
    that would not be made but for the recipient's prior service as
    an employee.
    E.   The only justification for disregarding the plain
    meaning of the "by reason of" exception would be that it would
    produce "a result demonstrably at odds" with congressional intent
    or "would thwart the obvious purpose of the statute."    Griffin v.
    Oceanic Contractors, Inc., 
    458 U.S. 564
    , 571 (1982) (quotation
    omitted), but the majority does not even attempt to make such a
    showing.    I see nothing that demonstrates that following the
    plain meaning of the statutory language would produce a result
    that is demonstrably at odds with Congress' intent.    I find
    nothing conclusive in the legislative history, and while I agree
    with the majority that the payments in question here are quite
    different from "bribery and extortion," Maj. Op. at 13, there are
    reasons, many of which are set out in Judge Mansmann's opinion,
    why Congress might have wished to preclude such employer
    payments.    I will simply note that this very case serves as an
    example of why Congress might have wanted to prohibit the
    payments at issue.    The majority's description of these payments
    as "innocuous" (Maj. Op. at 8) ignores the fact that
    Caterpillar's decision to stop paying the chairmen's salaries was
    (..continued)
    
    Toth, 883 F.2d at 1302
    (criticizing Trailways for this reason).
    57
    designed to "put economic pressure on the Union" during the
    strike.   (App. 144) Prohibiting company control over such
    payments furthers the goal of union independence by removing this
    weapon from the company's arsenal.   In short, while I am unsure
    whether this prohibition is on balance desirable or undesirable,
    I am certain that it is far from absurd.   The "explicit statutory
    direction" that the majority purports to find wanting (Maj. op.
    at 14) is plainly contained in the text of Section 302.
    The history of "no docking" provisions, which seems to
    form the centerpiece of the union's submission, also does not
    persuade me to disregard the plain statutory language.    "No
    docking" provisions differ, at least in degree, from the type of
    arrangement that is before us, and there are times in the law
    when differences in degree are dispositive.   In any event, the
    legality of "no docking" provisions is unsettled; that question
    is not before us; and, like Judge Mansmann, I would not reach it
    here.
    Since Section 302 is a criminal statute, I would apply
    the rule of lenity if I thought that the statutory language was
    ambiguous, see, e.g., Crandon v. United States, 
    494 U.S. 152
    , 158
    (1990), but since I see no ambiguity, I find that rule
    inapplicable.   See Reno v. Koray, 
    115 S. Ct. 2021
    , 2029 (1995)),
    (rule of lenity applies only "if, ``after seizing everything from
    which aid can be derived,' we can make ``no more than a guess as
    to what Congress intended'") (citations omitted).   I would
    58
    therefore affirm the decision of the district court.   If this
    result is not desirable as a matter of public policy, the union
    and its amicus, the United States, surely understand how to seek
    correction in Congress.19
    19. Indeed, the government's amicus brief seems at places to
    amount to a request that we craft a legislative solution to the
    problem of collective bargaining agreements that call for
    employers to make payments to former employees who become union
    officials. According to the government's brief, such payments
    may violate Section 302 if they are "incommensurate" with the
    recipient's former compensation as a regular employee, if the
    recipient negotiated the right to receive those payments, or if
    the recipient has not worked for the employer in his or her
    regular job for an extended period and is unlikely ever to return
    to such work. U.S. Amicus Br. at 26-28. These may be sensible
    rules, but I am unable to tease them out of the current language
    of Section 302. They provide material for legislative, not
    judicial, consideration.
    59
    

Document Info

Docket Number: 96-7012

Citation Numbers: 107 F.3d 1052

Judges: Sloviter, Becker, Stapleton, Mansmann, Greenberg, Scirica, Cowen, Nygaard, Alito, Roth, Lewis, McKee

Filed Date: 3/4/1997

Precedential Status: Precedential

Modified Date: 10/19/2024

Authorities (15)

Reno v. Koray , 115 S. Ct. 2021 ( 1995 )

Walters v. Metropolitan Educational Enterprises, Inc. , 117 S. Ct. 660 ( 1997 )

basf-wyandotte-corporation-v-local-227-international-chemical-workers , 791 F.2d 1046 ( 1986 )

john-p-herrera-iii-and-deborah-herrera-v-international-union-united , 73 F.3d 1056 ( 1996 )

United States v. Ron Pair Enterprises, Inc. , 109 S. Ct. 1026 ( 1989 )

Herrera v. International Union, United Automobile, ... , 858 F. Supp. 1529 ( 1994 )

Appalachian States Low-Level Radioactive Waste Commission v.... , 93 F.3d 103 ( 1996 )

Andrew Toth v. Usx Corporation , 883 F.2d 1297 ( 1989 )

reinforcing-iron-workers-local-union-426-international-association-of , 634 F.2d 258 ( 1981 )

National Labor Relations Board v. Hendricks County Rural ... , 102 S. Ct. 216 ( 1981 )

National Labor Relations Board v. Town & Country Electric, ... , 116 S. Ct. 450 ( 1995 )

Communications Workers of America v. Bell Atlantic Network ... , 670 F. Supp. 416 ( 1987 )

EMPLOYEES'INDEPENDENT UNION v. Wyman Gordon Company , 314 F. Supp. 458 ( 1970 )

Caterpillar, Inc. v. International Union, United Automobile,... , 909 F. Supp. 254 ( 1995 )

United States v. Thermon Phillips, E.B. Rich, Usx ... , 19 F.3d 1565 ( 1994 )

View All Authorities »