This case involves the interpretation of § 302 of the Labor Management Relations Act ("LMRA"), which forbids an employer to pay union officials who represent its employees, but exempts such payments where the union representative is a current or former employee and is being compensated "for, or by reason of," that employment. 29 U.S.C. § 186(c).
Caterpillar is a manufacturer and distributor of heavy equipment. Under a collective bargaining agreement with the United Auto Workers ("UAW"), union grievance chairpersons could devote their entire work week to union business without losing company-paid wages or benefits. Once the collective bargaining agreement expired, however, Caterpillar informed the union that the company questioned the legality of these payments under the LMRA and therefore would cease paying the grievance chairmen. Thereafter, the UAW filed an unfair labor charge with the NLRB, prompting Caterpillar to file a federal suit seeking a declaratory judgment that such payments violate § 302 of the LMRA.
The district court held that Caterpillar's payments to the union's grievance chairmen violated § 302, and the union appealed. A divided Third Circuit, sitting en banc, overruled its own precedent and became the first court of appeals to extend § 302's exemption to union officials who no longer perform any work for the employer. The court observed that although such payments were not compensation for hours worked in the past, they were — by virtue of their inclusion in the collective bargaining agreement — compensation "by reason of" that service and were, thus, consistent with § 302.
Question presented:
…Whether section 302(c)(1) permits an employer to pay or agree to pay the current wages of full-time union officials who are former employees of the employer but who no longer perform any work for the employer.
Lower court opinion: 107 F.3d 1052 (3d Cir.)
Status: Oral argument January 20, 1998. The case was dismissed on March 23, 1998 without a decision.