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            Title Caterpillar, Inc. v. International Union

 

            Date 1997

            By

            Subject Other\Dissenting

                

 Contents

 

 

Page 1

30 of 64 DOCUMENTS

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

No. 96-7012

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

107 F.3d 1052; 1997 U.S. App. LEXIS 3763; 154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

August 8, 1996, Argued; December 2, 1996, Reargued

March 4, 1997, Filed

SUBSEQUENT HISTORY:   **1    Certiorari Granted

September 29, 1997, Reported at: 1997 U.S. LEXIS 4444. PRIOR HISTORY: ON APPEAL FROM THE UNITED STATES   DISTRICT   COURT   FOR   THE   MIDDLE DISTRICT  OF  PENNSYLVANIA.  (D.C.  Civil  Action No. 92-01854).

DISPOSITION: Affirmed.

CASE SUMMARY:

PROCEDURAL POSTURE: Defendants, a labor union and   its   local   chapter,    appealed   the   order   of   the United  States  District  Court  for  the  Middle  District of  Pennsylvania,  which  held  that  plaintiff  employer's grant of paid leaves of absence to defendants' full-time grievance chairmen violated § 302 of the National Labor Relations Act, 29 U.S.C.S. § 186.

OVERVIEW: Plaintiff employer sued defendants, a la- bor  union  and  its  local  chapter,  claiming  the  practice of  making  payments  to  defendants'  full-time  grievance chairmen, who were granted paid leaves of absence from work while doing union business, constituted a violation of § 302 of the National Labor Relations Act, 29 U.S.C.S.

§ 186. The district court held the practice violated § 302. On appeal,  the court reversed and overruled significant portions of Trailways Lines, Inc. v. Trailways, Inc. Joint Council, Amalgamated Transit Union, 785 F.2d 101 (3d Cir. 1986), because the test presented in Trailways misin- terpreted the scope of § 302. The court reasoned that the anti-docking provisions were contained in the collective bargaining agreement, and that the payments at issue were payments by reason of service rendered. The court held that absent explicit statutory direction from Congress, it

would not condemn anti-docking payments to defendants as criminal.

OUTCOME: Order finding payments to defendants' in violation of National Labor Relations Act reversed and remanded because statute was enacted to prevent bribery, extortion  and  other  corrupt  practices,  and  not  to  regu- late the anti-docking provisions in the collective bargain- ing agreement, which, absent express statutory direction, could not be considered criminal.

LexisNexis(R) Headnotes

Labor & Employment Law > Collective Bargaining & Labor Relations > Right to Organize

Labor & Employment Law > Leaves of Absence > Short- Term Leave

HN1  See § 302(a) of the National Labor Relations Act,

29 U.S.C.S. § 186(a).

Labor & Employment Law > Collective Bargaining & Labor Relations > Right to Organize

Labor & Employment Law > Collective Bargaining & Labor Relations > Protected Activity

HN2  See § 302(c) of the National Labor Relations Act,

29 U.S.C.S. § 186(c)(1).

Labor & Employment Law > Collective Bargaining & Labor Relations > Right to Organize

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN3   Section  302(c)(1)  of  the  Labor  Management Relations  Act,  29  U.S.C.S.  §  186(c)(1),  legalizes  pay- ments to current or former employees based on their "ser- vices" as employees, not their "status" as such.

Labor & Employment Law > Collective Bargaining & Labor Relations > Right to Organize

107 F.3d 1052, *; 1997 U.S. App. LEXIS 3763, **1;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

Page 2

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN4   After  careful  consideration  and  reargument  be- fore the in banc court, the court believes that Trailways Lines, Inc. v. Trailways, Inc. Joint Council, Amalgamated Transit Union, 785 F.2d 101 (3d Cir. 1986), was wrongly decided  and  tends  to  subject  innocuous,  bargained-for and  fully  disclosed  payments  to  the  criminal  sanctions of the Labor Management Relations Act (LMRA). The court's  disagreement  is  with  the  Trailways  court's  con- clusion that the "by reason of" language in § 302(c)(1) of  the  LMRA,  29  U.S.C.S.  §  186(c)(1),  exempts  only those payments for past services actually rendered while the former employee was still employed by the company. That statement misinterprets the text of § 302(c)(1) and does nothing to further the policy objectives Congress had when it enacted the LMRA.

Labor & Employment Law > Collective Bargaining & Labor Relations > Right to Organize

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN5  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 com- pany is paying for services not actually rendered for it, since those employees are already receiving their regular hourly wages and benefits for their production line work. No-docking arrangements are upheld by the court as not in violation of § 302 of the Labor Management Relations Act, 29 U.S.C.S. § 186.

Labor & Employment Law > Collective Bargaining & Labor Relations > Right to Organize

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN6  Like wages,  overtime,  insurance,  or accrued se- niority, the pension fund payments are consideration for services rendered and, as such, are permissible under §

302(c)(1)  of  the  Labor  Management  Relations  Act,  29

U.S.C.S. § 186(c)(1).

COUNSEL:   DAVID   M.   SILBERMAN,   ESQUIRE

(Argued), Bredhoff & Kaiser, Washington, DC. DANIEL W.   SHERRICK,   ESQUIRE,   International   Union   of United Auto Workers, Detroit, MI. WENDY L. KAHN, ESQUIRE, Zwerdling, Paul, Leibig, Kahn, Thompson & Driesen, Washington, DC. Attorneys for Appellants.

GERALD  C.  PETERSON,  ESQUIRE,  COLUMBUS R.  GANGEMI,  Jr.,  ESQUIRE,  (Argued),  Winston  & Strawm, Chicago, IL. Attorneys for Appellee.

JAMES  B.  COPPESS,  ESQUIRE,  Washington,   DC. Attorney for Amicus-Appellant.

American Federation of Labor & Congress of Industrial Organizations   (AFL-CIO),   ALLEN   H.   FELDMAN, ESQUIRE  EDWARD  D.  SIEGER,  ESQUIRE,  United States  Dep't  of  Labor,  Washington,  DC.  Attorneys  for Amicus Curiae United States of America, COUNCIL ON LABOR LAW EQUALITY, Proposed Amicus-Appellee.

JUDGES:  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.

OPINIONBY: NYGAARD

OPINION:

*1053   OPINION OF THE COURT

NYGAARD,   **2   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, re- lying 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 los- ing pay, benefits or full-time status. In 1973, this agree- ment was expanded to allow the union's full-time union committeemen **3    and grievance chairmen to devote their entire work week to union business without losing pay. These employees are placed on leave 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

107 F.3d 1052, *1053; 1997 U.S. App. LEXIS 3763, **3;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

Page 3

purposes.

In 1991, a nationwide labor dispute erupted between

Caterpillar and the union, which resulted in the employ- ees  returning  to  work  without  a  contract.  A  year  later, Caterpillar

107 F.3d 1052, *1054; 1997 U.S. App. LEXIS 3763, **3;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

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*1054    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 re- scinding the payments, Caterpillar refused to bargain in good faith. A month later, Caterpillar filed this suit seek- ing 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 **4   a recommended decision and order dismiss- ing the union's charges, finding that the payments violated

§ 8 of the National Labor Relations Act. n1 The district court then lifted the stay and held that Caterpillar's pay- ments to the union's full-time grievance chairmen violated

§ 302. The union now appeals.

n1 The ALJ, while questioning the validity of the payments under § 302 of the LMRA, did not reach that issue in his proposed holding.

II. A.

Section 302(a) of the LMRA provides:

HN1  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 em- ployees who are employed in an industry af- fecting 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 com- merce .

29 U.S.C. § 186(a). Caterpillar is an employer in an in- dustry  that   **5    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

HN2  the 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. 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. n2 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

**6  that possibility as a matter of statutory construction, opining:

n2 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 cur- rent 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.

To the Union, the pension fund contributions made  on  behalf  of  former  employees  cur- rently  on  leave  to  serve  as  union  officials were earned solely "by reason" of their past service to Trailways. But for their past em- ployment by Trailways, the Union contends, these officials would not be eligible for pen- sion fund contributions; therefore, these pay- ments are "by reason of their service as an employee of" Trailways.

A logical reading of the statute makes clear

**7   that the "payments to former employ- ees' 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'

107 F.3d 1052, *1055; 1997 U.S. App. LEXIS 3763, **7;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

Page 5

*1055    employees  they  would  not  be  el- igible  for  pension  contributions  made  on their  behalf,  it  does  not  therefore  follow that the pension fund contributions made by Trailways pursuant to the collective bargain- ing 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 ser- vices actually rendered by those former em- ployees  while  they  were  employees  of  the company. Just as clearly, however, the pen- sion 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). n3

n3 In a footnote, the court noted that the pen- sion  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).

**8

Were we to follow Trailways, its holding would con- trol  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 po- sition adverse to Caterpillar's. HN3  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 sub- section (c)(5) in Trailways,  under subsection (c)(1) the chairmen can be employees of both the union and the em- ployer. It relies especially on NLRB v. Town & Country

Electric, 116 S. Ct. 450, 456, 133 L. Ed. 2d 371, (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.   **9   But there, the Court noted that the employee still performed services for the benefit and under the control of the em- ployer, 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 employ- ees "as compensation for" their past services as employ- ees.  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 sup- port a finding that the payments at issue here somehow

"related back" to these former employees' services on the factory floor.

B.

Nevertheless,   HN4  after careful consideration and reargument  before  the  in  banc  court,  we  believe  that Trailways was wrongly decided and tends to subject in- nocuous, bargained-for and fully disclosed payments to the criminal sanctions of the LMRA.

We have no difficulty with the Trailways holding re- garding "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 **10   for their past services rendered as production employees. Our disagree- ment 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 fac- tory floor. The Trailways

107 F.3d 1052, *1056; 1997 U.S. App. LEXIS 3763, **10;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

Page 6

*1056    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 **11    by those former em- ployees 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. HN5  Under a no-docking clause, the employer agrees that shop stewards **12  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 ac- tually rendered 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  viola- tion 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  in- tended  that  granting  four  employees  two  hours   **13  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, cer- tainly  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  have  received.  Thus, every employee implicitly gave up a small amount in cur- rent wages and benefits in exchange for a promise that, if he or she should someday be elected grievance chairper- son, Caterpillar would continue to pay his or her salary. n4 As our colleague Judge Becker pointed out, dissenting in Trailways:

n4 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.

**14

The collective bargaining agreement con- tains the terms of workers' employment with Trailways;  each  of  the  benefits  the  work- ers receive under that collective bargaining agreement are part of the consideration for their services at Trailways. In

107 F.3d 1052, *1057; 1997 U.S. App. LEXIS 3763, **14;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

Page 7

*1057    addition to the standard terms for wages, overtime pay, and insurance, the col- lective  bargaining  agreement  provides  that persons who take a leave of absence to work as  union  officials  have  a  right  to  reinstate- ment  at  Trailways  after  their  union  service and  retain  their  seniority  during  their  ab- sence. 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 bar- gaining  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.   HN6   Like  wages, overtime, insurance, or accrued seniority, the pension fund payments are consideration for services rendered **15    and, as such, are permissible under § 302(c)(1).

Trailways, 785 F.2d at 109 (Becker, J., dissenting).

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 "one obvious instance in which contin- uing  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., 1993 U.S. Dist. LEXIS  376,  16  E.B.C.  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 de- cide what is legal regardless of federal law by agreeing in

a labor contract to a particular course of **16   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 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 em- ployees 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 is- sue  here  as  posing  the  kind  of  harm  to  the  collective bargaining process that Congress contemplated when it

**17    enacted the LMRA. Section 302 of that statute was passed to address bribery,  extortion and other cor- rupt  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 col- lective bargaining agreement on which each rank-and-- file employee has the opportunity to vote. Thus, the of- ficials  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 con- demn these payments as criminal. Accordingly, we will reverse.

DISSENTBY: MANSMANN; ALITO

DISSENT:  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

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*1058   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 **18   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 pay- ments 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. 235, 241, 109 S. Ct. 1026, 1030,

103 L. Ed. 2d 290 (1989); New Rock Asset Partners, L.P. v. Preferred Entity Advancements,  Inc.,  101 F.3d 1492,

, 1996 WL 708610, at *5 (3d Cir. 1996) (unless literal application will produce absurd result, plain meaning is conclusive). It is for Congress, not the courts, to create ex- ceptions 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 **19    of value to any representa- tive 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 em- ployee, who presently works as a grievance chairperson for the union, are 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) sim- ply recognizes that current and former employees might have **20   a right to receive payments from their em- ployers 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 ben- efits"), 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 "vaca- tion  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 prop- erly called compensation, "by reason of" payments "arise

**21   from" the employee's services for the employer. Without the section 302(c)(1) exception,  these pay- ments would be illegal if paid to any employee or former employee who also worked for the union. Thus, an em- ployee who worked full time for the company, but who held a part-time position with the union (a practice per- mitted 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

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*1059  paid his salary and could not receive fringe bene- fits -- 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) ex- ception does not entitle union representatives to receive payments because of their service for the union; the ex- ception 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 **22   ren- dered  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 1046 at

1049 ("by reason of" payments are those "occasioned by the fact that the employee has 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,  pay- ment 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 pay- ments at issue here and that we must affirm the judgment of the district court. n5

n5 The majority overstates the effect of our de- cision  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 di- rect compensation for services (wages) or merely by reason of those services (vacation pay, jury pay, et  cetera) --  must  somehow  relate  to  those  indi- viduals' services for the employer. The Trailways opinion did not merge "compensation for" and "by reason of" as the majority suggests; it does not dis- pute 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 rec-

ognized 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 in- deed 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 com- pensation for or by reason of their former services, must be related to that former service. Just as for- mer employees are no longer entitled to "by rea- son 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 ser- vice. Accordingly,  I see no reason to reverse our decision in Trailways.

**23

II.

Because the plain language of the "by reason of" ex- ception  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 ma- jority also recognizes, Congress was concerned about, in- ter 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 **24  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

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*1060  Labor and Congress of Industrial Organizations). n6 Congress desired to close the loopholes "which both employer representatives and union officials turned to ad- vantage at the expense of employees." Id. at 2330.

n6 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 dis- cussion 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 in- cluded in the official conference report.

**25

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 indi- vidual 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).

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  1046 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 **26   was concerned with cor- ruption through both (1) bribery of employee representa- tives by employers and (2) extortion by those represen- tatives.  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 vig- orous unions. Playing both sides of the street, using union office for personal financial ad- vantage,  undercover  deals,  and  other  con- flicts of interest corrupt, and thereby under- mine and weaken the labor movement. . . . The Government . . . must make sure that the power to act as exclusive bargaining repre- sentative  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 se- cret,  back-room  deals.  Congress  was  concerned  about any  form  of  payment  that  could  upset  the  balance  be- tween 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.

For  example,          **27      let  us  assume  that  ABC Corporation and the union are engaged in difficult negoti- ations over a pension plan. Also assume that the employer was stonewalling on this issue, that the union had the "cor- rect" position, and that the company could have accepted the union's proposal without suffering noticeable finan- cial 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 employ- ees,  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 his- tory and purpose of section 302, however, this scenario represents just what Congress sought to avoid.

III.

As the majority concedes, the grievance **28   chair- men in this case do not perform any

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*1061    services whatsoever for Caterpillar. Maj. Op., at 7. Instead, the chairmen perform services exclusively for the union. The majority concludes, however, that pay- ments  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 some- thing"  in  negotiations  with  the  employer  so  that  these payments may be included in the agreement, such pay- ments 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 pay- ment provision in a collective bargaining agreement does not, however, make the payment "by **29   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 repre- sentative of any of his employees.  29 U.S.C. § 186(a)(1). Thus, actual payments to union representatives are pro- hibited, but so are agreements to pay union representa- tives. The majority places special emphasis on the fact that the payments in this case were negotiated and were not, in effect, secret agreements. Congress, on the other hand, was not concerned about the secrecy of these agree- ments. 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 un- der section 302(c)(1). Congress could easily have written an exception for payments by employers to union repre- sentatives 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 repre- sentative's services for the employer. n7

n7 Senator Ball stated that the section 302(c)(1) exception  allows  payment  of  "money  due  a  rep- resentative  who  is  an  employee  or  a  former  em- ployee of the employer, on account of wages actu-

ally 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 en- compass payments to a former employee that are entirely unrelated to the employee's services.

**30

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 agree- ments. 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 ex- ception such that the rule is rendered a nullity. n8

n8 I am also concerned that by placing so much emphasis on the fact that the payments were negoti- ated and included in the collective bargaining agree- ment,  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. Nonetheless,  the majority uses the bargaining process to legitimize a payment that is otherwise prohibited by statute.

The majority next reasons that since current employ- ees must surely "give up something" during negotiations in exchange for an agreement by the employer **31   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 oth- erwise 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  subsi- dize the pension fund of the union's permanent staff -- all because

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*1062   the company's employees might "give up some- thing" 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 "giving 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

**32   agreement.

The majority's reasoning violates the plain language of section 302(c)(1) in yet another way. This section al- lows 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  pay- ments  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 ser- vice 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 sec- tion 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 con- strued to apply to several situations **33   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, n9 the individual serves as grievance chairperson and 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.

n9 While the agreement in this case may con- tain a time restriction, that restriction did not play

any part in the 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.

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")                 **34      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  ser- vices, but Michael's prior employment (for which he was already fully compensated) entitles him to continued pay- ment from the employer. n10

n10 Altering this example somewhat, let us as- sume  that  Michael  worked  for  twenty  years  be- fore being elected grievance chairperson, but that Mary  worked  one  day.  In  this  situation,  the  em- ployer 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 con- siders what the collective group gave up. I contend that the employer may not do that under the plain terms of section 302(c)(1).

The majority's reasoning also **35   fails as a matter of logic in "open shops." In an open shop, not all employ- ees 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 as- pire 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 ad- dition, 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 em- ployer to subsidize representatives' salaries in exchange for reductions in pay or benefits. These agreements will be

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*1063   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' ser- vices --  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 **36   are lawful under section 302, the pay- ments at issue here should also be lawful. The majority writes that "it would be strange indeed if Congress in- tended that granting four employees two hours per day of paid union leave is permissible, while granting a sin- gle 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 anal- ogous  to  no-docking  payments,  the  majority  assumes

(without deciding) that no-docking provisions are law- ful.  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  conclu- sion 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.   **37  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 cur- rent 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 absences to perform union work is no different from vacation pay, sick pay, and mil- itary 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 **38    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 em- ployers. 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 pro- visions  are  lawful.  In  several  of  those  cases,  however, the courts carefully distinguished no-docking payments from payments made to union officials who did not per- form 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: We  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 **39   payroll,

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*1064   performed  no  service  as  an  em- ployee,  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  employ- ment were clearly so incommensurate with that former employment as not to qualify as payments "in compensation for or by reason of" that employment . . . .

883 F.3d 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).

Indeed, the **40    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 la- bor organization. This rule contains one exception:  "an employer shall not be prohibited from permitting employ- ees 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  con- tribute  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  conve- nience of the employees and the employer. In contrast, the grievance chairmen in this case are paid full time re- gardless of whether there is any union **41    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.

V.

While the majority emphasizes its policy determina- tion 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 posi- tion 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 ag- grieved 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

**42   of an individual whose sole function is to oppose the employer. n11

n11  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' opin- ions  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 po- sition of grievance 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.

**43

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Page 15

*1065   Next, by sanctioning an agreement whereby the company  pays  grievance  chairmen  to  perform  services for the union, the majority unnecessarily creates uncer- tainty 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 fa- vorably 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  ex- cerpt 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 pay- roll, perhaps they remain employees of the company. The majority  does  not  decide  whether  the  company  or  the union is the chairmen's employer. n12

n12 This uncertainty will extend beyond cases arising under the NLRA. The Supreme Court re- cently 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. Metropolitan Educ. Enters.,  Inc.,         U.S.         ,  136  L.  Ed.  2d  644,  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, "the pay-

roll 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  com- pletely 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  tradi- tional  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 exclu- sively  for  one  entity  and  are  paid  exclusively  by another.

**44

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  chairper- son injures a third party while performing union work? Who will be responsible for providing a reasonable ac- commodation 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 FMLA employer or whether the company is an FMLA employer?  n13 If a grievance chairperson is injured while performing union duties, will she nevertheless be entitled to disability or workers' com- pensation from the company?  May the company termi- nate, suspend or discipline a grievance chairperson if he engages in activity that would qualify for termination,

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*1066    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 **45    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.

n13   The   Senate   Report   accompanying   the Family and Medical Leave Act of 1993 states that the  term  "employ"  means  "maintain  on  the  pay- roll." S. Rep. No. 103-3, 103d Cong. 1st Sess. 22, reprinted  in  1993  U.S.C.C.A.N.  3,  24  (individu- als 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.

The final and most important **46   policy consid- eration not addressed by the majority is that federal labor policy demands that labor organizations and employers remain separate and distinct from one another. The ma- jority would sanction a pay practice that violates this im- portant policy.

By enacting the labor laws as written, Congress in- sisted  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 distinc- tion  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. 1040 (1947) (Douglas, J., dissenting)

("industrial philosophy" recognizes that management and labor are "basic opposing forces"); Cedars-Sinai Medical

**47     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 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  ap- proach 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 manage- ment.  I  accept  and  encourage  arm's  length  cooperation between labor and management. I cannot condone pay- ments  that  threaten  the   **48    independence  of  labor, create conflicts of interest for union negotiators, and vi- olate the plain language of our laws. It is for Congress, not  the  courts,  to  determine  if  and  when  to  permit  la- bor organizations and employers to blur the line between them.

Accordingly, I respectfully dissent. 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 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, 103 L. Ed. 2d

290, 109 S. Ct. 1026 (1989) (quoting Griffin v. Oceanic

Contractors, Inc., **49   458 U.S. 564, 571, 73 L. Ed. 2d

973, 102 S. Ct. 3245 (1982)).

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*1067     Here,  the  majority  has  not  heeded  the  plain meaning of Section 302 and has not shown that the lit- eral 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 subsec- tion (c)(1), which applies to "any money or other thing of  value  payable  by  an  employer  .  .  .  to  any  represen- tative  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). The union argues that these payments fall within this exception for three sepa- rate reasons: (1) they are compensation for the grievance chairmen's current service as Caterpillar employees; (2) they are compensation for the grievance chairmen's for- mer  service  as  Caterpillar  employees;  and  (3)  they  are made  "by  reason  of"  the  grievance   **50    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 reg- ular 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 cur- rent Caterpillar employees. The union contends that the grievance chairmen, who are officially on leaves of ab- sence 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 em- ployment, since it permits an employer, under certain cir- cumstances, to make payments to "any representative of his employees . . . who is also an employee . . . of such em- ployer." 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 employ- ees.   **51   Assuming that they are, I am convinced that Caterpillar's payments to them are not made "as compen- sation 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 repre- sentation of the workers "often places them in a position adverse to Caterpillar's." Maj. Op. at 7. n14

n14 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.

It is noteworthy that the union's excellent brief, while arguing strenuously that the chairmen are joint employ- ees, 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   **52    work.  As  the record shows, the chairman's job . . . is "to make sure that contract works" and if he suc- ceeds, "everyone benefits -- the workers, the Company and its production needs, and the Union." App. 260.

Appellant's Br. at 48.

This argument seems to me to obliterate the distinc- tion,  which  is  surely  significant  in  the  real  world,  be- tween services performed for an employer and services performed  for  a  union.  I  do  not  question  the  proposi- tion that "everyone benefits" if the contract works;  nor do  I  question  the  proposition  that  the  grievance  chair- men  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

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*1068     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 super- visors, could be viewed as working for the union. Thus, the union's logic leads to preposterous results. Therefore, regardless of whether **53    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).

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 em- ployee is then selected to serve as a grievance chairman, and **54   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 af- ter 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 presumably be entitled to receive those payments if, in- stead 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 pay- ments at issue here are not compensation for a grievance chairman's work prior to his selection for that position. As the majority states: "the chairmen were already compen- sated for their production line work long ago in **55  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 for- mer  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 major- ity paid more attention to the meaning of this language, it would be forced to recognize that the payments in dispute here 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   **56         Edition of the Oxford English

Dictionary 2431 (1971). When x is said to have occurred

"by reason of" y, what is usually

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*1069    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  con- structing 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 ridicu- lous 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.

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 **57   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. n15 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.

n15 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,

93 L. Ed. 2d 356, 107 S. Ct. 403 (1986), we noted that "while the Union is correct in asserting that had these individuals never been Trailways' employees they  would  not  be  eligible  for  pension  contribu- tions  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 . . .

."

**58

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 natu- ral 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 **59    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.") (em- phasis  added)  (other  emphasis  omitted);  id.  at  21  (the

"by reason of" exception "leaves no room for payments which were not earned by prior service"). The union con- tends that the Eleventh Circuit's opinion in United States v. Phillips, 19 F.3d 1565 (11th Cir. 1994), cert.

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*1170   denied,  115  S.  Ct.  1312,  131  L.  Ed.  2d  194

(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 of- ficial  "did  not  have  a  right  to  such  payment  before  he severed his employment relationship with the company."

19 F.3d at 1575. The union relies (Br. at 37) on the court's explanation that "when 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 **60   to work for the union . . . ." Id. at 1576.

I agree that a payment from Caterpillar to a former em- ployee now working as a grievance chairman would be legal under Section 302 if the chairman's right to that pay- ment 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, 107 L. Ed. 2d

541, 110 S. Ct. 544 (1989). Cf.  BASF Wyandotte Corp. v. Local 227, Int'l Chem. Workers Union, 791 F.2d 1046,

1049 (2d Cir. 1986).

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 re- ceive  these  payments  are  conditioned  upon  their  per- formance  of  certain  duties  in  their  current  positions  as grievance  chairmen.  If,  as  the  union  argues,  the  chair- men's rights to these payments were earned before their employment with Caterpillar terminated, then the chair- men could go fishing all day, every day, instead of pro- cessing grievances. Here, contrary **61   to the govern- ment's argument, see Gov't Br. at 16, the payments made by Caterpillar are measured by the chairmen's current ser- vices 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 noth-

ing 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 employ- ees 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, 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

**62   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 re- ceive future payments from the company after that em- ployee'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 con- tingent 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 em- ployee's past service that went to pay for this contingent right.

This argument is inventive -- but wrong.   **63   At the  outset,  it  should  be  noted  that  the  majority's  argu- ment logically leads to strange results that the majority does not seem to contemplate. The majority's argument is dependent on a grievance chairman's

107 F.3d 1052, *1071; 1997 U.S. App. LEXIS 3763, **63;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

Page 21

*1071    having "paid," while working as a regular em- ployee, 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 com- pany would pay the grievance chairmen but that the com- pany and the union then enter into such an arrangement. The first group of employees chosen as grievance chair- men  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  com- pany's payments to the initial group of grievance chair- men 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 **64   felonies in order to set in motion the type of arrangement that the majority sanctions. n16

n16 I would assume that the same would be true every time a new collective bargaining agreement took effect.

Moreover, although the majority postulates that reg- ular employees "pay" for the contingent right to receive future compensation from the employer, it is by no means clear that this is true in most cases. Obviously, each reg- ular  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 "pay- ing" for is not the contingent right to receive future pay- ments from the employer but rather the current improve- ment 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 **65   in future years when that employee might himself be a grievance chairman. n17

n17  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 im- provement  in  grievance  handling)  because,  from the standpoint of a wealth-maximizing regular em- ployee, 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 reg- ular employee, if selected as a grievance chairman, will have to make future contributions of labor (per- forming the work of a grievance chairman) that are fully worth the wages and benefits that the employer will provide. (Indeed, under the collective bargain- ing agreement before us here, a regular employee selected as a grievance chairman does not realize any gain in wages or benefits; he continues to re- ceive the same wages and benefits as he did before.) Second, this contingent right probably does little to increase an employee's chances of obtaining what- ever non-monetary gratification may flow from do- ing the work of a grievance chairman as opposed to the work of a regular employee. Assuming that em- ployees in a particular bargaining unit who are will- ing to forgo $x per year in exchange for their em- ployer's payments to the grievance chairmen would be willing to pay the same amount per year in in- creased 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  per- forming the work of a grievance chairman) whether or not the grievance chairmen are paid by the em- ployer.

**66

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  em- ployee is not the sole or even a major cause of this fu- ture 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 per- formance 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.

107 F.3d 1052, *1072; 1997 U.S. App. LEXIS 3763, **66;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

Page 22

*1072   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

**67   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.

D. The majority also argues that by exempting pay- ments  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  quar- rel  with  this  elementary  principle  of  statutory  interpre- tation, 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 formula- tions of "as compensation for" and "by rea- son of" in that provision, intended to remove from  the  statute's  prohibitions  two   **68  general  categories  of  payments  to  employ- ees:   (1)  wages,  i.e.,  sums  paid  to  an  em- ployee  specifically  "as  compensation  for" work performed; and (2) payments not made specifically for work performed that are oc- casioned "by reason of" the fact that the em- ployee  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" ser- vice 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 up- held when it vested before the employee be-

gan 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 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)  (ci- tations  omitted).  BASF  Wyandotte   **69         Corp.,  on which Phillips principally relied,  deemed "fringe bene- fits" 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 pay- ments 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 formu- lations" 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. n18 In contrast to 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.   **70

n18 In Toth, the Seventh Circuit interpreted our decision  in  Trailways  as  resting  on  the  proposi- tion 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 Toth, 883

F.2d at 1302 (criticizing Trailways for this reason).

107 F.3d 1052, *1073; 1997 U.S. App. LEXIS 3763, **70;

154 L.R.R.M. 2609; 133 Lab. Cas. (CCH) P11,776

Page 23

*1073    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."   **71    Griffin v. Oceanic Contractors, Inc.,  458  U.S.  564,  571,  73  L.  Ed.  2d  973,  102  S.  Ct.

3245 (1982) (quotation omitted),  but the majority does not  even  attempt  to  make  such  a  showing.  I  see  noth- ing 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 noth- ing 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 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 **72   prohibition is on balance desirable or undesirable, I am certain that it is far from absurd. The "explicit statutory direction" that the major- ity  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 lan- guage. "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 dispos-

itive. 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, 108 L. Ed. 2d 132, 110 S. Ct. 997 (1990), but since I see no ambiguity, I find that rule inapplicable. See Reno v. Koray, 515 U.S. 50, 132 L. Ed. 2d 46, 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

**73   intended'") (citations omitted). I would 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. n19

n19  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 bar- gaining 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 "in- commensurate"  with  the  recipient's  former  com- pensation  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.

**74

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