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Home > Blog > Eighth Circuit Denies Appointment of Impartial Umpire to Resolve Dispute Over Payment of Attorneys’ Fees from Welfare Trust

Eighth Circuit Denies Appointment of Impartial Umpire to Resolve Dispute Over Payment of Attorneys’ Fees from Welfare Trust

In Gillick v. Elliott, No. 20-1686, __F.3d__, 2021 WL 2446787 (8th Cir. June 16, 2021), Appellants are employer-appointed trustees of the Greater St. Louis Construction Laborers Welfare Trust (“Trust”) established under § 302(c)(5) of the Labor Management Relations Act, 29 U.S.C. § 186(c)(5) (LMRA). Due to a “deadlock” at a Board of Trustees meeting with the union-appointed trustees (Appellees), they filed a complaint in district court seeking appointment of an impartial umpire to resolve the deadlock. The district court dismissed the complaint and declined to appoint an umpire, and the Eighth Circuit affirmed.

Appellants and Appellees are required to administer the Trust in compliance with the LMRA and ERISA. The Trust Agreement authorizes the Trustees to seek attorneys for advice and use Trust assets for payment of the services. One of the Employer Trustees brought a motion to allow the Employer Trustees and Union Trustees to each pay attorneys’ fees for separate counsel from the Trust. “In other words, the motion sought to allow each ‘faction’ of Trustees to hire counsel to advise that faction alone and to pay the separate counsel with Trust assets.” The Employer Trustees voted for the motion and the Union Trustees voted against it. The Trust Agreement provides for an impartial umpire to be assigned by the Chief Judge for the U.S.D.C. Eastern District of Missouri if the parties could not agree on an impartial umpire. They could not.

The Eighth Circuit affirmed the dismissal of the complaint because (1) the deadlock does not involve a matter of trust fund administration within the meaning of § 302(c)(5); and (2) the matter is not one designated as arbitrable by an umpire in the Trust Agreement. The court found that the Trust Agreement does not permit “the indefinite delegation of authority to a Trustee faction to hire service providers, paid for by the Trust, who will serve and report to only that faction.” A Trustee has responsibilities as a member of the Board, not as a member of a Trustee faction. The Trust Agreement would have to be amended to allow such delegation of authority, but the Trustees lack authority to amend the Trust Agreement. Amending a trust agreement is not a matter of day-to-day administration of the trust funds. For these reasons, the Eighth Circuit declined to appoint an impartial umpire to settle the dispute.

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