Julius Mullins v. Kaiser Steel Corporation

WILKEY, Circuit Judge,

dissenting:

This appeal raises the question whether a purchase-of-coal penalty clause may be enforced against appellant steel company even if the clause violates antitrust and labor laws. The district court held that the legality of the clause was irrelevant and struck the illegality defense. My colleagues agree with the analysis of the district court. Since I know of no reason in law or logic why any court should enforce a contract clause which plainly violates the law specifically designed to prohibit such clauses, I dissent. Necessarily, the district court’s award of attorney's fees to appellee trustees cannot stand.

I. BACKGROUND

Since the 1940’s the United Mine Workers of America (UMWA) has sought through various clauses in collective bargaining agreements to encourage signatories to purchase coal from other signatories only. In the 1940’s and 1950’s some agreements included a “no subcontracting clause,” prohibiting subcontracting by UMWA operators for the mining and loading of coal.1 The 1958 agreement included a “protective wage clause” prohibiting the purchase of coal from operators providing wages and benefits below those paid under the UMWA contract.2 In 1964 the purchase-of-coal clause was included in the agreement, calling for the payment to the UMWA health *1321and pension fund of $.80 for each ton of coal purchased from a nonsignatory.3 Kaiser Steel submits that the purpose of such clauses was and is to aid the UMWA in organizing the nonsignatories;4 the trustees submit that the purpose of the clauses is to deal with the threat to the work and work standards of UMWA employees presented by the purchase of cheap coal by signatories from producers having subunion wages, fringe benefits, and working conditions.5

Until 1971 the UMWA agreements left the steel companies free to purchase nonUMWA coal for use in their manufacture of steel.6 But beginning in 1971, the purchase-of-coal penalty clause was included in the UMWA agreements with the steel companies.7 The clause here challenged, part of the 1974 agreement, required signatories to contribute to the union health and pension funds $1,182 for each ton of coal purchased from non-signatories in 1974, $1,456 in 1976, and $1.55 in 1977.8 Thus, in addition to the amounts that UMWA operators must contribute to those funds based on coal tonnage actually produced and hours worked by UMWA members, the contract requires contributions for each ton of coal purchased from nonsignatories.

From the time the agreement was signed, Kaiser Steel refused to make any penalty payments or even to report purchases of coal.9 Kaiser submits that the trustees of the UMWA funds must have known since at least 1971 about Kaiser’s purchases from Mid-Continent (a nonsignatory).10 The trustees say they did not know that Kaiser was purchasing coal from nonsignatories until near the end of the 1974 contract period.11 After the contract expired the trustees sued Kaiser Steel to obtain the contributions called for by the purchase-of-coal clause agreement.

In the district court Kaiser defended the action on the basis that the purchase-of-coal clause violated the Sherman Act12 and section 8(e) of the Labor-Management Relations Act.13 On motion for summary judgment, the district court ruled that the claimed illegality of the clause was not a valid defense in this action. Allegedly following Kelly v. Kosuga,14 the court rejected the antitrust defense, finding that “requiring payments pursuant to the purchase-of-coal clause cannot be said to be enforcing a restraint of trade within the meaning of Kelly” because the 1974 agreement had expired, and that “decisions to purchase or not to purchase have been made and acted upon.”15 The court held that the section 8(e) challenge to the clause was not a valid defense because that claim had not been raised before the NLRB in a timely fashion.16 Finally, the court ordered Kaiser Steel to pay plaintiffs’ attorney’s fees.17

II. ENFORCEMENT OF AN ILLEGAL CLAUSE

On the question of illegality, my colleagues do not purport to hold that the clause is legal; rather, they believe that *1322the alleged illegality of the clause under labor and antitrust law is irrelevant. They say:

The narrow issue on appeal, therefore, is not whether an illegal contract clause should be enforced but rather whether Kaiser’s proffered defense of illegality should be entertained.... [T]he district court decided that Kaiser was not entitled to interpose the illegality defense. This, we now hold, is correct.18

This is a fair statement of the trial court’s ground of decision, and of the position in which the issue comes to us, but the answer given is wrong on at least two counts.

In the first place, if Kaiser is not entitled to judicial consideration of the clause’s illegality as an affirmative defense, it may very well be held to have waived any challenge to it anywhere, anytime. Federal Rule of Civil Procedure 8(c) states that “a party shall set forth affirmatively ... illegality” as an affirmative defense. A defendant’s failure to raise the issue of illegality under the applicable substantive law may result in a waiver of that claim.19 If an affirmative defense is not treated as the equivalent of an action for enforcement to test the substantive law, then the lawful character vel non of a contract clause is left behind in a handicapped “race to the courthouse.”

In the second place, there are only two logical grounds on which a court can order enforcement of a contract clause whose legality has been challenged: (1) The court can find that the clause is legal, or (2) the court can assume (or find) the clause to be illegal and enforce it for other reasons. In my view, neither option is tenable in this case. The first is foreclosed because no finding has been made that the clause is legal. With respect to the second, I believe that if the clause is illegal, it is unenforceable, as I shall proceed to show.

A. The Principles of Kelly v. Kosuga Prohibit Enforcement of an Illegal Clause

In Kelly v. Kosuga20 plaintiffs sold onions to defendant at an agreed-upon price. The parties made an additional agreement not to deliver onions to the futures market in order to keep the price of onions high. The defendant-purchaser took delivery of some of the onions and refused to pay the agreed-upon purchase price. When the plaintiff-seller sued for the purchase price, the purchaser defended on the basis that the agreement to withhold the onions from the futures market violated the antitrust laws and precluded enforcement of his contractual obligation to pay for the onions. In rejecting the defense, the Supreme Court noted that antitrust defenses to contract actions have “not met with much favor,” particularly when a vendor seeks to recover an agreed-upon price for goods sold.21 It reasoned that “[pjast the point where the judgment of the Court would itself be enforcing the precise conduct made unlawful by the Act, the courts are to be guided by the overriding general policy, as Mr. Justice Holmes put it, ‘of preventing people from getting other people’s property for nothing when they purport to be buying it.’ ”22

With these principles in mind, the Court found that although “the nondelivery agreement between the parties could not be enforced by a court, if its unlawful character under the Sherman Act be assumed,” giving “legal effect to a completed sale of onions at a fair price” would not “enforce a violation of the Act.”23 Thus, reasoned the Court, “while analysis in terms of ‘divisibility’ or some other verbal formula may well be circular, ... in any event, where, as *1323here, a lawful sale for a fair consideration constitutes an intelligible economic transaction in itself, we do not think it inappropriate or violative of the intent of the parties to give it effect even though it furnished the occasion for a restrictive agreement of the sort here in question.”24 On that basis the Court reaffirmed the common-law rule that the illegality of a portion of a contract does not prevent a court from enforcing a severable legal portion of that contract.25

1. Enforcing The Purchase-Of-Coal Clause Implements Conduct Proscribed By Law

Because the purchase-of-coal clause in itself is violative of antitrust and labor law (as we must assume on this summary judgment 26) Kelly forbids its enforcement.27

Kaiser contends that the purchase-of-coal clause violates the antitrust laws because it is a group boycott against nonsignatory coal companies. Nonsignatories are injured by the clause because UMWA operators are deterred economically from making purchases from them.28 Signatories are injured because they must choose between restricting their purchases to other signatories or paying a “penalty” when purchasing from nonsignatories.

The district court held that enforcing the clause would not make the court a “party to the carrying out one of the very restraints forbidden by the Sherman Act.” It reasoned that because the 1974 agreement had expired and decisions to purchase or not to purchase had already been implemented, enforcement would not cause Kaiser to refrain from purchasing non-UMWA coal.29 *1324Observe that the district court did not hold that if the contract were current, enforcement of the illegal clause would be authorized.

But my colleagues go further. They ask: “how can the court be a party to an anti-competitive scheme simply by enforcing a contract which requires employers to make payments into a union’s health and retirement funds?” “Elementary, my dear Watson”: simply because the payments compelled by the court are payments under the illegal contract, an effort to enforce an illegal secondary boycott.30 Furthermore, there is the impingement on Kaiser’s purchasing discretion, an interest the antitrust laws were meant to protect. Kaiser has an interest in being able to make purchases from “boycotted” companies without being required to pay penalties for so doing.

Requiring Kaiser to make these penalty payments is enforcement of the precise conduct made unlawful by the antitrust laws. Just as the Supreme Court observed that the nondelivery agreement in Kelly “could not be enforced by a court, if its unlawful character under the Sherman Act be assumed,” 31 so also I conclude that the pur*1325chase-of-coal clause is unenforceable if it is assumed to violate the antitrust laws. The legal part of the contract in Kelly was the sale and delivery of the particular load of onions, payment for which the Supreme Court enforced; the legal part of the contract here is the payment into the fund of a royalty on every ton of coal mined by Kaiser itself, payment of which has been made 100% by Kaiser. The illegal part of the contract in Kelly was the agreement not to deliver onions to the futures market, which the Supreme Court held could not be enforced, but since this illegal part was not the part sought to be enforced, its illegality was irrelevant to the enforceability of the legal, already-executed portion on which the suit was brought; the illegal part of the contract in the case at bar is the agreement for Kaiser to pay a royalty on coal which it has not mined, and since this is the very part of the contract sought to be enforced, its illegality cannot be irrelevant. Its illegality makes it unenforceable, just as was the nondelivery agreement in Kelly.

As Kaiser points out in its brief, if it were to sue the UMWA for damages under the antitrust laws, it would arguably be able to recover any purchase-of-coal penalty payments it made pursuant to the unlawful clause.32 It would be unseemly for this court to compel Kaiser to make the very payments giving rise to pecuniary injury redressable under the antitrust laws.

Likewise, enforcing the clause would result in the precise conduct section 8(e) is meant to proscribe. The section’s prohibition of hot cargo agreements was intended to protect neutral employers like Kaiser from harm caused by being caught in the middle of a dispute between other parties.33 It is argued that the purpose of the purchase-of-coal clause is to pressure UMWA signatories to boycott non-UMWA producers, thereby giving the union a lever in its attempt to organize the nonsignatories.34 Assuming this is the case, compelling Kaiser to make the penalty payment results in the principal injury section 8(e) is intended to prevent: harm to neutral parties.35

The majority recognizes, without so saying, that the effect of the purchase of coal clause is to penalize (either by eliminating sales or forcing sales at lower prices) the purchase of nonunion coal: “If Kaiser had raised a timely challenge to the purchase-of-coal-clause and won, the union (as guaranteed in the contract) would have had a chance to bargain for a lawful substitute. It might have succeeded in obtaining an increased rate of contribution for coal mined by an employer’s own workers to offset what was lost by the invalidation (ex hypothesis) of the disputed clause.” Majority opinion at 1313. This insight comprehends indubitably the clause’s effect, which is to allocate the cost of the benefits received by union employees to nonunion employees and producers. The nonunion parties receive no benefits from this additional cost transferred to them by the operation of the purchase-of-coal provision. It is plain that a penalty is involved where nonunion producers and employees pay a price without realizing any benefits. The nominal assignment to Kaiser of the costs associated with the purchase-of-coal clause does not mitigate the damage to the nonunion parties. The damage, or penalty ef*1326feet, results when Kaiser would naturally shift part of the cost to the nonunion parties by decreasing coal purchases from them and increasing purchases from union producers, i. e., even paying somewhat higher prices or purchasing from nonunion producers at sufficiently lower prices.

Enforcement of this illegal claim in the now expired contract will, of course, have future effects. The same clause is present in the current contract.36 On the basis of this precedent, all the trustees have to do respecting the present contract is wait until it expires and automatically collect on it, too. By enforcing an illegal contract in this suit the court provides a precedent for enforcement in the future of a contract which Congress has outlawed. It is true that Kaiser still has the option of seeking a declaratory judgment as to the 1978 contract or suing the union for treble the amount it is ordered to pay here. But for reasons expressed elsewhere in this opinion37 I believe it is unfair to require a party wronged by an illegal clause to sue at a time and place satisfactory to the offending party. And the logical time-perhaps the only time-38 to determine whether the clause is illegal is when enforcement is sought.

2. Nonenforcement Of The Clause Does Not Result In A Windfall For Kaiser

The trustees argue that the purchase-of-coal payments are a form of compensation and, relying on Kelly, submit that the clause should be enforced to avoid giving Kaiser something “for nothing.”39 On simple basic economic analysis, withholding enforcement could not result in a “windfall” for Kaiser. There is evidence in the record indicating that Mid-Continent, from whom Kaiser purchased virtually all of its requirements for mid-volatile coal, provides wages and benefits equal to or better than those provided by UMWA operators.40 Mid-Continent makes contributions to a pension plan for its own employees41 and presumably these costs are included In the price at which the coal is offered Kaiser. Thus, every time Kaiser buys a ton of coal from Mid-Continent, part of the price goes into the pension fund for the Mid-Continent miners. It is no windfall for Kaiser if this court declines to enforce a contract requirement that the steel company also contribute to a pension fund for miners who did not extract the coal; paying fully once for the miners who did the work should be sufficient. If anything, compelling payment of such an unearned royalty to the fund could be viewed as a windfall for the UMWA fund.

3. Availability Of Other Remedies And Kaiser’s “Delay” Do Not Vitiate Defense

The trustees argue that Kaiser should be precluded from raising the antitrust defense because other remedies were available to the company.42 Kaiser questions whether it previously could have brought an antitrust action, since absent enforcement of the claim it arguably suffered no antitrust injury.43 The trustees suggest that even so, Kaiser could have brought an action for declaratory judgment as did United States Steel.44 They argue that “[hjaving determined not to challenge the purchase-of-coal clause at the proper time and in the proper fashion, [Kaiser] cannot be heard *1327now to complain that the Agreement should not be enforced.”45

The Court in Kelly referred to a judicial reluctance to add nonenforcement of contracts to the arsenal of remedies expressly made available by the Sherman Act.46 Nevertheless, it recognized an interest in avoiding judicial sanction of restraints of trade, and concluded that nonenforcement of contracts would not be precluded “where the judgment of the Court would itself be enforcing the precise conduct made unlawful by the Act.”47 Since compelling purchase-of-coal payments by Kaiser would result in such conduct, i.e., punishment of Kaiser for not complying with a group boycott, on Kelly principles this is a situation where enforcement should be denied.

The trustees further intimate that Kaiser’s refraining from challenging the clause until the contract had expired and the miners had completed their portion of the agreement was unfair.48 The trustees claim that they did not know of Kaiser’s refusal to make the payments until near the end of the contract period.49 They point out that had the clause been struck down during the time the contract was in force, a substitute clause could have been negotiated.50

To a large degree, the trustees’ “unfairness” argument depends on their alleged ignorance of Kaiser’s decision not to make purchase-of-coal payments-a claim which is not available to the trustees in this summary judgment proceeding. If the trustees did have knowledge of the breach-and this we must now assume-Kaiser’s election not to challenge the clause in court would not be unfair, because the trustees could have moved in the district court or the NLRB to compel the company to make the payments. Kaiser asserts that the trustees were aware of the nonpayment from 1971 on. If so, and we so assume on summary judgment, it was the trustees who had the obligation to take earlier legal action, not Kaiser. The district court did not make a finding that the trustees lacked knowledge of the breach during the contract period, nor, significantly, did the trustees even make such a claim in their Statement of Material Facts as to Which There is no Genuine Dispute accompanying their motion for summary judgment. If such a claim had been made, no doubt Kaiser would have vigorously disputed it, as Kaiser has in its appellate brief, and thus summary judgment by the district court would have been impossible. It is now therefore outside an appellate court’s function to find that Kaiser acted unfairly based on the trustees’ possible ignorance of the refusal to pay.

The failure of the union or of the trustees to object to or comment upon Kaiser’s noncompliance with the purchase-of-coal clause may indicate their suspicion that the illegality projected for the clause in Article XX(d)(l) would in fact materialize if challenged. By waiting until after the expiration of the 1974 Agreement, the union and trustees may have sought to accomplish an end-around the renegotiation provision and its implied recognition that the purchase-of-coal arrangement would not withstand legal inquiry. In any event, Article XX(d)(l) suggests that the parties to the Agreement all had doubts regarding the clause and were aware that its lawfulness was likely to be reviewed.51 The Court’s *1328decision today unfortunately leaves these understandable doubts unresolved.

Furthermore, it was perfectly permissible in this case for Kaiser to wait until the trustees sued before raising the antitrust defense. Arguably wronged by the union’s insistence on inclusion of an illegal clause in the labor contract, Kaiser should be under no obligation to accommodate the labor union and trustees by testing the validity of the clause at a time and in a manner satisfactory to the trustees and the UMWA. Kaiser has pursued its remedy (at the time) which became appropriate, given the appellees’ instigation of this lawsuit in the forum and moment of their choice.52

Requiring parties subject to onerous, illegal clauses to sue immediately in order to retain the illegality defense is not only unfair, but it increases unnecessary litigation. Ofttimes offending parties recognize that certain clauses are illegal and never seek judicial enforcement. Allowing wronged parties to wait and see if enforcement is sought before raising the illegality defense results in better use of judicial resources and relieves the parties of unnecessary expense.

4. Other Case Law Does Not Support Enforcement of the Illegal Contract Clause Here

In arguing that illegality is irrelevant here, the trustees place a great deal of reliance on the Third Circuit’s decision in Huge v. Long’s Hauling Co.,53 particularly Judge Adams’ concurring opinion. In that case, in contrast to Kaiser’s regular payment on all coal it mined, the employer sought to avoid making any payment into the UMWA’s health and retirement funds, based on the alleged illegality of a clause prohibiting subcontracting of coal transportation to nonsignatories. Noting that pension fund contributions “payable for coal already mined ”54 are a form of compensation for services performed, that courts are reluctant to recognize defenses against employer promises to make such payments, and that other antitrust remedies were available to the company, the court disallowed the antitrust defense.55 In so holding, the court followed the Kelly rule that the possible illegality of one clause in a contract does not prevent enforcement of a separable, legal portion of the agreement. Most significantly, Long’s Hauling did not hold that a court should enforce a clause that in itself violates the antitrust laws.

Concurring in Long’s Hauling, Judge Adams advocated a special rule with respect to union trust funds. He urged that “where the trustees of a union welfare or pension fund sue to compel an employer to make contributions as stipulated in the labor contract between the employer and the union, the employer may not assert any defenses that he may arguably have to that contract.”56 In support of this argument, Judge Adams relied on the Supreme Court’s decision in Lewis v. Benedict Coal57 and the importance of pension funds. However, neither Benedict Coal nor the utility of trust funds warrants adoption of his special, proposed rule.

Benedict Coal is not inconsistent with Judge Adams’ proposal, but it is inapplicable to the instant appeal. In Benedict Coal the Court was faced with an employer’s attempt to set off against amounts due the union pension fund damages suffered by the employer from illegal work stoppages and strikes. The Court determined that *1329this depended on whether the collective bargaining agreement could be construed to make (1) the union’s performance of its promises a condition precedent to payment of royalties to the trustee, or (2) the trustee’s right to the royalties subject to counterclaims the employer has against the union. The court found that performance of union promises was not a condition precedent to royalty payment.58 It also held that a collective bargaining agreement would not be construed to subject the trustee’s right to the royalties to offset by employer claims against the union, unless such an intent were expressed in “unequivocal words.” Such words were not present in the agreement, and no set off was allowed.59 Thus Benedict Coal presented primarily a question of contract construction; nowhere did the Court suggest that fund trustees may enforce illegal contracts.

I believe that union trust funds serve vital public interests. But I do not think that their importance warrants a wholesale exemption from the rule that courts should not enforce illegal contract clauses. Society has an interest in discouraging unlawful conduct, including that of labor unions as well as business. The Kelly standard strikes the best balance between society’s interest in sound trust funds and in deterring unlawfulness; and besides, it is the Supreme Court which has struck that balance. Thus if payment into union funds of “penalty” or other contributions itself would violate the law, any law-abiding court must deny such a remedy. Since compelling payment here would violate the law, enforcement cannot be granted.

In addition to Long’s Hauling, the majority opinion relies heavily on Waggoner v. R. McGray, Inc.,60 wherein a panel of the Ninth Circuit held, over a dissent, that the primary jurisdiction doctrine precludes a federal court from entertaining an unfair labor practice defense. In Waggoner trustees of a number of employee benefit funds sued various building contractors and subcontractors for payments due under the terms of a “Master Labor Agreement.” This Agreement required signatory employers to make fringe benefit contributions on an hours-worked basis to the trusts established for their employees. Furthermore, contractors were by the terms of the Agreement prohibited from granting contracts to subcontractors who were “delinquent.” The contractors were also to become liable for the delinquencies of those subcontractors who had been granted contracts after having been posted on a “delinquency list” prepared and furnished to the contractors by the union. The defendant employers, contractors and subcontractors, were all signatories to the Agreement.

The decision in Waggoner rests on outstanding differences in the facts, which distinguish the situation in that case from the case before this court. In Waggoner the alleged right to employee benefit contributions operated to benefit union members who had in fact worked the hours to accrue the benefits. All of the employees, unions, and employers who were affected by this provision of the Agreement were also parties to the Agreement. In the case before this court, on the other hand, the union trustees demand that Kaiser be compelled to make contributions in accordance with the hours worked by nonunion employees who were never party to the applicable Agreement and do not benefit from it. This distinction, of course, explains the antitrust defense raised here by Kaiser whereas no such defense was interposed in Waggoner. The restraint of trade effect, which for summary judgment purposes we must assume to be present in the case before us today, casts the instant facts and defenses in a substantially different light. This distinction removes our case from the more limited arena of employers and employees bargaining together to reach a collective agreement to govern their own limited relations. Consequently, judicial interference becomes more appropriate.

*1330The Waggoner court also fails to consider fully the impact of recent Supreme Court cases which limit the primary jurisdiction doctrine. The Ninth Circuit, full of enthusiasm to enforce a stiff primary jurisdiction rule, repeatedly cited Sears, Roebuck & Co. v. Carpenters,61 as authority for its outcome, even though the Carpenters decision expands quite considerably the jurisdiction of courts to consider questions which occur in the context of labor disputes. To be sure, Waggoner recognized that “later cases have refined the Garmon [primary jurisdiction] standard.”62

This “refinement” of the primary jurisdiction doctrine is evinced as well in Connell Construction Co. v. Plumbers & Steamfitters Local Union No. 100,63 but is not relied upon in Waggoner. In Connell the Supreme Court held “that the federal courts may decide labor law questions that emerge as collateral issues in suits brought under independent féderal remedies, including the antitrust laws.”64 The majority in Connell were persuaded that “[t]here is no legislative history in the 1959 Congress suggesting that labor-law remedies for § 8(e) violations were intended to be exclusive, or that Congress thought allowing antitrust remedies in cases like the present one would be inconsistent with the remedial scheme of the NLRA.”65

It is odd that Waggoner reflects only part way the statutory and precedential authorities which permit district courts to adjudicate suits over collective bargaining agreements which arise under section 301 of the Labor Management Relations Act.66 Thus, Waggoner would require employers to face union claims in district courts67 without allowing the same forum and opportunity to hear the correlative defenses.68 This bifurcation seems hardly equitable in view of the Supreme Court’s restrictions upon the primary jurisdiction doctrine, as well as usual concern for judicial consolidation in the interest of coherence and efficiency.

The trustees cite several other cases that rely on Kelly in arguing that illegality of the clause is irrelevant in this action.69 *1331With one exception, all of the cases involved attempts to avoid enforcement of legal clauses on the ground that a collateral, separable portion of the agreement was illegal. The sole exception is Mullins v. Reitz Coal Co.,70 decided by a district court in our circuit after the instant district court decision was issued.

The fact situation in Reitz was almost identical to that of this appeal. In rejecting the antitrust defense, the court purported to follow Long’s Hauling and Kelly. It asserted that “enforcement of the defendants’ obligations to make contributions can hardly be viewed as” enforcing an antitrust violation.71 The district court’s analysis does not face up to the real issue here. If we assume, as we must, that the purchase-of-coal clause violates the antitrust laws, then enforcement of the clause also violates the law.

On the basis of the above analysis, it is clear that the Supreme Court’s rationale in Kelly (and progeny) support, rather than negate, the applicability of Kaiser’s illegality defense.

B. The District Court Had Jurisdiction to Determine Whether the Clause Violated Section 8(e)

The district court rejected Kaiser’s proffered defense that the purehase-of-coal clause violated section 8(e), holding that the NLRB had exclusive jurisdiction to make such unfair labor determinations. While I agree that the NLRB generally has exclusive jurisdiction to determine unfair labor practice claims when a plaintiff brings suit for relief, its jurisdiction cannot be exclusive when a plaintiff seeks to have a federal court enforce an unlawful contract provision and the labor law issue is raised by way of defense. The employer cannot be deprived of his legitimate defense of illegality under the labor laws simply by the PLAINTIFF’S choice of forum; the federal court, in order to do justice, must be authorized to adjudicate the ..legal issues raised by such defense.

1. Courts Have Power to Decide Whether Contract Clauses Violate Law and Public Policy

The authority of federal courts to enforce contracts is necessarily subject to legal and public policy constraints. As the Supreme Court pointed out in Hurd v. Hodge, “[t]he power of the federal courts to enforce the terms of private agreements is at all times exercised subject to the restrictions and limitations of the public policy of the United States as manifested in ... federal statutes .... Where the enforcement of private agreements would be violative of that policy, it is the obligation of courts to refrain from such exertions of judicial power.”72 Section 8(e) is one of those constraints on the authority of the district court to enforce contract clauses. Necessarily then, the district court must have authority to determine the applicability of section 8(e) to the clause it was asked to enforce.

This power and obligation of the courts is particularly clear with respect to section 8(e) because of the section’s explicit language.73

*13322. Clauses Violating Section 8(e) Are “Unenforcible And Void” and Should Not Be Enforced by Federal Courts

Section 8(e) declares that “hot cargo” clauses are not only unfair labor practices, but also “unenforcible and void.”74 It would be difficult to phrase a more clear and unmistakable statutory command that federal courts refrain from enforcing such illegal clauses.

The trustees argue that this language is not meant to create a separate enforcement mechanism independent of proceedings before the NLRB. Rather, they suggest that it was used to describe the status of agreements after the NLRB makes an unfair labor determination.

In making this argument the trustees refer to statements in the legislative history indicating that section 8(e) was intended to create a new unfair labor practice. They argue that the addition of the “unenforcible and void” language by amendment did not change Congress’s initial purpose or understanding. That amendment provided that “any contract or agreement entered into heretofore or hereafter containing such an [illegal hot cargo clause] shall be to such *1333extent unenforcible and void.”75 The entire purpose of this addition, according to the trustees, was to ensure that the hot cargo prohibition would reach all contracts, even those in effect at the time of the legislation.

I agree that certainly that was one of the purposes of the amendment. But I am also convinced that another purpose was to declare that such clauses cannot be enforced by the courts. As Congressman Griffin, the sponsor of the House bill after whom the statute was named, stated, the provision “not only makes it an unfair labor practice to enter into a ‘hot cargo’ agreement, but also, makes it clear that such contracts are ‘void and unenforceable.’ ”76 I believe that Congress meant what it said, and that these clauses are unenforceable by the federal courts.

This interpretation finds support in judicial decisions interpreting section 8(e). In National Woodwork Manufacturers Association v. NLRB,77 the Supreme Court point out that section 8(e) was designed to plug a gap in prior law resulting from an earlier Supreme Court decision in Local 1976, Brotherhood of Carpenters v. NLRB (Sand Door).78 The Court stated that, among others, was the concern that “[t]he Sand Door decision was believed ... to create the possibility of damage actions against employers for breaches of ‘hot cargo’ clauses.”79 It was precisely Congress’s intent to preclude such damage actions by making the clauses “unenforcible and void.”

In Connell Construction Co. v. Plumbers & Steamfitters Local Union No. 100,80 Justice Stewart in his dissent stated that “the signatory of a purely voluntary agreement that violates § 8(e) is fully protected from any damage that might result from the illegal ‘hot cargo’ agreement by his ability simply to ignore the contract provision that violates § 8(e). ... Since § 8(e) provides that any prohibited agreement is ‘unenforceable and void,’ any union effort to invoke legal processes to compel the neutral employer to comply with this purely voluntary agreement would obviously be unavailing.” 81 In the case at bar, Kaiser Steel has faithfully followed Mr. Justice Stewart’s interpretation, with which the Court’s majority did not disagree, but my two colleagues will not let Kaiser ignore the illegal contract provision; on the contrary, they insist on compelling Kaiser as a neutral employer to comply with the illegal agreement.

As shown above, the clear statutory language, legislative history, and subsequent judicial interpretation all indicate that a neutral employer is free to ignore an illegal hot cargo clause and raise the clause’s illegality as a defense in any subsequent action brought by the union.

3. Kaiser Should Be Able to Raise the Section 8(e) Defense as a Collateral Matter

Even if section 8(e) only operated to make hot cargo clauses unfair labor practices within the jurisdiction of the NLRB, it is clear that the district court would still have authority to rule on the section 8(e) defense as a collateral matter. The Supreme Court pointed out that the federal courts have jurisdiction to consider such questions “in suits brought under independent federal remedies, including the antitrust laws.”82 The trustees argue that this plain language in Connell does not autho*1334rize consideration of the section 8(e) defense in this case. They point out that the only “collateral” labor law issue the Court was asked to determine in Connell was whether Congress intended to sanction certain union conduct by enacting a construction industry proviso to section 8(e). Determining that the conduct was not so sanctioned, the Court found that the union’s activity was subject to antitrust laws. The trustees point out that the Court was not asked to determine if the union’s conduct constituted an unfair labor practice. They would limit the court’s authority to consider collateral labor law issues to interpretation of provisos similar to that interpreted in section 8(e).

But I see no reason why the court’s authority should be construed so narrowly. In interpreting the construction industry proviso in Connell, the Supreme Court considered congressional intent and interests served by section 8(e),83 the same sort of issues that would be involved in deciding if the purchase-of-coal clause violates section 8(e). Surely, in pursuing the same analysis, the court has authority to rule on the section 8(e) issues presented here.

There is a difference between claims for relief that rest on alleged labor law violation — in which case courts generally defer to the exclusive jurisdiction of the NLRB- and claims relating to or based on other legal grounds for which there is an independent jurisdictional basis. Because Kaiser raises the section 8(e) issue by way of defense, in an action brought by the union’s choice in the district court, the defense must be allowed. Federal courts generally have a duty to resolve all legal issues before them, and this case should be no exception.

III. AWARD OF ATTORNEY’S FEES

The district court awarded attorney’s fees to the trustees without explanation, and without the benefit of briefing or oral argument. Federal courts may not award attorneys fees unless authorized to do so by the governing statute.84 The trustees brought suit under section 301 of the LMRA85 and section 502 of the ERISA.86 In my view, neither of these statutes authorizes the award of attorney’s fees in this case. On appeal the trustees apparently concede that attorneys fees are not authorized by the LMRA. They therefore contend that the ERISA gave the district court power to award attorneys fees.

Section 502 of the ERISA provides that a civil action may be brought'

by a ... fiduciary (A) to enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provision of this title or the terms of the plan.

Section 502(g) of the act in turn authorizes the district court to award attorneys fees “[i]n any action under this title by a ... fiduciary.”

This suit was not brought to challenge a violation of the pension plan, but was brought to enforce a collective bargaining agreement. The trustees, however, argue that the plans were “incorporated into the 1974 agreement” and that Article XX of the agreement was incorporated into the plan. Therefore, they argued that violation of one by Kaiser “would automatically violate the other as well” and that Kaiser's failure to make penalty payments under the purchase-of-coal clause accordingly violated the plans.87 However, the so-called “incorporation” of Article XX into the plans *1335consists of a description of the sources of funding and imposes no independent obligation on Kaiser. I agree with Kaiser that “[t]he plans ... no more incorporate Article XX than the 1974 Agreement incorporates the Consumer Price Index to which it refers.”88

The trustees also argue that they filed suit to “enforce express provisions of” ERI-SA. They theorize that because they were required by ERISA to bring the action that it was brought to enforce ERISA. This argument is absurd. The trustees have confused an effort to comply with ERISA with an action to enforce it. It may be that had trustees foregone suit against Kaiser they would have been suable under ERISA. But since it has not been shown that Kaiser violated the terms of ERISA or of the plans, I do not see how this suit can be said to enforce ERISA.

Because this action was not brought to enforce a plan or ERISA, I conclude that the district court erred in awarding the trustees’ attorney’s fees.

IV. CONCLUSION

This court does not sit to enforce illegal contract clauses. Since the district court held that illegality was irrelevant, it made no determination whether the clause violated antitrust and labor laws. The judgment of the district court should be reversed and the case remanded for a determination whether the purchase-of-coal clause in fact violates antitrust and labor laws. I therefore dissent from the affirmance of the judgment in favor of the trustees.

Furthermore, even if the judgment in favor of the trustees is to be affirmed, I would reverse the award of attorney’s fees because such is unauthorized by applicable statutes.

For these reasons I respectfully dissent.

. See, e. g., Kanawha District Agreement at 34-35 (22 Aug. 1941), reprinted in Joint Appendix (J.A.) at 483.

. National Bituminous Coal Wage Agreement of 1950 as Amended, Effective 1 December 1958, at 2-3, reprinted in J.A. at 485.

. National Bituminous Coal Wage Agreement of 1950 as Amended, Effective 2 April 1964, at 2, reprinted in J.A. at 589.

. Brief for Appellant at 4.

. Brief for Appellees at 9.

. See Letter from Charles M. Heath to W. A. Boyle (21 Oct. 1968), reprinted in J.A. at 492; Affidavit of S. W. Zanolli at 6 (18 Oct. 1978), reprinted in J.A. at 479.

. See Affidavit of S. W. Zanolli at 6 (18 Oct. 1978), reprinted in J.A. at 479.

. National Bituminous Coal Wage Agreement of 1974 at 28, reprinted in J.A. at 491.

. Kaiser’s remittance forms during the period at issue are reprinted in J.A. at 192-275.

. Brief for Appellant at 7-8.

. Brief for Appellees at 6.

. 15 U.S.C. §§ 1, 2 (1976).

. 29 U.S.C. § 158 (1976).

. 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959).

. 466 F.Supp. 911, 915 (D.D.C.1979).

. Id. at 916-17.

. Id. at 917.

. Majority Opinion at 1308.

. See Stanish v. Polish Roman Catholic Union of America, 484 F.2d 713 (7th Cir. 1973); 2A Moore’s Federal Practice 8.27[3] (1979).

. 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959).

. Id. at 518, 79 S.Ct. at 430.

. Id. at 520-21, 79 S.Ct. at 432 (quoting Continental Wall Paper Co. v. Louis Voight & Sons Co., 212 U.S. 227, 271, 29 S.Ct. 280, 296, 53 L.Ed. 486 (1909) (Holmes, J., dissenting) (emphasis added).

. Id. at 521, 79 S.Ct. at 432 (emphasis added).

. Id. (emphasis added) (citation omitted).

. See 6A Corbin §§ 1518-1531 (1962).

. The court questions in footnote 6 of the majority opinion whether “the illegality of the disputed clause must be assumed because this is an appeal from a summary judgment," citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1368, at 692-93 (1969). That authority, id. at 693, states, however, that:

In addition to assuming the truthfulness of the actual allegations for purposes of the motion, all reasonable inferences and intendments from these facts are drawn in favor of the nonmoving party, [citations omitted] In National Labor Board v. Weirton Steel Company, [146 F.2d 144 (3d Cir. 1944)], for example, the NLRB brought a contempt proceeding for violation of a decree involving certain unfair labor practices and moved for a partial summary judgment on the pleadings. The Third Circuit refused to grant the motion, although it recognized that by drawing certain inferences from the’ facts, the conclusion sought by the Board might be supported. The court stated;
but, a court is without right to draw inferences favorable to a movement for summary judgment on [the] pleadings. In that situation, all reasonable intendments and inferences from the pleadings are, as a matter of law, to be taken against the movement and in favor of the opponent. [M at 145]

Surely, the manifest implications in Kaiser’s pleadings would support judicial inference regarding the antitrust defense. These inferences are sufficient to vitiate the propriety of the district judge’s refusal to entertain the antitrust defense without receiving any proof at all of the subject.

. The majority’s discussion of Kelly is simply conclusory. Though the majority purports not to be examining the application of the Sherman Act to the contract clause at issue in this litigation, footnotes 5-7 to the court’s opinion appear to assume sub rosa an antitrust holding favoring appellees. This is inappropriate in an appeal taken from a summary judgment granted below, when the trial court never reached the question of illegality. Nevertheless, their reliance on Kelly in this case, where enforcement of the clause in question has the necessary effect of restraining trade with nonunion coal producers, is totally indefensible, whatever the ultimate decision on the merits on other grounds.

. In order to compete for business from designatories, nonsignatories must lower their prices to make it economically feasible for UMWA operators to pay the purchase price and make a contribution to the health and pension funds as well.

. The trustees argue that because Kaiser continued to make purchases from nonsignatories, “there was no boycott of nonunion coal producers.” Therefore, they submit the clause does not lead to conduct proscribed by the Sherman Act, and the exception to Kelly is inapplicable. Brief for Appellees at 27. In other words, the trustees argue that the antitrust defense may not be raised because there was no antitrust violation. And Kaiser may not prove the antitrust violation because the antitrust defense may not be raised. This is blatant circular reasoning and is unacceptable.

That Kaiser continued to make purchases from nonunion coal companies does not prove *1324that the purchase-of-coal clause had no deterrent effects. It may well be that the only reason Kaiser did so was that it believed it would not have to pay the purchase-of-coal “penalty,” and therefore did not take that into consideration in its purchasing decisions. In any event, Kaiser should first be allowed to make its case that the clause had anticompetitive effects before a court concludes on summary judgment that the defense must be disallowed because no violation occurred.

. Are natural consequences of intended acts irrelevant? More sophisticated scrutiny would not so blithely overlook the necessary effects of the clause cooked up by the union. The effects of that clause are clearly injurious to nonunion producers and their employees. The majority opinion, reluctant to draw inferences about the anticompetitive character of the clause, is much quicker to draw the inference that the purchase-of-coal clause was intended to counteract wage competition among coal producers, see footnote 5 of the majority opinion.

The “wage competition” issue diverts attention away from the proper focus for attention on this appeal. There has been no finding whatsoever that the employees of nonunion producers received less advantageous wages than unionized employees. Moreover, courts have traditionally looked beyond the facial appearance of challenged activities. In United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940), the Supreme Court labeled as price fixing a concerted program whereby oil companies entered the oil market as buyers. The Court held that this buying program represented price fixing, a per se violation of the Sherman Act. The violation resulted from the necessary effect that the program would have on prices. It is important to note that the necessary effect was proscribed regardless of whether “the conspirators had the means available for accomplishment of their objective.” Id. at 225 n.59, 60 S.Ct. at 845. Here, just as in Socony-Vacuum, the anticompetitive effect can be inferred from the consequences logically entailed by the operation of the purchase-of-coal clause. The following quote from Sullivan, Antitrust 313 (1977) is informative:

[Wjhere the course agreed upon is not explicitly to fix prices or divide territories, there may also be, as there was in Socony-Vacuum, inference involved in the conclusion that the purpose and effect of what was expressly agreed upon is tantamount to price fixing or market division or that the purpose and effect (though not capable of being assimilated under one of the per se violations) is nevertheless unreasonable, [footnote omitted] Inference, be it understood, may be involved in one or more of several steps in the analysis, in deciding that an agreement took place, in concluding that the agreement which did take place should be characterized in a way which offends a per se rule, or in concluding that the agreement is, on balance, unreasonable.

. 358 U.S. at 521, 79 S.Ct. at 432.

The majority opinion confounds the ostensible purpose of the purchase-of-coal clause and its necessary effects. The majority writes in footnote 9: “On its face, and apart from any consideration of its purpose and effect in a particular context, the purchase-of-coal clause ‘constitutes an intelligible economic transaction in itself.’ Kelly, 358 U.S. at 521, 79 S.Ct. at 432. Accordingly, Kelly requires that the illegality defense must be disallowed.” This is another instance of the majority’s failing to recognize that however “intelligible” the purchase-of-coal clause is, it is itself the offensive clause under the antitrust laws. When the court enforces this clause it promotes the necessary effects of the clause and harms the economic interests of both sellers and buyers of nonunion coal. The antitrust violation is implicit in the purchase-of-coal clause itself; there is no allegation that any other part of the collective bargaining agreement between the union and Kaiser is violative of the antitrust laws.

. Brief for Appellant at 26-27.

. National Woodwork Mfrs. Ass’n v. NLRB, 386 U.S. 612, 624-25, 635, 87 S.Ct. 1250, 1254, 1263, 18 L.Ed.2d 357 (1967).

. Brief for Appellant at 4.

. The court states (at footnote 5): “It may well be that the provision Kaiser challenges here is a kind of ‘union standards’ clause and, hence, lawful under section 8(e).” But there is no issue in this case of pension benefits “below union standards. ” It must be assumed that the price Kaiser pays for coal it buys from nonunion producers includes a component attributable to the pension benefits the nonunion producers pay their employees. The clause at issue only prejudices the nonunion producers by making their coal less attractive to Kaiser; and prejudices Kaiser by constraining its opportunity to choose coal suppliers for itself. Though the majority writes “[i]t may well be ... ”, there is no evidence that this clause was a “union standards” clause, and such an assumption is unwarranted on this appeal from summary judgment granted below. See note 30 supra.

. National Bituminous Coal Wage Agreement of 1978, Effective 27 March 1978, reprinted in J.A. at 487-89.

. See text & accompanying notes 42-51 infra.

. See note 19 supra.

. Brief for Appellees at 22-23.

. Affidavit of Robert Delaney at 3-7 (9 Oct. 1978), reprinted in J.A. at 329-33; Affidavit of S. W. Zanolli at 7-8 (18 Oct. 1978), reprinted in J.A. at 480-81.

. Affidavit of Robert Delaney at 406 (9 Oct. 1978), reprinted in J.A. at 331-32.

. Brief for Appellees at 23.

. Brief for Appellant at 28.

. United States Steel Corp. v. UMWA et al., No. 75-1966 (D.D.C.1977).

. Brief for Appellees at 23.

. 358 U.S. at 518-19, 79 S.Ct. at 430.

. Id. at 520, 79 S.Ct. at 432.

. Brief for Appellees at 20.

. Id. at 6.

. Id. at 7.

. “Equitable considerations,” see maj. op. at 1311-1313 would not free the trustees to circumvent the unlawfulness of a provision intended to benefit the trusts which they administer. Kaiser’s challenge of the purchase-of-coal clause, which takes the form of an affirmative defense, is a matter to be decided at law, not equity.

A curious point, however, is that the trustee’s legal position has been that they had no notice that Kaiser made no reports or payments in accordance with the terms of the purchase-of-coal clause. Surely this failure to be currently informed of matters pertaining to the employee pension fund manifests a problem for the *" *1328tees or this court when they rely upon “equitable considerations.”

. That Kaiser may have drawn upon other inchoate remedies suggests, perhaps, that some nature of relief should be availing. There is no justified fear, of course, that Kaiser’s alleged surfeit of “other” remedies would entail excessive relief from the burden of a contract clause which is maintained to be unlawful.

. 590 F.2d 457 (3d Cir. 1978).

. Id. at 459 (emphasis added).

. Id. at 459-60.

. Id. at 463 (Adams, J., concurring) (original emphasis).

. 361 U.S. 459, 80 S.Ct. 489, 4 L.Ed.2d 442 (1960).

. Id. at 465-66, 80 S.Ct. at 493.

. Id. at 466, 470-71, 80 S.Ct. at 493, 495.

. 607 F.2d 1229 (9th Cir. 1979).

. 436 U.S. 180, 98 S.Ct. 1745, 56 L.Ed.2d 209 (1978).

. 607 F.2d at 1233 (citing Carpenters) (emphasis added).

. 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975).

. Id. at 626, 95 S.Ct. at 1837 (footnote omitted).

. Id. at 634, 95 S.Ct. at 1841 (footnote discussing Justice Stewart’s dissent id. at 638, 650, 95 S.Ct. at 1842, 1848 omitted).

. 29 U.S.C. § 185 (1976).

. See 607 F.2d at 1234-35.

. See id. at 1236.

. See Reply Brief for Appellant at 11, 12 n.14 (citing following cases): e. g., Pennington v. United Mine Workers, 325 F.2d 804 (6th Cir. 1963) (rejecting employer’s attempt to avoid welfare fund contribution because union security clause was illegal and the contract was entered under duress), cert. denied, 381 U.S. 949, 85 S.Ct. 1796, 14 L.Ed.2d 723 (1965); Universal Towing Co. v. United Barge Co., 579 F.2d 1098, 1103 (8th Cir. 1978) (party to contract tried to avoid obligation to pay rent on ground that contract contained a separate price fixing agreement); Arkla Air Conditioning Co. v. Famous Supply Co., 551 F.2d 125, 127 (6th Cir. 1977) (manufacturer tried to avoid paying commissions owed to distributor under agreement that included exclusive territorial arrangement, arguing that the exclusive was illegal; the court (i) held that the unlawful provision was collateral to that sought to be enforced and that enforcing the payment obligation would not bring about antitrust injury and (ii) noted that, since the manufacturer was the source of the restrictions, the defense “lies ill in the mouth of the defendant”); Levin v. IBM, 319 F.Supp. 51 (S.D.N.Y.1970) (plaintiff sought to prevent foreclosure by lessor for nonpayment of rent on ground that lease agreement also included alleged tie-in provision); Viacom Int'l Inc. v. Tandem Prod., Inc., 526 F.2d at 598 (whether contract clause could be enforced would “depend on the court’s perception of the contract [provision sought to be enforced] as a separate or ‘collateral’ entity or as an integral part of [the illegal provision], enforcement of which would effectuate ‘the precise conduct made unlawful’ ”); Thomas v. Reading Anthracite Co., 264 F.Supp. 339, 344-48 (M.D.Pa.1966) (coal operator defended suit by UMW fund trustees for contributions on ground that funds’ management was illegal since “neutral” trustee was union official; the court rejected the defense, not because it was insufficient as a matter of law, but because the defendant operator had ratified the trustee’s appointment).

. No. 78-715 (D.D.C. 23 Mar. 1979).

. Id., slip op. at 6.

. 334 U.S. 24, 34-35, 68 S.Ct. 847, 853, 92 L.Ed. 1187 (1948) (footnotes omitted).

. Footnote 5 of the majority opinion suggests that a union’s anticompetitive acts are broadly protected by labor law exemptions to the antitrust law. To be sure, there are statutory and implied labor exemptions for some anticompetitive activity, but the exemptions at most only cover lawful labor practices. See Consolidated Express, Inc. v. New York Shipping Ass’n, Inc. (Conex), 602 F.2d 494 (3d Cir. 1979), vacated and remanded on other grounds, 448 U.S. 902, 100 S.Ct. 3040, 65 L.Ed.2d 1131 (1980) (violation of section 8(e) “hot cargo” prohibition automatically strips unions and employers of any antitrust exemption). “Where an action seeks only declaratory or injunctive relief, a finding that an agreement violates § 8(e) should always remove the antitrust exemption. Once it is clear that a § 8(e) violation has occurred no labor policy is advanced by permitting on-going operation of an illegal contract ....” Id. at 519. Though the NLRB had made a previous determination that the contract clause in Conex violated § 8(e), and the court decided to give collateral estoppel effect to the NLRB’s deter*1332mination, id. at 511-12, the implication of that court’s collateral estoppel analysis is that it assumed a district court would certainly have jurisdiction to consider the legality of labor practices and whether they violate the antitrust laws.

. 29 U.S.C. § 158(e) (1976).

The majority opinion cites at 1306 International Union, United Mine Workers of America and Bituminous Coal Operators Association, 188 N.L.R.B. 753 (26 Feb. 1971) (Supplemental Decision and Order) for the proposition that “hot cargo” clauses are not plainly violative of section 8(e). There, the Board held lawful a clause within a collective bargaining agreement between coal miners and coal operators which required the signatory operators to make certain payments to the union for coal they obtained by subcontracting work out to nonsignatory mines. The Board affirmed the Trial Examiner’s findings that “the intent of the parties in adopting the 80-cent clause was to equalize the differences in the costs of wage and fringe benefits generally existing between mines signatory to the National Bituminous Coal Wage Agreement and those which are not in order to protect the work opportunities and standards provided UMW members employed by signatory operators” and “that wage, fringe, and working condition standards of employees in nonsignatory mines are generally lower than those established in the National Bituminous Coal Wage AgreementId. at 753. The Board wrote that: “The validity of a union standards clause lies in the fact that it removes the economic incentive to subcontract unit work to employers maintaining substandard conditions of employment which enable such employers to perform the work at cheaper labor costs. Id. at 754. Here, the factor of “union standards” and the intention to propogate them are completely missing. There have been no findings that the intent of the parties was to protect the wages and working conditions of the union members, or that there was in fact a disparity in the benefits, etc., received by union as compared with nonunion employees. See notes 30 and 35 supra. Moreover, in the cited NLRB precedent, Chairman Miller and member Brown dissented strongly. They stated:

The lawfulness of the clause does not depend upon the parties’ subjective intent in executing the clause or upon their conduct in enforcing it....
We are persuaded that the 80-cent clause is an implied union signatory clause, and not a union standards clause as found by our colleagues. Clearly, as the Mid-Continent example demonstrates, signatories are required to make the 80-cent payment on coal purchases from nonsignatories even though the wage and fringe benefit standards of the nonsignatory may be comparable to or even better than those established in the UMW contract, while no such payment is imposed on coal purchased from signatories.... Accordingly, even though we accept the Trial Examiner’s findings that the parties adopted the clause in order to equalize the wage and fringe benefit costs of signatories and nonsignatories, we must find that the parties have failed to embody their purpose in language that operates in a lawful [sic] manner.

Id. at 755 (footnotes omitted).

It is plain, then, that a “hot cargo” clause is lawful only under the most refined of conditions, and then only marginally. As there is no evidence in the instant case that the purchase-of-coal clause was intended by the parties to the Agreement as a means of standardizing wages and working conditions among union and nonunion employees or even that there was in fact a differential in the treatment of those two groups of workers, the clause can only be viewed as imposing a penalty on purchases of coal from nonunion producers. Any other conclusion rests only on speculation which ill becomes this court.

. Pub.L.No. 86-257, § 704(b) 73 Stat. 525, 542-45 (1959) (codified at 29 U.S.C. § 158(e) (1976)).

. 2 NLRB, Legislative History of Labor-Management Reporting and Disclosure Act of 1959, at 1523 (1959).

. 386 U.S. 612, 87 S.Ct. 1250, 18 L.Ed.2d 357 (1967).

. 357 U.S. 93, 78 S.Ct. 1011, 2 L.Ed.2d 1186 (1958).

. 386 U.S. at 634, 87 S.Ct. at 1263 (emphasis added).

. 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975).

. Id. at 649, 650 n.9, 95 S.Ct. at 1848.

. Id. at 626, 95 S.Ct. at 1837 (footnote omitted).

. See id. at 628-35, 95 S.Ct. at 1837.

. Alyeska Pipeline Co. v. Wilderness Soc'y, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975).

. 20 U.S.C. § 185 (1976).

. 29 U.S.C. § 1132 (1976).

. The 1950 and 1974 pension plans provided: “Contributions to the [pension trusts] to fund the benefits under this Plan shall be paid solely by the Employers in accordance with Article XX of the Wage Agreement.” Art. V, f 8, quoted in Brief for Appellees at 62. The 1950 and 1974 Benefit Plan stated merely that they were established “[p]ursuant to Article XX of the Wage Agreement.” Id. Art. I.

. Reply Brief for Appellant at 24-25.