CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT.
Stewart, J., delivered the opinion of the Court, in which Burger, C. J., and Brennan, White, Marshall, Blackmun, Powell, and Rehnquist, JJ., joined. Stevens, J., filed a dissenting opinion, post, p. 339.
JUSTICE STEWART delivered the opinion of the Court.
This litigation concerns the relationship between two important provisions of the Labor Management Relations Act, 1947 (LMRA).*fn1 Section 8(b)(1)(B) of the National Labor Relations Act, as amended by § 101 of the LMRA, 61 Stat.
, makes it an unfair labor practice for a union "to restrain or coerce . . . an employer in the selection of his representatives for the purposes of collective bargaining or the adjustment of grievances . . . ."*fn2 Section 302(c)(5) of the LMRA, 61 Stat. 157, permits employers and unions to create employer-financed trust funds for the benefit of employees, so long as employees and employers are equally represented by the trustees of the funds.*fn3 The question at issue is whether the employer-selected trustees of a trust fund created under § 302 (c)(5) are "representatives" of the employer "for the purposes of collective bargaining or the adjustment of grievances" within the meaning of § 8(b)(1)(B).
The Amax Coal Co. owns several deep-shaft bituminous coal mines, most of them in the Midwestern United States. The United Mine Workers of America (the union) represents Amax's employees, and, with respect to the midwestern mines, Amax is a member of the Bituminous Coal Operators Association (BCOA), a national multiemployer group that bargains with the union. Through its collective-bargaining contract with the union, Amax, along with the other members of the BCOA, agreed to contribute to the union's national pension and welfare trust funds. These funds, established under § 302(c)(5) of the Act, provide comprehensive health and retirement benefits to coal miners and their families. In accord with § 302(c)(5)(B), the trust funds are administered by three trustees, one selected by the union, one by the members of BOCA, and one by the other two.*fn4
In 1972, Amax opened the Belle Ayr Mine in Wyoming, the company's first sub-bituminous surface mine. Although Amax did not join the BCOA with respect to that mine, Amax and the union negotiated a collective-bargaining contract for Belle Ayr which resembled the BCOA national contract, and under which Amax contributed specified amounts of money to the national trust funds to benefit the employees at Belle Ayr. In January 1975, when the collectively bargained contract covering the Belle Ayr Mine ended, the union struck Belle Ayr and other western mines, attempting to compel the mine owners to establish a multiemployer bargaining unit and to agree to a new collective contract proposed by the union, under which the members of the new employer unit would contribute to the national trust funds. Amax resisted, and the union, threatened with a complaint from the National Labor Relations Board Regional Counsel for illegally attempting to coerce the employer into a multiemployer bargaining unit, soon began separate negotiations with Amax. Those negotiations came to an impasse, and the union continued its strike at the Belle Ayr Mine. Amax then filed with the Board unfair labor practice charges against the union.
The matter of pension and welfare benefits had been a major barrier to agreement between Amax and the union, and formed an important part of Amax's charges before the Board. Amax had proposed its own benefit and pension trust plan, outside the purview of § 302(c)(5), but the union, claiming that such a plan would not be sufficiently portable to or reciprocal with the national trust funds, had rejected this proposal. Rather, the union had insisted that Amax, even as a separately bargaining employer, continue to contribute to the national trust funds for the Belle Ayr employees.
Amax, of course, as a member of BCOA, had participated in selecting the management-appointed trustee of the national trust funds, but it now wanted to appoint its own trustee for any trust fund covering the employees of the Belle Ayr Mine. Amax took the view that any management-appointed trustee of a § 302(c)(5) trust fund was a collective-bargaining "representative" of the employer within the meaning of § 8(b)(1)(B); therefore, since the management trustee of the national trust fund had already been selected by BCOA, Amax contended that the union's insistence that it participate in the national trust funds with regard to Belle Ayr employees constituted illegal coercion under § 8(b)(1)(B) of the Act. Amax also charged the union with refusing to bargain in good faith in violation of § 8(b)(3) of the Act.*fn5
The National Labor Relations Board unanimously concluded that the union had acted legally in bargaining to impasse and striking to obtain Amax's participation in the national trust funds for the Belle Ayr employees.*fn6 The Board noted that the purpose of § 8(b)(1)(B) was to ensure that an employer can bargain through a freely chosen representative completely faithful to his interests under the principles of agency law, while the trustee of a joint trust fund, though he may appropriately consider the recommendations of the party who appoints him, is a fiduciary owing undivided loyalty to the interest of the beneficiaries in administering
the trust.*fn7 Accordingly, the Board concluded that the union had not violated § 8(b)(1)(B).
On cross-petitions by the parties, the Court of Appeals for the Third Circuit, relying on its earlier decision in Associated Contractors of Essex County, Inc. v. Laborers International Union, 559 F.2d 222, 227-228, held that management-appointed trustees of a § 302(c)(5) trust fund act as both fiduciaries of the employee-beneficiaries and as agents of the appointing employers, and, insofar as is consistent with their fiduciary obligations, are expected to administer the trusts in such a way as to advance the employer's interests. 614 F.2d 872, 881-882. The court therefore concluded that the union had acted in violation of § 8(b)(1)(B) in exerting its economic power to induce Amax to participate in the national trust funds with respect to employees of the Belle Ayr Mine, and reversed the Board's ruling to the contrary. We granted certiorari to consider the important question of federal labor law these cases present. 449 U.S. 1110.
Although § 302(a) of the Act*fn8 generally prohibits an employer from making payments to any representative of his employees, § 302(c)(5) allows an employer to contribute to an employee benefit trust fund that satisfies certain statutory requirements. To ensure that the funds in such a trust are not used as a union "war chest," Arroyo v. United States, 359 U.S. 419, 426, the Act provides that the funds may be used only for specified benefits for employees and their dependents, and that the basis for these payments be laid out in a detailed written agreement between the union and the employer.*fn9 The fund must be subject to an annual audit, and
the results of the audit must be made available to all interested persons.*fn10 Furthermore, pension or annuity funds must be kept in a trust separate from other union welfare funds.*fn11 Finally, § 302(c)(5)(B) requires that "employees and employers [be] equally represented in the administration of such fund, together with such neutral persons as the representatives of the employers and the representatives of the employees may agree upon . . . ."*fn12
Congress directed that union welfare funds be established as written formal trusts, and that the assets of the funds be "held in trust," and be administered "for the sole and exclusive benefit of the employees . . . and their families and dependents . . . ." 29 U. S. C. § 186(c)(5). Where Congress uses terms that have accumulated settled meaning under either equity or the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms. See Perrin v. United States, 444 U.S. 37, 42-43. Under principles of equity, a trustee bears an unwavering duty of complete loyalty to the beneficiary of the trust, to the exclusion of the interests of all other parties. Restatement (Second) of Trusts § 170(1) (1957); 2 A. Scott, Law of Trusts § 170 (1967). To deter the trustee from all temptation and to prevent any possible injury to the beneficiary, the rule against
a trustee dividing his loyalties must be enforced with "uncompromising rigidity." Meinhard v. Salmon, 249 N. Y. 458, 464, 164 N. E. 545, 546 (Cardozo, C. J.). A fiduciary cannot contend "that, although he had conflicting interests, he served his masters equally well or that his primary loyalty was not weakened by the pull of his secondary one." Woods v. City National Bank & Trust Co., 312 U.S. 262, 269.
Given this established rule against dual loyalties and Congress' use of terms long established in the courts of chancery, we must infer that Congress intended to impose on trustees traditional fiduciary duties unless Congress has unequivocally expressed an intent to the contrary. See Owen v. City of Independence, 445 U.S. 622, 637. However, although § 302(c)(5)(B) requires an equal balance between trustees appointed by the union and those appointed by the employer, nothing in the language of § 302(c)(5) reveals any congressional intent that a trustee should or may administer a trust fund in the interest of the party that appointed him, or that an employer may direct or supervise the decisions of a trustee he has appointed.*fn13 And the legislative history of the
LMRA confirms that § 302 (c)(5) was designed to reinforce, not to alter, the long-established duties of a trustee.
As explained by Senator Ball, one of the two sponsors of the provision, the "sole purpose" of § 302(c)(5) is to ensure that employee benefit trust funds "are legitimate trust funds, used actually for the specified benefits to the employees of the employers who contribute to them. . . ." 93 Cong. Rec. 4678 (1947). Senator Ball stated that "all we seek to do by [§ 302(c)(5)] is to make sure that the employees whose labor builds this fund and are really entitled to benefits under it shall receive the benefits; that it is a trust fund, and that, if necessary, they can go into court and obtain the benefits to which they are entitled." Id., at 4753; see H. R. Conf. Rep. No. 510, 80th Cong., 1st Sess., 66-67 (1947), 1 NLRB, Legislative History of the Labor-Management Relations Act, 1947, p. 570 (1948) (Leg. Hist. LMRA). The debates on § 302(c)(5) further reveal Congress' intent to cast employee benefit plans in traditional trust form precisely because fiduciary standards long established in equity would best protect employee beneficiaries. For example, one opponent of the bill suggested that § 305(c)(5) was unnecessary because even without that provision, the "officials who administer [the fund] thereby become trustees, subject to all of the common law and State safeguards against misuse of funds by trustees." 93 Cong. Rec. 4751 (1947) (Sen. Morse). Senator Taft, the primary author of the entire Act, answered that many existing funds were not created expressly as trusts, and that § 302(c)(5)'s requirement that each fund be an express and enforceable trust would ensure that the future operations of all such funds would be subject to supervision by a court of chancery. 93 Cong. Rec. 4753 (1947). See also id., at 4678 (Sen. Ball); id., at 3564-3565 (Rep. Case, author of House bill on which § 302(c)(5) was patterned). In sum, the duty of the management-appointed trustee of an employee benefit fund under
§ 302(c)(5) is directly antithetical to that of an agent of the appointing party.*fn14
Whatever may have remained implicit in Congress' view of the employee benefit fund trustee under the Act became explicit when Congress passed the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829. ERISA essentially codified the strict fiduciary standards that a § 302(c)(5) trustee must meet. See 29 U. S. C. §§ 1002(1) and (2); H. R. Conf. Rep. No. 93-1280, pp. 296, 307 (1974). Section 404(a)(1) of ERISA requires a trustee to "discharge his duties . . . solely in the interest of the participants and beneficiaries . . . ." 29 U. S. C. § 1104(a)(1).*fn15 Section
(b)(2) declares that a trustee may not "act in any transaction involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries." 29 U. S. C. § 1106(b)(2). Section 405(a) imposes on each trustee an affirmative duty to prevent every other trustee of the same fund from breaching fiduciary duties, including the duty to act solely on behalf of the beneficiaries. 29 U. S. C. § 1105(a).
Moreover, the fiduciary requirements of ERISA specifically insulate the trust from the employer's interest. Except in circumstances involving excess contributions or termination of the trust, "the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan." § 403(c)(1), 29 U. S. C. § 1103(c)(1). Finally, § 406(a)(1)(E) prohibits any transaction between the trust and a "party in interest," including an employer, and § 407 carefully limits the amount and types of employer-owned property and securities that the trustees may obtain for the trust. 29 U. S. C. §§ 1106(a)(1)(E), ...