Blankenship v. Boyle

The United Mine Workers of America Welfare and Retirement Fund of 1950 (the fund) was created by agreement between the United Mine Workers of America union (the union) (defendant) and several coal operators. The fund was used to pay various benefits to coal operators’ employees and employees’ families and dependents. The fund was funded primarily by royalties paid by the coal operators. From its inception, the fund had done its banking business with the National Bank of Washington (the bank) (defendant). The bank was owned, controlled by, and closely related to the union. The fund was administered by three trustees (collectively, the trustees) (defendants)—one selected by the union, one selected by the coal operators, and one neutral trustee selected by the other two trustees. The trustees’ duties and obligations were not specified in any fund documentation, but one of the fund’s developers asserted that the trustees had the duties of trustees under testamentary trusts (i.e., duties of confidentiality, good faith, loyalty, and general sound management consistent with the beneficiaries’ long-term best interests). The trustees did not hold regular meetings, and important matters were often decided informally in meetings between the neutral trustee and the union-selected trustee without any input from the coal operators’ selected trustee. As a result, the fund became entangled with the union in ways that disadvantaged the beneficiaries. Willie Ray Blankenship and a class of coal miners with a present or future right to benefits under the fund (collectively, the beneficiaries) (plaintiffs) sued the fund, some of the trustees and former trustees, the union, and the bank in federal district court. The beneficiaries asserted claims for breach of trust and conspiracy, alleging, among other things, that (1) the fund accumulated excessive amounts of cash and held that cash at the bank for the benefit of the union and the bank instead of investing the cash to create income for the beneficiaries, (2) the trustees made investments in electric-utility companies in an attempt to force the companies to burn union-mined coal, which benefited the union and the coal operators instead of the beneficiaries, and (3) the trustees approved an increase in pension payouts in an imprudent and hasty manner. Following a bench trial, the court issued findings of fact and conclusions of law.