Mr. MILLER. No questions at this time.

The CHAIRMAN. There are no further questions from the members of the subcommittee.

Mr. Counsel, are you finished with this witness?

Mr. MCCABE. Yes, sir.

The CHAIRMAN. That will be all. You may be excused.

Mr. MCCABE. The next witness will be Mrs. Elizabeth Marshall. The CHAIRMAN. Raise your right hand. Do you solemnly swear to tell the truth, the whole truth, and nothing but the truth, so help you God?

Mrs. MARSHALL. I do.

TESTIMONY OF MRS. ELIZABETH MARSHALL, SAN

BERNARDINO, CALIF.

Mr. MCCABE. Mrs. Marshall, would you state your full name, please?

Mrs. MARSHALL. Elizabeth Marshall.

Mr. MCCABE. Your address?

Mrs. MARSHALL. 1923 Bell Street, San Bernardino.

Mr. MCCABE. Your occupation?

Mrs. MARSHALL. Secretary of the Hotel and Restaurant Insurance Trust Funds.

Mr. MCCABE. You are here in response to a subpena, are you not? Mrs. MARSHALL. That is right.

Mr. MCCABE. Did that subpena direct you to bring with you certain records?

Mrs. MARSHALL. Yes.

Mr. MCCABE. You have been in the hearing room during the testimony of Mr. Lutes just preceding your appearance?

Mrs. MARSHALL. Yes.

Mr. MCCABE. Were you able to hear Mr. Lutes' testimony?

Mrs. MARSHALL. Yes.

Mr. MCCABE. He told us that moneys were appropriated by the trustees to defend a particular lawsuit.

Mrs. MARSHALL. Yes.

Mr. MCCABE. Do you have with you the minutes of the trustees' meetings which would indicate the nature of that suit, the proposal to appropriate the funds, and any other data connected with it? Mrs. MARSHALL. Yes, and a letter from the attorney explaining it in much better words than I could explain it.

Mr. MCCABE. Well, would you explain it in either his words or your own words? And also, we would like to have read into the record the minutes of the meeting which covered that specific transaction.

Mrs. MARSHALL. First?

Mr. MCCABE. If you can locate them, please.

Mrs. MARSHALL. I will have to thumb.

October 1, 1953. Mr. Jeanney

Mr. Jeanney is the employers' counsel, Milton E. Jeanney.

Mr. Jeanney recommended trust authority for retention of two additional lawyers to assist Mr. Sprague.

Mr. Sprague is retained by the trust on a retention fee of $50 a month to answer questions, help us in any small legal difficulties, collection of uncollectible accounts that the collector is unable to manage himself.

a George Bodle, labor attorney, and Richard A. Perkins, represented management, combined fee not to exceed a thousand dollars; court costs, not included.

Then there was considerable discussion after that as to the advisability of taking the money from the fund to pay such an expense. Money in the fund is definitely for the small administration expense and the purchase of insurance, putting aside a certain percentage in the hope that we can increase the coverage as the time goes on. We have not increased our coverage since the inception of the plan as yet.

Mr. Bodle would have represented the union. Mr. Perkins was associated with Mr. Jeanney, and Mr. Jeanney was very anxious that he be retained because this was rather an important case. If it was

into

proved in court or the judge ruled that it was not necessary to pay the fund, by paying into the fund those are the premiums due on the employees, it would set up a precedent so that other houses would say, "Well, if Mr. So-and-So didn't, I don't have to."

Then gradually nobody would be paying and then nothing would happen. So they were supposed to think about it. So they thought about it until the next meeting, until the October 27 meeting.

Mr. MCCABE. Was this the next meeting following the October 1 meeting, the next regular meeting?

Mrs. MARSHALL. Yes. That was where they approved the payment of $500 to Richard Perkins, to represent the employers council at that time. They all felt that the trust fund was vitally involved in this, although the suit, countersuit, from the Gee's, it was Harry and Joseph Gee, incidentally, who were involved. They felt that the trust fund was vitally interested in this suit, and that it would be a good move on their part to expend this amount of money in defense of the suit. Mr. MCCABE. In going back to Mr. Lucas' question, which was directed earlier to Mr. Lutes, could the record be made explicitly clear as to who was suing whom and why?

Mrs. MARSHALL. Should I read Mr. Sprague's letter which would explain exactly who was, or would you gentlemen just care to have it? Mr. MCCABE. Well, if that would answer the specific question as to the identity of the parties to the suit.

Mrs. MARSHALL. That is what it is about.

Mr. MCCABE. All right.

The CHAIRMAN. Either read it or explain it, Mr. Counsel, so we know it.

Mrs. MARSHALL (reading):

On or about September 15, 1953, Harry Gee and George Gee, as operators of two Barstow cafes, filed action No. 79831 in the Superior Court of the State of California in and for the County of San Bernardino, against the following defendants-Culinary Workers and Bartenders Union, Local No. 535, Louis J. Rees, as an officer of the union, Joseph DeBell as an agent of the union, the Restaurant Hotel Employers Council, Inc., a California corporation, and Thomas Neblett, individually and as an officer and agent of said council.

Prior to the filing of this suit, local 535 had been picketing the cafes because of the failure of the operators to abide by union rules and for their failure to make payments into the trust fund as required under their contract.

53814-54-pt. 1- 2

The suit sought an injunction against this picketing, and the main contention made by the plaintiffs was that picketing to force their compliance with the trust agreement was picketing for an unlawful purpose, since under the trust agreement, and the agreement between the council and local 535, the council and the union could theoretically increase the amount of contributions required of employers, which would be binding upon plaintiffs who were not a member of the council, and which therefore in effect made the plaintiffs "members" of the council, contrary to sections 921 and 923 of the California Labor Code.

This suit was considered by the union and by the council, here and in Los Angeles, to be of grave importance since if the local superior court were to uphold the plaintiffs' contention, its decision would be a precedent which would be cited in other similar lawsuits which would certainly be filed, all of which would endanger the entire trust fund plan. The undersigned, of course, represented local 535, and also was under retainer from your trust fund (which would not include court appearances.) The union's joint board in Los Angeles hired Mr. Bodle to assist me on behalf of the union here. The Los Angeles firm of Denison & Dietrich, general counsel for the Los Angeles Hotel-Restaurant EmployerUnion Welfare Fund, was requested to, and did, file a brief with the court as amicus curiae. There then came the question of representation of the employers' council and Mr. Neblett, Richard A. Perkins of Los Angeles being the council's attorney.

It was felt that while the last two named defendants were nominally in the lawsuit, the real party in interest, with an interest as great as that of local 535, was the San Bernardino Trust Fund, and that your trust fund should contribute something for the attorney fees involved. At least, that is my understanding of Mr. Jeanney's feelings on the matter.

Therefore, at the next trustees meeting in San Bernardino, all the union trustee members and all the employer trustee members (with the exception of Mr. Lutes) voted to authorize payment of not to exceed $1,000 in attorneys' fees. Actually, all that was ever necessary to be paid was $500, which I understand Mr. Perkins did receive. My own fees were paid by local 535.

Some 77 pages of legal briefs were filed by this office and by Perkins and by Denison & Dietrich, involving many hours of research and thought. Having more attorneys than this office involved in the case made it more easily brought home to the judge the importance of the question before him, and the judge thereafter decided the case in our favor, refusing to grant the requested injunction. Plaintiffs thereafter dismissed the suit.

In brief, the local trust fund was not nominally a party to the lawsuit, but was certainly a real party in interest since plaintiffs' contentions, if upheld, would invalidate or at best work serious harm to a proper administration of the fund. There is no question in my mind that the proper protection of the local fund justified the expenditure of the $500 in fees. No part of this money was used to pay any fees incurred by the union, as stated, since the union was protecting its interest by its retainer of this office and Mr. Bodle-who received no money from your trust fund to my knowledge.

That was why the expenditure was made.

Mr. MCCABE. Do you have in your records or in your possession now, Mrs. Marshall, the records of that actual expenditure?

Mrs. MARSHALL. I have the check.

Mr. MCCABE. May that be accepted for our record?

The CHAIRMAN. Without objection, yes.

Mr. MCCABE. May this be identified as Marshall Exhibit No. 1, Mr. Chairman.

The CHAIRMAN. It will be so marked.

(The letter was marked "Marshall Exhibit No. 1" and filed with the committee.)

Mr. MCCABE. Mrs. Marshall, according to the agreement, parts of which were read during the testimony of the prior witness, union members in good standing are entitled to life-insurance coverage without contribution into this welfare fund by any employer, is that your understanding?

Mrs. MARSHALL. There are two types of coverage.

Mr. MCCABE. Would you explain them to us, please?

Mrs. MARSHALL. Our fund is set up almost with two separate policies, two separate divisions. We have what is called the package plan, and we have the portion which is life insurance only. The package plan covers hospitalization and surgery, medical care, and life insurance. The other is life insurance only. Shall I break it down as to how you are eligible? Mr. Lutes was confused.

Mr. MCCABE. Please.

Mrs. MARSHALL. In order to be eligible for the package plan, everyone must be a member in good standing in the local. That goes without saying. In order to be eligible for the first group, the employee must work for a signatory house or a house who is making contributions into the fund every month. They must work for 3 consecutive months of at least 64 hours a month, and they must be to work the first to the fourth month. That doesn't mean the first day of August or September, but the first scheduled day at work. The first of the month they might be closed or it might be their day off. After their appearance at work, the first of the fourth month, they are then eligible for the benefits. If they are just receiving medical care, nothing that necessitates an absence from work, they must continue to work at least 44 hours a month. If they are disabled, because of their illness, to work, there is then a 90-day limit in which they may be carried for their benefits without payment into the fund for that particular disability only.

If you are laid up because of an appendectomy and while you are recuperating at home, no payment was made into the fund, and you were unfortunate enough to fall down and break your leg, you would not be covered, only for that one disability.

When you are covered for the package plan, you are also covered for the life insurance.

This coverage of hospitalization and surgery is for the union member only. Our only dependency clause is polio, or the death benefit. So if you are covered for the package plan, you have your medical hospitalization and your life insurance.

Is that clear?

Mr. MCCABE. I think that explains the two types of coverages, Mrs. Marshall.

Mrs. MARSHALL. Those that are entitled to life insurance only are some of the retired members of the union who no longer work but do continue to keep up their union dues. They are elderly and chances are they couldn't get any other type of coverage. They must, however, have paid their union dues for at least 12 consecutive months. They must never have been suspended. They must be in good standing with the union. Some of them are working, maybe, in nonunion houses, but there is no contribution on the retired members or members working in a nonunion house paid into the fund for their life-insurance premium. That comes out of the general fund. I pay the premium in two different categories. Did you wish to know what it was?

Mr. MCCABE. Yes.

Mrs. MARSHALL. For every member that is eligible under the package plan, I pay $4.79 per eligible employee. Then every month-I am always paying for the month back-every month the union gives me the number of lives on which they pay their per-capita tax to the international. I take that number of lives times a dollar. So if they

have paid-I don't know what their tax is—if they have paid on 1,600 members into international, I would pay $1,600 on the life-insurance portion of our policy. That will then include life insurance for those that are eligible under the package plan and those that are merely union members working in the nonunion houses; or merely keeping up their dues for the life insurance.

Mr. MCCABE. Mrs. Marshall, you mentioned that these people are retired union members.

Mrs. MARSHALL. Well, I meant retired from work. They are not employed any more.

Mr. MCCABE. Retired for what reason?

Mrs. MARSHALL. Well, maybe they are too old; maybe somebody considers them unemployable; maybe they haven't been very well and are not able to work. Maybe they are just people who were members of the union years ago and have just kept up their dues for what they consider to be very, very cheap life insurance, which it is.

Mr. MCCABE. Is there any specific requirement that they be of any age or any physical condition or any employable condition?

Mrs. MARSHALL. Not under those conditions. If a person came into the union, just came in from outside and said, "I want to join the union and I would like to come under your plan just on my own and pay for it myself," they would then have to have a physical examination at their own expense. All this time you have to be a member of the union for any of these things. They could then have a physical. That is the only time at which we require you to go to certain doctors. You must then go to the doctors that are recommended by the Occidental Insurance Co. If you are accepted, then you may pay your own premium plus your union dues. If you aren't then you are not in.

Mr. GRAHAM. Are any of the employers eligible?

Mrs. MARSHALL. The owners?

Mr. GRAHAM. Yes, ma'am.

Mrs. MARSHALL. Yes. We have worked it this way: At the time an owner signs a union contract, he may, at that time, make payments into the plan himself. As a rule, most of them are not interested, as they have their own coverage; some private plan.

Mr. GRAHAM. Is that restricted to members of the council or can any operator, who is

Mrs. MARSHALL. Any operator at the time they sign a new union contract or sign a contract. That was a decision made by the trustees. Mr. GRAHAM. But they have to make payments in to cover them? Mrs. MARSHALL. Oh, yes.

Mr. GRAHAM. It was mentioned by Mr. Lutes that the union itself previously carried a life-insurance policy on its membership; that is, they took it out of dues. The trust fund has assumed that; is that correct?

Mrs. MARSHALL. Yes. I don't know just what the union had because I was not associated at that time.

Mr. GRAHAM. But it would mean again, to reiterate, nonparticipants in the fund; in other words, those who are not eligible for the welfare fund, for reasons that they have no employer contributing in their behalf, are, nevertheless, carried for life insurance out of the fund by payment of a dollar?

Mrs. MARSHALL. Yes, sir.