BELL v. DAIMLERCHRYSLER CORP. (October 29, 2008)
In the late 1970s through 1980, DaimlerChrysler Corp. (“Chrysler”) laid off hundreds of workers at its New Castle, Indiana plant. The workers were members of the United Auto Workers (“the union”). The union and Chrysler were parties to a collective bargaining agreement and over seventy side letters. The side letters were collected in a so-called “Book of Letters.” The agreement between Chrysler and the union provided laid-off workers a preference over other applicants for job openings at any Chrysler facility within fifty miles of their former work locations. Later side letters expanded the area of preference to any opening within the same state as the employee’s last work location. From 1984 to 1987, Chrysler hired over seven hundred workers at its Kokomo, Indiana plant. It did not offer these jobs to the workers who had been laid off from the New Castle plant. In 2002, Local 371 of the union filed two grievances charging that Chrysler violated their labor agreements by not offering the Kokomo jobs to the laid-off workers. The grievances were filed pursuant to a multiple-step procedure defined by the labor agreements. Chrysler denied the grievances as untimely. Local 371 continued to pursue the grievances to the Appeal Board step of the procedure. At that step, the national union representative decide to withdraw the grievances. The basis for his withdrawal was twofold. First he believed that they were untimely. Second, they also presented significant proof problems due to the deaths and retirements of many necessary witnesses. A local or an individual union member can appeal a grievance withdrawal within thirty days. No appeal was taken of the withdrawal. Two groups of Chrysler employees filed suit in federal court pursuant to section 301 of the Labor Management Relations Act. They alleged that Chrysler breached its obligations under the labor agreements. After the two suits were consolidated, the district court granted summary judgment to Chrysler. The court held that the plaintiffs failed to exhaust their administrative remedies. The plaintiffs appeal.
In their opinion, Judges Flaum, Rovner, and Sykes affirmed. The Court noted the hybrid nature of a section 301 suit. Chrysler and the union have agreed to resolve their disputes privately. Union members must avail themselves of that process, up to and including binding arbitration. In a section 301 suit, the union member complains of an employer’s violation of the labor agreement but also complains of the union’s breach of its duty of fair representation with respect to that violation. A member cannot generally bring a section 301 suit until she has first exhausted all her available administrative appeals. There is no dispute in the case that the plaintiffs failed to exhaust available appeals. The Court noted that the Supreme Court, in Clayton v. UAW, has identified situations where that failure can be excused. They are: a) futility – where the union has displayed such hostility to the grievance that further appeals appear futile, b) inadequacy – where the procedure cannot lead to reinstatement of the grievance or result in full relief, and c) undue delay – where exhaustion of all appeals will result in undue delay. The plaintiffs take the position that futility and inadequacy excuse their failure to exhaust.
The Court first addressed plaintiffs' inadequacy argument. The plaintiffs argued that Chrysler should not be allowed to rely on one of the side letters because: a) Chrysler failed to raise it until its reply brief, and b) the collective bargaining agreement contained an integration clause. The Court rejected the arguments. It stated that: a) Chrysler’s reference to the side letter was in response to plaintiffs’ argument and properly appeared in their reply, and b) the plaintiffs could have filed a surreply to Chrysler’s reply, if they wanted an opportunity to address the document. The Court further held that the plaintiffs waived the integration clause argument by not raising it in the district court. The Court also rejected plaintiffs' argument that they are excused from further appeals because the appeals could not have provided them with full relief. The second Clayton factor of inadequacy excuses exhaustion only if neither reinstatement nor full relief is possible. Further appeals could have resulted in a reinstatement of the grievance. Plaintiffs’ final argument on the inadequacy factor is that they did not even know of the existence of the side letter. The Court conceded that plaintiffs did lack knowledge of the side letter. The Court concluded, however, that there was an insufficient record to excuse them from that knowledge. They knew of the existence of several side letters and made no showing that, with due diligence, they could not have discovered the letter.
With respect to the futility factor, the plaintiffs simply rely on one union representative’s comment that the appeal was a “dead issue” and the general lack of support or direction they received from the union. The Court noted that it had “repeatedly rejected” those kinds of statements as demonstrating the pervasive hostility required by the first Clayton factor. The district court did not abuse its discretion in granting summary judgment.
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Prate Installations, Inc. filed a grievance against its Union, the Chicago Regional Counsel of Carpenters, in 2003. Prate alleged that the Union's requirement that Prate pay hourly wages while allowing competitors to pay on a piece work basis violated the Collective Bargaining Agreement (CBA). The parties selected an arbitrator in accordance with the terms of the 2001 CBA. Arbitrator Martin issued an award in September of 2008. He awarded close to $10 million in damages, injunctive relief and attorney's fees. Meanwhile, the parties entered into a new CBA in 2005 that modified the arbitration procedure. It established a rotating panel of arbitrators -- Martin was not on the panel. Prate brought suit to confirm the award. Judge St. Eve (N.D. IL) confirmed the damages award, as amended to eliminate damages after the revised CBA, and the attorneys’ fees. She also vacated the equitable relief because it applied after the expiration of the earlier CBA. Both parties appeal.
In his position as an officer in the 