BARNES v. SVC MANUFACURING, INC., 1:12-cv-01468

Background

SVC (PepsiCo subsidiary) audited 2010–2011 unemployment claims after a DWD (Indiana Department of Workforce Development) probe and an anonymous tip; SVC and DWD investigated and found 95 employees with discrepancies and the DWD determined that 53 had knowingly misrepresented facts; 27 plaintiffs were among those terminated for violating Plant Rule No. 1 (prohibiting falsification).
Plaintiffs were union members represented by Local Union No. 1999 and the United Steelworkers International; the CBA required “just cause” for discharge and provided a four-step grievance/arbitration procedure (terminated employees excluded from third-step meetings).
The Union automatically filed grievances for the terminated employees, reviewed company and DWD materials, met repeatedly, and ultimately withdrew all termination grievances—concluding arbitration would be futile given the DWD findings and arbitration precedent.
Plaintiffs sued in a hybrid LMRA § 301 action against SVC (breach of the CBA) and the Union (breach of the duty of fair representation), alleging unjust terminations and racial discrimination in the investigation and grievance handling.
The district court found Plaintiffs waived their breach-of-contract argument by failing to meaningfully oppose defendants’ summary judgment briefing and, alternatively, held on the merits that the CBA/plant rules authorized termination for falsifying unemployment forms and SVC’s actions did not violate the CBA.
Because the hybrid claim requires both a contractual violation and a union breach, the court granted summary judgment for both the Company and the Union and entered judgment for defendants.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did SVC breach the CBA by terminating employees for falsifying unemployment forms?	Terminations lacked just cause and were inconsistent with progressive discipline and inadequate notice.	Plant Rule No. 1 and the Manual permit termination for falsification; DWD determinations and SVC's independent investigation supported terminations.	No breach; plaintiffs waived detailed challenge and, on the merits, rule covered unemployment forms and terminations comported with CBA.
Did the Union breach its duty of fair representation by withdrawing grievances?	Union acted arbitrarily/discriminatorily and failed to advocate or investigate race complaints.	Union reviewed records, considered arbitration prospects, concluded arbitration would be futile, and withdrew grievances in good faith.	Court need not decide DFR because plaintiffs' CBA claim fails; summary judgment granted for Union.
Were termination decisions racially discriminatory?	High proportion of terminated employees were African‑American; alleged disparate treatment.	Terminations were based on DWD findings applied uniformly; non‑white and white employees were treated alike according to DWD outcomes.	No evidence of racial taint sufficient to defeat summary judgment; disparate raw numbers insufficient.
Did plaintiffs preserve and present evidence necessary to oppose summary judgment?	Plaintiffs presented explanations (mistake/confusion) and testimony challenging process.	Plaintiffs largely failed to present specific, timely evidence to rebut DWD findings or to oppose legal arguments; many issues waived.	Plaintiffs waived contract argument by failing to meaningfully respond; factual assertions insufficient to create a genuine issue of material fact.

Key Cases Cited

Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment burden and genuine-issue standard)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (insufficient evidence cannot defeat summary judgment)
Vaca v. Sipes, 386 U.S. 171 (duty of fair representation standard)
DelCostello v. Int’l Bhd. of Teamsters, 462 U.S. 151 (hybrid §301 claims are interdependent)
Truhlar v. U.S. Postal Serv., 600 F.3d 888 (Seventh Circuit discussion of §301 hybrid claims)
Yeftich v. Navistar, Inc., 722 F.3d 911 (treats arbitrary/discriminatory/bad faith elements separately)
Goodpaster v. City of Indianapolis, 736 F.3d 1060 (waiver by failing to respond to argument)