Defendant-appellant Local 584, International Brotherhood of Teamsters (Union), was the collective bargaining representative of plaintiffs-appellees, former workers at the Liberty Farms, Inc., milk processing plant in Ozone Park, New York, under the multi-employer Milk Industry Collective Bargaining Agreement (Agreement). In 1990, the United States District Court for the Southern District of New York, Michael B. Muka-sey, J., found after a four-day bench trial that defendant-appellant Tuscan Dairy Farms, Inc. (Tuscan), which purchased the plant in 1987, had breached its obligation under the Agreement to dovetail the seniority of plaintiffs with the seniority of employees at two other Tuscan plants.
Lewis v. Tuscan Dairy Farms,
On the appeal by Tuscan and the Union from the judgment in
Lewis I,
we remanded the case for reconsideration in light of the Supreme Court’s opinion in
Air Line Pilots Association v. O’Neill,
I. Background
The milk industry in New York State went through a “period of upheaval” following a January 1987 decision of the United States District Court for the Eastern District of New York, which declared unconstitutional New York’s restrictions on the distribution of milk coming from outside the state.
Farmland Dairies v. Commissioner of New York
By February 1987, rumors of an impending sale were circulating around the Ozone Park plant. The rumors were discussed at Union meetings, but Whelan “provided no definite information to the members as to whether a sale was imminent.” Id. Plaintiffs, who were utility workers at Ozone Park, 1 were concerned about their rights should Tuscan shift production from the Ozone Park plant to Tuscan’s other facilities. General Rule IV C of the Agreement required an employer to dovetail seniority lists when it merges or consolidates facilities:
In all consolidations of branches or plants, company craft group seniority shall prevail for the purpose of layoffs, vacations, bidding and in all other usual respects.
If the Employer acquires all or any part of a milk business ... and merges or consolidates the same with its own business, or handles the same in any other manner, ... the Employer shall be required to assume responsibility for the employment of the employees who elect to or who are transferred to the new Employer as provided herein who shall enjoy craft group seniority, on the basis of the period of employment in the business acquired for the purpose of layoffs, vacations, bidding and in all other usual respects. (Emphasis supplied).
Union counsel John Driscoll testified at trial that he had advised Whelan that even if Rule IV C required the dovetailing of seniority, “ ‘[Whelan] had the power to modify that or to ignore that if he thought it necessary in order to promote the interest of the general membership.’ ”
Lewis I,
Thus, without following the modification procedure outlined in the Union’s bylaws, Whelan and Caiola “apparently worked out an ad hoc arrangement which Whelan felt empowered to implement.” Id. Even before the precise terms of the Tuscan-Kotcher deal had been set, Whelan assured Caiola that the Union would not seek a merger of the seniority lists under Rule IV C. Id. Whelan concealed this fact from Ozone Park employees. In fact, he told them if Tuscan bought the plant’s equipment or paid Kotcher’s unfunded liability under the Employee Retirement Income Security Act (ERISA), such action would constitute a merger requiring the dovetailing of seniority under Rule IV C. He also encouraged Ozone Park employees to stay on the job and told them that if they were to leave, they would be denied Union work cards allowing them to find work elsewhere. Id. at 119-20.
Whelan also told two Ozone Park workers that because he was running for reelection that year, he was hesitant to merge the Ozone Park seniority list with those of the two other Tuscan plants that would assume the Ozone Park plant’s functions after the sale. To do so would risk alienating over 200 Tuscan workers to please 100 or so Ozone Park workers, who were relatively senior. In addition, Whelan was trying to obtain from Tuscan a $2.5 million payment to cover Koteher’s unfunded pension fund liability under ERISA.
Four days after the Ozone Park plant closed, plaintiff-appellee Ernest “Buddy” Lewis sent a letter to Whelan demanding that the seniority lists be merged under Rule IV C. Lewis, the plant’s former shop steward, was “a frequent antagonist of Whelan and aggressive in protecting the interests of his constituents.” Id. Whelan understood Lewis’s letter to be a demand that the issue be submitted to arbitration. According to usual Union procedure, such a demand is voted on by the Union’s executive committee and its membership. Whelan, however, failed to bring Lewis’s demand before either the executive committee or the membership.
Thereafter, plaintiffs brought this suit, invoking jurisdiction under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and under 28 U.S.C. §§ 1331 & 1337. As indicated above, this appeal now comes to us after Judge Mukasey’s decision in Lewis I, our remand and the judge’s decision in Lems II.
II. Discussion
1. Recusal
The Union argues that Judge Muka-sey should have recused himself from the ease on grounds of personal bias under 28 U.S.C. §§ 144 and 455(b)(1). 2 This contention is based on an unrelated proceeding that took place shortly before the trial in this case. In that proceeding, Judge Mukasey found Whelan’s testimony not credible and ordered him imprisoned for contempt of court for refusing to order striking union members back to work. Dellwood Foods, Inc. v. Local 584, Int'l Bhd. of Teamsters, 89 Civ. 4635 (S.D.N.Y.1989). According to the Union, that order casts doubt upon the judge’s ability to be impartial .in the present ease.
We reject this argument. A motion for recusal requires a showing of personal bias. Ordinarily, such a showing must be based on “extrajudicial conduct ... not conduct which arises in a judicial context.”
Apple v. Jewish Hosp. and Medical Ctr.,
2. The Union’s breach of the duty of fair representation
After the district court in
Lewis I
found that the Union, by Whelan’s actions, had breached its duty of fair representation, but before we heard the first appeal in this ease, the Supreme Court clarified the stan
We hold that the rule announced in Vaca v. Sipes,386 U.S. 171 , 190 [87 S.Ct. 903 , 916-17,17 L.Ed.2d 842 ] (1967) — that a union breaches its duty of fair representation if its actions are either “arbitrary, discriminatory, or in bad faith” — applies to all union activity, including contract negotiation. We further hold that a union’s actions are arbitrary only if, in light of the factual and legal landscape at the time of the union’s actions, the union’s behavior is so far outside a “wide range of reasonableness,” Ford Motor Co. v. Huffman,345 U.S. 330 , 338 [73 S.Ct. 681 , 686,97 L.Ed. 1048 ] (1953), as to be irrational.
O’Neill,
In
O’Neill,
the Court reversed a finding that a union had breached the duty of fair representation where it turned out in retrospect that the union had agreed to a bad settlement.
The Union argues that the district court interpreted the
O’Neill
standard too narrowly and that Whelan’s actions were not irrational in view of the entire “factual and legal landscape at the time.” The Union claims that Whelan made a rational decision in the best interests of the Union membership as a whole. As the district court found, a $2.5 million payment by Tuscan to cover Kotcher’s unfunded pension plan liability for the Ozone Park employees “would not have been forthcoming as quickly” without the Union’s agreement not to apply Rule IV C.
Lewis I,
However, whether Tuscan would have backed away from the purchase without the “deal” with Whelan is questionable. Plaintiffs claim that Tuscan signed a letter of intent to purchase the Kotcher plants before the alleged commitment from Whelan. Moreover, the district court did not find in either Lewis I or Lewis II that Tuscan insisted on the agreement as a precondition to negotiations with Kotcher. Judge Mukasey stated only that ‘Whelan and Caiola of Tuscan apparently worked out an ad hoc arrangement” not to apply Rule IV C. Lewis I, 752 F.Supp. at 119. In a brief, unpublished opinion in August 1991, dealing with joint and several liability, the judge also stated that Whelan and Caiola “had agreed that Tuscan would go through with the purchase of Liberty Farms if the union did not press a merger of the Ozone Park seniority list.”
More significantly, even if Whelan did have practical justifications for the oral agreement, this would not insulate the Union from liability in the circumstances of this ease. Whether or not he acted arbitrarily, Whelan acted in bad faith, in violation of the duty of fair representation, by willfully concealing the oral agreement from Union members. Before Tuscan bought the Kotcher plants, Whelan represented to workers that such a
Even if Whelan’s agreement with Tuscan had been legitimate, he could not justify deliberately misrepresenting to employees a change in their rights guaranteed under the collective bargaining agreement. No “ ‘range of reasonableness,’ ” O’Neill,
There is an important distinction between a negotiated modification of an agreement’s terms and an unstated “modification” intended to apply only to selected individuals: we call the latter a “breach.”
Bennett v. Local Union No. 66, Glass Workers Int’l Union,
The Union argues that the district court failed to consider the effect of the incursion of out-of-state milk producers in the wake of the
Farmland Dairies
decision. In light of the extreme pressures placed on the industry, the Union claims, Whelan was justified in waiving Rule IV C in order to induce Tuscan to buy the Kotcher plants and prevent the loss of Union jobs. The Union argues that a union may modify or even abrogate seniority rights under a collective bargaining agreement without seeking ratification when it faces “emergency situations not envisaged in the Collective Bargaining Agreement.” According to the Union, a court should defer to the union leadership’s discretion when it determines “that it must act promptly and aggressively in order to maximize its membership’s interests.”
Famulare v. United Transp. Union Int’l,
The district court considered and rejected this argument. The judge found, and we agree, that no emergency situation existed. Even if Whelan had reasonably, but incorrectly, believed that he was making a contract modification under emergency conditions when he made his oral agreement with Caiola, he “had weeks [thereafter] in which to seek approval for his proposed change in how the parties would address a situation that was envisaged and precisely treated in the collective bargaining agreement.”
Lewis II,
Finally, after the Ozone Park plant closed, Whelan violated standard union procedure by failing to present Lewis’s demand for arbitration of the Rule IV C issue to the Union’s executive committee or to its membership. Although a union’s duty of fair representation does not require it to take every employee grievance to arbitration, “a union may not arbitrarily ignore a meritorious grievance or process it in perfunctory fashion.”
Vaca v. Sipes,
In sum, we affirm the district court’s holding that the Union, by the actions of its president, breached its duty of fair representation to plaintiffs.
3. Tuscan’s liability for breach of the Agreement
We must still determine, however, whether the district court erred, as Tuscan urges, when it held that Tuscan breached the Agreement.
The district court found that Rule IV C required the merging of seniority lists under the circumstances of this case. Rule IV C requires such merging of seniority
[i]f the Employer acquires all or any part of a milk business ... and merges or consolidates the same with its own business, or handles the same in any other manner[J
The present case involved a merger or consolidation as contemplated by Rule IV C. As the district court found, “the overwhelming bulk of both the equipment and the production was transferred to Tuscan’s Lindenhurst and Woodside plants, both of whose employees are represented by Local 584.”
Tuscan and the Union, citing two 1974 arbitration decisions involving the Union and other employers also covered by the Agreement, argue that Rule IV C does not apply to the Tuscan-Kotcher deal. The district court held, however, that those decisions are distinguishable. In one -In re Local 584 and Delltown Foods, Inc., -80 percent of production of the closed plant was moved into the jurisdiction of a different union that was not subject to the Agreement, unlike the present case, where Tuscan transferred most of Ozone Park’s production and equipment to facilities within Local 584’s jurisdiction. In the other -In re Local 584 and Honeywell Farms, Inc., -the employer shut down its milk bottling plant for economic reasons and subcontracted its bottling operations to another company. The arbitrator found that the subcontracting did not constitute a merger or consolidation within the meaning of Rule IV C.
On this record, we cannot say that the district court erred in holding that Rule IV C applied, as written, to the TuscanKotcher deal. Tuscan argues, however, that this is not the end of the matter. It contends that it is not liable for breach of contract because the Agreement was effectively modified by the oral agreement between Caiola, Tuscan’s president, and Whelan, the Union’s president. Tuscan also argues that, at the very least, it was entitled to rely on Whelan’s apparent authority to modify Rule IV C on behalf of the Union. Tuscan vigorously contends that it would not have invested many millions of dollars — including the $2.5 million for Kotcher’s ERISA liability — unless Tuscan reasonably thought that the arrangement on seniority was authorized. Tuscan cites a number of cases in support of its legal propositions, including one from this
cour
t-Koz
era v. Westchester-Fairfield Chapter of Nat’l Elec. Contractors Ass’n,
On. the facts, plaintiffs respond that Tuscan was a member of the Greater New York Milk Dealers Labor Committee, the signatory to the Agreement for the employers, at the time of the Kotcher buyout; thus, Tuscan was aware of the procedures that Whelan ignored and that the Agreement is a multiemployer agreement that no single employer may modify. On the law, plaintiffs cite a number of decisions strongly condemning secret, unrati-fied union-employee agreements. E.g.,
Bennett,
The district court apparently did not directly address these issues, undoubtedly be
... union president Willie Whelan and Tuscan’s president Louis Caiola had agreed that Tuscan would go through with the purchase of Liberty Farms if the union did not press a merger of the Ozone Park seniority list into the Lindenhurst and Woodside seniority lists.
Further, in this court’s opinion remanding this case on the appeal in Lewis I, we noted
Tuscan purchased Liberty after entering into an agreement with Local 584’s president that the Union would not press for a merger of the Ozone Park seniority list into Tuscan’s Lindenhurst and Woodside seniority lists.
The issues thus posed by Tuscan are not insubstantial. In Kozera, we noted that an amendment to a multiemployer labor agreement “had not been ratified by the membership” and -then concluded
even though the [amendment] had not been ratified by the membership, we conclude that, notwithstanding the issue of the duty of fair representation and disclosure owed by the [union] president and manager to the membership, the [employer] could reasonably believe that officers of the [union] had authority ... to bind the union membership.
Under all the circumstances, we believe it advisable to remand this aspect of the case to the district court. Thereafter, on this record or on an expanded record in the district court’s discretion, it should address the issues raised by Tuscan’s arguments that the Agreement was orally amended and that, in any event, it was entitled to rely on Whelan’s apparent authority to modify it.
It was suggested at oral argument that if Tuscan is found not liable for breach of contract, the district court will lose jurisdiction over the claim against the Union for breach of the duty of fair representation, because this suit was brought as a “hybrid” action under 29 U.S.C. § 185 and plaintiffs could challenge the Union’s breach of duty alone only before the National Labor Relations Board. However, the Supreme Court has made clear that a breach of contract by the employer is not a jurisdictional prerequisite to a suit against a union for breach of its duty of fair representation.
Breininger v. Sheet Metal Workers Int’l Ass’n,
[w]hile in Vaca an allegation that the union had breached its duty of fair representation was a necessary component of the § 301 claim against the employer, the converse is not true here: a suit against the union need not be accompanied by an allegation that an employer breached the contract, since whatever the employer’s liability, the employee would still retain a legal claim against the union.
4. Apportionment of liability
Tuscan argues that even if it did breach the Agreement, the district court erred in holding it jointly and severally liable with the Union for damages. The general rule “is to apportion liability between the
In the present case, Judge Mukasey made two possibly contradictory findings as to the interrelatedness of defendants-appellants’ conduct. In his August 1991 opinion on apportionment of damages, he held Tuscan and Whelan jointly and severally liable because “the breaches by the parties were mutually dependent and agreed upon.” In September 1992, however, in another brief, unpublished opinion on plaintiffs motion for attorneys fees and costs, he noted that “Tuscan did not participate in the [Ujnion’s breach of the duty of fair representation.”
If the Agreement was not amended by an oral agreement between Whelan and Caiola, or if Tuscan was not reasonably entitled to rely on Whelan’s apparent authority, then Tuscan committed a breach of contract. In the event that the district court again so holds, we leave to it in the first instance the resolution again of issues concerning the apportionment of liability between the Union and Tuscan. Cf.
Bowen v. United States Postal Serv.,
We affirm the judgment of the district court insofar as it holds the Union liable to plaintiffs. With respect to Tuscan’s liability, we vacate and remand for further proceedings consistent with this opinion.
Notes
. The Union represents various categories of milk industry workers, including utility workers, who work inside processing and distributing facilities and make some supplemental milk deliveries, and route drivers, who deliver milk along regular routes.
. 28 U.S.C. § 144 provides in relevant part:
Whenever a party to any proceeding in a district court makes and files a timely and sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice either against him or in favor of any adverse party, such judge shall proceed no further therein, but another judge shall be assigned to hear such proceeding.
28 U.S.C. § 455(b)(1) provides in relevant part:
[A judge] shall ... disqualify himself in the following circumstances:
(1) Where he has a personal bias or prejudice concerning a party.