HINES ET AL. v. ANCHOR MOTOR FREIGHT, INC., ET AL.
No. 74-1025
Supreme Court of the United States
Argued November 12, 1975—Decided March 3, 1976
424 U.S. 554
Niki Z. Schwartz argued the cause and filed briefs for petitioners.
Bernard S. Goldfarb argued the cause and filed a brief for respondent Anchor Motor Freight, Inc. David Leo Uelmen and Eugene Green filed a brief for respondent Local Union No. 377. David Previant and George Kaufmann filed a brief for respondent International Brother-
MR. JUSTICE WHITE delivered the opinion of the Court.
The issue here is whether a suit against an employer by employees asserting breach of a collective-bargaining contract was properly dismissed where the accompanying complaint against the union for breach of duty of fair representation has withstood the union‘s motion for summary judgment and remains to be tried.
I
Petitioners,1 who were formerly employed as truck drivers by respondent Anchor Motor Freight, Inc. (Anchor), were discharged on June 5, 1967. The applicable collective-bargaining contract forbade discharges without just cause. The company charged dishonesty. The practice at Anchor was to reimburse drivers for money spent for lodging while the drivers were on the road overnight. Anchor‘s assertion was that petitioners had sought reimbursement for motel expenses in excess of the actual charges sustained by them. At a meeting between the company and the union, Local 377, International Brotherhood of Teamsters (Union), which was also attended by petitioners, Anchor presented motel receipts previously submitted by petitioners which were in excess of the charges shown on the motel‘s registration cards; a notarized statement of the motel clerk asserting
A hearing before the joint area committee was held on July 26, 1967. Anchor presented its case. Both the Union and petitioners were afforded an opportunity to present their case and to be heard. Petitioners denied their dishonesty, but neither they nor the Union presented any other evidence contradicting the documents presented by the company. The committee sustained
There were later indications that the motel clerk was in fact the culprit; and the present suit was filed in June 1969, against Anchor, the Union, and its International. The complaint alleged that the charges of dishonesty made against petitioners by Anchor were false, that there was no just cause for discharge, and that the discharges had been in breach of contract. It was also asserted that the falsity of the charges could have been discovered with a minimum of investigation, that the Union had made no effort to ascertain the truth of the charges, and that the Union had violated its duty of fair representation by arbitrarily and in bad faith depriving petitioners of their employment and permitting their discharge without sufficient proof.
The Union denied the charges and relied on the decision of the joint area committee. Anchor asserted that petitioners had been properly discharged for just cause. It also defended on the ground that petitioners, diligently and in good faith represented by the Union, had unsuccessfully resorted to the grievance and arbitration machinery provided by the contract and that the adverse decision of the joint arbitration committee was binding upon the Union and petitioners under the contractual provision declaring that “[a] decision by a majority of a
After reviewing the allegations and the record before it, the Court of Appeals concluded that there were sufficient facts from which bad faith or arbitrary conduct on the part of the local Union could be inferred by the trier of fact and that petitioners should have been afforded an opportunity to prove their charges.4 To
II
Section 301 of the Labor Management Relations Act, 1947, 61 Stat. 156,
Collective-bargaining contracts, however, generally contain procedures for the settlement of disputes through mutual discussion and arbitration. These provisions are among those which are to be enforced under § 301. Furthermore, Congress has specified in § 203 (d), 61 Stat. 154,
Pursuant to this policy, we later held that an employee could not sidestep the grievance machinery provided in the contract and that unless he attempted to utilize the contractual procedures for settling his dispute with his employer, his independent suit against the employer in the District Court would be dismissed. Republic Steel Corp. v. Maddox, 379 U. S. 650 (1965). Maddox nevertheless distinguished the situation where “the union refuses to press or only perfunctorily presses the individual‘s claim.... See Humphrey v. Moore, 375 U. S. 335; Labor Board v. Miranda Fuel Co., 326 F. 2d 172.” Id., at 652 (footnote omitted).
The reservation in Maddox was well advised. The federal labor laws, in seeking to strengthen the bargaining position of the average worker in an industrial economy, provided for the selection of collective-bargaining agents with wide authority to negotiate and conclude collective-bargaining agreements on behalf of all employees in appropriate units, as well as to be the employee‘s agent in the enforcement and administration of the contract. Wages, hours, working conditions, seniority, and job security therefore became the business of certified or recognized bargaining agents, as did the contractual procedures for the processing and settling of grievances, including those with respect to discharge.
Necessarily “[a] wide range of reasonableness must be allowed a statutory bargaining representative in serv-
Claims of union breach of duty may arise during the life of a contract when individual employees claim wrongful discharge or other improper treatment at the hands of the employer. Contractual remedies, at least in their final stages controlled by union and employer, are normally provided; yet the union may refuse to utilize them or, if it does, assertedly may do so discriminatorily or in bad faith. “The problem then is to determine under
Humphrey v. Moore, supra, involved a seniority dispute between the employees of two transportation companies whose operating authorities had been combined. The employees accorded lesser seniority were being laid off. Their grievances were presented to the company and taken by the union to the joint arbitration committee pursuant to contractual provisions very similar to those now before us. The decision was adverse. The employees then brought suit in the state court against the company, the union, and the favored employees, asserting breach of contract by the company and breach of its duty of fair representation by the union. They sought damages and an injunction to prevent implementation of the decision of the joint arbitration committee. The union was charged with dishonest and bad-faith representation of the employees before the joint committee. The unions and the defendant employees asserted the finality of the joint committee‘s decision, if not as a final resolution of a dispute in the administration of a contract, as a bargained-for accommodation between the two parties. The state courts issued the injunction. Respondents argued here that “the decision of the Committee was obtained by dishonest union conduct in breach of its duty of fair representation and that a decision so obtained cannot be relied upon as a valid excuse for [their] discharge under the contract.” 375 U. S., at 342. We reversed the judgment of the state court but only after independently determining that the union‘s conduct was not a breach of its statutory duties and that the joint committee‘s decision was not infirm for that reason. Our conclusion was that the disfavored employees had not
In Vaca v. Sipes, supra, the discharged employee sued the union alleging breach of its duty of fair representation in that it had refused in bad faith to take the employee‘s grievance to arbitration as it could have under the contract. In the course of rejecting the claim that the alleged conduct was arguably an unfair practice within the exclusive jurisdiction of the Labor Board, we ruled that “the wrongfully discharged employee may bring an action against his employer in the face of a defense based upon the failure to exhaust contractual remedies, provided the employee can prove that the union as bargaining agent breached its duty of fair representation in its handling of the employee‘s grievance.” 386 U. S., at 186 (footnote omitted). This was true even though “the employer in such a situation may have done nothing to prevent exhaustion of the exclusive contractual remedies...,” for “the employer has committed a wrongful discharge in breach of that agreement, a breach which could be remedied through the grievance process... were it not for the union‘s breach of its statutory duty of fair representation....” Id., at 185. We could not “believe that Congress, in conferring upon employers and unions the power to establish exclusive grievance procedures, intended to confer upon unions such unlimited discretion to deprive injured employees of all remedies for breach of contract.” Id., at 186. Nor did we “think that Congress intended to shield employers from the natural consequences of their breaches of bar-
III
Even though under Vaca the employer may not insist on exhaustion of grievance procedures when the union has breached its representation duty, it is urged that when the procedures have been followed and a decision favorable to the employer announced, the employer must be protected from relitigation by the express contractual provision declaring a decision to be final and binding. We disagree. The union‘s breach of duty relieves the employee of an express or implied requirement that disputes be settled through contractual grievance procedures; if it seriously undermines the integrity of the arbitral process the union‘s breach also removes the bar of the finality provisions of the contract.
It is true that Vaca dealt with a refusal by the union
In Vaca “we accept[ed] the proposition that a union
Anchor would have it that petitioners are foreclosed from judicial relief unless some blameworthy conduct on its part disentitles it to rely on the finality rule. But it was Anchor that originated the discharges for dishonesty. If those charges were in error, Anchor has surely played its part in precipitating this dispute. Of course, both courts below held there were no facts suggesting that Anchor either knowingly or negligently relied on false evidence. As far as the record reveals it also prevailed before the joint committee after presenting its case in accordance with what were ostensibly wholly fair procedures. Nevertheless there remains the question whether the contractual protection against relitigating an arbitral decision binds employees who assert that the process has fundamentally malfunctioned by reason of the bad-faith performance of the union, their statutorily imposed collective-bargaining agent.
It is urged that the reversal of the Court of Appeals will undermine not only the finality rule but the entire collective-bargaining process. Employers, it is said, will be far less willing to give up their untrammeled right to discharge without cause and to agree to private settlement procedures. But the burden on employees will remain a substantial one, far too heavy in the opinion of some.10 To prevail against either the company or the Union, petitioners must not only show that their discharge was contrary to the contract but must also carry the burden of demonstrating breach of duty by the
Petitioners are not entitled to relitigate their discharge merely because they offer newly discovered evidence that the charges against them were false and that in fact they were fired without cause. The grievance processes cannot be expected to be error-free. The finality provision has sufficient force to surmount occasional instances of mistake. But it is quite another matter to suggest that erroneous arbitration decisions must stand even though the employee‘s representation by the union has been dishonest, in bad faith, or discriminatory; for in that event error and injustice of the grossest sort would multiply. The contractual system would then cease to qualify as an adequate mechanism to secure individual redress for damaging failure of the employer to abide by the contract. Congress has put its blessing on private dispute settlement arrangements provided in collective agreements, but it was anticipated, we are sure, that the contractual machinery would operate within some minimum levels of integrity. In our view, enforcement of the finality provision where the arbitrator has erred is conditioned upon the union‘s having satisfied its statutory duty fairly to represent the employee in connection with the arbitration proceedings. Wrongfully discharged employees would be left without jobs and without a fair opportunity to secure an adequate remedy.
Except for this case the Courts of Appeals have arrived at similar conclusions.11 As the Court of Appeals for the
Petitioners, if they prove an erroneous discharge and the Union‘s breach of duty tainting the decision of the joint committee, are entitled to an appropriate remedy against the employer as well as the Union. It was error to affirm the District Court‘s final dismissal of petitioners’ action against Anchor. To this extent the judgment of the Court of Appeals is reversed.
So ordered.
MR. JUSTICE STEVENS took no part in the consideration or decision of this case.
MR. JUSTICE STEWART, concurring.
I agree with the Court that proof of breach of the Union‘s duty of fair representation will remove the bar of finality from the arbitral decision that Anchor did not wrongfully discharge the petitioners. See Vaca v. Sipes, 386 U. S. 171, 194; Humphrey v. Moore, 375 U. S. 335, 348-351. But this is not to say that proof of breach of the Union‘s representation duty would render Anchor potentially liable for backpay accruing between the time of the “tainted” decision by the arbitration committee
If an employer relies in good faith on a favorable arbitral decision, then his failure to reinstate discharged employees cannot be anything but rightful, until there is a contrary determination. Liability for the intervening wage loss must fall not on the employer but on the union. Such an apportionment of damages is mandated by Vaca‘s holding that “damages attributable solely to the employer‘s breach of contract should not be charged to the union, but increases if any in those damages caused by the union‘s refusal to process the grievance should not be charged to the employer.” 386 U. S., at 197-198. To hold an employer liable for back wages for the period during which he rightfully refuses to rehire discharged employees would be to charge him with a contractual violation on the basis of conduct precisely in accord with the dictates of the collective agreement.
MR. JUSTICE REHNQUIST, with whom THE CHIEF JUSTICE joins, dissenting.
Petitioners seek $1 million damages from their employer and their union on the grounds that they were wrongfully discharged from their jobs. The District Court granted summary judgment for respondents, finding that the issues had been finally decided as to respondent Anchor Motor by the arbitration committee and that petitioners had failed “to show facts comprising bad faith, arbitrariness or perfunctoriness on the part of the Unions.” The Court of Appeals reversed the summary judgment as to the local Union, holding that the issue of bad faith should not have been summarily decided. However, as to respondent Anchor Motor the Court of Appeals affirmed, holding that where, as here, the collective-bargaining agreement provided that arbitra-
In Vaca v. Sipes, 386 U. S. 171 (1967), this Court held that, where the union has prevented the employee from taking his grievance to arbitration, as provided in the collective-bargaining agreement, he may then turn to the courts for relief. This decision bolstered the consistent policy of this Court of encouraging the parties to settle their differences according to the terms of their collective-bargaining agreement. Steelworkers v. American Mfg. Co., 363 U. S. 564, 566 (1960). By subjecting the employer to a damages suit due to the union‘s failure to utilize the arbitration process on behalf of the employees, the Vaca decision put pressure on both employers and unions to make full use of the contractual provisions for settling disputes by arbitration.
The decision in this case will have the exact opposite result. Here the Court has cast aside the policy of finality of arbitration decisions and established a new policy of encouraging challenges to arbitration decrees by the losing party on the ground that he was not properly represented.
The majority cites Margetta v. Pam Pam Corp., 501 F. 2d 179, 180 (CA9 1974), for the proposition that “it
Here the case was presented to a concededly fair and neutral arbitrator but the claim is that that arbitration decision should be vacated because the employee did not receive “fair representation” from the Union in the sense of representation by counsel at a trial. Obviously this stretches Vaca far beyond its original meaning and adopts the novel notion that one may vacate an otherwise valid arbitration award because his “counsel” was ineffective.
As noted, such a principle violates this Court‘s policy favoring the finality of arbitration awards. It also has no basis in the statutory provisions respecting arbitration. Section 12 of the Uniform Arbitration Act, which is in use in many States, sets forth the grounds for vacating an award. These include awards having been procured by corruption or fraud, and arbitrators’ exceeding their powers or exhibiting evident partiality. The federal statute governing arbitration,
The Court‘s decision is particularly vexing on the facts of this case. Petitioners had at their own disposal
Now the employer, which concededly acted in good faith throughout these proceedings, is to be subjected to a damages suit because of the Union‘s alleged misconduct. In view of the fact that petitioners have an action for damages against the Union, see Czosek v. O‘Mara, 397 U. S. 25 (1970), this additional remedy against the employer seems both undesirable and unnecessary.
For the reasons stated I would affirm the judgment of the Court of Appeals.