379 U.S. 650 (1965), 43, Republic Steel Corp. v. Maddox

Docket Nº:No. 43
Citation:379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580
Party Name:Republic Steel Corp. v. Maddox
Case Date:January 25, 1965
Court:United States Supreme Court

Page 650

379 U.S. 650 (1965)

85 S.Ct. 614, 13 L.Ed.2d 580

Republic Steel Corp.



No. 43

United States Supreme Court

Jan. 25, 1965

Argued November 18, 1964



Respondent employee sued his employer for severance pay under a collective bargaining agreement existing between his union and employer, which was subject to the Labor Management Relations Act (LMRA). Judgment for respondent was affirmed in the state courts on the ground that the state law did not require him to exhaust contract grievance procedures before suit, which he had not done.

Held: under federal policy reflected in the LMRA, contract grievance procedures, which apply to severance as well as other types of claims, must, unless specified as nonexclusive, be exhausted before direct legal redress is sought. Moore v. Illinois Central R. Co., 312 U.S. 630, and Transcontinental & Western Air, Inc. v. Koppal, 345 U.S. 653, distinguished. Pp. 652-659.

275 Ala. 685, 158 So.2d 492, reversed.

HARLAN, J., lead opinion

MR. JUSTICE HARLAN delivered the opinion of the Court.

Respondent Maddox brought suit in an Alabama state court against his employer, the Republic Steel Corporation, for severance pay amounting to $694.08, allegedly owed him under the terms of the collective bargaining

Page 651

agreement existing between Republic and Maddox' union. Maddox had been laid off in December, 1953. The collective bargaining agreement called for severance pay if the lay-off was the result of a decision to close the mine, at which Maddox worked, "permanently."1 The agreement also contained a three-step grievance procedure to be followed by binding arbitration,2 but Maddox made no effort to utilize this mode of redress. Instead, in August, 1956, he sued for breach of the contract. At all times material to his claim, Republic was engaged in interstate commerce within the meaning of the Labor Management Relations Act,3 and Republic's industrial relations with Maddox and his union were subject [85 S.Ct. 616] to the provisions of that Act.

The case was tried on stipulated facts without a jury. Judgment was awarded in favor of Maddox, and the appellate courts of Alabama affirmed on the theory that state law applies to suits for severance pay since, with the employment relationship necessarily ended, no further danger of industrial strife exists warranting the application of federal labor law.4 Moore v. Illinois Central

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R. Co., 312 U.S. 630 (1941), and Transcontinental & Western Air, Inc. v. Koppal, 345 U.S. 653 (1953), cases decided under the Railway Labor Act,5 were cited to support the proposition. Furthermore, it was held that, under Alabama law, Maddox was not required to exhaust the contract grievance procedures. We granted Republic's petition for certiorari, 377 U.S. 904, to determine whether the rationale of Moore v. Illinois Central R. Co. carries over to a suit for severance pay on a contract subject to § 301(a) of the Labor Management Relations Act.6 We conclude that the state judgment must be reversed.


As a general rule, in cases to which federal law applies, federal labor policy requires that individual employees wishing to assert contract grievances must attempt use of the contract grievance procedure agreed upon by employer and union as the mode of redress.7 If the union refuses to press or only perfunctorily presses the individual's claim, differences may arise as to the forms of redress then available. See Humphrey v. Moore, 375 U.S. 335; Labor Board v. Miranda Fuel Co., 326 F.2d 172.8 But

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unless the contract provides otherwise,9 there can be no doubt that the employee must afford the union the opportunity to act on his behalf. Congress has expressly approved contract grievance procedures as a preferred method for settling disputes and stabilizing the "common law" of the plant. LMRA § 203(d), 29 U.S.C. § 173(d); § 201(c), 29 U.S.C. § 171(c) (1958 ed.). Union interest in prosecuting employees grievances is clear. Such activity complements the union's status as exclusive bargaining representative by permitting it to participate actively in the continuing administration of the contract. In addition, conscientious handling of grievance claims will enhance the union's prestige with employees. Employer interests, for their part, are served by limiting the choice of remedies available to aggrieved employees. And it cannot be said in the normal situation that contract grievance procedures are inadequate to protect the interests of an aggrieved employee until the employee has attempted to implement the procedures and found them so.

A contrary rule which would permit an individual employee to completely sidestep available grievance procedures in favor of a lawsuit has little to commend [85 S.Ct. 617] it. In addition to cutting across the interests already mentioned, it would deprive employer and union of the ability to establish a uniform and exclusive method for orderly settlement of employee grievances. If a grievance procedure cannot be made exclusive, it loses much of its desirability as a method of settlement. A rule creating such a situation "would inevitably exert a disruptive influence upon both the negotiation and administration of collective agreements." Teamsters Local v. Lucas Flour Co., 369 U.S. 95, 103.

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Once it is established that the federal rule discussed above applies to grievances in general, it should next be inquired whether the specific type of grievance here in question -- one relating to severance pay -- is so different in kind as to justify an exception. Moore v. Illinois Central R. Co., and Transcontinental & Western Air, Inc. v. Koppal, supra, are put forward for the proposition that it is.

In Moore, the Court ruled that a trainman was not required by the Railway Labor Act to exhaust the administrative remedies granted him by the Act before bringing suit for wrongful discharge. MR. JUSTICE BLACK, for the Court, based the decision on the use of permissive language in the Act -- disputes "may be referred . . . to the . . . Adjustment Board. . . ."10 MR. JUSTICE BLACK wrote again in Slocum v. Delaware, L. & W. R. Co., 339 U.S. 239 (1950), a declaratory judgment suit brought in a state court by a railroad company against two unions to resolve a representation dispute. The Court held that jurisdiction of the Adjustment Board to resolve such disputes was exclusive. Moore was distinguished thus:

Moore was discharged by the railroad. He could have challenged the validity of his discharge before the Board, seeking reinstatement and back pay. Instead, he chose to accept the railroad's action in discharging him as final, thereby ceasing to be an employee, and brought suit claiming damages for breach of contract. As we there held, the Railway Labor Act does not bar courts from adjudicating such cases. A common law or statutory action for wrongful discharge differs from any remedy which

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the Board has power to provide, and does not involve questions of future relations between the railroad and its other employees.

339 U.S. 239, at 244. This distinction was confirmed in Transcontinental & Western Air, Inc. v. Koppal, supra:

Such [a wrongfully discharged] employee may proceed either in accordance with the administrative procedures prescribed in his employment contract or he may resort to his action at law for alleged unlawful discharge if the state courts recognize such a claim. Where the applicable law permits his recovery of damages without showing his prior exhaustion of his administrative remedies, he may so recover, as he did in the Moore litigation, supra, under Mississippi law.11

345 U.S. 653, at 661.

Federal jurisdiction in both Moore and Koppal was based on diversity; federal law was not thought to apply merely by reason of the fact that the collective bargaining agreements [85 S.Ct. 618] were subject to the Railway Labor Act. Since that time, the Court has made it clear that substantive federal law applies to suits on collective bargaining agreements covered by § 204 of the Railway Labor Act, International Assn. of Machinists v. Central Airlines Inc., 372 U.S. 682, and by § 301(a) of the LMRA, Textile Workers v. Lincoln Mills, 353 U.S. 448. Thus, a major underpinning for the continued validity of the Moore case in the field of the Railway Labor Act, and more importantly in the present context, for the extension of its rationale to suits under § 301(a) of the LMRA, has been removed.

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We hold that any such extension is incompatible with the precepts of Lincoln Mills, and cannot be accepted. Grievances depending on severance claims are not critically unlike other types of grievances. Although it is true that the employee asserting the claim will necessarily have accepted his discharge as final, it does not follow that the resolution of his claim can have no effect on future relations between the employer and other employees. Severance pay and other contract terms governing discharge are of obvious concern to all employees, and a potential cause of dispute so long as any employee maintains a continuing employment relationship. Only in the situation in which no employees represented by the union remain employed, as would be the case with a final and permanent plant shutdown, is there no possibility of a work stoppage resulting from a severance pay claim. But even in that narrow situation, if applicable law did not require resort to contract procedures, the inability of the union and employer at the contract negotiation stage to agree upon arbitration as the exclusive method of handling permanent shutdown severance claims in all situations could have an inhibiting effect on reaching an agreement. If applicable law permitted a...

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