Grimes v. BNSF Ry. Co.

• Decision Date: 18 March 2014
• Docket Number: No. 13–60382.,13–60382.
• Citation: 746 F.3d 184
• Parties: Danny L. GRIMES, Plaintiff–Appellant v. BNSF RAILWAY COMPANY, a Delaware Corporation, Defendant–Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

746 F.3d 184

Danny L. GRIMES, Plaintiff–Appellant

v.BNSF RAILWAY COMPANY, a Delaware Corporation, Defendant–Appellee.

No. 13–60382.

United States Court of Appeals, Fifth Circuit.

March 18, 2014.

Christopher W. Bowman, [COR LD NTC Retained], Yaeger & Jungbauer Barristers, P.L.C., Saint Paul, MN, Robert Bradley Best, [COR NTC Retained], Holcomb, Dunbar, Watts, Best, Masters & Golmon, P.A., Oxford, MS, for Plaintiff–Appellant.

Margaret Sams Gratz, Esq., Lucius F. Sams, Jr., Esq., [COR LD NTC Retained], Mitchell McNutt & Sams, Tupelo, MS, Jacqueline M. Holmes, [COR NTC Retained], Jones Day, Washington, DC, Andrea Hyatt, [NTC Retained], Burlington Northern & Santa Fe Railway Company, Fort Worth, TX, for Defendant–Appellee.

Appeal from the United States District Court for the Northern District of Mississippi.

Before SMITH, DeMOSS, and HIGGINSON, Circuit Judges.

ON PETITION FOR REHEARING

PER CURIAM:

IT IS ORDERED that the petition for rehearing is DENIED. The opinion, 2014 WL 593600, 2014 U.S.App. LEXIS 2861 (Feb. 17, 2014), is WITHDRAWN, and the following opinion is SUBSTITUTED to provide clarification as properly suggested in the petition.

JERRY E. SMITH, Circuit Judge:

Danny Grimes appeals a judgment giving collateral-estoppel effect, in his Federal Railway Safety Act (“FRSA”) suit, to a finding of fact made by a Public Law Board (“PLB”) in the course of Grimes's pursuit of his rights under a collective bargaining agreement (“CBA”) with BNSF Railway Company (“BNSF”). Concluding that the application of collateral estoppel was error, we vacate and remand. We also decide that the election-of-remedies provision in the FRSA does not bar Grimes's suit.

I.

Grimes, a BNSF employee, was injured in an accident while working with two co-employees on a nonmoving train. The accident occurred because one of the other employees operated one of the cars even though he was not certified to do so. Grimes initially reported that he could not recall what had happened, and only after an investigator questioned him the next day did he acknowledge that the other employee was operating the train. After the investigation and a hearing by BNSF, the company terminated all three employees after concluding that they had covered up for each other, thereby violating a company rule that “[e]mployees must not withhold information, or fail to give all the facts to those authorized to receive information regarding unusual events, accidents, personal injuries, or rule violations.”

During BNSF's investigation and hearing, Grimes was represented by a union representative and had opportunities to cross-examine and call witnesses and introduce evidence. Pursuant to the CBA and the Railway Labor Act (“RLA”), which renders the CBA and its arbitration proceedings enforceable, the case was appealed to a PLB that decided the case after reviewing the records of the investigation and hearing. The PLB found that Grimes had been dishonest but thought the punishment too harsh given his otherwise spotless record; it therefore ordered him reinstated but without compensation for the lost time.

Grimes sued alleging a violation of 49 U.S.C. § 20109(a), a part of the FRSA that provides that a “railroad carrier engaged in interstate or foreign commerce ... may not discharge ... an employee due, in whole or in part, to the employee's lawful, good faith act done ... to notify the railroad carrier ... of a work-related personal injury....” BNSF counters that it fired Grimes for dishonesty, a direct violation of company rules. Although the parties disagree as to which burden-shifting framework applies, both agree that to make out a prima facie case of unlawful discharge Grimes has to prove that he engaged in a “protected activity,” which requires that he have reported the incident honestly and in good faith.

The district court gave preclusive effect to the arbitral finding of fact—made by the PLB—that Grimes had been dishonest. Because that fact issue determined the rest of the statutory claim, the court granted summary judgment to BNSF. On appeal, Grimes contends that findings in arbitration proceedings cannot be used collaterally to estop decisions in federal-court proceedings based on independent federal claims and, alternatively, that collateral estoppel was inappropriate because the arbitral procedures were inadequate. Agreeing that they were inadequate, we remand for the district court to make its own determination as to whether there is a genuine issue of material fact for trial. We also hold, consistently with a new decision of the Seventh Circuit, that the FRSA's election-of-remedies provision does not bar this suit.

II.

Grimes urges that a trilogy of cases—McDonald v. City of West Branch, Mich., 466 U.S. 284, 104 S.Ct. 1799, 80 L.Ed.2d 302 (1984), Barrentine v. Arkansas–Best Freight System, Inc., 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981), and Alexander v. Gardner–Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974)—precludes the application of collateral estoppel here. We agree with BNSF, however, that those cases counsel against only claim preclusion, not issue preclusion.

In Gardner–Denver, the district court had decided that a Title VII discrimination claim was precluded because an identical nondiscrimination claim under the CBA had been submitted to final arbitration. The Supreme Court, 415 U.S. at 60, 94 S.Ct. 1011, held that “the federal court should consider the employee's claim de novo” but added, “The arbitral decision may be admitted as evidence and accorded such weight as the court deems appropriate.” The Court explained that a trial court has discretion as to how much weight to afford the arbitral decision and that “[r]elevant factors” include the similarity of claims, the “degree of procedural fairness in the arbitral forum,” the “adequacy of the record,” and the “special competence of particular arbitrators.” Id. at 60 n. 21, 94 S.Ct. 1011. Moreover, a court may afford great weight to the arbitral decision “especially ... where the issue is solely one of fact, specifically addressed by the parties and decided by the arbitrator on the basis of an adequate record.” Id.

In Barrentine, the plaintiff had submitted a contract-based wage claim to arbitration pursuant to a CBA, and the arbitrator rejected the claim without opinion. The district court refused to address the Fair Labor Standards Act (“FLSA”) claim subsequently filed because it was based on the same underlying facts. The Supreme Court, 450 U.S. at 745, 101 S.Ct. 1437, reversed, but its holding was only that the claim was not precluded. The Court again distinguished between factual and legal claims: “Although an arbitrator may be competent to resolve many preliminary factual questions, such as whether the employee ‘punched in’ when he said he did, he may lack the competence to decide the ultimate legal issue whether an employee's right to a minimum wage or to overtime pay under the statute has been violated.” Id. at 743, 101 S.Ct. 1437. The Court cited its admonition in Gardner–Denver: “We do not hold that an arbitral decision has no evidentiary bearing on a subsequent FLSA action in court.” Id. at 743 n. 22, 101 S.Ct. 1437.¹

Finally, in McDonald, the Supreme Court determined that arbitration under a CBA could not preclude a 42 U.S.C. § 1983 suit in federal court even if the underlying facts were the same. Although the Court held that neither “res judicata” nor “collateral estoppel” could apply, 466 U.S. at 292, 104 S.Ct. 1799, it relied on Gardner–Denver and Barrentine and again noted that the arbitral proceedings can have evidentiary weight, id. at 292 n. 13, 104 S.Ct. 1799. In short, there is no reason to believe that McDonald was intended to be a departure from the prior two decisions.²

It follows that these Supreme Court decisions do not prohibit a court from applying collateral estoppel. BNSF, for its part, also posits the other extreme—that collateral estoppel must apply because the RLA, and specifically 45 U.S.C. § 153, First (m) and (q), makes the findings of the arbitral panel “conclusive on the parties” and its award “final and binding.” We disagree: The RLA makes the arbitral findings conclusive on the parties in the dispute governed by the RLA. Grimes does not disagree that the arbitral findings of fact are conclusive on his CBA claim that he pursued with the PLB. Those findings are not, however, necessarily conclusive in a suit brought under a different statute.

III.

The answer lies somewhere in the middle. As a general matter, arbitral proceedings can have preclusive effect even in litigation involving federal statutory and constitutional rights, and the decision to apply it is within the discretion of the district court. As acknowledged in Universal American Barge Corp. v. J–Chem, Inc., 946 F.2d 1131, 1136 (5th Cir.1991), the Court held in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 223, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), that collateral estoppel may apply in federal-court litigation to facts found in arbitral proceedings as long as the court considers the “federal interests warranting protection.” In Greenblatt v. Drexel Burnham Lambert, Inc., 763 F.2d 1352, 1358–62 (11th Cir.1985), the court discussed Byrd and concluded that the determination of fact issues in the arbitration of state-law claims should have preclusive effect in a subsequent federal RICO suit where those fact issues determined the existence of predicate acts for purposes of RICO.

A district court has “broad discretion” to decide whether to apply the doctrine, “at least when the arbitral pleadings state issues clearly, and the arbitrators set out and explain their findings in a detailed written opinion.” Universal Am. Barge, 946 F.2d at 1137. Additionally, “[a] district court in exercising its discretion must carefully consider whether procedural differences between arbitration and the district court proceeding might prejudice the party challenging the use of...