Kaftantzis v. D & L TRANSPORT CO.

• Decision Date: 29 January 1982
• Docket Number: No. 81 C 5482.,81 C 5482.
• Citation: 531 F. Supp. 566
• Parties: John KAFTANTZIS, Plaintiff, v. D & L TRANSPORT CO., an Illinois Corporation, and Automobile Mechanics Union, Local 701, Defendants.
• Court: U.S. District Court — Northern District of Illinois

531 F. Supp. 566

John KAFTANTZIS, Plaintiff, v. D & L TRANSPORT CO., an Illinois Corporation, and Automobile Mechanics Union, Local 701, Defendants.

No. 81 C 5482.

United States District Court, N. D. Illinois, E. D.

January 29, 1982.

Brundage & Garr, Ltd., Chicago, Ill., for plaintiff.

Lori Stone, John C. Polales, Ltd., Chicago, Ill., David Mathews, Carmell, Charone & Widmer, Chicago, Ill., for defendants.

MEMORANDUM OPINION

MARSHALL, District Judge.

This case requires us to decide an important question of national labor policy: What is the appropriate statute of limitation for an action brought by an employee against his employer and union which challenges the determination at a contractually-authorized grievance proceeding that the employer has not violated its labor contract?

I

Plaintiff alleges the following. Plaintiff is an employee of defendant D & L Transport Co. ("D & L"), and a member of defendant Automobile Mechanics Union, Local 701 ("the union"). On May 23, 1980, plaintiff was laid off from his position as a mechanic at D & L's Gary, Indiana terminal, due to a downturn in D & L's business. On or about February, 1981, plaintiff learned that D & L had not laid off a less senior employee, in violation of the labor contract between D & L and the union. Plaintiff informed the union of this apparent violation of the contract.

On March 2, 1981, plaintiff was returned to his position at D & L's Gary terminal. On March 19, pursuant to the labor contract between D & L and the union, a grievance hearing was held to determine whether plaintiff's layoff was unauthorized and whether monies were owed to plaintiff as a result of the layoff. The hearing resulted in an adjudication adverse to plaintiff.

Plaintiff subsequently asked the union, which apparently had represented him at the grievance hearing, why it had not raised certain points at the hearing, including plaintiff's loss of wages and fringe benefits. Plaintiff received no response to his inquiry. Then, in April of 1981, plaintiff made a demand upon the union to initiate arbitration with D & L, pursuant to the labor contract. Again, plaintiff received no response from the union.

Plaintiff filed the instant complaint in the Circuit Court of Cook County, Illinois on August 26, 1981. The complaint proceeds on the theory that D & L violated plaintiff's contractual rights, and that the union breached its duty of fair representation to plaintiff. D & L filed a timely petition for removal to this court pursuant to 28 U.S.C. § 1441(b) (1976).¹ This court's jurisdiction rests on § 301(a) of the Labor-Management Relations Act, 29 U.S.C. § 185(a) (1976).

II

D & L has moved to dismiss the complaint on the ground that it is time-barred. Defendant contends the ninety day statute of limitations for actions to vacate arbitration awards contained in Indiana Code 34-4-2-13 (1976) applies to this action.² Plaintiff claims that the proper statute of limitation is the six month time limit for filing charges of unfair labor practices found in § 10(b) of the National Labor Relations Act, 29 U.S.C. § 160(b) (1976). Since the instant complaint was filed more than three but less than six months after the grievance adjudication, we are required to choose between these statutes.

The question of whether state arbitration statutes of limitation or § 10(b) should be applied to actions of this type has not been decided in any reported decision. In United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981), the Supreme Court held that an action under § 301 challenging a mediator's decision and a union's subsequent refusal to arbitrate the grievance should be governed by the state statute of limitation for actions seeking to vacate arbitration awards, and not the state period of limitation for actions on contracts. However, the Court reserved the question of whether § 10(b) of the NLRA should be applied in preference to the state statute, noting that the question was not properly before it. See 101 S.Ct. at 1562 n. 2. See also id. at 1565 (Blackmun, J., concurring). However, Justice Stewart did indicate that, in his view, the appropriate statute of limitation was that found in the NLRA. See id. at 1565-68 (Stewart, J., concurring in the judgment). The court of appeals for this circuit has also mentioned but not reached the question of whether § 10(b) should be applied. See Davidson v. Roadway Express, 650 F.2d 902, 904 n. 2 (7th Cir. 1981). We are apparently the first post-Mitchell court to reach this question in a published opinion.³

Congress did not specify which statute of limitation was to govern suits under § 301(a). Therefore, courts must decide which statute of limitation should govern as a matter of federal law, "which courts must fashion from the policy of our national labor laws." International Union, United Automobile, Aerospace & Agricultural Implement Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 701, 86 S.Ct. 1107, 1110, 16 L.Ed.2d 192 (1966) (quoting Textile Workers Union v. Lincoln Mills of Alabama, 353 U.S. 448, 456, 77 S.Ct. 912, 917, 1 L.Ed.2d 972 (1957)). In Hoosier Cardinal, the Court held that, for a breach of contract suit brought by a union against an employer under § 301, the appropriate statutes of limitations are the state statutes for contract actions. However, what the Court said as to why the state statute was appropriate indicates that its holding was limited.

The present suit is essentially an action for damages caused by an alleged breach of an employer's obligation embodied in a collective bargaining agreement. Whether other § 301 suits different from the present one might call for the application of other rules of timeliness we are not required to decide, and we indicate no view whatsoever on that question. 383 U.S. at 705 n. 7.

Unlike Hoosier Cardinal, the instant suit is not simply a private breach of contract action. This much was established by United Parcel:

Respondent's characterization of his action as one for "breach of contract" ignores the significance of the fact that it was brought in the District Court pursuant to § 301(a) of the LMRA and that the indispensible predicate for such an action is not a showing under traditional contract law that the discharge was a breach of the collective bargaining agreement, but instead a demonstration that the union breached its duty of fair representation. 101 S.Ct. at 1563-64.

This action is therefore very different from a simple private action on a contract. Before plaintiff may recover, he must demonstrate that the union breached its duty of fair representation. See Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 96 S.Ct. 1048, 47 L.Ed.2d 231 (1976); Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967). This duty of fair representation is itself derived from the National Labor Relations Act. See Clayton v. International Union, United Automobile, Aerospace & Agricultural Implement Workers, 451 U.S. 679, 101 S.Ct. 2088, 2095, 68 L.Ed.2d 538 (1981); International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 46, 99 S.Ct. 2121, 2124, 60 L.Ed.2d 698 n. 8 (1979); Vaca v. Sipes, 386 U.S. 171, 177, 186-87, 87 S.Ct. 903, 914-15, 17 L.Ed.2d 842 (1967). The National Labor Relations Board considers the breach of this duty an unfair labor practice under the NLRA. See, e.g., Miranda Fuel Co., 140 N.L.R.B. 181 (1962), enforcement denied sub nom. NLRB v. Miranda Fuel Co., 326 F.2d 172 (2d Cir. 1963).⁴

Therefore, it makes much more sense to view the NLRA as the appropriate statute to look to for a statute of limitation than are state arbitration statutes. Because suits such as the instant one involve rights under the NLRA, and not simply private contractual rights and duties, the NLRA and not state statutes governing private arbitration contains a more appropriate limitation period than do the state statutes. Section 10(b) of the NLRA represents a congressional judgment as to the appropriate balance between an employee's interest in vindicating his rights and the overall interest in industrial peace and attaining some measure of finality in the arbitral process. Local Lodge No. 1424 v. NLRB, 362 U.S. 411, 428-29, 80 S.Ct. 822, 832-33, 4 L.Ed.2d 832 (1960). This congressional balance, because it represents the judgment of the national legislature, is of necessity more responsive to the needs of national labor policy than are state statutes.

In § 10(b) of the NLRA, Congress established a limitations period attuned to what it viewed as the proper balance between the national interests in stable bargaining relationship and finality of private settlements, and an employee's interest in setting aside what he views as an unjust settlement under the collective bargaining system. That is precisely the issue in this case. 101 S.Ct. at 1568 (Stewart, J., concurring in the judgment).

D & L argues that § 10(b) is not applicable to this case since it involves a suit against an employer which has not committed an unfair labor practice, and therefore should not be covered by the NLRA. However, D & L itself concedes that the test is not whether a statute of limitations is by its terms applicable, but rather which statute is most appropriate given the subject matter of the instant case.⁵ In any event, the United Parcel Court quickly tossed aside such an argument, stating that the test was not whether the statute was by its terms applicable, but rather whether it was "closely analogous" to a § 301 action. See 101 S.Ct. 1563 n. 3. Because the balance struck by § 10(b) is exactly the same as the balance which must be struck in this case, it is more closely analogous than the statutes defendant relies on, which do not purport to consider competing national labor policies appropriate to the federal common law under § 301.⁶

III

D & L has also moved to dismiss the complaint on the ground that it fails to allege sufficient facts to make out a breach of the...