Badon v. General Motors Corp.

• Decision Date: 25 May 1982
• Docket Number: No. 80-1730,80-1730
• Citation: 679 F.2d 93,110 L.R.R.M. 2562
• Parties: 110 L.R.R.M. (BNA) 2562, 94 Lab.Cas. P 13,572 Henry M. BADON and Jessie B. Badon, Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION, and Local 659 and the International United Automobile, Aerospace, Agricultural Workers of America, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 93

679 F.2d 93

110 L.R.R.M. (BNA) 2562, 94 Lab.Cas. P 13,572

Henry M. BADON and Jessie B. Badon, Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION, and Local 659 and the International United Automobile, Aerospace Agricultural Workers of America Defendants-Appellees.

No. 80-1730.

United States Court of Appeals Sixth Circuit.

Argued March 4, 1982.

Decided May 25, 1982.

David Melkus, Flint, Mich., for plaintiffs-appellants.

David M. Davis, Marley Weiss, Alan V. Reuther, Detroit, Mich., for defendants-appellees.

Before MARTIN, Circuit Judge, PECK, Senior Circuit Judge, and PORTER, Senior District Judge. ^*

BOYCE F. MARTIN, Jr., Circuit Judge.

We have before us an interesting question involving the timeliness of Henry Badon's claims against his former employer, General Motors Corporation and his union, the United Auto Workers. In his complaint he invoked the jurisdiction of the District Court under section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, alleging that General Motors wrongfully denied him pension benefits provided by the national agreement between General Motors and the United Auto Workers. As against the union, Badon contended that it violated his rights under section 301 by failing to represent him fairly in the processing of his pension claim against the company. See Hines v. Anchor Motor Freight, 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). In addition, Badon attached a pendant state law claim against General Motors asking the court to employ its equitable powers and void the settlement of his worker's compensation claim. He charged that General Motors fraudulently induced him to agree to a settlement which the company knew would result in the loss of his disability pension.

Badon's disability stemmed from an on-the-job injury suffered in December, 1970. On October 26, 1971, he settled his worker's compensation claim with the company after a redemption hearing before a state referee. See M.C.L.A. § 418.837, M.S.A. § 17.237(837). The agreement stipulated that Badon would voluntarily quit his job. Previously, Badon had filed a claim with the company for a total and permanent disability pension. That claim was pending during the hearing on the settlement of his workmen's compensation claim. On December 3, 1971, General Motors notified Badon that his pension claim was denied. The company found the medical evidence insufficient to support the application. Thereafter the union had thirty days in which to appeal the denial on Badon's behalf. No appeal was taken and General Motors' decision became final and binding on all parties pursuant to the terms of the national contract. Ordinarily, the employee himself could then file a renewed application, but because Badon had resigned his position in the settlement of his worker's compensation claim, this avenue was foreclosed. Thus all his internal remedies against the company were lost.

Almost six years later, on October 31, 1977, Badon instituted this action. Both defendants moved for summary judgment on the section 301 claims on the ground that they were time barred. The District Court agreed and borrowed Michigan's three-year tort statute of limitations to grant the motions. M.C.L.A. § 600.5805(7), M.S.A. § 27A.5805(7). The court used the Michigan statute because the Labor Management Relations Act contains no statute of limitations.

In International Union, UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 704-05, 86 S.Ct. 1107, 1112-13, 16 L.Ed.2d 192 (1966), the Supreme Court held that federal courts should apply the most analogous state statute to section 301 suits as a matter of federal law. This court has consistently held that Michigan's tort statute governs the timeliness of section 301 actions. Echols v. Chrysler Corporation, 633 F.2d 722 (6th Cir. 1980); Gallagher v. Chrysler Corporation, 613 F.2d 167 (6th Cir.), cert. denied, 449 U.S. 841, 101 S.Ct. 119, 66 L.Ed.2d 48 (1980); Smart v. Ellis Trucking Co., 580 F.2d 215 (6th Cir.), cert. denied, 440 U.S. 958, 99 S.Ct. 1497, 59 L.Ed.2d 770 (1978). Nevertheless, Badon argues that the District Court should have distinguished those authorities and applied Michigan's six-year contract statute of limitations. M.C.L.A § 600.5807, M.S.A. § 27A.5807. He contends that because his claim involves a wrongful denial of pension benefits, Smart and its progeny, which disposed of wrongful discharge claims, are not relevant. This reasoning ignores the fact that Echols barred a section 301 pension claim as untimely under the tort statute.

The District Court also granted General Motors' motion for summary judgment on the fraud claim. Absent some duty imposed by state law requiring the company to inform Badon of all the possible consequences of his worker's compensation settlement, the court found no set of facts alleged in the pleadings, or appearing in the documents filed, which could support a claim of fraud. The redemption hearing record revealed no misrepresentations by the company. In fact, the relationship between the redemption process and the pending pension claim was discussed and Badon was, quite correctly, told that the two were independent. The District Court searched Michigan law for some obligation on the part of General Motors to inform Badon or his counsel that should the company deny the pension application and should Badon agree to resign his employment in the course of settling the worker's compensation claim, he would be left without recourse against the company if the union failed to appeal the pension denial. The court found no such affirmative duty owing to Badon. See Williams v. Benson, 3 Mich.App. 9, 141 N.W.2d 650 (1966).

We find that summary judgment was properly entered in favor of General Motors on the fraud claim. The events which operated to deny Badon his pension, i.e. the company's adverse decision and the union's failure to appeal, had not yet occurred at the time of the workmen's compensation hearing and were not completely within General Motors' control. Badon was at all times represented by counsel and has offered no proof of any misrepresentation by the company. Furthermore, the parties were not, as Badon suggests, laboring under any mutual mistake of fact. Any mistake regarding the possible consequences of the redemption was unilateral on Badon's part. In the context of the settlement, General Motors owed no fiduciary or other duty to Badon. Williams v. Benson, supra. Absent such a duty, Badon can allege no facts sufficient to support his claim of fraud. We turn now to the more difficult statute of limitations question.

After the initial briefs were filed but prior to oral argument and the filing of appellant's reply brief, the Supreme Court in United Parcel Service v. Mitchell, 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981) addressed the question before us: What state statute of limitations should be applied by federal courts to hybrid section 301-unfair representation actions? Expanding upon the rationale of Hoosier Cardinal, supra, the Court held that the most appropriate state statute was that pertaining to the vacation of arbitration awards. 451 U.S. at 62, 101 S.Ct. at 1563. Like the present case, Mitchell involved a section 301 suit by an employee against both his employer and union. The District Court employed New York's ninety-day arbitration statute ¹ and dismissed the wrongful discharge claim as untimely. On appeal, the Second Circuit reversed and applied its rule that section 301 actions were to be governed by New York's six-year contract statute. ² See Abrams v. Carrier Corp., 434 F.2d 1234 (2d Cir. 1970), cert. denied, 401 U.S. 1009, 91 S.Ct. 1253, 28 L.Ed.2d 545 (1971). Thereafter the employer alone appealed and the Supreme Court, through its analysis of the special nature of section 301 actions, rejected the position of the Second Circuit and reinstated the trial court's dismissal.

In Mitchell, use of the contract statute was inappropriate because, in the Court's opinion, section 301 suits are a matter of federal labor law. All section 301 actions hinge on allegations of breach of a collectively bargained contract. ³ Even though the plaintiff-employee's claim against the employer-wrongful discharge, denial of pension benefits, etc.-arises out of the employment contract, the merits of that claim will not be heard unless the employee successfully challenges the finality accorded the employer's decision. That finality stems from the fact that the decision against the employee will have been reached pursuant to a contractually established union-management dispute resolution process, the results of which are binding on all parties to the contract, including the employee. Circumventing that finality requires an attack on the fairness of the decision-making process. Mitchell, 451 U.S. at 61-62, 101 S.Ct. at 1563. See also Vaca v. Sipes, supra. This is the substance of an unfair representation claim against a union, ⁴ an action which the Court characterized as "more a creature of 'labor law' as it has developed since the enactment of section 301 than it is of general contract law." Id. 451 U.S. at 63, 101 S.Ct. at 1564. Because the effect of a decision for the employee in Mitchell would have been the vacating of an arbitration award won by the employer pursuant to the terms of the employment contract, the Court felt that the state statute governing such actions provided the most appropriate time limitations under Hoosier Cardinal. Id. 451 U.S. at 62, 101 S.Ct. at 1563. Initially we must consider whether Mitchell controls here, or whether, as Badon suggests, it is inapposite because, unlike the employee's claim in Mitchell, Badon's pension dispute was never submitted to arbitration or heard by any impartial panel. Furthermore, we note at this juncture that even if Mitchell is disregarded altogether, we would find Badon's claim time-barred because we are not...