Bond v. Local Union 823, Intern. Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America

• Decision Date: 04 August 1975
• Docket Number: No. 74-1482,74-1482
• Citation: 521 F.2d 5
• Parties: 89 L.R.R.M. (BNA) 3153, 77 Lab.Cas. P 11,036 Franklin E. BOND, Appellee, v. LOCAL UNION 823, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 5

521 F.2d 5

89 L.R.R.M. (BNA) 3153, 77 Lab.Cas. P 11,036

Franklin E. BOND, Appellee, v. LOCAL UNION 823, INTERNATIONAL BROTHERHOOD OF TEAMSTERS CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Appellant.

No. 74-1482.

United States Court of Appeals Eighth Circuit.

Submitted Feb. 10, 1975.

Decided Aug. 4, 1975.

Daniel J. Leary, Joplin, Mo., for appellant.

John A. Biersmith, Kansas City, Mo., for appellee.

Before MATTHES, Senior Circuit Judge, HEANEY and WEBSTER, Circuit Judges.

WEBSTER, Circuit Judge.

This appeal presents for our review an award of actual and punitive damages in favor of an employee against his union for breach of its duty of fair representation. See Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967).

Franklin E. Bond, plaintiff below, had been employed as an over-the-road driver by Red Arrow Transportation Company, which was party to a collective bargaining agreement with Teamsters Local 823, of which Bond was a member. In July 1968, Red Arrow ceased operations and filed a petition in bankruptcy. Bond thereafter went to work for Tri-State Motor Freight, Inc. During the course of Red Arrow's bankruptcy proceedings, Yellow Freight System, Inc., defendant below, purchased the operating rights of Red Arrow, subject to the approval of the Interstate Commerce Commission. Following the granting of such approval by the I.C.C., Yellow "tacked on" Red Arrow's permits to its own at their common points. Yellow also hired several new employees not previously associated with Red Arrow.

After the "tack on," Bond approached Kitts, the President and Business Representative of Local 823, concerning employment at Yellow. When the union persuaded Yellow to employ Bond and four other drivers from Red Arrow, Bond was hired at the bottom of Yellow's seniority list, below those new employees hired after the "tack on." Bond thereupon attempted to present a grievance through Local 823, claiming a right to greater seniority under the terms of the collective bargaining agreement between Yellow and Local 823. The union, however, in accordance with its established procedures, elected to pursue the issue on behalf of Fred Renier, another employee similarly situated, and did not submit Bond's grievance to the Grievance Committee. The Grievance Committee denied Renier's grievance following a hearing to which Bond had not been invited. When no further appeals of that decision were processed, Bond filed his own grievance in which he sought the fringe benefits to which he felt entitled by virtue of his claimed seniority. He was never given an opportunity to appear before the Grievance Committee; his claim was denied and he was told that the decision could not be appealed. Bond then initiated this action pursuant to § 301 of the National Labor-Management Relations Act, 29 U.S.C. § 185.

In the first count of his complaint, Bond sought compensatory damages against Yellow for breach of contract and against the union for failure to represent him fairly in connection with his grievance. In the second, he named Yellow and the union as members of a conspiracy and sought damages from both for the resulting deprivation of seniority benefits. The third count of the complaint asked for the recovery of punitive damages from both defendants.

Following a jury trial, the District Court ¹ directed a verdict in favor of both defendants on the conspiracy count. The other counts were submitted to the jury, which awarded Bond $10,500 in actual and $22,500 in punitive damages against the union; the jury assessed the same amounts against Yellow. Following post-trial motions by both defendants, Judge Becker entered a judgment notwithstanding the verdict in favor of Yellow on the issue of punitive damages, but he let stand the other portions of the jury's award. ²

The union has taken this appeal, challenging the trial court's instructions to the jury, the submission of the issue of fair representation to the jury, the award of punitive damages, and the trial judge's restriction of Kitts' testimony. With the exception of the assessment of punitive damages against the union, for which we find inadequate factual support in the record, we affirm the judgment below.

I. THE INSTRUCTION ON THE CONTRACT PROVISIONS

The collective bargaining agreement between Yellow and Local 823 contained, in addition to a general clause recognizing the seniority rights of employees, ³ specific seniority provisions designed to apply "(i)n the event that the Employer absorbs the business of another private, contract or common carrier, or is a party to a merger of lines":

(2) If, in the type of transaction described above, one of the Companies is insolvent at the time of the transaction, then the employees of the insolvent Company will go to the bottom of the Master Seniority List. The test of whether a Company is solvent or insolvent is governed entirely by whether bankruptcy, receivership, composition for the benefit of creditors, reorganization, or similar proceedings are pending in the state or federal court. If such proceedings are pending, the Company is considered insolvent for the purpose of this rule.

(3) If the transaction involved constitutes merely a purchase of permits or rights by one Carrier from another Carrier, without the purchase or acquisition of equipment, terminals, or business, the employees of the Company selling the permits shall have no seniority rights at all, but shall be offered opportunity for employment at the bottom of the seniority list of the Company purchasing the permits. If such employees are hired they shall be given seniority credit for fringe benefits only.

Throughout this litigation, it has been the defendants' position that these contract provisions were inapplicable since Yellow had not absorbed Red Arrow's business but had, instead, simply purchased its operating licenses following the total cessation of Red Arrow's operations and the ensuing bankruptcy proceedings. The issue was as important to the union's case as it was to Yellow's because, but for the underlying breach of the collective bargaining agreement by Yellow, the question of unfair representation would not have arisen.

In this appeal, the union contends that the jury was erroneously charged on the application of the contract provisions. The challenged instruction explained that:

(the) agreements provided in material parts that if Yellow Freight System, Inc., a solvent carrier, absorbed the business of a bankrupt carrier, Yellow Freight System, Inc., was obligated to grant seniority to the former employees of Red Arrow Transportation Company, Inc., at the bottom of the existing Yellow Freight Master Seniority List. And this agreement is applicable even though only the operating rights of Red Arrow Transportation Company, Inc., were purchased by Yellow Freight.

Therefore, if you find that Yellow Freight System, Inc., in 1969, absorbed the business of Red Arrow Transportation Company, Inc., by purchase and exercise of the operating rights of Red Arrow Transportation Company, Inc., from the trustee in bankruptcy, and you further find that Yellow Freight System, Inc., failed to grant plaintiff seniority at the bottom of its pre-existing Master Seniority List, when it absorbed the business of Red Arrow Transportation Co., Inc., then you shall find the agreements aforesaid breached. And if you find such a breach and that the plaintiff suffered monetary loss as a direct result thereof, you may find that the plaintiff was damaged within the meaning of these instructions.

We find no error in the instruction, for the question of absorption, stressed by appellant, was properly left to the jury to decide as an issue of fact. Thus, the instruction was carefully worded to inform the jury that the special seniority provisions were to apply Only if the jury first found that Yellow had absorbed Red Arrow's business. Contrary to appellant's contentions, the contract was not ambiguous and Judge Becker correctly interpreted it for the jury. See Butler v. Teamsters Local 823, 514 F.2d 442, 452 (8th Cir. 1975).

Appellant's alternative contention that Judge Becker gave Bond the benefit of both the "insolvency" rule (subsection (2) quoted Supra ) and the "purchase of permits" rule (subsection (3) quoted Supra ) likewise lacks merit. Both provisions unequivocally require that, following absorption, the employees of the affected company be placed at the bottom of Yellow's existing seniority list. The instruction fairly tracks the relevant provisions of the collective bargaining agreement and we discern no error here.

II. DUTY OF FAIR REPRESENTATION

Appellant asserts that there was insufficient evidence as a matter of law to submit to the jury the alleged breach of its duty of fair representation and that instruction to the jury on that duty did not accurately reflect the law. We disagree.

The duty of a union to represent fairly the employees for whom it is the exclusive bargaining agent is a duty imposed by federal law. Vaca v. Sipes, supra, 386 U.S. at 177, 87 S.Ct. at 909-10; See Feller, A General Theory of the Collective Bargaining Agreement, 61 Calif.L.Rev. 663, 702 (1973). "Under (the fair representation) doctrine, the exclusive agent's statutory authority to represent all members of a designated unit includes a statutory obligation to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct." Vaca v. Sipes, supra, 386 U.S. at 177, 87 S.Ct. at 910. Thus, a breach of that duty "occurs only when a union's conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith." Vaca v. Sipes, supra, 386 U.S. at 190, 87 S.Ct. at 916; See Butler v. Teamsters Local 823, supra, 514 F.2d at 453-54; Augspurger v. Brotherhood of Locomotive Engineers, 510 F.2d 853, 859 (8th Cir. 1975); Richardson v....