BROTH. OF RY. CARMEN OF US v. Delpro Co., Civ. A. No. 82-464 MMS.

• Decision Date: 24 January 1984
• Docket Number: Civ. A. No. 82-464 MMS.
• Citation: 579 F. Supp. 1332
• Parties: BROTHERHOOD RAILWAY CARMEN OF the UNITED STATES AND CANADA, et al., Plaintiffs, v. DELPRO COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Delaware

579 F. Supp. 1332

BROTHERHOOD RAILWAY CARMEN OF the UNITED STATES AND CANADA, et al., Plaintiffs, v. DELPRO COMPANY, et al., Defendants.

Civ. A. No. 82-464 MMS.

United States District Court, D. Delaware.

January 24, 1984.

Sheldon Sandler, Young, Conaway, Stargatt & Taylor, Wilmington, Del., for plaintiffs; Edward J. Hickey, Jr., Michael S. Wolly, Thomas A. Woodley, and Joshua M. Javits, Mulholland & Hickey, Washington, D.C., of counsel.

Richard G. Elliott, Jr., and Gregory P. Williams, Richards, Layton & Finger, Wilmington, Del., for defendants.

OPINION

MURRAY M. SCHWARTZ, District Judge.

This is a class action suit brought by Brotherhood Railway Carmen of the United States and Canada ("BRC") and Earl D. Whaley, an individual employee and union member, as representatives of a class of employees who worked for Delpro Company ("Delpro") and who were furloughed in March or June 1982, and terminated in July, 1982, when Delpro closed its Bear, Delaware, facility. Plaintiffs allege that Delpro and its corporate parent, Trailer Train Company, intentionally, willfully and in bad faith violated the Railway Labor Act ("RLA"), 45 U.S.C. § 151 et seq. (1976), by failing to bargain in good faith and by unilaterally changing working conditions and terms of employment.¹ Plaintiffs seek declaratory and injunctive relief, back pay and punitive damages.

In a previous opinion, Brotherhood Railway Carmen of United States and Canada v. Delpro Co., 549 F.Supp. 780, 782 (D.Del.1982), the Court held that BRC could seek declaratory and injunctive relief other than reinstatement of terminated employees but that BRC had no standing to seek reinstatement, back pay, benefits or punitive damages on behalf of individual employees. Thus, those latter claims are now being pursued only by the class plaintiffs. In a later opinion, Brotherhood Railway Carmen of United States and Canada v. Delpro Co., 98 F.R.D. 471 (D.Del.1983), the Court certified the plaintiff class under both Rule 23(b)(2) and Rule 23(b)(3). Reinstatement, back pay and benefits, the Court held, could be brought under Rule 23(b)(2), but the punitive damage issue, the Court held, could be maintained only under Rule 23(b)(3). Id. at 478. The Court ordered plaintiffs to submit a proposed form of notice on the punitive damage aspect of the case as required in 23(b)(3) class actions. See Fed.R.Civ.P. 23(c)(2).

Prior to class certification, neither defendants, plaintiffs nor the Court questioned the propriety of punitive damages under the RLA. This issue was raised for the first time when, soon after the Court's certification decision issued, defendants moved to dismiss the class plaintiffs' punitive damage claim. That motion is now before the Court.²

Discussion

The class plaintiffs' punitive damage claim faces considerable precedential obstacles. Although one decision in the Southern District of New York has held punitive damages recoverable under the RLA against an employer, see Brown v. World Airways, Inc., 539 F.Supp. 179 (S.D.N.Y. 1982), that case is in possible conflict with an earlier decision in this District. See Brady v. Trans World Airlines, Inc., 196 F.Supp. 504 (D.Del.1961), aff'd on later appeal, 401 F.2d 87 (3d Cir.1968), cert. denied, 393 U.S. 1048, 89 S.Ct. 684, 21 L.Ed.2d 691 (1969). Moreover, the federal courts have disallowed punitive damage awards under virtually every federal labor statute against both unions and employers. See e.g., International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 99 S.Ct. 2121, 60 L.Ed.2d 698 (1979) (no punitive damages against union for breach of duty of fair representation under RLA); Republic Steel Corp. v. NLRB, 311 U.S. 7, 61 S.Ct. 77, 85 L.Ed. 6 (1940) (no punitive damages against employer for unfair labor practice under National Labor Relations Act); Local 127, United Shoe Workers v. Brooks Shoe Manufacturing Co., 298 F.2d 277 (3d Cir.1962) (no punitive damages against employer for breach of collective bargaining agreement under Labor Management Relations Act); Dian v. United Steelworkers of America, 486 F.Supp. 700 (E.D.Pa.1980) (no punitive damages under Labor Management Relations Act against union for breach of duty of fair representation); Delaware Coca-Cola Bottling Co. v. General Teamsters Local Union 326, 474 F.Supp. 777 (D.Del.1979), rev'd on other grounds, 624 F.2d 1182 (3d Cir.1980) (no punitive damages under Labor Management Relations Act against union for breach of collective bargaining agreement); see generally Deboles v. Trans World Airlines, 552 F.2d 1005, 1019 (3d Cir.), cert. denied, 434 U.S. 837, 98 S.Ct. 126, 54 L.Ed.2d 98 (1977) (discussing case law under various federal labor statutes denying punitive damage awards); but see International Brotherhood of Electrical Workers v. Foust, 442 U.S. at 59, 99 S.Ct. at 2131 (Blackmun, J., concurring) (circuit courts of appeals have awarded punitive damages against unions for violations of Landrum-Griffin Act, 29 U.S.C. §§ 411, 412).³ Because the Court is not convinced it should deviate from this line of cases, it will grant defendants' motion to dismiss plaintiffs' punitive damage claim.

Defendants place primary reliance on this District's opinion in Brady v. Trans World Airlines, Inc. Brady sued both his union and his employer for violations of the RLA. The union moved to strike Brady's demand for a jury trial. "Intermixed" with this jury trial issue, Judge Wright explained, was the question of whether the plaintiff was entitled to punitive damages. 196 F.Supp. at 505. If punitive damages were available, plaintiff would be entitled to a jury trial because an equity court, without express statutory authority, would be unable to award punitive damages itself. Id. at 505-506. Such damages, the Court held, were unavailable. Judge Wright explained that punitive damages could not be recovered under the plaintiff's first statutory cause of action, brought under the RLA's union security clause provision, 45 U.S.C. § 152 (Eleventh), because the Supreme Court had held in United Brotherhood of Carpenters and Joiners v. NLRB, 365 U.S. 651, 81 S.Ct. 875, 6 L.Ed.2d 1 (1961), that the corresponding union security clause provisions of the Labor Management Relations Act did not permit punitive damages. Judge Wright explained that:

the regulation of economic relations between labor and management is an exceedingly delicate matter, and this Court is unwilling to employ the crude device of punitive damages as a remedy in causes founded on a detailed and pervasive federal statutory scheme without express authorization from Congress.

Id. at 506.⁴

Although this broad language in Brady suggests that all punitive damage awards are barred under the RLA because of Congress' failure to provide explicitly for their recovery, it is uncertain whether Judge Wright's holding reached the defendant employer. Only the union moved to strike the plaintiff's jury demand, not the employer. This Court, therefore, cannot rely on Brady as conclusive precedent.

A fresh look at the question of punitive damages is, in any event, demanded by International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 99 S.Ct. 2121, 60 L.Ed.2d 698. There the Supreme Court held that punitive damages for a union's breach of its duty of fair representation may not be recovered under the RLA. The Supreme Court sought in Foust to determine "whether awarding punitive damages would comport with ... national labor policy." Id. at 48, 99 S.Ct. at 2125. Courts must "implement a remedial scheme," the Supreme Court explained, "that will best effectuate the purposes of the Railway Labor Act, recognizing that the overarching legislative goal is to facilitate collective bargaining and to achieve industrial peace." Id. at 47, 99 S.Ct. at 2125.

Punitive damage awards against unions for unfair representation, the Court concluded, would not advance national labor policy. Offsetting potential benefits of punitive awards, the Court explained, "is the possibility that punitive awards could impair the financial stability of unions and unsettle the careful balance of individual and collective interests which the Supreme Court had previously articulated in the unfair representation area." 442 U.S. at 48, 99 S.Ct. at 2126. Unpredictable punitive awards "could deplete union treasuries, thereby impairing the effectiveness of unions as collective-bargaining agents." Id. at 50-51, 99 S.Ct. at 2127. In addition, the threat of large punitive awards might impinge on union discretion in handling grievances by forcing unions "to process frivolous claims or resist fair settlements," id. at 52, 99 S.Ct. at 2127, against the interests of its members. Furthermore, under the National Labor Relations Act and Labor Management Relations Act, the Court noted, Supreme Court decisions have refused to permit punitive damage awards because of the "essentially remedial" goals of those acts. Id. "Like the NLRA," the Court explained, "the Railway Labor Act is essentially remedial in purpose." Id.

The Foust court directed its analysis to suits against unions. That analysis is not immediately transferable to actions against employers. Two of Foust's policy arguments in particular have less import in suits against management. One is Foust's concern with the economic hardship wrought by punitive awards. The other is the Foust Court's fear that collective interests would be sacrificed for those of the individual. Employers, with their larger treasuries and their ability to pass costs on to customers, would under most circumstances be able to absorb or deflect the financial impact of a sizable punitive award. In contrast, a large punitive award against a labor union could easily cripple its financial health. In addition, awards against employers would rarely compromise the collective interest. It is conceivable that an employer under threat of a punitive damage suit by an individual employee might grant special treatment to that employee...