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

• Decision Date: 08 May 1975
• Docket Number: Nos. 74-1342,74-1567,s. 74-1342
• Citation: 514 F.2d 442
• Parties: 88 L.R.R.M. (BNA) 3169, 76 Lab.Cas. P 10,739 Billy G. BUTLER, Appellee, v. LOCAL UNION 823, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Appellant, and Yellow Freight System, Inc., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 442

514 F.2d 442

88 L.R.R.M. (BNA) 3169, 76 Lab.Cas. P 10,739

Billy G. BUTLER, Appellee, v. LOCAL UNION 823, INTERNATIONAL BROTHERHOOD OF TEAMSTERS CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Appellant and Yellow Freight System, Inc., Appellant.

Nos. 74-1342, 74-1567.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 12, 1974.

Decided March 18, 1975.

Rehearings and Rehearings En Banc Denied May 8, 1975.

John J. Kitchin, Kansas City, Mo., and Daniel J. Leary, Joplin, Mo., for appellant.

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

Before VAN OOSTERHOUT, Senior Circuit Judge, HEANEY, Circuit Judge, and MEREDITH, Chief District Judge. ^*

HEANEY, Circuit Judge.

Billy G. Butler brought this action against his employer, Yellow Freight System, and against Teamsters Local 823, alleging that Yellow had breached certain terms of its collective bargaining agreement and that the Local had failed to fairly represent him in the processing of his resultant grievances. The jury returned verdicts against both defendants. ¹

Butler's former employer, Watson-Wilson Transportation Systems, merged with Yellow in 1966, at a time when Butler was on layoff status. Butler was called to work for Yellow at its terminal in Baxter Springs, Kansas, in March of 1967. Yellow granted Butler a company seniority date of May 6, 1959 (his date of hire with Watson-Wilson) for fringe benefit purposes, but granted him a terminal seniority date of March 29, 1967, for bid purposes. Butler filed a grievance on July 5, 1967, claiming that he was entitled to company seniority for bid purposes under the collective bargaining agreement. ² The grievance was denied by the Missouri-Kansas Grievance Committee after an August 2, 1967, hearing. This lawsuit was commenced on June 8, 1972.

The appellants assert: (1) that the actions against the Employer and the Local were barred by the appropriate statutes of limitations; (2) that the court erred in its instructions as to the legal effect of the collective bargaining agreement; (3) that the instructions were improper and that there was not sufficient evidence on the issue of fair representation; (4) that the award of punitive damages was erroneous; and (5) that the scope of post-trial equitable relief was too broad. We affirm the actions of the trial court, except for its award of punitive damages.

I. THE STATUTE OF LIMITATIONS.

The trial court held that the action against each defendant was "based on a written contract," and that it was not necessary to determine whether the law of Missouri (the forum state) or the law of Kansas governed, since both states provided a five-year period for actions based on written contracts. See Rev.Stat.Mo. § 516.120; Kans.Stat.Ann. § 60-511. The court further held that, under the doctrine of Vaca v. Sipes, 386 U.S. 171, 186-187, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), Butler had no "fully vested" cause of action against the Employer or the Local until Butler had exhausted the grievance procedures. Since the adverse Grievance Committee decision was rendered with five years of Butler's commencement of suit, the court held that the suit was not barred. We agree that neither action was barred.

Because there is no federal statute of limitations governing § 301 breach of contract actions or governing fair representation actions, the timeliness of such suits is governed by the "appropriate" state statute of limitations. International Union v. Hoosier Cardinal Corp., 383 U.S. 696, 704-705, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966). This search for the " appropriate" statute requires determination of several sub-issues, some of which are controlled by federal law, and others by state law.

A. THE CHARACTER OF THE CAUSE OF ACTION AGAINST THE EMPLOYER.

When a plaintiff sues on a federal cause of action, the character of the action e. g., whether it is one in "tort" or in "contract" is a federal question. International Union v. Hoosier Cardinal Corp., supra at 706, 86 S.Ct. 1107; Abrams v. Carrier Corp., 434 F.2d 1234, 1251-1252 (2nd Cir. 1970), cert. denied, 401 U.S. 1009, 91 S.Ct. 1253, 28 L.Ed.2d 545 (1971). The task is to select the characterization which "best effectuates the federal policy at issue." Vanderboom v. Sexton, 422 F.2d 1233, 1237 (8th Cir.), cert. denied, 400 U.S. 852, 91 S.Ct. 47, 27 L.Ed.2d 90 (1970), quoting Charney v. Thomas, 372 F.2d 97, 100 (6th Cir. 1967). The District Court's decision to apply the written contract statute of limitations to the action against the Employer does this. The Supreme Court in International Union v. Hoosier Cardinal Corp., supra, did apply an oral contract statute of limitations to a § 301 action, but it did not purport to lay down a universal rule. ³ Here, the determination of whether or not the Employer had in fact breached the collective bargaining agreement depended entirely on an interpretation of the written documents which comprised that agreement. Thus, as in Sandobal v. Armour & Co., 429 F.2d 249 (8th Cir. 1970), the action against the Employer was properly characterized as one on a written contract.

B. THE CHARACTER OF THE CAUSE OF ACTION AGAINST THE LOCAL.

The proper characterization of the fair representation action against the Local is more difficult, and is an issue which has divided the Circuits. The First and Fifth Circuits have held that a fair representation action against a union, even when coupled with a breach of contract action against an employer, is properly characterized as a tort action, notwithstanding the fact that the disparate characterizations may result in a longer period of vulnerability for the employer than for the union. See Sanderson v. Ford Motor Co., 483 F.2d 102, 114 (5th Cir. 1973); De Arroyo v. Sindicato de Trabajadores Packinghouse, AFL-CIO, 425 F.2d 281, 286-287 (1st Cir.), cert. denied, 400 U.S. 877, 91 S.Ct. 117, 27 L.Ed.2d 114 (1970). On the other hand, the Second Circuit has held that the actions against employer and union ought to be of the same duration, and, therefore, has applied the written contract period of limitations to a fair representation action where that action was joined with a breach of contract suit against the employer. ⁴ See Abrams v. Carrier Corp., supra, 434 F.2d at 1251-1253. Accord, Dudley v. Woods Industries, Inc., Civ.No. KC-3491 (D.Kan., March 20, 1974); Buchholtz v. Swift & Co., 62 F.R.D. 581, 602-604 (D.Minn.1973) (dictum).

We acknowledge that the arguments in De Arroyo favor characterizing the unfair representation action as a tort. The gist of the action is malicious, arbitrary or fraudulent conduct injuring the employee. The action exists independent of the § 301 action against the employer, and the union need not be sued in order to sue the employer. Vaca v. Sipes, supra, 386 U.S. at 186-187, 87 S.Ct. 903. Moreover, there will be instances in which the action against the employer is really only incidental to the primary claim that the union has breached its duty of fair representation. In such instances, it may be "letting the tail wag the dog" to extend the union's period of vulnerability by tacking on an incidental § 301 claim against the employer.

Yet, despite the logic of these arguments, we conclude, as did the District Court, that the policies underlying federal labor law will be best effectuated by applying the written contract statute of limitations to the action against the Local. We reach this conclusion for the following reasons:

First, it is clear since Vaca v. Sipes that to recover against his employer, an employee will first have to establish that the union has breached its duty of fair representation. Thus, the traditional argument favoring statutes of limitations that claims based on stale evidence ought to be barred is simply not applicable. The "stale evidence" is necessary anyway. See Abrams v. Carrier Corp., supra, 434 F.2d at 1252; Buchholtz v. Swift & Co., supra, 62 F.R.D. at 603.

Second, the damages assessed against the union are inextricably tied to the breach of contract. If a court determines that the employer has not breached the contract, even if the union has breached its independent duty of fair representation, the employee will not be entitled to collect from the union damages flowing from the alleged contract breach. See Vaca v. Sipes, supra, 386 U.S. at 198, 87 S.Ct. 903.

Third, only by providing the same limitations period against both employer and union, will the court be able to fashion a remedy which properly allocates the damages between them. ⁵ In instances where the employer has acted entirely in good faith in its interpretation of the contract, it will be protected if the union has fairly represented the employee, but it will be vulnerable if the union has acted unfairly. Because the good faith employer's liability is dependent on the union's conduct, there is an inherent unfairness in a rule which would allow the union to raise a limitations defense while denying such a defense to the employer. The Supreme Court in Vaca recognized the importance of having both defendants before the court:

* * * (I)t is obvious that the courts will be compelled to pass upon whether there has been a breach of the duty of fair representation in the context of many § 301 breach-of-contract actions. If a breach of duty by the union and a breach of contract by the employer are proven, the court must fashion an appropriate remedy. Presumably, in at least some cases, the union's breach of duty will have enhanced or contributed to the employee's injury. What possible sense could there be in a rule which would permit a court that has litigated the fault of employer and union to fashion a remedy only with respect to the employer? * * *

Id. at 187, 87 S.Ct. at 915.

The Court continued:

The governing principle, then, is to apportion liability between the employer and the union according to the damage caused by the fault of each. Thus, damages attributable solely to the employer's breach of contract...