Central Operating Co. v. Utility Workers of America

• Decision Date: 24 January 1974
• Docket Number: No. 73-1714.,73-1714.
• Citation: 491 F.2d 245
• Parties: CENTRAL OPERATING COMPANY, Appellee, v. UTILITY WORKERS OF AMERICA, AFL-CIO, et al., Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

491 F.2d 245 (1974)

CENTRAL OPERATING COMPANY, Appellee, v. UTILITY WORKERS OF AMERICA, AFL-CIO, et al., Appellants.

No. 73-1714.

United States Court of Appeals, Fourth Circuit.

Argued November 7, 1973.

Decided January 24, 1974.

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Irwin Geller, New York City (Donald F. Menagh, New York City, and Musgrave & Musgrave, Point Pleasant, W. Va., on brief) for appellants.

William B. Poff, Roanoke, Va., (Woods, Rogers, Muse, Walker & Thornton, Roanoke, Va., E. Dennis White, Jr., Vinson, Meek & White, Huntington, W. Va., on brief) for appellee.

Before CLARK, Associate Justice,^* and WINTER and RUSSELL, Circuit Judges.

WINTER, Circuit Judge:

Plaintiff, the owner and operator of an electric power plant, sued the local union, the national union and certain individuals, who were plaintiff's employees and officers of the local union, alleging a violation of the "no strike" provision of the collective bargaining agreement to which plaintiff and the union defendants were parties and claiming injunctive relief and damages.¹ It obtained a default judgment against all defendants. All defendants later moved to have the default judgment set aside; and from the denial of their motions, all defendants appeal.

We agree with the national union that the district court lacked in personam jurisdiction over it. We find no basis on which to disturb the judgment against the local union. Plaintiff has suggested that if the default judgment against the local union is not disturbed, the judgments against the individual defendants may be set aside or vacated. We reverse as to the national union, affirm as to the local union and vacate the judgments against the individual defendants, remanding the case to the district court for dismissal of the complaint against individual defendants with prejudice.

I.

The collective bargaining agreement of July 19, 1971 between the parties contained a "no strike" provision. In May of 1972, a dispute arose concerning the overtime call procedures in effect at plaintiff's Philip Sporn plant in Mason County, West Virginia. This dispute culminated in a work stoppage that began in the late evening of May 27, 1972, and continued into the next day. It is undisputed that this work stoppage violated the "no strike" clause of the collective bargaining agreement, but each defendant denies responsibility for the breach.

On May 28, 1972, while the stoppage was still in progress, plaintiff filed its complaint in this action. It alleged that defendants had threatened to call a work stoppage if plaintiff did not act favorably on the overtime grievance and that they had made good on such threat on May 27th. Defendants have, throughout the course of this litigation, maintained that they never threatened a work stoppage, were not responsible for such stoppage as occurred, and, indeed, actively sought to prevent it. The complaint prayed for a temporary restraining order against continuance of the work stoppage pending a hearing and compensatory and punitive damages.

On May 28, 1972, the district judge ordered that defendants appear on June 1, 1972, to show cause why a preliminary injunction against picketing and striking at the Philip Sporn plant should not issue. In the interim, defendants, their agents and members were temporarily restrained from those activities. Copies of the complaint, summons, and temporary restraining order were personally served upon the local union and upon five of the individual defendants within the State of West Virginia. Service upon the national union was obtained by delivering copies of the complaint, summons and temporary restraining order to Mr. Potter, a national staff representative of the national union, at his home in Girard, Ohio, on June 10, 1972.

When the existence of the temporary restraining order became known to the employees participating in the work stoppage at the Philip Sporn plant, they discontinued picketing and returned to work. As a result of plaintiff's successive ex parte applications, the hearing on the temporary injunction set for June 1, 1972, was continued by orders entered on June 1, 1972, June 12, 1972, June 22, 1972, June 30, 1972, and July 11, 1972. Defendants did not appear on any of the dates set for the continued hearing; and during this period, no attorney entered an appearance in behalf of any of the defendants. No answer to the complaint was ever filed despite the fact that such an answer was due by June 22, 1972, according to the terms of the summons. The district court's final continuance order of July 11, 1972, set the date of the continued hearing for July 20, 1972, and also provided that "the Defendants shall file it's sic answer or any other responsive pleading prior to the aforesaid date."

When none of the defendants appeared at the hearing on July 20, 1972, and no answer or other responsive pleading had been filed, plaintiff moved for judgment by default. The district court granted the motion, and after having heard plaintiff's evidence on the damages it suffered as a result of the work stoppage, entered a judgment against all defendants, jointly and severally, in the amount of $13,701.38.

Between July 25, 1972 and August 4, 1972, copies of the district court's judgment order were served upon all defendants. On November 22, 1972, all defendants appeared in the proceedings, moved to set aside the default judgment, and tendered an answer to the original complaint. As grounds for the motion, the national union urged that the judgment against it was void because it had never been subjected to the district court's in personam jurisdiction by service of process in a manner authorized by law. The individual defendants asserted that the judgment was void as to them because the district court lacked subject matter jurisdiction over the claim against them individually for breach of contract. The local union and the individual defendants both urged that they never received notice of the continuance orders in this action and that the entry of default under such circumstances deprived them of due process of law, thereby rendering the judgment void. Finally, the local union and the individual defendants asserted that they ought to be relieved of the judgment pursuant to Rule 60(b)(1) F.R.Civ.P. on the ground that entry of default was due to mistake and excusable neglect on their part and that they had a meritorious defense to the claim.

After an evidentiary hearing, the district court, by memorandum order, denied defendants' motion. The court was satisfied that all the defendants had been properly served, and that it had subject matter jurisdiction under 29 U. S.C. § 185(a) over all the claims in the suit. The court denied relief from judgment under Rule 60(b)(1) because of defendants' "inexcusable dereliction" in failing to seek relief from judgment until almost four months after receiving notification.² As a further ground for denying the motion to vacate, the district court said that "defendants have failed to carry their burden of showing they have a meritorious defense to the claim."

II.

It is axiomatic that a federal court cannot acquire in personam jurisdiction over a defendant who does not voluntarily appear unless he is served with process in a manner authorized by federal statute or rule. Robertson v. Railroad Labor Bd., 268 U.S. 619, 622, 45 S.Ct. 621, 69 L.Ed. 1119 (1925). We therefore turn to the national union's contentions that because extraterritorial service of the summons and complaint upon its agent in Ohio was not authorized by any statute or rule,³ in personam jurisdiction over the national union was not acquired, and the judgment against the national union was void.

Rule 4(f), F.R.Civ.P., provides that the process of the district court may be served beyond the territorial limits of the state in which the court sits when such service is authorized by statute of the United States or the federal rules of civil procedure. Plaintiff contends that 29 U.S.C. § 185(d) authorizes service of process upon unions, named as defendants in suits within the grant of subject matter jurisdiction contained in § 185(a), to be effected anywhere in the United States.⁴ Section 185(d) provides that:

The service of summons, subpoena, or other legal process of any court of the United States upon an officer or agent of a labor organization, in his capacity as such, shall constitute service upon the labor organization.

Plaintiff claims that the phrase "any court" manifests Congress' intention to permit a United States court in any district to summon a union defendant by service effected in any other district.

We find plaintiff's reading of § 185(d) a strained one. The section, on its face, appears to be concerned with the proper agent for receipt of process upon the union and not the locale of service, and this reading is supported by the legislative history of the Labor Management Relations Act. Section 185 was designed to provide a federal forum for the adjudication of disputes between unions and employers arising out of violations of collective bargaining agreements. Prior to the enactment of § 185(d), a major obstacle to such suits had been the status of unions under state law as unincorporated associations. As such, they lacked capacity to sue and be sued and, concomitantly, could not be summoned before the court by service of process upon their agents. We believe that Congress enacted § 185(d) in order to remove such obstacles by providing that the service of summons upon an agent of a union would be adequate to subject such union to the jurisdiction of the federal court issuing the summons. Plaintiff has not pointed to any legislative history suggesting that Congress also intended to authorize the execution of such summons beyond the borders of the state in which the issuing court sits, and we have found none.

Nor are we persuaded that, in order to effectuate the general congressional purpose to subject unions to suit...