Cox v. Guy F. Atkinson Co.

• Decision Date: 30 March 1979
• Docket Number: Civ. No. 76-301.
• Parties: Walter B. COX, Plaintiff, v. GUY F. ATKINSON COMPANY, a corporation, Defendant.
• Court: U.S. District Court — Northern District of Indiana

468 F. Supp. 677

Walter B. COX, Plaintiff, v. GUY F. ATKINSON COMPANY, a corporation, Defendant.

Civ. No. 76-301.

United States District Court, N. D. Indiana, Hammond Division.

March 30, 1979.

Bernard M. Tetek, Gary, Ind., William G. Conover, Conover, Claudon & Chew, Valparaiso, Ind., for plaintiff.

Frederick H. Link and David C. Jensen, Hammond, Ind., Stuart S. Ball, H. Blair White, Thomas F. Ryan, Sidley & Austin, Chicago, Ill., for defendant.

MEMORANDUM DECISION

McNAGNY, District Judge.

I. Jurisdiction.

This action was initiated on September 27, 1976 in the Circuit Court of Porter County, Indiana. It is with this Court as a result of defendant's Petition for Removal, filed October 21, 1976, in which defendant availed itself of 28 U.S.C. § 1441, stating in support thereof that this "is a civil action wherein the matter in controversy exceeds the sum or value of $10,000 . . . and is between citizens of different states." Plaintiff did not contest removal. It thus appears that the Court's 28 U.S.C. § 1332 jurisdiction is here invoked.

II. Background.

Plaintiff Walter B. Cox ("Cox") was employed by Walsh Construction Company ("Walsh"), a heavy construction firm, from May of 1963 until June 12, 1972, at which time the complaint alleges Cox was discharged "without good cause." Walsh has been a subsidiary or operating division of defendant Guy F. Atkinson Company ("Atkinson") since 1966.

Cox was employed by Walsh while Walsh was the general contractor for the construction of a "fully integrated" steel mill at Burns Harbor, Porter County, Indiana for Bethlehem Steel Corporation ("Burns Harbor Project"). Cox began his employment with Walsh as a mechanic. In November of 1963, Cox became the master mechanic at the Burns Harbor Project, i. e., the person in charge of all mechanics and heavy equipment operators employed by Walsh through Local 150 of the International Union of Operating Engineers ("Union"). Plaintiff was a member of the Union during the term of his employment with Walsh, apparently retaining membership to this day.

The complaint alleges that during plaintiff's tenure, it was Walsh policy and practice to perform gratuitous personal services for the supervisory project personnel of those companies for which facilities were to be, or were being, erected. This policy and practice was referred to internally as "government jobs."¹ The complaint states:

"In furtherance of this policy, Walsh acting through its chairman of the board of directors and other officers ordered its employees at the Burns Harbor project to implement that policy by performing gratuitous personal services requested by Bethlehem supervisory construction personnel and providing such other services necessary to promote project harmony."

Cox alleges that in 1966 he was ordered by "his superiors" to participate in the implementation of this "policy" at the Burns Harbor Project. He claims to have initially refused the proposition, but submitted to the order when he was told that failure to comply would result in termination, an eventuality Cox could not financially afford. The complaint further states:

"Plaintiff was then given money by Tom Walsh, Jr., chairman of the board of directors of Walsh, and disbursed such money to Bethlehem supervisory construction personnel, and other interested persons, in accordance with the directions of his superiors at the Burns Harbor project, including Thomas J. Murphy, Jr., Walsh project manager, Elmer R. Haney, assistant project manager, and William H. Weaver, general constructions superintendent."

In 1972, the Internal Revenue Service notified Atkinson that an investigation was being conducted of certain unnamed Walsh employees working at the Burns Harbor Project. Subsequent to this notification, Cox was discharged. The complaint maintains that Cox was discharged because Atkinson, alerted to the IRS investigation, "sought to protect its own interests by denying any knowledge of the `government jobs' and offering the plaintiff as one of its `scapegoats.'"²

The complaint further states:

"That by reason of plaintiff following his superiors' orders, plaintiff has suffered a loss of wages by virtue of his discharge, he has incurred expense in defending himself against both civil actions brought by the Internal Revenue Service and criminal actions brought by the Department of Justice, that he has been further forced to defend himself in other litigation as well, that he has been compelled to devote substantial amounts of his own time appearing in various administrative and court hearings, and suffered the indignity of serving jail time."

Plaintiff prays judgment for compensatory and exemplary damages in the sum of Six Million Dollars.

III. Discussion.

On August 11, 1977, defendant tendered a Motion for Summary Judgment, stating as grounds that: (1) plaintiff's claims for breach of his employment contract must be dismissed because of plaintiff's failure to exhaust the grievance-arbitration procedure in an applicable collective bargaining agreement; (2) plaintiff's claims for breach of his employment contract must be dismissed because he was discharged for cause. Additionally, defendant's Motion states that: (1) plaintiff's claim for damages must be dismissed insofar as it pertains to his having committed tax evasion; (2) plaintiff's claim for exemplary damages must be dismissed.

A. Exhaustion.

It is clear from the complaint and from plaintiff's deposition testimony that plaintiff has endeavored to state a claim for wrongful discharge. It is equally undisputed that, as an employee of Walsh and as a member of Local No. 150 of the International Union of Operating Engineers, plaintiff's wages, hours, and terms and conditions of employment were governed by the collective bargaining agreement in effect between Walsh and the Union. Article IV, Section 22 of this agreement provided that employees covered by the agreement "may be discharged for cause." Article X of the agreement sets forth a grievance-arbitration procedure,³ to be followed "whenever any difference or dispute shall arise as to interpretation or application of the terms of this agreement."

Defendant argues that this Court lacks jurisdiction over this action because of plaintiff's failure to exhaust this grievance-arbitration procedure. Cox did utilize the procedure to a limited extent. Shortly after discharge, Cox spoke with various Union officials. His initial complaint was that Walsh had not given him a statement of the reasons for his discharge. On or about July 7, 1972, he met with Darcey Best, a Union business agent, and filed a written grievance, requesting "a detailed statement of charges and specifications against him." As provided in the first step of the collective bargaining agreement, Best investigated plaintiff's grievance and spoke with a representative of Walsh. Best returned from the meeting with a paper setting forth a reason for plaintiff's termination. Cox never requested that a grievance be processed into the remaining grievance procedure steps, and did not attempt to have the dispute submitted to arbitration.

Defendant supports his first argument by reference to Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), in which the Supreme Court stated:

"If the wrongfully discharged employee himself resorts to the court before the grievance procedure has been fully exhausted, the employer may well defend on the ground that the exclusive remedies provided by such a contract have not been exhausted. Since the employee's claim is based upon breach of the collective bargaining agreement, he is bound by terms of that agreement which govern the manner in which contractual rights may be enforced." Id. at 184, 87 S.Ct. at 914.⁴

See also, e. g.: Baldini v. Local U. No. 1095, Intern. U., Etc., 581 F.2d 145 (7th Cir. 1978); Papadopoulas v. Sheraton Park Hotel, 410 F.Supp. 217 (D.D.C.1976); American Postal Workers Union v. United States Postal Service, 396 F.Supp. 608 (N.D.Tex. 1975).

Plaintiff responds by pointing to yet another provision of the agreement, Article XII, asserting this relieves him of the "exhaustion" requirement:

"No employee covered by this Agreement shall be required to exhaust the remedies provided in this Article as a condition precedent to the commencement by him of a civil or other action for wages or money claimed due the employee from the Employer."

It seems unlikely that this clause contemplates the relief plaintiff seeks to derive from it.

Doubts as to the applicability of grievance-arbitration procedures are to be resolved in favor of coverage. See, e. g., United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-583, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); Republic Steel Corp. v. Maddox, 379 U.S. 650, 659, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965); Local 804, International Brotherhood of Teamsters v. United Parcel Service, Inc., 86 LRRM 2294, 2295 (S.D.N.Y.1974); Local No. 1434, I. B. E. W. v. E. I. duPont de Nemours & Co., 350 F.Supp. 462, 466 (E.D.Va.1972); Air Line Pilots Assn. International v. Capitol Airways, Inc., 64 LRRM 2569, 2571 (M.D.Tenn.1966).

Here the grievance-arbitration clause is quite broad: "Any difference or dispute that shall arise as to interpretation or application of the terms of this Agreement . . . shall be resolved by the grievance-arbitration procedure." Excluded from required exhaustion are suits "for wages or money claimed due the employee from the employer." As the Second Circuit observed in ITT World Communications, Inc. v. Communications Workers, 422 F.2d 77, 82 (2nd Cir. 1970): "The combination of a broad arbitration clause and vague . . . exclusionary language has usually . . . led to arbitration."

But no genuine ambiguity surfaces here. It seems clear that this exclusionary language was intended to exempt from the exhaustion requirement situations where an employee believed his employer owned him wages for work he had performed....