Harrison v. Chrysler Corp., 75-1970

• Decision Date: 28 June 1977
• Docket Number: No. 75-1970,75-1970
• Citation: 558 F.2d 1273
• Parties: 95 L.R.R.M. (BNA) 2953, 81 Lab.Cas. P 13,294 Terrence J. HARRISON, Plaintiff-Appellant, v. CHRYSLER CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1273

558 F.2d 1273

95 L.R.R.M. (BNA) 2953, 81 Lab.Cas. P 13,294

Terrence J. HARRISON, Plaintiff-Appellant, v. CHRYSLER CORPORATION, Defendant-Appellee.

No. 75-1970.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 17, 1977.

Decided June 28, 1977.

Preston T. Breunig, Indianapolis, Ind., for plaintiff-appellant.

Stephen E. Davis, Indianapolis, Ind., for defendant-appellee.

Before FAIRCHILD, Chief Judge, CASTLE, Senior Circuit Judge, and CUMMINGS, Circuit Judge.

CASTLE, Senior Circuit Judge.

Defendant Chrysler Corporation discharged Terrence J. Harrison on December 5, 1966, on the ground that he had falsified a production count. Denying the alleged falsification, Harrison sought reinstatement and back pay by resorting to a grievance procedure established under the collective bargaining agreement between Chrysler and his Union. ¹ At the conclusion of the grievance proceeding, Harrison was granted reinstatement but denied back pay. He thereafter brought this action under section 301(a) of the Labor-Management Relations Act, 29 U.S.C. § 185(a), claiming that he had been unfairly represented by the Union in the grievance proceeding. The district court granted summary judgment for Chrysler on the ground that Harrison had made no effort before bringing suit to remedy the Union's alleged unfair representation by resorting to certain intraunion appellate procedures. We reverse. The principal question addressed by the parties on appeal is whether failure to exhaust intraunion remedies may be raised by an employer as a defense to an employee's section 301(a) action. While we recognize that such failure may be a good defense under certain circumstances, we hold that the defense is not available to Chrysler here.

I.

Before his discharge, Harrison was assigned to the task of inspecting power steering units on an assembly line at Chrysler's electrical plant in Indianapolis, Indiana. Chrysler discharged Harrison because he reported that he had inspected 52 units on November 30, 1966, and Chrysler supervisors found only 26 units stamped that day with the letter "N". It is undisputed that Harrison used an inspection stamp embossed with "N" for at least part of the day in question, but Harrison asserted and still maintains that he used two inspection stamps on that day.

The Union filed a grievance protesting Harrison's discharge on December 23, 1966. The grievance procedure contained four steps in which union representatives and management representatives, at increasing levels of responsibility, tried to resolve the employee's grievance. If the participants in the last step the officers of the local union and the plant manager were unable to dispose of the matter, the Union could refer the grievance to an Appeal Board which consisted of two or three union officials, two or three management executives, and an Impartial Chairman. The Appeal Board considered the grievance in two stages. The union and management representatives first tried to settle it. If they could not, the matter was resolved by a decision of the Impartial Chairman, acting as arbitrator. Under the collective bargaining agreement, a decision of the Appeal Board was final and binding on the employee, the Union and Chrysler.

According to a deposition of Felix D. Curtis, labor relations supervisor for Chrysler, Curtis met with Harrison and Beuford C. Holt, president of the local union, shortly after the grievance was filed. Curtis offered reinstatement to Harrison if he would admit that he had falsified the production count and would consent to a 30-day disciplinary layoff. Harrison rejected the offer. Holt privately told Curtis at that time that he did not think Harrison was telling the truth.

Harrison's grievance was processed through the four initial steps of the grievance procedure and referred finally to the Appeal Board. On July 10, 1969, the union and management representatives on the Board issued a written disposition of the grievance under which Harrison was granted reinstatement with full seniority but was denied back pay. Chrysler sent Harrison a message shortly after the decision directing him to return to work on July 31, 1969, but Harrison asserts that the message did not inform him of the Appeal Board's decision. Harrison telephoned Chrysler, learned that he was being offered reinstatement without back pay, and declined the offer. Harrison states that he was first informed of the Board's decision in 1971 after he telephoned a representative of the Union to check into the progress of his grievance. The representative advised Harrison of the decision and told him that it was final. Harrison thereafter brought this action against Chrysler under section 301(a), asserting that the Union had unfairly represented him in the grievance proceeding.

Section 301(a), which provides for suits in district court for violations of collective bargaining agreements, permits suits by individual employees for wrongful discharge. Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 562, 96 S.Ct. 1048, 47 L.Ed.2d 231 (1976). However, the courts temper the exercise of their jurisdiction in such suits to give full play to procedures established in collective bargaining agreements for the settlement of employee grievances. This policy is mandated by the declaration of Congress that "(f)inal adjustment by a method agreed upon by the parties is . . . the desirable method for settlement of grievance disputes . . .." 29 U.S.C. § 173(d). To effectuate that policy, the Supreme Court has held that a suit by an employee who has sidestepped the grievance machinery provided in a collective bargaining agreement must be dismissed by the district court. Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965). The Court has also declared that, where an employee's grievance has been submitted to arbitration in accordance with a procedure chosen by the parties, the district court ordinarily may not review the merits of the arbitration award. Hines v. Anchor Motor Freight, Inc., supra at 563, 96 S.Ct. 1048.

This policy of noninterference with contractual grievance procedures, however, has limits. The adequacy of such procedures as a method of resolving employee grievances depends in essential part on the union's fair representation of the employee in his dispute with the employer. The union breaches its duty of fair representation when its conduct toward the member is "arbitrary, discriminatory, or in bad faith." Vaca v. Sipes, 386 U.S. 171, 190, 87 S.Ct. 903, 916, 17 L.Ed.2d 842 (1967). A breach of that duty relieves the employee of any "express or implied requirement that disputes be settled through contractual procedures . . .." Hines v. Anchor Motor Freight, Inc., supra at 567, 96 S.Ct. at 1058. Moreover, even if the grievance has been taken to arbitration, the union's breach removes any contractual finality of the arbitration decision "if it seriously undermines the integrity of the arbitral process." Id.

Under the express terms of the collective bargaining agreement, Harrison was bound by the final decision of the Appeal Board denying him back pay. He seeks to avoid that contractual bar to his present action by showing that the decision was tainted by unfair representation on the part of the Union. He bases his assertion of unfair representation on evidence of the following facts: (1) Holt's early statement to Curtis that he disbelieved Harrison; (2) the slow processing of his grievance, which resulted in a two-and-one-half year delay between the filing of the grievance and the Appeal Board decision; (3) the ultimate agreement of the Union's representatives on the Appeal Board not to take the grievance to arbitration but to grant Harrison the same relief he was offered shortly after the grievance was filed; and (4) the failure of the Union to notify him of the Appeal Board's decision.

Chrysler concedes that this evidence, taken by itself, creates an issue of fact on the question of whether the action of the Appeal Board's union representatives constituted or resulted from unfair representation by the Union. However, the defendant asserts that Harrison as a matter of law cannot establish the Union's unfair representation, because he never tried to remedy the alleged misconduct by resorting to certain intraunion appellate procedures established in the Union's constitution. Chrysler contends that, if Harrison had turned to these procedures, he might have obtained either one of two remedies that would have obviated this suit. One of these was a reversal of the decision by the Appeal Board's union representatives to settle his grievance without granting back pay and a reopening of the grievance proceeding to consider that claim. The other, assuming the grievance proceeding could not be reopened, was a grant out of Union funds of an amount to cover Harrison's claim for back pay. Chrysler contends that Harrison's failure to seek these remedies from the Union precludes him from establishing that the Union breached its duty of fair representation.

Harrison contends that exhaustion of intraunion remedies is not an essential element of proving unfair representation, but that failure to exhaust such remedies is a defense that is available to a union, and only the union, because of its particular relationship to the employee. Moreover, Harrison asserts that the remedies that Chrysler claims were available to him were inadequate to satisfy his grievance against Chrysler.

II.

We first turn to and reject Chrysler's argument that intraunion exhaustion is an essential element of proving unfair representation by the Union. The exhaustion requirement does not create an exception to traditional agency principles under which a union is held responsible for the authorized actions of its representatives. We have said that exhaustion of intraunion remedies is an "indispensable prerequisite" to the institution of a civil action against a union, where...