Hines v. Anchor Motor Freight, Inc

• Decision Date: 03 March 1976
• Docket Number: No. 74-1025,74-1025
• Citation: 424 U.S. 554,47 L.Ed.2d 231,96 S.Ct. 1048
• Parties: Charles A. HINES, etc., et al., Petitioners, v. ANCHOR MOTOR FREIGHT, INC., et al
• Court: U.S. Supreme Court

424 U.S. 554

96 S.Ct. 1048

47 L.Ed.2d 231

Charles A. HINES, etc., et al., Petitioners,

v ANCHOR MOTOR FREIGHT, INC., et al.

No. 74-1025.

Argued Nov. 12, 1975.

Decided March 3, 1976.

Syllabus

Petitioner employees were discharged by respondent employer for alleged dishonesty. Respondent union, claiming that petitioners were innocent, opposed the discharges, and pursuant to the collective-bargaining contract the matter was submitted to an arbitration committee, which upheld the discharges. The collective-bargaining contract provided that a decision by the arbitration committee would be final and binding on all parties, including the employees affected. However, when subsequent information indicated that the charges of dishonesty might have been false, petitioners brought a wrongful-discharge suit against the employer and union under § 301 of the Labor Management Relations Act, alleging that the falsity of the charges could have been discovered with a minimum of investigation, and that the union had made no effort to ascertain the truth and thereby had violated its duty of fair representation by arbitrarily and in bad faith depriving petitioners of their employment and permitting their discharge without sufficient proof. The District Court granted summary judgment for respondents on the ground that the arbitration committee's decision was final and binding absent a showing of bad faith, arbitrariness, or perfunctoriness on the union's part. Concluding that there were sufficient facts from which to infer bad faith or arbitrary conduct on the union's part and that petitioners should have been afforded an opportunity to prove their charges, the Court of Appeals reversed the District Court to that extent, but affirmed the judgment in the employer's favor on the ground that the finality provision of the collective-bargaining contract had to be observed unless evidence showed misconduct by the employer or a conspiracy between it and the union. Held : It was improper to dismiss petitioners' suit against respondent employer, since if petitioners prove an erroneous discharge and respondent union's breach of duty of fair representation tainting the arbitration committee's decision, they are entitled to an appro- priate remedy against the employer as well as the union. Pp. 561-572.

(a) A union's breach of duty relieves the employee of an express or implied requirement that disputes be settled through contractual procedures and, if it seriously undermines the integrity of the arbitral process, also removes the bar of the finality provision of the contract. Pp. 567-569.

(b) Respondent employer, if the charges of dishonesty were in error, played its part in precipitating the dispute, and though the employer may not have knowingly or negligently relied on false evidence in discharging petitioners and may have prevailed before the arbitration committee after presenting its case by fair procedures, petitioners should not be foreclosed from their § 301 remedy otherwise available against the employer if the contractual processes have been seriously flawed by the union's breach of its duty. Pp. 569-570.

(c) While the grievance processes cannot be expected to be error-free, enforcement of the finality provision where the arbitrator has erred is conditioned upon the union's having satisfied its statutory duty fairly to represent the employees in connection with arbitration proceedings; otherwise, a wrongfully discharged employee would be left without a job and a fair opportunity to secure an adequate remedy. Pp. 570-571.

506 F.2d 1153, reversed in part.

Niki Z. Schwartz, Cleveland, Ohio, for petitioners.

Bernard S. Goldfarb, Cleveland, Ohio, for respondents.

Mr. Justice WHITE delivered the opinion of the Court.

The issue here is whether a suit against an employer by employees asserting breach of a collective-bargaining contract was properly dismissed where the accompanying complaint against the union for breach of duty of fair representation has withstood the union's motion for summary judgment and remains to be tried.

I

Petitioners,¹ who were formerly employed as truck drivers by respondent Anchor Motor Freight, Inc. (Anchor), were discharged on June 5, 1967. The applicable collective-bargaining contract forbade discharges without just cause. The company charged dishonesty. The practice at Anchor was to reimburse drivers for money spent for lodging while the drivers were on the road overnight. Anchor's assertion was that petitioners had sought reimbursement for motel expenses in excess of the actual charges sustained by them. At a meeting between the company and the union, Local 377, International Brotherhood of Teamsters (Union), which was also attended by petitioners, Anchor presented motel receipts previously submitted by petitioners which were in excess of the charges shown on the motel's registration cards; a notarized statement of the motel clerk asserting the accuracy of the registration cards; and an affidavit of the motel owner affirming that the registration cards were accurate and that inflated receipts had been furnished petitioners. The Union claimed petitioners were innocent and opposed the discharges. It was then agreed that the matter would be presented to the joint arbitration committee for the area, to which the collective-bargaining contract permitted either party to submit an unresolved grievance.² Pending this hearing, petitioners were reinstated. Their suggestion that the motel be investigated was answered by the Union representatives' assurances that "there was nothing to worry about" and that they need not hire their own attorney.

A hearing before the joint area committee was held on July 26, 1967. Anchor presented its case. Both the Union and petitioners were afforded an opportunity to present their case and to be heard. Petitioners denied their dishonesty, but neither they nor the Union presented any other evidence contradicting the documents presented by the company. The committee sustained the discharges. Petitioners then retained an attorney and sought rehearing based on a statement by the motel owner that he had no personal knowledge of the events, but that the discrepancy between the receipts and the registration cards could have been attributable to the motel clerk's recording on the cards less than was actually paid and retaining for himself the difference between the amount receipted and the amount recorded. The committee, after hearing, unanimously denied rehearing "because there was no new evidence presented which would justify a reopening of this case." App. 212.

There were later indications that the motel clerk was in fact the culprit; and the present suit was filed in June 1969, against Anchor, the Union, and its International. The complaint alleged that the charges of dishonesty made against petitioners by Anchor were false, that there was no just cause for discharge, and that the discharges had been in breach of contract. It was also asserted that the falsity of the charges could have been discovered with a minimum of investigation, that the Union had made no effort to ascertain the truth of the charges, and that the Union had violated its duty of fair representation by arbitrarily and in bad faith depriving petitioners of their employment and permitting their discharge without sufficient proof.

The Union denied the charges and relied on the decision of the joint area committee. Anchor asserted that petitioners had been properly discharged for just cause. It also defended on the ground that petitioners, diligently and in good faith represented by the Union, had unsuccessfully resorted to the grievance and arbitration machinery provided by the contract and that the adverse decision of the joint arbitration committee was binding upon the Union and petitioners under the contractual provision declaring that "(a) decision by a majority of a Panel of any of the Committees shall be final and binding on all parties, including the employee and/or employees affected." ³ Discovery followed, including a deposition of the motel clerk revealing that he had falsified the records and that it was he who had pocketed the difference between the sums shown on the receipts and the registration cards. Motions for summary judgment filed by Anchor and the Unions were granted by the District Court on the ground that the decision of the arbitration committee was final and binding on the employees and 'for failure to show facts comprising bad faith, arbitrariness or perfunctoriness on the part of the Unions." 72 CCH Lab. Cas. P 13,987, p. 28,131 (ND Ohio 1973). Although indicating that the acts of the Union "may not meet professional standards of competency, and while it might have been advisable for the Union to further investigate the charges . . .," the District Court concluded that the facts demonstrated at most bad judgment on the part of the Union, which was insufficient to prove a breach of duty or make out a prima facie case against it. Id., at 28,132.

After reviewing the allegations and the record before it, the Court of Appeals concluded that there were sufficient facts from which bad faith or arbitrary conduct on the part of the local Union could be inferred by the trier of fact and that petitioners should have been afforded an opportunity to prove their charges.⁴ To this extent the judgment of the District Court was reversed. The Court of Appeals affirmed the judgment in favor of Anchor and the International. Saying that petitioners wanted to relitigate their discharges because of the recantation of the motel clerk, the Court of Appeals, quoting from its prior opinion in Balowski v. International Union, 372 F.2d 829 (CA 6 1967),⁵ concluded that the finality provision of collective-bargaining contracts must be observed because there was "(n)o evidence of any misconduct on the part of the employer . . . " and wholly insufficient evidence of any conspiracy between the Union and Anchor. 506...