International Union of Elevator Constructors v. Home Elevator Co., Inc.

• Decision Date: 12 August 1986
• Docket Number: No. 85-2405,85-2405
• Citation: 798 F.2d 222
• Parties: 123 L.R.R.M. (BNA) 2355, 55 USLW 2129, 105 Lab.Cas. P 12,002 INTERNATIONAL UNION OF ELEVATOR CONSTRUCTORS and Local 34 International Union of Elevator Constructors, Plaintiffs-Appellants, v. The HOME ELEVATOR COMPANY, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 222

798 F.2d 222

123 L.R.R.M. (BNA) 2355, 55 USLW 2129,

105 Lab.Cas. P 12,002

INTERNATIONAL UNION OF ELEVATOR CONSTRUCTORS and Local 34 International Union of Elevator Constructors Plaintiffs-Appellants, v. The HOME ELEVATOR COMPANY, INC., Defendant-Appellee.

No. 85-2405.

United States Court of Appeals Seventh Circuit.

Argued Jan. 15, 1986.

Decided Aug. 12, 1986.

Francis J. Martorana, O'Donoghue & O'Donoghue, Washington, D.C., for plaintiffs-appellants.

James S. Downing, Peterson Haramy Cline & Shoup, Indianapolis, Ind., for defendant-appellee.

Before HARLINGTON WOOD, JR., EASTERBROOK and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

Section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. Sec. 185(a), grants jurisdiction to the federal courts over "suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce...." Pursuant to section 301, the International Union of Elevator Constructors and Local 34 of the International Union of Elevator Constructors (Union) filed suit in the district court alleging that Home Elevator Company (Company) had breached the collective-bargaining agreement. Relying on DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), the district court applied the six-month statute of limitations contained in section 10(b) of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 160(b), to bar the section 301 cause of action. In following this course, the district court departed from the general practice, established in International Union, United Automobile Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966), of borrowing the most analogous state limitations period.

We do not believe that the Supreme Court's holding in DelCostello justified a departure in this case from the general approach of Hoosier Cardinal. We hold, therefore, that the district court erred by not applying the most analogous state limitations period to the section 301 suit in this case. We reverse and remand this case to the district court for application of the most analogous state statute of limitations, the Indiana two-year statute of limitations governing all actions relating to the terms, conditions and privileges of employment except actions based upon a written contract. Ind.Code Sec. 34-1-2-1.5.

I FACTS

In November, 1977, the Union entered into a collective-bargaining agreement with the Company. The agreement established the terms and conditions of employment including the wage rate and all other wage related payments. It also contained an arbitration clause to resolve all differences and disputes regarding the application and construction of the agreement. The contract expired in July 1982. However, the parties continued to bargain until they reached impass in March 1983. The Union claims that, during these negotiations, it first discovered that the Company had not paid the employees the rate established by the agreement. Rather than submitting the dispute to arbitration, the Union waited until August 1, 1984 and then filed suit under section 301 of the LMRA. ¹ In its complaint, the Union alleged that the Company had violated the collective-bargaining agreement, and sought specific performance and damages for breach of contract. It did not petition to compel arbitration.

On July 12, 1985, the district court granted the defendant's motion to dismiss. The district court decided that the six-month statute of limitations in section 10(b) of the NLRA ² was the period most conducive to federal labor policy and most applicable to the section 301 suit in this case. International Union of Elevator Constructors v. Home Elevator Co., 613 F.Supp. 253, 255 (S.D.Ind.1985). Application of the federal statute of limitations, the court concluded, was also consistent with a desire to establish a uniform limitations period for all section 301 suits. Id. at 256. The district court concluded that Hoosier Cardinal did not control because, unlike the situation in this case, the agreement in Hoosier Cardinal did not contain an arbitration clause. Id. at 255. However, on appeal, the Union argues that the facts in this case are not materially different from those in Hoosier Cardinal, and that therefore the district court should have applied the state statute of limitations most analogous to this section 301 claim.

II DISCUSSION

1) General Principles

Many federal statutes, while providing a federal forum for litigation, contain no specific statute of limitations. Therefore, federal courts, faced with this lapse in the legislative process, have been forced to fill the gap left by the Congress. ³ Our task is to identify, in light of the purpose of the particular statute, the most analogous statute of limitations. The courts "have generally concluded that Congress intended that the courts apply the most closely analogous statute of limitations under state law." DelCostello, 462 U.S. at 158, 103 S.Ct. at 2287. Sometimes, there is a:

direct indication in the legislative history suggesting that Congress did in fact intend that state statutes should apply. More often, however, Congress has not given any express consideration to the problem of limitations periods. In such cases, the general preference for borrowing state limitations periods could more aptly be called a sort of fallback rule of thumb than a matter of ascertaining legislative intent; it rests on the assumption that, absent some sound reason to do otherwise, Congress would likely intend that the courts follow their previous practice of borrowing state provisions.

Id. at 158-59, 103 S.Ct. at 2287-88. However, state statutes of limitations can sometimes be "unsatisfactory vehicles for the enforcement of federal law." Id. at 161, 103 S.Ct. at 2289.

State legislatures do not devise their limitations periods with national interests in mind, and it is the duty of federal courts to assure that the importation of state law will not frustrate or interfere with the implementation of national policies. "Although state law is our primary guide in this area, it is not, to be sure, our exclusive guide."

Occidental Life Ins. Co. v. EEOC, 432 U.S. 355, 367, 97 S.Ct. 2447, 2454, 53 L.Ed.2d 402 (1977) (quoting Johnson v. Railway Express Agency, 421 U.S. 454, 465, 95 S.Ct. 1716, 1722, 44 L.Ed.2d 295 (1975)).

2) Section 301 of the LMRA--Hoosier Cardinal and DelCostello

Section 301 of the LMRA establishes a federal forum to resolve suits for violation of contracts between an employer and a labor organization. The LMRA contains no statute of limitations applicable to section 301 actions. Accordingly, in Hoosier Cardinal, the Supreme Court, employing the general approach outlined in the foregoing subsection, applied a state statute of limitations.

In Hoosier Cardinal, a union brought suit pursuant to section 301 alleging that the company had breached the collective-bargaining agreement by failing to pay accumulated vacation pay. 383 U.S. at 698, 86 S.Ct. at 1109. The Court first considered whether federal labor policy required a uniform statute of limitations for all section 301 actions. After noting that federal labor policy sought to further swift, private resolution of labor disputes in order to preserve the bargaining relationship, the Court concluded that "[f]or the most part, statutes of limitations come into play only when these processes have already broken down. Lack of uniformity in this area is therefore unlikely to frustrate in any important way the achievement of any significant goal of labor policy." Id. at 702, 86 S.Ct. at 1111. The Court characterized the section 301 action at issue as "essentially an action for damages caused by an alleged breach of an employer's obligation embodied in a collective bargaining agreement. Such an action closely resembles an action for breach of contract cognizable at common law." Id. at 705 n. 7, 86 S.Ct. at 1113 n. 7. The Court held that the timeliness of such a suit is to be determined as a matter of federal law, by reference to the appropriate state statute of limitations. Id. at 704-05, 86 S.Ct. at 1112-13. The Court decided that the Indiana six-year statute of limitations governing actions not based on a written contract provided the most appropriate limitations period and was not inconsistent with federal labor policy. Id. at 707, 86 S.Ct. at 1114.

In Hoosier Cardinal, the Court explicitly noted that other section 301 suits might call for application of other rules on timeliness, id. at 705 n. 7, 86 S.Ct. at 1113 n. 7; in DelCostello, the Court was confronted with such a situation. The section 301 action in DelCostello, involved a suit by an employee "against an employer and a union, alleging that the employer had breached a provision of the collective-bargaining agreement, and that the union had breached its duty of fair-representation by mishandling the ensuing grievance-and-arbitration proceedings." 462 U.S. at 154, 103 S.Ct. at 2285. The Supreme Court concluded that this type of a section 301 suit should be subject to the six-month statute of limitations contained in section 10(b) of the NLRA. It distinguished the "straight-forward" section 301 suit in Hoosier Cardinal from the "hybrid" section 301 suit in DelCostello in several respects. The Court first noted that Hoosier Cardinal did not involve any agreement to submit disputes to arbitration, and that the suit in Hoosier Cardinal was brought by the union itself rather than by an individual employee. DelCostello, 462 U.S. at 162, 103 S.Ct. at 2289. Second, the suit in Hoosier Cardinal did not involve any of the consensual processes that federal labor law is designed to protect. Id. at 163, 103 S.Ct. at 2289. By contrast, in DelCostello, the plaintiff challenged the outcome of the grievance procedure. Therefore, the contractually created method for private settlement of disputes was directly...