Kennard v. United Parcel Service, Inc.

• Decision Date: 16 February 1982
• Docket Number: Civ. No. 81-70156.
• Citation: 531 F. Supp. 1139
• Parties: Kenneth K. KENNARD, Plaintiff, v. UNITED PARCEL SERVICE, INC., and Local 243 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, jointly and severally, Defendants.
• Court: U.S. District Court — Western District of Michigan

531 F. Supp. 1139

Kenneth K. KENNARD, Plaintiff, v. UNITED PARCEL SERVICE, INC., and Local 243 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, jointly and severally, Defendants.

Civ. No. 81-70156.

United States District Court, E. D. Michigan, S. D.

February 16, 1982.

Michael L. Pitt, Detroit, Mich., for plaintiff.

Robert M. Vercruysse, Detroit, Mich., for United Parcel.

Ted J. Cwiek, Detroit, Mich., Gerry M. Miller, Milwaukee, Wis., for Local 243.

OPINION

GUY, District Judge.

Plaintiff filed an initial complaint on January 15, 1981 against his employer, United Parcel Service (UPS), and his Union, Local 243 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Union).¹ The complaint alleged a violation of the United States Arbitration Act, 9 U.S.C. § 10 (Count I), and asserted claims under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, for the breach of the duty of fair representation against the Union and wrongful discharge against UPS (Count II). Pursuant to defendants' earlier motions, this court dismissed Count I of the complaint for lack of standing under the United States Arbitration Act.

In addition to claiming damages, plaintiff seeks to set aside an arbitration award as requested relief for defendants' alleged violation of their respective duties under § 301. The arbitration decision rendered on October 21, 1980 by the United Parcel Service Joint State Grievance Committee denied plaintiff's grievance and upheld his discharge by UPS. Plaintiff received notice of this decision on October 28, 1980.²

The question before the court raised by defendants' motions to dismiss and the motions for reconsideration³ concerns the retroactive operation of the rule established in United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981), decided subsequent to the filing of this lawsuit. The Supreme Court in Mitchell held that the state statute of limitations governing actions to vacate arbitration awards should be applied to determine the timeliness of § 301 suits against an employer if the alleged wrongful discharge proceeded through arbitration prior to suit in federal court.⁴ The Supreme Court decision resolved a conflict in the circuits as to the appropriate state statute of limitations in certain § 301 actions.⁵ The Mitchell court determined that a § 301 claim against plaintiff's employer was "more analogous to an action to vacate an arbitration award than to a straight contract action." Id. at 62, 101 S.Ct. at 1564. By rejecting the statute of limitations applicable in contract actions, the Court reversed the Second Circuit below which had found that specific limitation period appropriate in the § 301 context. See, Mitchell v. United Parcel Service, Inc., 624 F.2d 394 (2nd Cir. 1980), reversed, 451 U.S. 56, 101 S.Ct. 1559 (1981). The Court also found limitation periods governing actions upon a statute, personal injury actions, or malpractice actions inapposite to § 301 claims. Mitchell, supra, at 62 n.4, 101 S.Ct. at 1564 n.4.

Subsequent to the decision in Mitchell, defendants in the case sub judice moved to dismiss plaintiff's complaint on the basis of the twenty-day limitation period governing actions to vacate arbitration awards under Michigan General Court Rule (GCR) 769.⁶ Plaintiff responded to defendants' motions to dismiss by arguing, inter alia, that the rule established in Mitchell should not be applied retroactively to this case. This court denied defendants' motions based on the tripartite test outlined in Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349, 355-56, 30 L.Ed.2d 296 (1971):

In our cases dealing with the nonretroactivity question, we have generally considered three separate factors. First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that "we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation." Finally, we have weighed the inequity imposed by retroactive application, for "where a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the `injustice or hardship' by a holding of nonretroactivity."

(Citations omitted.)

Both defendants have moved for reconsideration of the court's denial of their motions to dismiss on the basis of the statute of limitations.⁷ They argue several points in favor of their motions.

I.

Initially, defendants contend that a district court lacks discretion to bar retroactive operation of an appellate court decision. In summary, defendants argue that retroactivity is the rule while prospectivity is the exception effective only when an appellate court so rules.

An analysis of defendants' argument evidences confusion between two distinct precepts impacting the doctrine of stare decisis. Defendants argue that a decision barring retroactive application of a higher court's holding is beyond the power of a district court. However, defendants confuse a decision by a district court to apply new precedent to a case before it predicated on facts which occurred prior to the rendition of a new rule with "prospective overruling," an appellate doctrine wherein the court overrules prior precedent yet refuses to apply that new rule of law to the case at bar.

While the general rule is that judicial precedent should normally be given both retroactive and prospective effect, courts have favored doctrines lending greater flexibility in controlling the impact of stare decisis. See generally, Zweibon v. Mitchell, 606 F.2d 1172, 1175-77 (D.C.Cir. 1979). One such doctrine, prospective overruling, involves two separate functions of an appellate court:

Proponents of the prospective-limitation approach urge that an appellate court performs two distinct functions in deciding a case before it — disposing of that case, and shaping the decisional law; and that since the factors that should control these two functions may be fundamentally different, it is sensible for the court to consider these factors in two separate categories. Or, stated in another way, when precedent is under attack, an appellate court should give attention separately (1) to the rule under attack, and whether it ought to be overruled; and if so, (2) to whether, in the disposition of the case at bar, the new rule should for any reason not be applied.

1B Moore's Federal Practice ¶ 0.4023.-2 at 182. Unlike an appellate court, a district court cannot shape decisional law by overruling precedent, since it lacks the power to do so, but instead merely applies the law as it finds it. "Decisions of district courts may persuade other courts by the force of the supporting rationale, but they are not binding in any other case, even before the same judge who rendered the decision, nor upon any other court. (E.g., H. Black (1912) The Law of Judicial Precedents 10 et seq.)" (Footnotes omitted.) Kessler v. Associates Financial Services Co., 573 F.2d 577, 579 (9th Cir. 1977).

However, district courts and appellate courts alike may determine, under the factors announced in Chevron, whether a precedent setting decision should be applied retroactively to an individual case. The Supreme Court, in Bowen v. United States, 422 U.S. 916, 920, 95 S.Ct. 2569, 2573, 45 L.Ed.2d 641 (1975), instructed that "district courts and courts of appeals should follow our practice, when issues of both retroactivity and application of constitutional doctrine are raised, of deciding the retroactivity issue first." While raised in the context of applying a new constitutional principle retroactively, the statement reiterates the authority of district courts to make the initial decision concerning nonretroactivity. The decision concerning nonretroactivity in turn depends upon an independent analysis of the Chevron factors as applied to an individual case. By refusing to grant retroactive effect to the rule established in Mitchell, this court did not overstep its authority to refuse retroactive operation of a new rule of law.⁸

II.

Defendants contend that this court erroneously interpreted the three Chevron factors when applied to the case before it.

A.

In deciding whether a new decisional rule should be limited to prospective application, the first criterion of Chevron requires the court to consider whether the Mitchell decision establishes a "new principle of law, either by overruling clear past precedent on which the litigants may have relied or by deciding an issue of first impression whose resolution was not clearly foreshadowed."⁹ Thus, a court must look both to the state of the law at the time plaintiff contemplated suit and the reasonable perceptions of those persons who claim to have relied on it.¹⁰

Defendants make several arguments in regard to the first prong of Chevron. Defendants contend that the Mitchell decision did not constitute a sharp break in the law. They point to the fact that the state of the law was unsettled with no Supreme Court precedent on point and diverse opinions on the issue throughout the federal courts. Despite the clear ruling of the Sixth Circuit in Smart v. Ellis Trucking Co., Inc., 580 F.2d 215 (6th Cir. 1978), cert. denied, 440 U.S. 958, 99 S.Ct. 1497, 59 L.Ed.2d 770 (1979), defendants emphasize the holding in Liotta v. National Forge Co., 629 F.2d 903 (3rd Cir. 1980), cert. denied, 451 U.S. 970, 101 S.Ct. 2045, 68 L.Ed.2d 348 (1981), which expressly repudiated Smart.¹¹

Under Smart, a federal court in Michigan applied Michigan's three-year limitations period controlling the timeliness of...