McDonald v. Chicago, M., St. P. & P. R. Co.

• Decision Date: 09 April 1968
• Court: Wisconsin Supreme Court
• Parties: , 67 L.R.R.M. (BNA) 2967 Sylvester A. McDONALD, Respondent, v. The CHICAGO, MILWAUKEE, ST. PAUL & PACIFIC RR. CO., a Wis. corporation, Appellant.

Page 553

157 N.W.2d 553

38 Wis.2d 526, 67 L.R.R.M. (BNA) 2967

Sylvester A. McDONALD, Respondent, v. The CHICAGO, MILWAUKEE, ST. PAUL & PACIFIC RR. CO., a Wis.

corporation, Appellant.

Supreme Court of Wisconsin.

April 9, 1968.

Godfrey, Trump & Davidson, Milwaukee, Richard R. Robinson, Milwaukee, of counsel, for appellant.

A. M. Frederickson, Milwaukee, Anthony J. Melo, Milwaukee, of counsel, for respondent.

WILKIE, Justice.

Three issues are raised on the railroad's appeal. They are:

1. Did the trial court have jurisdiction to hear the case?

2. Did the trial court err in striking the affirmative defense asserted by the railroad that McDonald had not exhausted the grievance procedure set forth in the labor contract?

3. Should the railroad be permitted to show nonexhaustion of this procedure by way of mitigating McDonald's damages?

Preliminary to the consideration of these issues it should be noted that no question is raised about the jury's finding that the discharge of McDonald was wrongful. Our subsequent discussion starts with the assumption that the jury verdict has resolved this hotly contested issue.

Jurisdiction.

On the first appeal is this case, in McDonald v. Chicago, M., St. P. & P. RR. Co., ² this court relied on Moore v. Illinois Central R. Co., ³ Transcontinental & Western Air v. Koppal, ⁴ and several federal ⁵ and state cases, ⁶ to hold that a discharged employee who accepts dismissal as final is not precluded by the Railway Labor Act ⁷ from bringing an action for wrongful discharge in a state court.

The holding of the first McDonald case in effect reiterated the rule that a discharged railroad employee has the option of seeking reinstatement and back pay by challenging the validity of his discharge under the auspices of the national railroad adjustment board or of accepting the dismissal as final and bringing a civil suit for damages resulting from the unlawful discharge. In the former situation, the adjustment board has exclusive jurisdiction; in the latter situation, the employee may seek recourse in the state courts.

The touchstone of the limited state court jurisdiction in this area is a discharge and more importantly, an acceptance of that discharge as final. When an employee refuses to accept the discharge as final, exclusive jurisdiction to adjudicate the dispute is in the adjustment board. ⁸

The appellant railroad's first argument on this appeal is that McDonald has not accepted the discharge as final and the state court was consequently without jurisdiction to entertain the case. This contention is without merit. Appellant's sole tenet in pursuing this proposition is that respondent's complaint sought lost wages and retirement benefits from the date of discharge through what would have been his retirement date in 1969, and that this 'belies' respondent's acceptance of his discharge as final. This argument is fatally defective on two grounds. First, the tip-off that one is not accepting a discharge as final and the action which would truly belie such acceptance, would be the seeking of reinstatement. This the respondent has never done. His complaint stated that the discharge was final and did not make any inconsistent allegations that he sought to be reinstated. The mere fact that respondent sought to recover the value of his lost wages and retirement benefits certainly is not tantamount to a request for reinstatement. These requests were only employed as a yardstick for measuring the damages that respondent suffered from the wrongful discharge.

Secondly, the allegation in plaintiff's complaint that the discharge was accepted as final was not denied by the railroad in its answer. Nor was plaintiff's claim in this regard ever disputed during the trial, on motions to set aside the verdict, or on motion for a new trial. Therefore, the defendant is attempting to raise this issue for the first time on appeal. This court has frequently said that it will not countenance the raising of issues for the first time on appeal. ⁹ While this rule is 'one of administration and not of power,' ¹⁰ there is no compelling reason to depart from the general practice in this case.

Appellant's Affirmative Defense.

Paragraph 8 of the appellant's answer alleged as an affirmative defense that the plaintiff, following his discharge, failed to follow the internal grievance procedure outlined in Rule 18 of the labor contract to which his union was a signatory. The trial court, ruling on motion by the plaintiff, ordered that the affirmative defense be stricken on the ground that Rule 18 is only applicable when reinstatement is sought and that when a party elects to sue for damages, noncompliance with the rule is no longer material or relevant.

Rule 18, in pertinent part, provides that:

'An employe who has been disciplined or dismissed * * * shall be given a fair and impartial hearing before the officer designated by the Railroad Company to handle such matters, provided that request for hearing is made in writing to the Superintendent within ten (10) days from date of advice of discipline or complaint. (Presumably this would also mean within ten days of dismissal although the rule does not expressly so state.) The hearing shall be held * * * and decision * * * rendered within ten (10) days from date the hearing is completed.'

The rule goes on to prescribe appeal machinery within the grievance structure.

In the first McDonald case this court noted that the employee's complaint did not state what grievance procedure was available under the contract, or that the plaintiff had exhausted that procedure. The court did hold however that 'if it to be claimed that some provision of the collective-bargaining contract cuts off a wrongfully discharged employee's right of action for damages for breach of contract, that is a matter of affirmative defense, and the facts must be pleaded by defendant.' ¹¹ (Emphasis ours.)

The contract provision the court had in mind by this language was a mandatory provision calling for resort to a grievance procedure, the failure to follow which would result in an absolute bar to plaintiff's action. In the instant case we do not consider Rule 18 mandatory. Thus that rule was not the type of contract provision contemplated by the first McDonald case to be asserted as an affirmative defense. The court's holding in the first McDonald case was repeated in Cheese v. Afram Brothers Co. ¹² In Cheese the plaintiff sued his former employer for damages resulting from a wrongful discharge. Although the case turned on different grounds, our court made this observation regarding exhaustion of remedies.

'Although the employer also urges that the complaint against it is defective because of the failure to allege an exhaution of remedies, we note that the case in which this court held that there was an obligation to allege and prove exhaustion of remedies in an action against an employer was one in which the employee sought reinstatement. Widuk v. John Oster Mfg. Co. (1962), 17 Wis.2d 367, 374, 117 N.W.2d 245. However, in McDonald v. Chicago, M., St. P. & P. RR. Co. (1964), 25 Wis.2d 205, 217, 130 N.W.2d 794, this court distinguished between an action for damages against an employer and one for reinstatement. In the same case, the court also distinguished between a damage suit for wrongful expulsion against the employer as opposed to such an action against the union. In this suit for damages, under our ruling in the McDonald case, Afram Brothers is not entitled to rely on Mr. Cheese's failure to allege an exhausion of remedies. Instead, the employer must plead such failure as an affirmative defense.' ¹³

Neither the first McDonald case nor Cheese held that in a state action the railroad can plead the failure to comply with any provision calling for the non-mandatory use of a contract provision specifying a grievance procedure as an affirmative defense to that action but only such provision as is deemed mandatory. In the first McDonald case the cause was before this court on demurrer and the court did not have before it the precise wording of Rule 18. Hence the holding could be only in terms of the general principle involved and not on the basis of the exact wording of the rule. The trial court was correct in striking the railroad's alleged affirmative defense that the plaintiff's action was barred by his failure to use and exhaust the grievance procedure contained in Rule 18 of the contract governing hours of service, rates of pay, and working conditions of employees in the...