Orphan v. Furnco Construction Corporation, 71-1455.

• Decision Date: 17 August 1972
• Docket Number: No. 71-1455.,71-1455.
• Parties: Al ORPHAN et al., Plaintiffs-Appellants, v. FURNCO CONSTRUCTION CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

466 F.2d 795 (1972)

Al ORPHAN et al., Plaintiffs-Appellants, v. FURNCO CONSTRUCTION CORPORATION, Defendant-Appellee.

No. 71-1455.

United States Court of Appeals, Seventh Circuit.

Argued April 12, 1972.

Decided August 17, 1972.

Charles J. Barnhill, Jr., Chicago, Ill., for plaintiffs-appellants.

R. Theodore Clark, Jr., Joel H. Kaplan, Chicago, Ill., for defendant-appellee, Furnco Construction Corp. ; Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., of counsel.

Before DUFFY, Senior Circuit Judge, and CUMMINGS, and HAMLEY,¹ Circuit Judges.

CUMMINGS, Circuit Judge.

In this class action, plaintiffs sought damages resulting from defendant's alleged breach of the collective bargaining contract between it and the Union.² Jurisdiction was asserted under Section 301(a) of the Taft-Hartley Act (29 U.S.C. § 185(a)). Commencing in June 1969, defendant, a bricklaying and masonry contractor, employed plaintiffs to do construction work at a Chicago plant of the United States Steel Corporation. Plaintiffs principally claim that in violation of the collective bargaining contract between their Union and defendant, they were deprived of overtime pay, under-paid during straight time, discriminated against in hiring, and deprived of work on certain days.

In four counts of the amended complaint,³ plaintiffs advance variant theories for their ability to maintain a court action despite the existence of a contractual grievance-arbitration remedy which has not been utilized. In Count I, plaintiffs assert that they "presented the grievances enumerated herein to the Union in every possible manner in an attempt to have the Union process them through arbitration * * *." Count II contains the allegation that the "`Disputes' clause mandatorily requires the Union to process to settlement or arbitration any grievance," but the Union "failed to process the grievances in violation of its contractual duty and said violation was in breach of its statutory duty of fair representation." In Count III, plaintiffs allege that "the `Disputes' clause * * * was not meant to be nor does it purport to be the exclusive remedy, or one that must first be exhausted, before an employee may pursue other means of redress," so that "resort to this Court irrespective of whether or not grievance procedures were otherwise pursued is permissible." Count IV alleges that "the defendant and the Union arranged and conspired to illegally ignore the Joint Agreement" and that "this collusion constituted a breach of the Union's statutory duty of fair representation."

The district court granted the defendant's motion to dismiss the amended complaint for failure to state a claim upon which relief can be granted,⁴ and filed a memorandum opinion reported at 325 F.Supp. 1220. The court held that the disputes clause in the collective bargaining contract⁵ provided the exclusive remedy for redress of employee grievances and that the plaintiffs' failure to file timely and proper grievances with the Union in accordance with the Union's by-laws clearly barred their suit. Similarly fatal, the court ruled, was plaintiffs' failure to allege exhaustion of intra-Union remedies. The court further decided that plaintiffs' allegations of breach of the Union's duty of fair representation were facially unsupportable because "a Union does not breach its duty of fair representation by failing to process untimely and improperly filed grievances" and were insufficient because conclusory. Finally, the court ruled that the Union was not mandatorily required to process grievances but had both the power and responsibility to screen grievances. The proprieties of these rulings form the issues we must address to decide whether the amended complaint was correctly dismissed.

Where, as here, the collective bargaining agreement establishes grievance and arbitration procedures for the redress of employee grievances, it is settled that the employee must at least attempt to exhaust these procedures before resorting to a judicial remedy. Vaca v. Sipes, 386 U.S. 171, 184, 87 S. Ct. 903, 17 L.Ed.2d 842; Republic Steel Corp. v. Maddox, 379 U.S. 650, 652, 85 S.Ct. 614, 13 L.Ed.2d 580. There are exceptions to this rule. One such exception exists "if a grievance and arbitration procedure is included in the contract, but the parties do not intend it to be an exclusive remedy * * *." Vaca v. Sipes, supra, 386 U.S. at 184, n. 9, 87 S.Ct. at 913. Another exception inheres in the situation where "the union has sole power under the contract to invoke the higher stages of the grievance procedure, and if * * * the employee-plaintiff has been prevented from exhausting his contractual remedies by the union's wrongful refusal to process the grievance." Id. at 185, 87 S.Ct. at 914. Plaintiffs endeavor to bring their action within both these exceptions—the former through Count III of the amended complaint and the latter variously through Counts I, II and IV.

EXCLUSIVITY OF THE CONTRACTUAL GRIEVANCE AND ARBITRATION PROCEDURES

Plaintiffs contend that the disputes clause⁶ is non-exclusive because it does not mention the rights and privileges of individual employees. But, as in International Union of Operating Engineers v. Flair Builders, Inc., 406 U.S. 487, 491, 92 S.Ct. 1710, 1712, 32 L.Ed.2d 248 (decided May 30, 1972), "there is nothing to limit the sweep of this language or to except any dispute or class of disputes from arbitration." Just as such a disputes clause is construed to encompass "all of the questions on which the parties disagree," "apart from matters that the parties specifically exclude," United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409, it is construed to establish the grievance and arbitration procedures as the exclusive mode of redress unless "the parties to the collective bargaining agreement expressly agreed that arbitration was not the exclusive remedy." Republic Steel Corp. v. Maddox, supra, 379 U.S. at 657-658, 85 S.Ct. at 619.

A contention similar to plaintiffs' was rejected in Belk v. Allied Aviation Services Co. of New Jersey, 315 F.2d 513 (2d Cir.), certiorari denied, Rogers v. Allied Aviation Service Co., 375 U.S. 847, 84 S.Ct. 102, 11 L.Ed.2d 74 (1963),⁷ where the court noted that "any collective agreement is intended to secure rights for individual employees," and held that "where the collective agreement provides for arbitration by the Union of the subject matter of the employee's suit, the employee must look to his union initially for the vindication of his rights." Id. at 515, 516. Likewise, in Harris v. Chemical Leaman Tank Lines, Inc., 437 F.2d 167 (5th Cir. 1971), where the disputes clause was in pari materia with the instant one, the court held individual employees bound to utilize the contractually specified vehicle for grievance resolution. "Where responsibility for processing disputes under a labor agreement is vested solely in the union, the employee must rely upon the union to exhaust contractual remedies in his behalf, and to enforce compliance with those remedies by the employer." Id. at 170.

Accordingly, we hold the Article XIII disputes clause to be the exclusive mode of redress for contractual grievances, and we decline to follow a National Labor Relations Board trial examiner's arguably contrary characterization of this disputes clause.⁸ That characterization is out of harmony with national labor policy. See Moore v. Sunbeam Corp., 459 F.2d 811, 817-818 (7th Cir. 1972). Count III of the amended complaint could therefore properly be stricken.

NON-COMPLIANCE WITH INTERNAL UNION GRIEVANCE PROCEDURES AND FAILURE TO EXHAUST INTRA-UNION REMEDIES

When the employer submitted its motion to dismiss, it tendered to the court the Union's by-laws for consideration. Article IX, Section 10 of these by-laws provides:

"GRIEVANCES. Any member who wishes the Union to process a grievance for him against an employer must present his grievance in writing to an Officer or District Manager of the Union within 10 days after the occurrence of the event about which he is complaining."

The employer argues here, as it argued below, that the allegations in the complaint conclusively show that the plaintiffs failed to comply with the requirements of this provision in grieving to their Union.⁹ Not having filed proper or timely grievances as specified in the by-laws, the plaintiffs are said in effect to have failed to satisfy the exhaustion requirement and so are ill-postured to bring this suit. The employer concludes that any breach of the duty of fair representation on the part of the Union would be irrelevant because plaintiffs, having failed properly to initiate a grievance with the Union in the first place, could not have been "prevented from exhausting * * * their contractual remedies by the union's later wrongful refusal to process the grievance."¹⁰ It is apparently this argument that the district court accepted in ruling that non-compliance with the by-laws' grievance-lodging requirements barred this suit. Plaintiffs assert that the employer has no standing to raise their non-compliance with the Union by-laws since it enjoys no privity of contract as to the by-laws and that even if the employer can raise this defense, the plaintiffs did file timely grievances.¹¹

Assuming (but not deciding) that there was a lack of compliance with the by-laws, then the employer seeks to equate plaintiffs' non-compliance with the by-laws with the failure of an employee properly to lodge a grievance in accord with the strictures of a collective bargaining agreement in a regime where the individual employee has the right and duty to initiate contractual grievance procedures. In the latter situation, even though the Union might have wrongfully refused to carry the improperly filed grievance to higher stages of the grievance procedure, the employer would be able to foreclose the employee's court action with the defense of the...