Retail Clerks Union Local 648, AFL-CIO v. Hub Pharmacy, Inc.

Decision Date07 June 1983
Docket NumberNo. 81-4417,P,AFL-CI,81-4417
Citation707 F.2d 1030
Parties113 L.R.R.M. (BNA) 3078, 97 Lab.Cas. P 10,217 RETAIL CLERKS UNION LOCAL 648,laintiff-Appellant, v. HUB PHARMACY, INC., Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

W. David Holsberry, Davis, Cowell & Bowe, San Francisco, Cal., for plaintiff-appellant.

Michael L. Ohleyer, Robert T. Parker, Titchell, Maltzman, Mark, Bass & Ohleyer, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before WALLACE and FERGUSON, Circuit Judges, and GRANT, * District Judge.

FERGUSON, Circuit Judge:

Retail Clerks Union Local 648 ("the Union") appeals the dismissal of its action against Hub Pharmacy, Inc. ("Hub"). The Union sued Hub for damages and an accounting pursuant to section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. Sec. 185, in order to enforce the collective bargaining agreement. The complaint was filed more than four years after the agreement expired, but intervening proceedings were held before the National Labor Relations Board ("NLRB") and this court.

The district court found that California's equitable tolling doctrine did not apply to extend the four-year statute of limitations and dismissed. We reverse.


In a prior action, the NLRB held in January 1975 that Hub had violated sections 8(a)(5) and (1) of the National Labor Relations Act when it repudiated a collective bargaining agreement reached on its behalf by the San Francisco Pharmaceutical Association in a multi-employer bargaining unit, and when it untimely withdrew from the unit. The NLRB ordered that Hub honor and abide by any agreement executed by the Union and the Association. Hub Pharmacy, Inc., 216 N.L.R.B. 69 (1975). In August 1977, this court entered its judgment enforcing the NLRB order.

The agreement which Hub repudiated terminated on October 31, 1976. Four and one-half years later, on April 9, 1981, the Union filed this section 301 suit to enforce its terms. Claiming that the four-year statute of limitations had been exceeded, Hub filed a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) or, in the alternative, for summary judgment. The Union argued that under California equitable tolling doctrine, the April 9, 1981 complaint should be timely because the statute of limitations would be tolled from May 4, 1974, when the Union filed its first unfair labor practice charge with the NLRB, until at least August 4, 1977, when this court entered its judgment. See Isthmus Landowners Ass'n v. California, 601 F.2d 1087, 1089 (9th Cir.1979) (when an action tolls the statute of limitations, the appeal further tolls the limitations period). The district court found that the four-year statute of limitations had run on the action because the prior proceedings gave insufficient notice to toll. It therefore granted the motion for summary judgment. 1

I. Standard of Review

Summary judgment is proper when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. The facts must be viewed and inferences must be drawn in the manner most favorable to the non-moving party. Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, 690 F.2d 1240, 1250 (9th Cir.1982). The moving party has the burden of demonstrating that it is entitled to summary judgment. Id. Summary judgment is improper if tolling of the statute of limitations requires the resolution of disputed factual issues. Admiralty Fund v. Jones, 677 F.2d 1289, 1293 (9th Cir.1982).

Generally, this court gives great deference to the district court's interpretation of the law of the state in which it sits and will uphold that determination unless it is clearly wrong. Washington v. Northland Marine Co., 681 F.2d 582, 584-85 (9th Cir.1982) (Labor Management Relations Act); see, e.g., Clark v. Musick, 623 F.2d 89, 91 (9th Cir.1980). 2

II. Statute of Limitations and Tolling

The applicable statute of limitations in a section 301 action is provided by the forum state's law. Waggoner v. Dallaire, 649 F.2d 1362, 1367 (9th Cir.1981). In California, the time period for this action is four years. Id.; Cal.Civ.Proc.Code Sec. 337. Federal law controls the date on which the statute starts to run. See Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1309 (9th Cir.1982).

When federal courts borrow a state statute of limitations, they also apply the state's tolling law if it is not inconsistent with federal law. Board of Regents v. Tomanio, 446 U.S. 478, 485-86, 100 S.Ct. 1790, 1795-96, 64 L.Ed.2d 440 (1980) (42 U.S.C. Sec. 1983); Maurer v. Pitchess, 691 F.2d 434, 436 (9th Cir.1982) (same). California equitably tolls the statute of limitations during the pendency of an earlier action if there is "timely notice, and lack of prejudice to the defendant, and reasonable and good faith conduct on the part of the plaintiff." Jackson v. Hayakawa, 605 F.2d 1121, 1127 (9th Cir.1979), cert. denied, 445 U.S. 952, 100 S.Ct. 1601, 63 L.Ed.2d 787 (1980) (quoting Addison v. State, 21 Cal.3d 313, 319, 578 P.2d 941, 943-44, 146 Cal.Rptr. 224, 227 (1978)). The two actions need not be identical. See Elkins v. Derby, 12 Cal.3d 410, 413, 525 P.2d 81, 83, 115 Cal.Rptr. 641, 643 (1974) (personal injury action followed worker's compensation claim).

Equitable tolling should not be applied in a manner that frustrates national labor-management policy. We believe that policy is fostered by having the NLRB attempt to resolve an issue before a party resorts to a section 301 action. Thus, if tolling is appropriate in this case, it would not be inconsistent with the constitution or with the applicable federal labor laws. We turn therefore to the requirements of California's equitable tolling doctrine.

A. Lack of Prejudice.

The district court did not address the question of prejudice. However, if a defendant has received timely notice of a possible action against him and has had ample opportunity to gather and preserve evidence in case he is eventually sued, "he can claim no substantial prejudice." Addison, 21 Cal.3d at 318, 578 P.2d at 943, 146 Cal.Rptr. at 226 (discussing Elkins ).

Hub claims that the earlier action did not give it sufficient notice of the nature of the section 301 action for damages and an accounting to reasonably enable it to prepare a defense. It also claims that the Union's withdrawal of a second NLRB charge, in which the Union attempted to obtain the employee records now sought in this action, induced it to believe that there was no need to collect and save them as necessary evidence.

Hub does not, however, assert that it failed in fact to gather and preserve the records, and the record indicates that there was no evidence which it failed to marshal. In 1978, well within the original limitations period, the Union requested the information which it seeks here; Hub's counsel responded in a letter that the employer had "made a thorough search of all files and records ... and cannot locate anything in addition to what has been provided." Thus on summary judgment, where inferences must be drawn favorably to the non-moving party, Clipper Exxpress, 690 F.2d at 1250, the lack-of-prejudice requirement has been met to the extent that it exists independent of the requirement of notice.

B. Notice.

Hub claims that the NLRB and appellate enforcement proceedings did not provide it with the notice required by the equitable tolling doctrine because: (1) the first proceeding was for declaratory relief as to the validity of the contract, while the second proceeding was for damages for its breach; therefore, the court-enforced order to honor and abide by the contract gave Hub notice only that the contract was enforceable and not notice of which contract provisions the Union might seek to enforce in a section 301 action; and (2) notice cannot be founded on correspondence between the parties but must come from the prior action itself.

We agree that, as a matter of law, simple correspondence between the parties and others does not provide the type of notice required to toll the statute of limitations. See Peles v. La Bounty, 90 Cal.App.3d 431, 437, 153 Cal.Rptr. 571, 575 (1979). Under California law, the first action itself must give sufficient notice. Addison v. California, 21 Cal.3d at 313, 578 P.2d 941, 146 Cal.Rptr. 224; Elkins, 12 Cal.3d at 417-18, 525 P.2d 81, 115 Cal.Rptr. 641.

The district court found that while the first action gave notice that the Union was seeking to enforce the contract, it did not give notice of those portions of the contract that the Union intended to enforce by other remedies. The court then stated that the tolling provisions did not apply because "while the claims were under the contract, they involved different claims[.]"

California, however, does not require that the causes of action be identical or even that damages be sought in both actions in order that requisite notice be given. See Elkins, 12 Cal.3d at 415, 525 P.2d at 84-85, 115 Cal.Rptr. at 644-45. While in California's first such case, Bollinger v. National Fire Ins. Co., 25 Cal.2d 399, 410-11, 154 P.2d 399, 405 (1944), the California Supreme Court tolled the statute of limitations because the second action was a continuation of the earlier one and involved the same parties, facts, and cause of action, its more recent cases do not make such demands. In County of Santa Clara v. Hayes Co., 43 Cal.2d 615, 275 P.2d 456 (1954), a newspaper published a proposed county charter containing errors; it was approved by the voters. Rather than sue the newspaper for damages, the county obtained legislative approval of the charter, but a court later invalidated the approval. The statute of limitations for the county's damage suit was tolled during the legislative and judicial proceedings. In Tu-Vu Drive-In Corp. v. Davies, 66 Cal.2d 435, 426 P.2d...

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