Rutherford v. Judge & Dolph Ltd.

• Decision Date: 04 February 2013
• Docket Number: No. 09–3706.,09–3706.
• Citation: 707 F.3d 710
• Court: U.S. Court of Appeals — Seventh Circuit
• Parties: John RUTHERFORD, et al., Plaintiffs–Appellants, v. JUDGE & DOLPH LTD. n/k/a Judge & Dolph LLC, et al., Defendants–Appellees.

707 F.3d 710

John RUTHERFORD, et al., Plaintiffs–Appellants,

v.JUDGE & DOLPH LTD. n/k/a Judge & Dolph LLC, et al., Defendants–Appellees.

No. 09–3706.

United States Court of Appeals, Seventh Circuit.

Argued April 5, 2012.

Decided Feb. 4, 2013.

Michael T. Smith (argued), Attorney, Roselle, IL, for Plaintiffs–Appellants.

Gregory L. Peters (argued), Attorney, Seaton Peters & Revnew, Minneapolis, MN, Jeffrey B. Gilbert (argued), Phillip H. Snelling, Attorneys, Johnson, Jones, Snelling, Gilbert & Davis, Josiah A. Groff, N. Elizabeth Reynolds, Attorneys, Allison, Slutsky & Kennedy, Chicago, IL, for Defendants–Appellees.

Before ROVNER, WOOD, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge.

In this suit brought under Section 301 of the Labor–Management Relations Act, 29 U.S.C. § 185, Plaintiffs–Appellants sue their former employer, Judge & Dolph, for terminating their employment on grounds forbidden by a collective bargaining agreement, and their union, Local 705, for settling their grievances for an unsatisfactory sum, allegedly violating its duty of fair representation. The district court granted Defendants' motions to dismiss, and Plaintiffs appealed.

But we lack jurisdiction over the employees' claim against Local 705. “Hybrid” claims for violations of a collective bargaining agreement pursuant to 29 U.S.C. § 185(a) may be asserted against an employer and a union when the employee needs the union to litigate his grievance. See Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967). But the employees in this case did not need Local 705 to litigate their grievance, because as soon as Judge & Dolph repudiated the arbitration procedure mandated by the contract, the employees could have gone straight to federal court with a claim solely against the employer. So the claim against the union is not part of a “hybrid” at all, and is outside Section 301's jurisdictional scope. Left with the employees' freestanding claim against the employer, we find that it fails on the merits because the collective bargaining agreement expired before Plaintiffs were terminated, so no agreement was violated. Where, as here, a union has provided an unambiguous, timely notice to terminate the collective bargaining agreement, that agreement expires pursuant to its terms even if the employer's payroll continues to reflect the payment of union wages and the deduction of union dues. We therefore affirm.

I. BACKGROUND

Plaintiffs, eight members in good standing with Teamsters Local Union 705 (“Local 705”), were employed as truck drivers with Judge & Dolph Ltd. n/k/a Judge & Dolph LLC (“J & D”). J & D entered into a collective bargaining agreement (“CBA”) with Local 705 and its parent organization, the International Brotherhood of Teamsters. Among other things, the CBA set specific wages, provided for the deduction of union dues from paychecks, and prohibited J & D from firing employees without “just cause.” In addition, Article 18 generally required that any grievance “regarding the application, meaning or interpretation of this Agreement” be subject to arbitration. And importantly, Article 23 included an evergreen clause which provided: “This Agreement shall be in full force and effect from April 1, 2003 to and including March 31, 2007 and shall continue from year to year thereafter unless written notice of desire to cancel or terminate the Agreement is served by either party upon the other at least sixty (60) days prior to date of expiration.”

On November 16, 2006 (before 60 days prior to March 31, 2007), Local 705 served a notice which provided:

Pursuant to the provision of the current, April 1, 2003 through March 31, 2007 Collective Bargaining agreement (CBA) Article 23, Sections 1 and 2 between Judge & Dolph, LTD, and the Union, please accept this letter as official notice to both terminate and negotiate modifications. In order to clarify the Union's bargaining position, relative to successor contract negotiations, it is the Union's desire to negotiate modifications to the current CBA, but Local 705 does not desire to continue or extend the current CBA beyond its expiration date of March 31, 2007.

J & D and Local 705 began negotiating a new CBA, and continued negotiations through the March 31, 2007 expiration date. J & D also continued paying the union wages required under the old CBA and deducting union dues after that date. Negotiations ended in August 2008, and no new CBA was signed.

Meanwhile, in June and July 2008, Plaintiffs were each terminated without “just cause”—for example, for refusing to sign new at-will employment agreements, among other reasons—in alleged violation of the CBA. J & D, however, refused to participate in arbitration concerning these alleged violations because it considered the CBA to have expired. Plaintiffs then asked Local 705 to bring unfair labor practices charges based on these alleged violations before the National Labor Relations Board (“NLRB”) on their behalf, which it did. Around April 2009, however, Local 705 and J & D agreed to a settlement, which would give Plaintiffs about 25% of their claimed damages ($104,000 out of $409,709 total). But Plaintiffs refused to consent to the settlement, and Local 705 did not continue pursuing the NLRB action. And the parties seem to have assumed that Plaintiffs could not litigate their claims before the NLRB on their own without Local 705.

Plaintiffs filed suit in federal district court under Section 301 of the Labor–Management Relations Act (“LMRA”), 29 U.S.C. § 185, raising claims against J & D for allegedly violating the CBA, and against Local 705 for violating its duty of fair representation when it settled the grievances that were brought before the NLRB for an amount unsatisfactory to Plaintiffs, among other claims not at issue here. Defendants moved to dismiss under Rule 12(b)(6). Plaintiffs filed evidence in opposition to those motions, but the district court did not formally convert the motions into motions for summary judgment. The district court then dismissed the claims because it found the CBA to have expired by the time of the terminations, and because it found that the complaint failed to allege facts plausibly establishing that Local 705 acted arbitrarily, irrationally, or in bad faith when it settled the grievances. Plaintiffs appealed.

II. ANALYSIS

A. The Motions to Dismiss Should Have Been Converted into Motions for Summary Judgment Pursuant to Rule 12(d)

We first address the proper posture of this case. Rule 12(d) provides:

If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.

Appellants submitted evidence before the district court in response to the Rule 12(b)(6) motions, including affidavits attesting that J & D continued to pay union wages and deduct union dues even after the March 2007 expiration date. Such evidence is not part of the pleadings, as it is not “referred to in the plaintiff[s'] complaint....” 188 LLC v. Trinity Indus. Inc., 300 F.3d 730, 735 (7th Cir.2002). Yet the district court considered this evidence when ruling on J & D's motion to dismiss without converting the motions into motions for summary judgment pursuant to Rule 12(d), and it applied the Rule 12(b)(6) standard rather than the summary judgment standard. This was error, and the district court should have adhered to Rule 12(d). See Gen. Elec. Cap. Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir.1997).

Nonetheless, in this case that is not cause for reversal or remand. Appellants were the ones who first submitted evidence outside the pleadings (J & D did initially submit a copy of the CBA, but that was the cornerstone of Appellants' complaint and may be considered part of the pleadings, see 188 LLC, 300 F.3d at 735). J & D and Local 705 discuss this confused procedural posture in their briefs, and Appellants have not suggested that they would have been, or would be, prejudiced by consideration of these motions as motions for summary judgment. We therefore treat this appeal as if the motions had been converted into motions for summary judgment, because we too rely on evidence submitted outside the pleadings, and because we do not reach the adequacy-of-pleading issue for reasons discussed below. Cf. Fleischfresser v. Dirs. of Sch. Dist. 200, 15 F.3d 680, 684–85 (7th Cir.1994) (district court decision to treat motion to dismiss as motion for summary judgment is not reversible error if there is no prejudice).

B. We Lack Jurisdiction to Consider Appellants' Claim Against Local 705 Because It Is Not a “Hybrid” Claim Under Section 301

Appellants' claims against Local 705 must be dismissed for lack of jurisdiction.¹ Section 301 of the LMRA provides for federal subject-matter jurisdiction “without respect to the amount in controversy or without regard to the citizenship of the parties,” but only over “[s]uits for violation of contracts between an employer and a labor organization....” 29 U.S.C. § 185(a). The language of this statute clearly contemplates claims by employees against the employer for violations of a CBA (or perhaps also between other parties, so long as the claim alleges a CBA violation). And it would also seem to exclude claims by employees against a union (or between other parties) that lack an allegation that the union or other party itself has violated the CBA.

In Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), however, the Supreme Court recognized a narrow exception to the statute's jurisdictional bar. Acknowledging that the statute permits suits by employees against employers for CBA violations, it recognized that as a practical matter, an employee often cannot go straight to federal court with such a claim because many CBAs (like the one in this case)...