Transcontinental Western Air v. Koppal

• Decision Date: 01 June 1953
• Docket Number: No. 509,509
• Citation: 345 U.S. 653,73 S.Ct. 906,97 L.Ed. 1325
• Parties: TRANSCONTINENTAL & WESTERN AIR, Inc. v. KOPPAL
• Court: U.S. Supreme Court

345 U.S. 653

73 S.Ct. 906

97 L.Ed. 1325

TRANSCONTINENTAL & WESTERN AIR, Inc.

v KOPPAL.

No. 509.

Argued April 8 and 9, 1953.

Decided June 1, 1953.

Mr. Horace G. Hitchcock, New York City, for petitioner.

Messrs. Fred J. Freel and Ray D. Jones, Jr., Kansas City, Mo., for respondent.

Mr. Justice BURTON delivered the opinion of the Court.

This case presents two questions: (1) whether a discharged employee of a carrier that is subject to the Railway Labor Act is precluded by that Act from resorting to a state-recognized cause of action for wrongful discharge and, if not, (2) whether, in such action, he must show that he has exhausted his administrative remedies, under his contract of employment. For the reasons hereafter stated, our answer to the first question is no and to the second, yes, provided the applicable state law so requires. After stating the case, we shall discuss the second question first.

Respondent Koppal is a citizen of Kansas who, in 1949, was employed as a master mechanic in Kansas City, Missouri, by petitioner, Transcontinental & Western Air, Inc., a Delaware corporation. At all times material to this case, petitioner has been a carrier by air, engaged in interstate commerce and subject to Title II of the Railway Labor Act.¹ The terms of respondent's employment contract were stated in a written agreement between petitioner and the International Association of Machinists. That association was a union which, for collective-bargaining purposes, represented respondent and the other mechanics in the employ of petitioner, although respondent was not a member of the union.

November 8, 1949, respondent reported to his employer by telephone that he was not well and would not be able to work that day. Before noon, a representative from petitioner's Industrial Relations Department made an unexpected call at respondent's home. He found respondent there with two of petitioner's employees, one of whom also had taken sick leave. While the testimony is conflicting, there is substantial evidence to support a conclusion that respondent was not sufficiently ill to justify his staying at home and that, by prearrangement, he met there with two other employees while preparing to take an examination to qualify as a flight engineer. On respondent's return to work the next day, he was suspended from employment on a charge of abuse of the sick-leave provisions of his contract and notified that a hearing would be held on that charge November 11, pursuant to the grievance procedure in his contract. He attended the hearing, which was held before a representative of petitioner other than the one bringing the complaint. At its conclusion, the hearing officer stated that there had been a severe abuse of the sick-pay policy and that respondent would be discharged. In view of respondent's past favorable record, the hearing officer asked him whether he would prefer to resign and advised him that he could appeal even if he resigned.

Respondent resigned, stating that he did so 'under protest.' He took no appeal under his employment contract but, June 30, 1950, instituted the present proceeding in the United States District Court for the Western District of Missouri, claiming diversity of citizenship and seeking $7,500 compensatory and $15,000 punitive damages.

During the trial, which was before a jury, petitioner (then defendant) moved for a directed verdict in its favor and made a similar motion at the close of evidence. Both motions were denied and the jury returned a verdict of $7,500 for respondent. The court set aside the verdict and dismissed the complaint on the ground that respondent had failed to appeal the original decision of the hearing officer and had otherwise failed to exhaust the remedies prescribed in his employment contract. The Court of Appeals, with one judge dissenting, reversed that judgment and remanded the case for further proceedings. 8 Cir., 199 F.2d 117. Because of differing opinions expressed as to the effect of our decisions in Moore v. Illinois Central R. Co., 312 U.S. 630, 61 S.Ct. 754, 85 L.Ed. 1089, and Slocum v. Delaware, L. & W.R. Co., 339 U.S. 239, 70 S.Ct. 577, 94 L.Ed. 795, and due to the importance of the case in relation to the Railway Labor Act, we granted certiorari. 344 U.S. 933, 73 S.Ct. 504.²

The jurisdiction of the District Court rested upon diversity of citizenship and an adequate amount in controversy. The complaint sought judgment for damages resulting from the alleged unlawful discharge of respondent in violation of a contract of employment made in Missouri, to be performed in Missouri and agreed by the parties to be a 'Missouri contract.' Accordingly, if the Railway Labor Act were not involved, there would be no question but that the substantive law of Missouri should determine the requirements of the cause of action, the interpretation of the contract and the measure of damages to be applied, Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188; Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477.

No decision of the Supreme Court of Missouri has been cited on the point but the law of Missouri has been shown, by the following cases, to be that an employee must exhaust the administrative remedies under his contract of employment in order to sustain his cause of action in such a case.

The United States Court of Appeals for the Eighth Circuit, in 1934, affirmed a decision of the United States District Court for the Eastern District of Missouri to that effect. Harrison v. Pullman Co., 68 F.2d 826. That was a diversity case, removed from a Missouri state court, in which a discharged porter sued his employer, the Pullman Company, for damages for his alleged unlawful discharge in November, 1926. The terms of his employment were stated in a printed agreement which contained a complete code for the adjustment of such disputes. The code called for an initial appeal by the employee to a district official of the company, a subsequent appeal to the highest local officer of the company designated to handle such matters, then an appeal to the Zone General Committee and finally to the Bureau of Industrial Relations. The porter made no substantial attempt to follow this procedure beyond the district official and none whatever to reach the Zone General Committee. Instead, about five years later, he brought suit and, in that litigation, the United States Court of Appeals, in affirming a directed verdict for the employer, said:

'Appellant in terms sues because of an alleged breach of this contract, and, to prevail, he must show that he has brought himself within its terms and has been unable to secure a satisfactory adjustment by the means therein expressly provided. This he has failed to do, and for this reason he is unable to present his case in court as a justiciable controversy.' 68 F.2d at page 827.

Similarly, in 1936, the St. Louis Court of Appeals, Missouri, in Reed v. St. Louis S.W.R. Co., 95 S.W.2d 887 (not published in State Reports), took a like position. There a discharged conductor sued his employer, the St. Louis Southwestern Railroad Company, for damages for his alleged unlawful discharge in 1928. The terms of his employment were stated in a written contract between the Order of Railway Conductors and the railroad. This prescribed a complete code for the hearing and review of discharges. The conductor was charged with intoxication and attended a prescribed hearing, which was held on that charge, before an assistant superintendent of the company. This resulted in the conductor's discharge but he resorted to none of the administrative appeals prescribed in the code. Instead, he sued his employer in a state court and won a verdict and judgment for damages due to his discharge. The St. Louis Court of Appeals reversed that judgment because the trial court had failed to sustain the employer's demurrer which was based on the ground that the conductor had failed to exhaust the remedies prescribed in his contract.³

Respondent's contract, in the instant case, consisted simply of his employment by petitioner pursuant to the terms of a written agreement between petitioner and the mechanics and related employees in its service, as represented by the International Association of Machinists. That agreement was entered into 'in accordance with the provisions of Title II of the Railway Labor Act, as amended * * *.' It contained detailed provisions as to grievance procedure and sick leave. It included provisions that no employee in respondent's status shall be discharged—

'without a fair hearing before a designated representative of the Company other than the one bringing complaint against the employee. * * * At a reasonable time prior to the hearing, such employee and his duly authorized representative will be apprised, in writing, of the precise charge and given a reasonable opportunity to secure the presence of necessary witnesses. * * * A written decision will be issued within five (5) work days after the close of such hearing. If the decision is not satisfactory, then appeal may be made in accordance with the procedure prescribed in Step 3.'

Step 3 provided for an appeal to the chief operating officer of the company. Notice of intent to appeal must be in writing and made within ten work days after the above-mentioned decision which is part of Step 2. If the decision in Step 3 is not satisfactory to the union, the matter then may be referred by the system general chairman,...