White v. White Rose Food

• Decision Date: 01 August 2000
• Docket Number: Docket No. 00-7232
• Citation: 237 F.3d 174
• Parties: (2nd Cir. 2001) STANLEY WHITE, ULYSSES BROWN, and DONALD W. SWANSON, individually and on behalf of all other persons similarly situated, Plaintiffs-Appellees-Cross-Appellants, v. WHITE ROSE FOOD, a division of DiGiorgio Corporation, Defendant-Appellant-Cross-Appellee
• Court: U.S. Court of Appeals — Second Circuit

Page 174

237 F.3d 174 (2nd Cir. 2001)

STANLEY WHITE, ULYSSES BROWN, and DONALD W. SWANSON, individually and on behalf of all other persons similarly situated, Plaintiffs-Appellees-Cross-Appellants, v. WHITE ROSE FOOD, a division of DiGiorgio Corporation, Defendant-Appellant-Cross-Appellee.

Docket No. 00-7232

August Term, 2000

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: October 4, 2000

Decided: January 10, 2001

Following a bench trial, the district court found that plaintiffs had established their "hybrid § 301/DFR" claim by proving (i) that White Rose Food had breached its settlement agreement with plaintiffs' union, and (ii) that the union's leadership had breached its duty of fair representation. We hold that the district court's finding was clearly erroneous, and reverse the judgment of the district court.

[Copyrighted Material Omitted]

LEONARD N. FLAMM, New York, New York (Norman Mednick, Eden M. Mauro, Jill Schwartz, Law Offices of Leonard N. Flamm, New York, New York, on the brief), for Plaintiffs-Appellees-Cross-Appellants.

JEDD MENDELSON, New York, New York (Grotta, Glassman & Hoffman, P.A., New York, New York), for Defendant-Appellant-Cross-Appellee.

Before: KEARSE, CALABRESI, and SOTOMAYOR, Circuit Judges.

SOTOMAYOR, Circuit Judge:

Defendant White Rose Food ("White Rose") appeals from a judgment entered following a bench trial in the United States District Court for the Eastern District of New York (Arthur D. Spatt, Judge), awarding plaintiffs Stanley White, Ulysses Brown, and Donald W. Swanson, individually and on behalf of all other persons similarly situated ("plaintiffs") $193,109.91 (plus prejudgment interest from September 23, 1993) and reasonable attorneys' fees, upon findings (i) that White Rose violated Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185 (1994), by breaching a settlement agreement it had with plaintiffs' union, and (ii) that plaintiffs' union breached its duty of fair representation ("DFR") by entering into an amendment to the settlement agreement with White Rose. White v. White Rose Food, 72 F. Supp. 2d 126 (E.D.N.Y. 1999). Plaintiffs cross-appeal from a judgment granting them only $151,611.00 of their requested $436,396.00 in attorneys' fees. White v. White Rose Food, 86 F. Supp. 2d 77 (E.D.N.Y. 2000). We have jurisdiction pursuant to 28 U.S.C. § 1291 (1994).

White Rose claims, inter alia, that the district court erred in finding that the union leadership breached its duty of fair representation. Finding this claim persuasive, we reverse the district court's judgment.

BACKGROUND

Because the facts of this case have been extensively recounted in three published opinions of the district court, White Rose Food, 72 F. Supp. 2d 126; White v. White Rose Food, 62 F. Supp. 2d 878 (E.D.N.Y. 1999); White v. White Rose Food, 930 F. Supp. 814 (E.D.N.Y. 1996), as well as in a prior opinion of this Court, White v. White Rose Food, 128 F.3d 110 (2d Cir. 1997), the following account is limited to facts that bear upon the issues which are the subject of the present opinion.

Plaintiffs were employed by White Rose at its Farmingdale, New York grocery warehouse and were members of the Furniture, Flour, Grocery, Teamsters, Chauffeurs & Warehousemen Union, Local No. 138 ("Local 138"). Local 138 went on strike against White Rose on February 1, 1991. On July 7, 1991, White Rose closed the Farmingdale warehouse and laid off all of the employees represented by Local 138. In July 1992, Local 138 and White Rose negotiated an agreement (the "Settlement Agreement" or "Agreement") to resolve their ongoing labor dispute. The Settlement Agreement provided that White Rose would place the sum of $1.5 million (the "Settlement Fund") in an escrow account to be distributed to eligible former employees of the Farmingdale facility.¹ The Settlement Agreement contained a binding arbitration clause and expressly stated that the Agreement required ratification by the eligible rank-and-file members of Local 138 who were former employees of White Rose. White Rose executed the Settlement Agreement on July 23, 1992, and the Local 138 membership ratified it on September 21, 1992.

In January 1993, the entity that was to serve as escrow agent and distributor of the Settlement Fund, Joint Council 16 (a division of Local 138's national union), informed Local 138 and White Rose that it would not serve in that capacity. Shortly thereafter, on January 23, 1993, Local 138 and White Rose entered into an "Amendment to Settlement Agreement" ("the Amendment"), which provided that White Rose - rather than Joint Council 16 - would distribute the settlement funds to the former employees. More importantly for the purposes of this appeal, the Amendment further provided:

This amendment shall not increase the cost of the Settlement Agreement to White Rose under any circumstances; [White Rose] shall not be required to spend more than [$1.5 million], inclusive of all employment tax liability . . . .

. . . .

[White Rose's] contribution share for all federal, state and local payroll taxes, and F.I.C.A., shall be included in the [$1.5 million Settlement] [F]und[] established in the Settlement Agreement. Accordingly, the [S]ettlement [F]und[] established by the Settlement Agreement which may go directly to former White Rose employees shall be reduced by the amount of such contributions.

The original Agreement, in contrast, was silent on the issue whether such payroll taxes could be drawn from the Settlement Fund, and who was to pay those taxes. The Amendment neither contained a ratification clause nor was presented to the rank and file for ratification.

Plaintiffs commenced this action on August 2, 1993 in New York Supreme Court, Kings County, naming White Rose as the sole defendant, and alleging that White Rose breached the Agreement by (i) entering into the Amendment without securing rank-and-file ratification thereof, and (ii) deducting payroll taxes from the Settlement Fund. On October 19, 1993, White Rose removed the case to the United States District Court for the Eastern District of New York on the basis of federal question jurisdiction under Section 301 of the LMRA, 29 U.S.C. § 185. The district court ultimately granted (without prejudice) White Rose's motion for summary judgment on the grounds that plaintiffs "could only proceed against White Rose for a breach of the [A]greement under § 301 of the LMRA" via the mechanism of a so-called "hybrid [§ 301/DFR] suit," and that plaintiffs had failed to adequately plead an essential element of such type of suit, namely, that the union had breached its duty of fair representation. White Rose Food, 930 F. Supp. at 818. Plaintiffs then filed a third amended complaint adding Local 138 as a defendant, and alleging, inter alia, that the union had breached its duty of fair representation by entering into the Amendment without presenting it to the rank and file for approval.

On July 8, 1996, the district court again granted summary judgment in favor of White Rose and Local 138 as to all claims. Id. at 814. On appeal, this Court affirmed the district court's dismissal of plaintiffs' claims against Local 138, agreeing that they were time-barred. White Rose Food, 128 F.3d at 114-15. However, we reversed the district court's dismissal of plaintiffs' hybrid § 301/DFR claim against White Rose, reasoning that "[t]he fact that the plaintiffs are time barred from bringing a claim against the union does not mean that the plaintiffs cannot prove that Local 138 breached its duty of fair representation in an action against White Rose." Id. at 116 (internal quotation marks omitted).

On remand, White Rose again moved for summary judgment as to all claims. On July 12, 1999, the district court denied White Rose's motion for summary judgment as to the hybrid § 301/DFR claim, but granted it as to all other claims. White Rose Food, 62 F. Supp. 2d 878. A bench trial followed on August 12 and 16, 1999. In a subsequent Memorandum and Order dated October 28, 1999, the district court found that, by entering into the Amendment, White Rose breached the Agreement and the union leadership breached its duty of fair representation, and accordingly granted judgment in favor of plaintiffs in the sum of $193,109.91. White Rose Food, 72 F. Supp. 2d 126. On February 7, 2000, the district court awarded plaintiffs attorneys' fees in the amount of $151,611.00. White Rose Food, 86 F. Supp. 2d 77.

On March 1, 2000, White Rose filed a timely notice of appeal. On March 7, 2000, plaintiffs filed a timely cross-appeal, challenging the district court's award of attorneys' fees in an amount significantly less than had been requested.

DISCUSSION

I. Standard of Review

In reviewing a district court's decision in a bench trial, we review the district court's findings of fact for clear error and its conclusions of law de novo. See United States v. Coppola, 85 F.3d 1015, 1019 (2d Cir. 1996). Mixed questions of law and fact are likewise reviewed de novo. See Scribner v. Summers, 84 F.3d 554, 557 (2d Cir. 1996).² Under the clearly erroneous standard, "there is a strong presumption in favor of a trial court's findings of fact if supported by substantial evidence. We will not upset a factual finding unless we are left with the definite and firm conviction that a mistake has been committed." Travellers Int'l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570, 1574 (2d Cir. 1994) (internal citations and quotation marks omitted).

II. Elements of a Hybrid § 301/DFR Claim

To establish a hybrid § 301/DFR claim, a plaintiff must prove both (1) that the employer breached a collective bargaining agreement and (2) that the union breached its duty of fair representation vis-a-vis the union members. See DelCostello v. Int'l Bhd. of Teamsters, 462 U.S. 151, 164-65 (1983). The plaintiff may sue the union or the employer, or both, but must allege violations on the part of both. See id. at 165.³

A...