After petitioner employee was discharged by respondent United
States Postal Service (USPS) as a result of an altercation with
another employee, he filed a grievance with respondent Union as
provided by the applicable collective bargaining agreement. When
the Union declined to take his grievance to arbitration, petitioner
sued respondents in Federal District Court, claiming that he had
been wrongfully discharged and seeking damages and injunctive
relief. Entering judgment on a jury verdict against both
respondents, the District Court held that the USPS had discharged
petitioner without just cause, and that the Union had handled his
grievance in an arbitrary manner. Accordingly, the court upheld the
jury's apportionment of damages between the USPS and the Union. The
Court of Appeals affirmed except for the award of damages against
the Union, holding that, because petitioner's compensation was
payable only by the USPS, reimbursement for his lost earnings
continued to be the USPS's exclusive obligation, and that hence no
portion of the deprivations was chargeable to the Union.
Held: Where the District Court's findings, accepted by
the Court of Appeals, established that petitioner's damages were
caused initially by the USPS's unlawful discharge and were
increased by the Union's breach of its duty of fair representation,
apportionment of the damages was required.
Vaca v. Sipes,
386 U. S. 171. Pp.
459 U. S.
218-230.
(a) The governing principle of
Vaca is that, where an
employee proves that his employer violated the collective
bargaining agreement and that his union breached its duty of fair
representation, liability is to be apportioned between the employer
and the union according to the damages caused by the fault of each.
To interpret this principle as requiring that an employer be solely
liable for damages resulting from a wrongful discharge treats the
relationship between the employer and employee, created by the
collective bargaining agreement, as if it were a simple contract of
hire governed by traditional common law principles. Such a reading
fails to recognize that a collective bargaining agreement is much
more than traditional common law employment terminable at will.
Rather, it is an agreement creating relationships and interests
under the federal common law of labor policy. Pp.
459 U. S.
218-220.
Page 459 U. S. 213
(b) Of paramount importance is the right of the employee, who
has been injured by both the employer's and the union's breach, to
be made whole. Even though both the employer and the union have
caused the damage suffered by the employee, the union is
responsible for the increase in damages resulting from breach of
its duty of fair representation having caused the grievance
procedure to malfunction, and, as between the two wrongdoers, the
union should bear its portion of the damages. Pp.
459 U. S.
220-224.
(c) When the union, as the employee's exclusive agent, waives
arbitration or fails to seek review of an adverse decision, the
employer should be in substantially the same position as if the
employee had had the right to act on his own behalf and had done
so. In the absence of damages apportionment where the default of
both the employer and the union contributes to the employee's
injury, incentives to comply with the grievance proceeding would be
diminished, and to impose total liability solely on the employer
could affect the willingness of employers to agree to arbitration
clauses. To require the union to pay damages does not impose a
burden on the union inconsistent with national labor policy, but
rather provides an additional incentive for the union to process
its members' claims where warranted. Pp.
459 U. S.
224-228.
(d)
Czosek v. O'Mara, 397 U. S. 25, is
not inconsistent with
Vaca's recognition that each party
should bear the damages attributable to its fault. Pp.
459 U. S.
228-230.
642 F.2d 79, reversed and remanded.
POWELL, J., delivered the opinion of the Court, in which BURGER,
C.J., and BRENNAN, STEVENS, and O'CONNOR, JJ., joined. WHITE, J.,
filed an opinion concurring in the judgment in part and dissenting
in part, in which MARSHALL and BLACKMUN, JJ., joined, and in all
but Part IV of which REHNQUIST, J., joined,
post, p.
459 U. S. 230.
REHNQUIST, J., filed a dissenting opinion,
post, p.
459 U. S.
246.
Page 459 U. S. 214
JUSTICE POWELL delivered the opinion of the Court.
The issue is whether a union may be held primarily liable for
that part of a wrongfully discharged employee's damages caused by
his union's breach of its duty of fair representation.
I
On February 21, 1976, following an altercation with another
employee, petitioner Charles V. Bowen was suspended without pay
from his position with the United States Postal Service. Bowen was
a member of the American Postal Workers Union, AFL-CIO, the
recognized collective bargaining agent for Service employees. After
Bowen was formally terminated on March 30, 1976, he filed a
grievance with the Union as provided by the collective bargaining
agreement. When the Union declined to take his grievance to
arbitration, he sued the Service and the Union in the United States
District Court for the Western District of Virginia, seeking
damages and injunctive relief.
Bowen's complaint charged that the Service had violated the
collective bargaining agreement by dismissing him without "just
cause," and that the Union had breached its duty of fair
representation. His evidence at trial indicated that the
responsible Union officer, at each step of the grievance process,
had recommended pursuing the grievance, but that the national
office, for no apparent reason, had refused to take the matter to
arbitration.
Following the parties' presentation of evidence, the court gave
the jury a series of questions to be answered as a special verdict.
[
Footnote 1] If the jury found
that the Service had discharged
Page 459 U. S. 215
Bowen wrongfully and that the Union had breached its duty of
fair representation, it was instructed to determine the amount of
compensatory damages to be awarded and to apportion the liability
for the damages between the Service and the Union. [
Footnote 2] In explaining how liability might
be apportioned, the court instructed the jury that the issue was
left primarily to its discretion. The court indicated, however,
that the jury equitably could base apportionment on the date of a
hypothetical arbitration decision -- the date at which the Service
would have reinstated Bowen if the Union had fulfilled its duty.
The court suggested that the Service could be liable for damages
before that date and the Union for damages thereafter. Although the
Union objected to the instruction allowing the jury to find it
liable for any compensatory damages, it did not object to the
manner in which the court instructed the jury to apportion the
damages in the event apportionment was proper. [
Footnote 3]
Upon return of a special verdict in favor of Bowen and against
both defendants, the District Court entered judgment,
Page 459 U. S. 216
holding that the Service had discharged Bowen without just cause
and that the Union had handled his "apparently meritorious
grievance . . . in an arbitrary and perfunctory manner. . . ."
470 F.
Supp. 1127, 1129 (1979). In so doing, both the Union and the
Service acted "in reckless and callous disregard of [Bowen's]
rights." [
Footnote 4]
Ibid. The court found that Bowen could not have proceeded
independently of the Union [
Footnote 5] and that, if the Union had arbitrated Bowen's
grievance, he would have been reinstated.
Ibid.
The court ordered that Bowen be reimbursed $52,954 for lost
benefits and wages. Although noting that "there is authority
suggesting that only the employer is liable for damages
Page 459 U. S. 217
in the form of backpay," it observed that
"this is a case in which both defendants, by their illegal acts,
are liable to plaintiff. . . . The problem in this case is not one
of liability, but rather one of apportionment. . . ."
Id. at 1130-1131. The jury had found that the Union was
responsible for $30,000 of Bowen's damages. The court approved that
apportionment, ordering the Service to pay the remaining $22,954.
[
Footnote 6]
On appeal by the Service and the Union, the Court of Appeals for
the Fourth Circuit overturned the damages award against the Union.
642 F.2d 79 (1981). It accepted the District Court's findings of
fact, but held as a matter of law that,
"[a]s Bowen's compensation was at all times payable only by the
Service, reimbursement of his lost earnings continued to be the
obligation of the Service exclusively. Hence, no portion of the
deprivations . . . was chargeable to the Union.
Cf. Vaca v.
Sipes, 386 U. S. 171,
386 U. S.
195 . . . (1967)."
Id. at 82 (footnote omitted). The court did not alter
the District Court's judgment in any other respect, but "affirmed
[it] throughout" except for the award of damages against the Union.
Id. at 83.
Thus, the Court of Appeals affirmed the District Court's
apportionment of fault and its finding that both the Union and the
Service had acted "in reckless and callous disregard of [Bowen's]
rights." [
Footnote 7] Indeed,
the court accepted the District
Page 459 U. S. 218
Court's apportionment of fault so completely that it refused to
increase the $22,954 award against the Service to cover the whole
of Bowen's injury. Bowen was left with only a $22,954 award,
whereas the jury and the District Court had awarded him lost
earnings and benefits of $52,954 -- the undisputed amount of his
damages.
II
In
Vaca v. Sipes, 386 U. S. 171
(1967), the Court held that an employee such as Bowen, who proves
that his employer violated the labor agreement and his union
breached its duty of fair representation, may be entitled to
recover damages from both the union and the employer. The Court
explained that the award must be apportioned according to
fault:
"The governing principle, then, is to apportion liability
between the employer and the union according to the damage caused
by the fault of each. Thus, damages attributable solely to the
employer's breach of contract should not be charged to the union,
but increases if any in those damages caused by the union's refusal
to process the grievance should not be charged to the
employer."
Id. at
386 U. S.
197-198.
Although
Vaca's governing principle is well
established, its application has caused some uncertainty. [
Footnote 8] The Union argues
Page 459 U. S. 219
that the Court of Appeals correctly determined that it cannot be
charged with any damages resulting from a wrongful discharge.
Vaca's "governing principle," according to
Page 459 U. S. 220
the Union, requires that the employer be solely liable for such
damages. The Union views itself as liable only for Bowen's
litigation expenses resulting from its breach of duty. It finds
support for this view in
Vaca's recognition that a union's
breach of its duty of fair representation does not absolve an
employer of all the consequences of a breach of the collective
bargaining contract.
See id. at 196. The Union contends
that its unrelated breach of the duty of fair representation does
not make it liable for any part of the discharged employee's
damages; its default merely lifts the bar to the employee's suit on
the contract against his employer.
The difficulty with this argument is that it treats the
relationship between the employer and employee, created by the
collective bargaining agreement, as if it were a simple contract of
hire governed by traditional common law principles. This reading of
Vaca fails to recognize that a collective bargaining
agreement is much more than traditional common law employment
terminable at will. Rather, it is an agreement creating
relationships and interests under the federal common law of labor
policy.
A
In
Vaca, as here, the employee contended that his
employer had discharged him in violation of the collective
bargaining agreement and that the union had breached its duty of
fair representation by refusing to take his claim to arbitration.
He sued the union in a Missouri state court for breach of its duty.
On finding that both the union and the employer
Page 459 U. S. 221
were at fault, the jury decided -- and the Missouri Supreme
Court agreed -- that the union was entirely liable for the
employee's lost backpay.
See id. at 195.
On appeal, this Court was required to resolve a number of
issues. One was whether an employee who had failed to exhaust the
grievance procedure prescribed in the bargaining agreement could
bring suit for a breach of that agreement. [
Footnote 9] In
Republic Steel Corp. v. Maddox,
379 U. S. 650
(1965), the Court had held that
"federal labor policy requires that individual employees wishing
to assert contract grievances must
attempt use of the
contract grievance procedure agreed upon by employer and union as
the mode of redress. [
Footnote
10]"
Id. at
379 U. S. 652
(emphasis in original; footnote omitted). Because the employee in
Republic Steel had made no attempt to exhaust the
grievance procedure, it was necessary for the Court to consider
only the union's interest in participating in the administration of
the contract and the employer's interest in limiting administrative
remedies. The Court noted, however, that, if "the union refuses to
press or only perfunctorily presses the individual's claim,"
federal labor policy might require a different result.
Ibid.
Vaca presented such a situation. The union, which had
the "sole power under the contract to invoke the higher stages of
the grievance procedure," had chosen not to take the employee's
claim to arbitration.
See 386 U.S. at
386 U. S. 185.
Thus, the Court faced a strong countervailing interest: the
Page 459 U. S. 222
employee's right to vindicate his claim.
Vaca resolved
these conflicting interests by holding that an employee's failure
to exhaust the contractual grievance procedures would bar his suit
except when he could show that the union's breach of its duty of
fair representation had prevented him from exhausting those
remedies.
See ibid. The Vaca Court then observed:
"It is true that the employer in such a situation may have done
nothing to prevent exhaustion of the exclusive contractual remedies
to which he agreed in the collective bargaining agreement. But the
employer has committed a wrongful discharge in breach of that
agreement, a breach which could be remedied through the grievance
process to the employee-plaintiff's benefit were it not for the
union's breach of its statutory duty of fair representation to the
employee. To leave the employee remediless in such circumstances
would, in our opinion, be a great injustice."
Id. at
386 U. S.
185-186.
The interests thus identified in
Vaca provide a measure
of its principle for apportioning damages. Of paramount importance
is the right of the employee, who has been injured by both the
employer's and the union's breach, to be made whole. In determining
the degree to which the employer or the union should bear the
employee's damages, the Court held that the employer should not be
shielded from the "natural consequences" of its breach by wrongful
union conduct.
Id. at
386 U. S. 186.
The Court noted, however, that the employer may have done nothing
to prevent exhaustion. Were it not for the union's failure to
represent the employee fairly, the employer's breach "could [have
been] remedied through the grievance process to the
employee-plaintiff's benefit." The fault that justifies dropping
the bar to the employee's suit for damages also requires the union
to bear some responsibility for increases in the employee's damages
resulting from its breach. To hold otherwise would make the
employer alone liable for the consequences of the union's breach of
duty.
Page 459 U. S. 223
Hines v. Anchor Motor Freight, Inc., 424 U.
S. 554 (1976), presented an issue analogous to that in
Vaca: whether proof of a breach of the duty of fair
representation would remove the bar of finality from an arbitral
decision. We held that it would, in part because a contrary rule
would prevent the employee from recovering
"even in circumstances where it is shown that a union has
manufactured the evidence and knows from the start that it is
false; or even if, unbeknownst to the employer, the union has
corrupted the arbitrator to the detriment of disfavored union
members."
424 U.S. at
424 U. S.
570.
It would indeed be unjust to prevent the employee from
recovering in such a situation. It would be equally unjust to
require the employer to bear the increase in the damages caused by
the union's wrongful conduct. [
Footnote 11] It is true that the employer discharged the
employee wrongfully and remains liable for the employee's backpay.
See Vaca, 386 U.S. at
386 U. S. 197.
The union's breach of its duty of fair representation, however,
caused the grievance procedure to malfunction, resulting in an
increase in the employee's damages. Even though both the employer
and the union have caused the damage suffered by the employee, the
union is responsible for the increase in damages and, as between
the two wrongdoers, should bear its portion of the damages.
[
Footnote 12]
Vaca's governing principle reflects this allocation of
responsibility. As the Court stated,
"damages attributable
solely to the employer's breach
of contract should not be charged to the union, but
increases, if any, in those damages
Page 459 U. S. 224
caused by the union's refusal to process the grievance should
not be charged to the employer."
Id. at
386 U. S.
197-198 (emphasis added). The Union's position here
would require us to read out of the
Vaca articulation of
the relevant principle the words emphasized above. [
Footnote 13] It would also ignore the
interests of all the parties to the collective agreement --
interests that
Vaca recognized and
Hines
illustrates.
B
In approving apportionment of damages caused by the employer's
breach of the collective bargaining agreement and the union's
breach of its duty of fair representation,
Vaca did not
apply principles of ordinary contract law. For, as the Court has
noted, a collective bargaining agreement "is more than a contract;
it is a generalized code to govern a myriad of cases which the
draftsmen cannot wholly anticipate."
Steelworkers v. Warrior
& Gulf Navigation Co., 363 U. S. 574,
363 U. S. 578
(1960). In defining the relationships created by such an
Page 459 U. S. 225
agreement, the Court has applied an evolving federal common law
grounded in national labor policy.
See Steelworkers v. American
Manufacturing Co., 363 U. S. 564,
363 U. S. 567
(1960);
Textile Workers v. Lincoln Mills, 353 U.
S. 448,
353 U. S.
456-457 (1957).
Fundamental to federal labor policy is the grievance procedure.
See John Wiley & Sons, Inc. v. Livingston,
376 U. S. 543,
376 U. S. 549
(1964);
Warrior & Gulf Navigation Co., supra, at
363 U. S. 578.
It promotes the goal of industrial peace by providing a means for
labor and management to settle disputes through negotiation, rather
than industrial strife.
See John Wiley & Sons, Inc.,
supra, at
376 U. S. 549.
Adoption of a grievance procedure provides the parties with a means
of giving content to the collective bargaining agreement and
determining their rights and obligations under it.
See Warrior
& Gulf Navigation Co., supra, at
363 U. S.
581.
Although each party participates in the grievance procedure, the
union plays a pivotal role in the process, since it assumes the
responsibility of determining whether to press an employee's
claims. [
Footnote 14] The
employer, for its part, must rely on the union's decision not to
pursue an employee's grievance. For the union acts as the
employee's exclusive representative in the grievance procedure, as
it does in virtually all matters
Page 459 U. S. 226
involving the terms and conditions of employment. Just as a
nonorganized employer may accept an employee's waiver of any
challenge to his discharge as a final resolution of the matter, so
should an organized employer be able to rely on a comparable waiver
by the employee's exclusive representative.
There is no unfairness to the union in this approach. By seeking
and acquiring the exclusive right and power to speak for a group of
employees, the union assumes a corresponding duty to discharge that
responsibility faithfully -- a duty which it owes to the employees
whom it represents and on which the employer with whom it bargains
may rely. When the union, as the exclusive agent of the employee,
waives arbitration or fails to seek review of an adverse decision,
the employer should be in substantially the same position as if the
employee had had the right to act on his own behalf and had done
so. Indeed, if the employer could not rely on the union's decision,
the grievance procedure would not provide the "uniform and
exclusive method for [the] orderly settlement of employee
grievances," which the Court has recognized is essential to the
national labor policy. [
Footnote
15]
See Clayton v. Automobile Workers, 451 U.
S. 679,
451 U. S.
686-687 (1981).
Page 459 U. S. 227
The principle announced in
Vaca reflects this
allocation of responsibilities in the grievance procedure -- a
procedure that contemplates that both employer and union will
perform their respective obligations. In the absence of damages
apportionment where the default of both parties contributes to the
employee's injury, incentives to comply with the grievance
procedure will be diminished. Indeed, imposing total liability
solely on the employer could well affect the willingness of
employers to agree to arbitration clauses as they are customarily
written.
Nor will requiring the union to pay damages impose a burden on
the union inconsistent with national labor policy. [
Footnote 16] It will provide an additional
incentive for the union to process its members' claims where
warranted.
See Vaca, 386 U.S. at
386 U. S. 187.
This is wholly consistent with a union's interest. It is a duty
owed to its members as well as consistent with the
Page 459 U. S. 228
union's commitment to the employer under the arbitration clause.
See Republic Steel, 379 U.S. at
379 U. S.
653.
III
The Union contends that
Czosek v. O'Mara, 397 U. S.
25 (1970), requires a different reading of
Vaca
and a different weighing of the interests our cases have developed.
Czosek, however, is consistent with our holding today.
[
Footnote 17] In
Czosek, employees of the Erie Lackawanna Railroad were
placed on furlough and not recalled. They brought suit against the
railroad for wrongful discharge and against their union for
breaching its duty of fair representation. They alleged that the
union had arbitrarily and capriciously refused to process their
claims against the railroad.
See 397 U.S. at
397 U. S. 26.
The District Court dismissed the claim against the railroad because
the employees had not pursued the administrative remedies
Page 459 U. S. 229
provided by the Railway Labor Act. [
Footnote 18] It dismissed the claim against the union
because the employees' ability to pursue an administrative remedy
on their own absolved the union of any duty. The Court of Appeals
for the Second Circuit affirmed the dismissal of the claim against
the railroad, but found that the employees had stated a claim
against the union. Even though the employees had a right to seek
full redress from an administrative board, the union still had a
duty to represent them fairly.
See Conley v. Gibson,
355 U. S. 41
(1957).
This Court affirmed. In so doing, it addressed the union's
concern that, if the railroad were not joined as a party, the union
might be held responsible for damages for which the railroad was
wholly or partly responsible. The Court stated:
"[J]udgment against [the union] can in any event be had only for
those damages that flowed from [its] own conduct. Assuming a
wrongful discharge by the employer independent of any
discriminatory conduct by the union and a subsequent discriminatory
refusal by the union to process grievances based on the discharge,
damages against the union for loss of employment are unrecoverable
except to the extent that its refusal to handle the grievances
added to the difficulty and expense of collecting from the
employer."
397 U.S. at
397 U. S. 29
(footnote omitted).
Although the statement is broadly phrased, it should not be
divorced from the context in which it arose. The Railway Labor Act
provided the employees in
Czosek with an alternative
remedy, which they could have pursued when the union refused to
process their grievances. Because the union's actions did not
deprive the employees of immediate access to a
Page 459 U. S. 230
remedy, it did not increase the damages that the employer
otherwise would have had to pay. The Court therefore stated that
the only damages flowing from the union's conduct were the added
expenses the employees incurred. This is consistent with
Vaca's recognition that each party should bear the damages
attributable to its fault.
IV
In this case, the findings of the District Court, accepted by
the Court of Appeals, establish that the damages sustained by
petitioner were caused initially by the Service's unlawful
discharge, and increased by the Union's breach of its duty of fair
representation. Accordingly, apportionment of the damages was
required by
Vaca. [
Footnote 19] We reverse the judgment of the Court of
Appeals and remand for entry of judgment allocating damages against
both the Service and the Union consistent with this opinion.
It is so ordered.
[
Footnote 1]
The jury sat only as an advisory panel on Bowen's claims against
the Service.
See 28 U.S.C. § 2402 ("Any action against the
United State under section 1346 shall be tried by the court without
a jury").
[
Footnote 2]
Question 3 of the special verdict stated:
"If [you find that the Union breached its duty of fair
representation and/or the Service discharged Bowen without just
cause], state from a preponderance of the evidence or with
reasonable certainty the amount of compensatory damages to which
[Bowen] is entitled."
App. to Pet. for Cert. A21-A22.
Question 8 stated:
"If compensatory damages are awarded by your answer to Question
3, state the amount, if any, that should be attributable to the
defendant Union and the amount, if any, that should be attributable
to the defendant Postal Service."
Id. at A22.
[
Footnote 3]
Counsel for the Union stated:
"Your Honor, in respect to this special verdict form, the
[Union] would object to any verdict or any question here which
would allow the jury to return a judgement against the [Union] for
any form . . . of wages. Traditionally, the Union does not pay
wages. And these damages are wholly assessable to the [Service], if
at all."
3 Record 611-612.
In a motion for judgment notwithstanding the verdict, counsel
for the Union reasserted that the "amount of back wages awarded
[Bowen] by the jury against the [Union] is as a matter of law
wholly assess[a]ble against the employer." 1 Record, Item 37,
112.
[
Footnote 4]
The District Court had instructed the jury that both the Union
and the Service could be liable for punitive damages if either had
acted "maliciously or recklessly or in callous disregard of the
rights of the Plaintiff [Bowen]." 3 Record 597. The jury found that
the Service and the Union were liable for punitive damages of
$30,000 and $10,000, respectively. App. to Pet. for Cert. A22. The
District Court determined, however, that punitive damages could not
be assessed against the Service because of sovereign immunity. 470
F. Supp. at 1131. Although the court found that the Union's actions
supported the jury's award of punitive damages, it set the award
aside. It concluded that it would be unfair to hold the Union
liable when the Service was immune.
Ibid. Bowen did not
appeal the District Court's decision on this point.
[
Footnote 5]
The grievance-arbitration clause contained in the contract
between the Service and the Union provides for a four-step
grievance procedure. The employee may initiate the grievance by
discussing it with his supervisor. The Union has discretion to
appeal on the employee's behalf, and can elect to pursue the
grievance through the next three steps. If the grievance is not
settled, the Union may refer the grievance to arbitration.
See 1 Record, Item 25, Exhibit 1.
Although Bowen could have appealed his discharge to the Civil
Service Commission, his right to do so expired 15 days after notice
of the Service's action. Moreover, by choosing to pursue his
administrative remedies, Bowen would have "waive[d] access to any
procedures under the National Agreement beyond Step 2B of the
Grievance-Arbitration Procedures." App. 90-91. By choosing the
remedy provided by the grievance procedure, he was prevented from
presenting his claim to the Civil Service Commission.
[
Footnote 6]
The District Court found as a fact that, if Bowen's grievance
had been arbitrated, he would have been reinstated by August, 1977.
Lost wages after that date were deemed the fault of the Union:
"While the [Service] set this case in motion with its discharge,
the [Union's] acts, upon which [Bowen] reasonably relied, delayed
the reinstatement of [Bowen], and it is a proper apportionment to
assign fault to the [Union] for approximately two-thirds of the
period [Bowen] was unemployed up to the time of trial."
470 F. Supp. at 1131.
[
Footnote 7]
In a footnote added after the opinion was first filed, the court
noted that it made
"no revision in the judgment of $22,954.12 against the Postal
Service. In this connection, we note that no appeal was entered by
[Bowen] from the judgment against the Service in the amount of
$22,954.12."
642 F.2d at 82, n. 6.
The court's view that the judgment against the Service could not
be increased because of Bowen's failure to appeal is erroneous.
Bowen won an unambiguous victory in the District Court. He
established that he had been discharged by the employer without
just cause, and that the Union had breached its duty of fair
representation. The amount of lost wages and benefits was not in
dispute, and the jury and the District Court awarded him all of his
damages, apportioning them between the Union and the Service. Bowen
had no reason to be unhappy with the award, and should not have
been deprived of the full amount of his compensatory damages
because of his failure to cross-appeal.
[
Footnote 8]
JUSTICE WHITE's dissent asserts that the "rationale" of
apportioning damages, applied by the Court today, "has been
rejected by every Court of Appeals that has squarely considered
it."
See post at
459 U. S. 231,
and n. 1. Apart from the fact that we apply the rationale -- the
"governing principle" -- articulated in
Vaca, few Courts
of Appeals have stated a rationale, nor has there been the
consistency in result perceived by the dissent. Only one case cited
by the dissent has declined to apportion damages after considering
the issue fully.
See Seymour v. Olin Corp., 666 F.2d 202
(CA5 1982). Others, such as the opinion below, have rejected
apportionment after giving the issue only minimal consideration.
See 642 F.2d 79, 82 (CA4 1981) (simply citing
Vaca, but not
Vaca's governing principle);
Milstead v. International Brotherhood of Teamsters, Local Union
957, 649 F.2d 395, 396 (CA6 1981) (finding that damages may
not be apportioned on the basis of
St. Clair v. Local 515,
422 F.2d 128 (CA6 1969), which found that damages may be
apportioned). Some courts have not apportioned damages, but have
articulated apparently conflicting rationales.
See Wyatt v.
Interstate & Ocean Transport Co., 623 F.2d 888, 892-893
(CA4 1980) (refusing to hold union liable for portion of damages
caused by its breach, but stating that damages can be apportioned
when the union "exacerbate[s the employee's] loss or diminution of
wages, beyond that for which the employer could be charged");
De Arroyo v. Sindicato de Trabajadores Packinghouse, 425
F.2d 281, 289-290 (CA1) (refusing to hold union liable for portion
of damages caused by its default, but stating that apportionment
would be proper where there was evidence "that, but for the Union's
conduct, the plaintiffs would have been reinstated or reimbursed at
an earlier date"),
cert. denied, 400 U.S. 877 (1970).
While it is true these cases reach the same result as the dissent,
they do not represent an affirmation of its reasoning.
Other cases have recognized that damages should be apportioned
between the union and the employer.
See Smart v. Ellis Trucking
Co., 580 F.2d 215, 219, n. 6 (CA6 1978) (on remand, trial
court to determine "the extent to which the employer's liability
for any backpay may be limited" because of its reliance on
arbitration proceeding);
Harrison v. Chrysler Corp., 558
F.2d 1273, 1279 (CA7 1977) ("union which breaches its duty of fair
representation may be sued by an employee for lost pay attributable
to the breach");
Ruzicka v. General Motors Corp., 523 F.2d
306, 312 (CA6 1975) ("Union . . . liable for that portion of
Appellant's injury representing
increases if any in those
damages [chargeable to the employer] caused by the union's refusal
to process the grievance'") (brackets in Court of Appeals opinion);
St. Clair v. Local 515, supra, at 132 (holding union
"liable for nothing more [than damages measured by backpay] and
perhaps for less" because Vaca requires those damages to
be apportioned between the employer and union according to each
party's fault). See also Feller, A General Theory of the
Collective Bargaining Agreement, 61 Calif.L.Rev. 663, 817-824
(1973) (employer's liability should not be increased by union's
default); Comment, Apportionment of Damages in DFR/Contract Suits:
Who Pays for the Union's Breach, 1981 Wis.L.Rev. 155 (same). In
sum, a fair reading of these cases reveals that, contrary to the
dissent's assertion, the Courts of Appeals have been far from
unanimous in either their results or their rationales.
[
Footnote 9]
The Court had previously held, in
Smith v. Evening News
Assn., 371 U. S. 195
(1962), that an employee may sue his employer for a breach of the
collective bargaining agreement under § 301 of the Labor Management
Relations Act.
See 29 U.S.C. § 185. Because the contract
in
Smith did not contain a grievance-arbitration procedure
that required exhaustion,
Smith did not reach the issue
presented in
Vaca. See 371 U.S. at
371 U. S. 196,
n. 1.
[
Footnote 10]
The Court based its decision on Congress' express approval of
contract grievance procedures as a preferred method of settling
disputes, the union's interest in actively participating in the
continuing administration of the contract, and the employer's
interest in limiting the choice of remedies available to aggrieved
employees.
See 379 U.S. at
379 U. S.
653.
[
Footnote 11]
We note that this is not a situation in which either the union
or the employer has participated in the other's breach.
See
Vaca, 386 U.S. at
386 U. S. 197,
n. 18.
[
Footnote 12]
Although the union remains primarily responsible for the portion
of the damages resulting from its default,
Vaca made clear
that the union's breach does not absolve the employer of liability.
Thus if the petitioner in this case does not collect the damages
apportioned against the Union, the Service remains secondarily
liable for the full loss of backpay.
[
Footnote 13]
In
Vaca, the jury had found the union responsible for
the entire amount of damages suffered by the employee. The judgment
upholding the verdict therefore was reversed. JUSTICE WHITE's
dissent reasons that, because
Vaca found that the employer
is not absolved from liability by the union's breach, the employer
must be solely responsible. The first proposition, however, does
not require the second. Thus,
Vaca's recognition that the
employer "may not hide behind the union's wrongful act" does not
answer the question posed by this case, how damages should be
apportioned as between the two wrongdoers, the union and the
employer. On this point, the explicit language of
Vaca's
governing principle makes clear that the union is responsible for
increases in the employee's damages flowing from the wrongful
discharge, a point which the dissent glosses over.
Although the Court in
Vaca concluded that the union had
not breached its duty, it observed that,
"[i]n this case, even if the Union had breached its duty, all or
almost all of [the employee's] damages would still be attributable
to his allegedly wrongful discharge."
Id. at
386 U. S. 198.
Assuming that such a breach did occur, the facts are not
sufficiently clear to determine when the breach would have occurred
or the portion of damages attributable to each party's fault. Thus,
this speculative observation is not inconsistent with the Court's
precisely worded statement of the governing principle.
[
Footnote 14]
The parties to the collective bargaining agreement, of course,
may choose not to include a grievance procedure supervised by the
union or, if they do, may choose not to make the procedure
exclusive.
See Vaca, supra, at
386 U. S. 184,
n. 9;
Republic Steel Corp. v. Maddox, 379 U.
S. 650,
379 U. S.
657-658 (1965);
cf. 29 U.S.C. § 159(a)
(employee may present grievances to his employer "without the
intervention of the bargaining representative, as long as the
adjustment is not inconsistent with the terms of a collective
bargaining contract or agreement then in effect . . ."). Most
collective bargaining agreements, however, contain exclusive
grievance-arbitration procedures and give the union power to
supervise the procedure.
See Feller,
supra, n. 8,
at 742, 752-753. When the collective bargaining agreement provides
the union with sole authority to press an employee's grievance, the
union acts as the employee's exclusive representative in the
grievance-arbitration procedure.
See Vaca, supra, at
386 U. S.
191-192.
[
Footnote 15]
Under the analysis of JUSTICE WHITE's dissent, the employer may
not rely on the union's decision not to pursue a grievance. Rather,
it can prevent continued liability only by reinstating the
discharged employee.
See post at
459 U. S.
238-239. This leaves the employer with a dubious option:
it must either reinstate the employee promptly or leave itself
exposed to open-ended liability. If this were the rule, the very
purpose of the grievance procedure would be defeated. It is
precisely to provide the exclusive means of resolving this kind of
dispute that the parties agree to such a procedure, and national
labor policy strongly encourages its use.
See Republic Steel,
supra, at
379 U. S.
653.
When the union has breached its duty of fair representation, the
dissent justifies its rule by arguing that "only the employer ha[s]
the continuing ability to right the wrong . . . by reinstating" the
employee, an ability that the union lacks.
See post at
459 U. S. 239.
But an employer has no way of knowing that a failure to carry a
grievance to arbitration constitutes a breach of duty. Rather than
rehiring, as the dissent suggests, the employer reasonably could
assume that the union had concluded the discharge was justified.
The union would have the option, if it realized it had committed an
arguable breach of duty, to bring its default to the employer's
attention. Our holding today would not prevent a jury from taking
such action into account.
See n19,
infra.
Moreover, the rule urged by the dissenting opinion would allow
the union and the employee, once the case goes to trial, to agree
to a settlement pursuant to which the union would acknowledge a
breach of its duty of fair representation in exchange for the
employee's undertaking to look to his employer for his entire
recovery. Although we may assume that this would not occur
frequently, the incentive the dissent's rule would provide to agree
to such a settlement demonstrates its unsoundness.
[
Footnote 16]
Requiring the union to pay its share of the damages is
consistent with the interests recognized in
Electrical Workers
v. Foust, 442 U. S. 42
(1979). In
Foust, we found that a union was not liable for
punitive damages. The interest in deterring future breaches by the
union was outweighed by the debilitating impact that "unpredictable
and potentially substantial" awards of punitive damages would have
on the union treasury and the union's exercise of discretion in
deciding what claims to pursue.
Id. at
442 U. S. 50-52.
An award of compensatory damages, however, normally will be limited
and finite. Moreover, the union's exercise of discretion is
shielded by the standard necessary to prove a breach of the duty of
fair representation. Thus, the threat that was present in
Foust is absent here.
[
Footnote 17]
In cases following
Vaca and
Czosek, the Court
has not had occasion to address the question presented here. In
Hines v. Anchor Motor Freight, Inc., 424 U.
S. 554 (1976), we held that proof of a breach of the
duty of fair representation will remove the bar of finality from
arbitral decisions. We did not consider the scope of the remedy
available, but stated that, if the employer had wrongfully
discharged the employee and the union had breached its duty, the
employee was "entitled to an appropriate remedy against the
employer as well as the Union."
Id. at
424 U. S. 572.
In
Foust, we reviewed the principles announced in
Vaca as bearing on the question of whether a union can be
held liable for punitive damages. Although
Foust's
discussion of
Vaca could be read as suggesting a contrary
principle to that stated in
Vaca, the holding in
Foust -- that a union may not be held liable for punitive
damages -- is consistent with our holding here. Finally, in
Clayton v. Automobile Workers, 451 U.
S. 679,
451 U. S. 690,
n. 15 (1981), the Court reiterated
Vaca's governing
principle. Although the Court did not apply that principle, the
context in which it was discussed bears on the question presented
here. In considering whether the remedies available to the employee
in an internal union procedure were equivalent to the remedies
available to an employee in a § 301 suit, the Court found it
significant that the union procedures allowed an employee to
recover backpay against the union. This was a recognition of
Vaca's explicitly announced governing principle.
[
Footnote 18]
See 45 U.S.C. §§ 153 First (i), (j). These sections
provide that an employee who is unsuccessful at the grievance level
can seek relief on his own from the National Railroad Adjustment
Board. The Board is authorized to provide remedies similar to those
available in a court suit.
See Republic Steel, 379 U.S. at
379 U. S. 657,
n. 14.
[
Footnote 19]
We need not decide whether the District Court's instructions on
apportionment of damages were proper. The Union objected to the
instructions only on the ground that no back wages at all could be
assessed against it. It did not object to the manner of
apportionment if such damages were to be assessed. Nor is it
necessary in this case to consider whether there were degrees of
fault, as both the Service and the Union were found to have acted
in "reckless and callous disregard of [Bowen's] rights."
JUSTICE WHITE, with whom JUSTICE MARSHALL, JUSTICE BLACKMUN, and
JUSTICE REHNQUIST (except as to Part IV) join, concurring in the
judgment in part and dissenting in part.
The Court holds that an employer who wrongfully discharges an
employee protected by a collective bargaining agreement with an
arbitration clause is only responsible for backpay that accrues
prior to the hypothetical date upon which an arbitrator would have
issued an award had the employee's union taken the matter to
arbitration. All backpay damages that accrue after this time are
the sole responsibility
Page 459 U. S. 231
of the union, even where, as here, the union is in no way
responsible for the employer's decision to terminate the employee.
This rationale, which heretofore has been rejected by every Court
of Appeals that has squarely considered it, [
Footnote 2/1] does not give due regard to our prior
precedents, to equitable principles, or to the national labor
policy. I therefore respectfully
Page 459 U. S. 232
dissent. For the following reasons, I believe that the employer
should be primarily liable for all backpay.
I
In
Smith v. Evening News Assn., 371 U.
S. 195,
371 U. S.
200-201 (1962), we held for the first time that an
individual employee may bring a § 301 [
Footnote 2/2] suit against his employer for breach of a
collective bargaining agreement. If, as in
Smith, the
agreement does not contain an arbitration provision, the employee's
right to bring suit is unqualified, and, in such a case, the
employer unquestionably is liable for any and all backpay that is
due.
On the other hand, if, as in the present case, the agreement
does contain an arbitration provision, it is much more difficult
for an employee to maintain a § 301 action against his employer for
any backpay whatsoever. This is because
Republic Steel Corp. v.
Maddox, 379 U. S. 650
(1965), established that contractual grievance and arbitration
procedures must be exhausted before an employee files a § 301 suit.
The
Republic Steel rule was adopted to protect the
integrity of the collective bargaining process, and to further the
national labor policy of encouraging private resolution of disputes
arising over the interpretation and implementation of collective
bargaining agreements.
See Clayton v. Automobile Workers,
451 U. S. 679,
451 U. S.
686-687 (1981).
Noting that contractual remedies sometimes prove to be
"unsatisfactory or unworkable for the individual grievant," we
considered, in
Vaca v. Sipes, 386 U.
S. 171,
386 U. S. 185
(1967), the question
"under what circumstances the individual employee may obtain
judicial review of his breach-of-contract claim despite
Page 459 U. S. 233
his failure to secure relief through the contractual remedial
procedures."
We found that one situation in which "the employee may seek
judicial enforcement of his contractual rights" is where the union
has the sole power to invoke the higher stages of the grievance
procedure,
and "the employee-plaintiff has been prevented
from exhausting his contractual remedies by the union's
wrongful refusal to process the grievance."
Ibid.
An employee may maintain a § 301 suit under these circumstances
because, in enacting the laws imposing a duty of fair
representation on unions, Congress did not intend
"to shield employers from the natural consequences of their
breaches of bargaining agreements by wrongful union conduct in the
enforcement of such agreements."
Id. at
386 U. S.
186.
Vaca made clear that, with respect to an
employer, the only consequence of a union's breach of a
fair representation duty to an
employee is that it
provides the employee with the means of defeating the employer's
"defense based upon the failure to exhaust contractual remedies,"
ibid., in a § 301 suit. The Court explicitly stated that
the union's violation of its statutory duty in no way "exempt[ed]
the employer from contractual damages which he would otherwise have
had to pay,"
id. at
386 U. S. 196,
and that the employer could not "hide behind the union's wrongful
failure to act."
Id. at
386 U. S.
197.
In
Hines v. Anchor Motor Freight, Inc., 424 U.
S. 554 (1976), we reiterated that a union's breach of
duty to an employee does not shield an employer from damages that
it would otherwise owe.
Hines involved employees whose
grievances had been fully arbitrated. The arbitrator had upheld the
discharge as rightful. Nevertheless, the Court held that the
employee might still maintain a § 301 action
if he could
establish that his union had breached its duty of representing him
fairly during the arbitral proceedings, even though the employer
was in no way responsible for the alleged union malfeasance.
Id. at
424 U. S. 569.
The employer protested
Page 459 U. S. 234
that, since its conduct during the arbitration was blameless, it
should be able to rely on the finality of the arbitral award. We
rejected this argument, pointing out that the employer had "surely
played its part in precipitating [the] dispute" by discharging the
plaintiff-employee in the first place.
Ibid. As in
Vaca, with respect to the employer, the only consequence
of the union's breach was that it "remove[d] the bar" to the
employee's right to bring a § 301 action. [
Footnote 2/3] 424 U.S. at
424 U. S.
567.
Thus, under our previous holdings, as far as the employer is
concerned, a union's breach of a fair representation duty does no
more than remove the procedural exhaustion-of-remedies bar to a §
301 suit by an aggrieved employee. The union's breach does not
affect the employer's potential liability, including backpay
liability, if the employee prevails in the § 301 judicial
proceedings by showing that the employer had breached its contract
in discharging him.
That the union is not primarily liable for backpay is readily
apparent upon close inspection of the facts in
Vaca. The
employee in that case had been discharged in January, 1960.
Sometime after February, 1961, the union refused to take the matter
to arbitration, and, in February, 1962, the employee filed suit,
claiming that the union's refusal to go to arbitration violated his
rights. The trial began in June, 1964, and the matter was not
finally adjudicated until this Court rendered its decision in
February, 1967.
See Vaca, 386 U.S. at
386 U. S.
173-176. Had the union opted in favor of arbitration,
an
Page 459 U. S. 235
award almost certainly would have been forthcoming long before
the judicial suit had even proceeded to trial. [
Footnote 2/4] Nevertheless, the
Vaca Court
commented that "all or almost all" of the employee's damages would
be attributable to the employer, not the union.
Id. at
386 U. S. 198.
Had the Court intended to hold the union responsible for backpay
accruing after the hypothetical arbitration date, presumably well
over half of this liability would have been attributed to the
union.
Of course, this does not mean that the union escapes liability
for the "natural consequences,"
Vaca, supra, at
386 U. S. 186,
of its wrongful conduct. The damages that an employee may recover
upon proof that his union has breached its duty to represent him
fairly are simply of a different nature than those recoverable from
the employer. This is why we found in
Vaca that
"damages attributable solely to the employer's breach of
contract should not be charged to the union, but increases if any
in those damages caused by the union's refusal to process the
grievance should not be charged to the employer."
386 U.S. at
386 U. S.
197-198.
What, then, is the proper measure of the union's damages in a
hybrid § 301/breach-of-duty suit? We considered this question in
Czosek v. O'Mara, 397 U. S. 25,
397 U. S. 29
(1970), and concluded that, under the
Vaca rule, the union
is liable in damages to the extent that its misconduct "add[s] to
the
Page 459 U. S. 236
difficulty and expense of collecting from the employer."
[
Footnote 2/5]
Czosek
reassured unions that they would not be forced to pay damages "for
which the employer is wholly
or partly responsible." 397
U.S. at
397 U. S. 28-29
(emphasis added).
It is true that, under the
Vaca-Czosek rule, the union
may sometimes only have
de minimis liability, and we
unanimously acknowledged this fact in
Electrical Worker v.
Foust, 442 U. S. 42,
442 U. S. 48,
442 U. S. 50
(1979).
"[T]he damages a union will be forced to pay in a typical unfair
representation suit are minimal; under
Vaca's
apportionment formula, the bulk of the award will be paid by the
employer, the perpetrator of the wrongful discharge, in a parallel
§ 301 action."
Id. at
442 U. S. 57
(BLACKMUN, J., concurring in result, joined by BURGER, C.J., and
REHNQUIST and STEVENS, JJ.). The
Foust majority
nevertheless reaffirmed
Vaca and, moreover, further
insulated unions from liability by holding that punitive damages
could not be assessed in an action for breach of the duty of fair
representation. In reaching these conclusions, the Court relied on
the policy of affording individual employees redress for injuries
caused by union misconduct without compromising the collective
interest of union members in protecting limited union funds. As in
Vaca, considerations of deterrence were deemed
insufficient to risk endangering union "financial stability." 442
U.S. at
442 U. S. 60-61.
[
Footnote 2/6]
Page 459 U. S. 237
II
Our precedents notwithstanding, the Court today abandons the
Vaca rationale and holds that a union's breach of duty
does far more than simply remove the exhaustion defense in an
employee's § 301 suit against his employer. The union's breach,
even if totally unrelated to the employer's decision to terminate
the employee, now serves to insulate the employer from further
backpay liability, as of the hypothetical arbitration date, even
though the employer, unlike the union, can stop backpay accretion
at any moment it desires, simply by reinstating the discharged
employee.
It cannot be denied that, contrary to
Vaca and its
progeny, under the Court's new rule, the "bulk of the award" for
backpay in a hybrid § 301/breach-of-duty suit will have to be borne
by the union, not the employer. In the present case, for example,
the jury, which was instructed in accordance with the Court's new
test, assessed $30,000 in compensatory damages against the union,
and only $17,000 against the employer. The union should well
consider itself fortunate that this dispute proceeded to trial less
than three years after the cessation of petitioner Bowen's
employment. Most of the cases of this nature that have been
reviewed by this Court have taken the better part of a decade to
run their course. [
Footnote
2/7]
Page 459 U. S. 238
Because the hypothetical arbitration date will usually be less
than one year after the discharge,
see 459
U.S. 212fn2/4|>n. 4,
supra, it is readily apparent
that, under the Court's rule, in many cases, the union will be
subject to large liability, far greater than that of the employer,
the extent of which will not be in any way related to the union's
comparative culpability. Nor will the union have any readily
apparent way to limit its constantly increasing liability.
[
Footnote 2/8]
Bowen and the Postal Service argue that the employer is not the
"cause" of an employee's lost earnings after the date on which an
arbitral decision would have reinstated or otherwise compensated
the employee. In the "but for" sense, of course, this is patently
false, as the Court concedes.
Ante at
459 U. S. 223.
But for the employer's breach of contract, there would be no
occasion for
anyone to reimburse the plaintiff for lost
wages accumulated either before or after a hypothetical
arbitration. Furthermore, the consequences of the breach -- the
discharge without cause -- continue to accumulate as long as the
employer refuses to reinstate. The union's failure to arbitrate
does not make the discharge and the refusal to reinstate any less
wrongful.
Thus, there is no reason why the matter should not be governed
by the traditional rule of contract law that a breaching defendant
must pay damages equivalent to the total harm suffered, "even
though there were contributing factors other than his own conduct."
5 A. Corbin, Contracts § 999 (1964). The plaintiff need not show
the proportionate part played by the defendant's breach of contract
among all the contributing factors causing the injury, and his loss
need not be "segregated proportionately."
Ibid. We
followed this rule in
Czosek, when we determined that an
employer must pay the damages if it is "wholly or partly"
responsible for the
Page 459 U. S. 239
plaintiff-employee's loss. 397 U.S. at
397 U. S. 29.
Even if the union did not stop the employer from persisting in its
breach of contract, as it might have done, conduct of this nature
is hardly sufficient to exonerate the employer.
It bears reemphasizing that, both before and after the
hypothetical arbitration date, the union did not in any way prevent
the employer from reinstating Bowen, and that the employer could
reinstate him. Under these circumstances, it is bizarre to hold, as
the Court does, that the relatively impotent union is
exclusively liable for the bulk of the backpay. The Court,
in effect, sustains the employer's protest to the union that
"you should be liable for all damages flowing from my wrong from
and after a certain time, because you should have caught and
rectified my wrong by that time."
Seymour v. Olin Corp., 666 F.2d 202, 215 (CA5 1982).
The employer's wrongful conduct clearly was the generating cause of
Bowen's loss, and only the employer had the continuing ability to
right the wrong and limit liability by reinstating Bowen. The
employer has the sole duty to pay wages, and it should be
responsible for all back wages to which Bowen is entitled.
The Court finds that its apportionment rule is "consistent with
the union's commitment to the employer under the arbitration
clause" of the collective bargaining agreement.
Ante at
459 U. S.
227-228. However, the Court in no way identifies a
legitimate source of the union's "commitment under the arbitration
clause" that it will bear exclusive liability for
post-arbitration-date backpay. The Court's finding is grounded on
the assumption that the collective bargaining agreement somehow
entitles the employer to rely on the union to bring any wrongful
discharge to its attention within the context of the grievance
machinery. But the typical collective agreement, including the one
here, contains no language entitling the employer to such reliance.
The agreement gives the union the
right to raise
grievances, but it does not
obligate it to do so. And,
most assuredly, the agreement in no way expressly
Page 459 U. S. 240
or impliedly grants the employer any rights against the union if
the union fails to bring a meritorious grievance to its
attention.
Indeed, it is only the union's
statutory duty --
implied by the judiciary [
Footnote
2/9] -- to
employees to provide them with fair
representation that in any way obliges the union to take certain
grievances to the employer for consideration. The duty of fair
representation obliges a union "to make an honest effort to serve
the interests of all [bargaining unit] members" fairly and
impartially.
Ford Motor Co. v. Huffman, 345 U.
S. 330,
345 U. S. 337
(1953);
Wallace Corp. v. NLRB, 323 U.
S. 248,
323 U. S. 255
(1944);
Steele v. Louisville & Nashville R. Co.,
323 U. S. 192,
323 U. S.
202-203 (1944). It serves as a
"bulwark to prevent arbitrary union conduct
against
individuals stripped of traditional forms of redress by the
provisions of federal labor law."
Vaca, 386 U.S. at
386 U. S. 182
(emphasis added). The union owes this duty of fair representation
to the employees it represents -- the duty does not run to the
employer, and the Court does not contend otherwise.
Accordingly, neither the collective bargaining agreement nor the
union's duty of fair representation provides any support for the
Court's conclusion that the union has somehow committed itself to
protect the employer, and that the employer has the right to rely
on the union to cut off its liability. Contrary to our past cases
construing the federal labor law, the Court, in effect, reads an
indemnification provision into the collective bargaining agreement,
even though the employer can, and more properly should, be required
to bargain for such
Page 459 U. S. 241
a provision, if desired. [
Footnote
2/10] It is a basic tenet of national labor policy that,
"when neither the collective bargaining process nor its end
product violates any command of Congress, a federal court has no
authority to modify the substantive terms of a collective
bargaining contract."
United Mine Workers Health & Retirement Funds v.
Robinson, 455 U. S. 562,
455 U. S. 576
(1982).
See also Carbon Fuel Co. v. Mine Workers,
444 U. S. 212,
444 U. S.
218-219 (1979);
Porter Co. v. NLRB,
397 U. S. 99,
397 U. S. 108
(1970). [
Footnote 2/11]
The Court also contends,
ante at
459 U. S.
226-227, that its rule will better enable grievance
procedures to provide the uniform and exclusive method for the
orderly settlement of employee grievances, because a contrary rule
"could well affect the willingness of employers to agree to
arbitration clauses as they are customarily written." Why the
Court's rule will not "affect the willingness" of
unions
to agree to such clauses is left unexplained. More importantly,
since the practical consequence of today's holding is that unions
will take many unmeritorious grievances to arbitration simply to
avoid exposure
Page 459 U. S. 242
to the new breach-of-duty liability, the Court's rule actually
impairs the ability of the grievance machinery to provide for
orderly dispute resolution.
I thus cannot agree with the Court's judgment imposing backpay
liability on the union. Lost wages are among the "natural
consequences,"
Vaca, supra, at
459 U. S. 186,
of an employer's wrongful discharge of an employee. Precedent,
equity, and national labor policy do not impose on the union
primary responsibility for all backpay accruing after its failure
to arbitrate. [
Footnote 2/12]
III
There are at least two situations in which a union should bear
some liability for backpay. First, as recognized in
Vaca,
the union and the employer may be jointly and severally liable
where the union has affirmatively induced the employer to commit
the alleged breach of contract. 386 U.S. at
386 U. S. 197,
n. 18. Second, even in a case such as this one, in which the union
is not responsible for the discharge, the union should be
secondarily liable. That is, if, due to a breach of duty by his
union, an employee is unable to collect the backpay to which he is
entitled from his employer, the entity primarily liable, he should
then be entitled to collect from the union. [
Footnote 2/13]
Page 459 U. S. 243
This rule of primary and secondary liability prevails in the law
of trusts, and should be equally applicable in the present context.
[
Footnote 2/14] Just as an
individual employee may bring a suit for breach of contract against
his employer if, but only if, the union has breached its duty of
fair representation in determining not to pursue the grievance on
the employee's behalf, a trust beneficiary may sue to enforce a
contract entered into on his behalf by the trustee if, but only if,
the trustee "improperly refuses or neglects to bring an action
against the third person." Restatement (Second) of Trusts § 282(2)
(1959); G. Bogert & G. Bogert, Law of Trusts and Trustees § 869
(2d ed.1982); 4 A. Scott, Law of Trusts § 282.1 (3d ed.1967). If
the beneficiary is able to collect in full from the primary
obligor, the trustee should not be monetarily liable.
See,
e.g., Pollard v. Pollard, 166 Cal. App.
2d 698, 701, 333 P.2d 356, 357 (1959). However, the trustee
must pay if his wrongful action causes a loss to the beneficiary,
such as where the claim was originally enforceable, but the obligor
has become insolvent, or where the claim has become barred by the
statute of limitations. 2 Scott,
supra, § 177.
The Court of Appeals for the Fourth Circuit correctly applied a
similar rule in the labor context in
Harrison v. United
Transportation Union, 530 F.2d 558 (1975),
cert.
denied, 425 U.S. 958 (1976). In that case, the
plaintiff-employee's union breached its duty of fair representation
by allowing the plaintiff's claim against the employer to become
time-barred. The court held that, under these circumstances, the
union should be responsible for the lost wages the plaintiff might
have recovered from the employer but for the union's
misconduct.
Page 459 U. S. 244
530 F.2d at 562.
See also Nedd v. United Mine Workers of
America, 400 F.2d 103, 106-107 (CA3 1968).
No such exception to the rule I would apply is applicable in
this case. The union did not incite Bowen's discharge, and Bowen is
able to recover in full from the Postal Service. Therefore, I would
affirm the judgment of the Court of Appeals to the extent that it
holds the union not liable for the backpay to which Bowen is
entitled.
IV
I disagree with the Court of Appeals, however, to the extent
that it holds the Service not liable for the $30,000 assessed by
the District Court against the union, thus precluding Bowen from
recovering this amount from either defendant. The parties
stipulated that Bowen lost approximately $47,000 in wages prior to
trial. [
Footnote 2/15] The
District Court, based upon the jury's special verdict, [
Footnote 2/16] found the employer liable
for $17,000 of these damages, and the union liable for the
remainder. Although the Court of Appeals held that Bowen's lost
earnings were an exclusive obligation of the Service, the court, in
a footnote belatedly added to its opinion, refused to amend the
judgment and assess the Service for the $30,000 that the District
Court erroneously charged against the union. This was done on the
erroneous ground that Bowen did not file a cross-appeal against the
Postal Service for the $30,000. 642 F.2d 79, 82, n. 6 (CA4
1981).
Page 459 U. S. 245
The purport of
Vaca v. Sipes is to provide employees
with effective remedies to make them whole. 386 U.S. at
386 U. S.
185-186.
See Electrical Workers v. Foust, 442
U.S. at
442 U. S. 48-49;
id. at
442 U. S. 54
(BLACKMUN, J., concurring in result). The footnote added by the
Court of Appeals had exactly the opposite effect: it deprived Bowen
of his full recovery, and did so in a procedurally questionable
manner. The Court of Appeals found no infirmity in the total
quantum of the District Court's judgment in Bowen's favor. It
reversed only that aspect of the judgment that was of no real
concern to Bowen, the apportionment of the burden of the award
between the union and the Postal Service. Yet the Court of Appeals
frustrated Bowen's entitlement to complete recovery by holding that
Bowen's failure to appeal prevented the reopening of the award
against the Postal Service.
Bowen had no cause to challenge this judgment. Under the law, he
had no right to a joint and several liability award against the
defendants. Because the
"Union played no part in [the Postal Service's] alleged breach
of contract, and since [the Postal Service] took no part in the
Union's alleged breach of duty, joint liability for either wrong
would be unwarranted."
Vaca v. Sipes, 386 U.S. at
386 U. S. 197,
n. 18. Thus, from Bowen's standpoint, apart from collectibility,
the legal effect of the judgment could not have been improved.
Whether or not he had some technical basis for appealing a judgment
in his favor, neither the facts of this case nor the concerns of
national labor policy required him to appeal to protect his
judgment. To rule otherwise would impose upon appellate courts the
burden of additional appeals from favorable decisions prosecuted by
litigants attempting to insulate their judgments from actions like
that taken here by the Court of Appeals. In this respect, the Court
and I are in agreement.
See ante at
459 U. S.
217-218, n. 7.
Accordingly, I would affirm the Court of Appeals' judgment that
the union was not liable for backpay damages, but I would reverse
the remainder of the judgment and remand
Page 459 U. S. 246
the case with instructions that the District Court be directed
to enter judgment against the Postal Service for the entire amount
of Bowen's backpay loss.
[
Footnote 2/1]
In addition to the opinion below in the present case, 642 F.2d
79 (CA4 1981),
see Seymour v. Olin Corp., 666 F.2d 202
(CA5 1982), and
Milstead v. International Brotherhood of
Teamsters, Local Union 957, 649 F.2d 395 (CA6),
cert.
denied, 454 U.S. 896 (1981). These three are the only Court of
Appeals decisions rendering square holdings on the issue. However,
also consistent with the view advanced in this dissent are
Wyatt v. Interstate & Ocean Transport Co., 623 F.2d
888 (CA4 1980) (assessing the employer for all backpay), and
Soto Segarra v. Sea-Land Service, Inc., 581 F.2d 291, 298
(1978), where the First Circuit specifically noted that, in
accordance with
Vaca v. Sipes, 386 U.
S. 171 (1967), and
Czosek v. O'Mara,
397 U. S. 25
(1970), the District Court "did not charge the union for any of the
back pay due appellee, but instead awarded $5,750 in attorney's
fees proximately caused by the Union's failure to process his
grievance."
See also De Arroyo v. Sindicato de Trabajadores
Packinghouse, 425 F.2d 281, 289-290 (CA1),
cert.
denied, 400 U.S. 877 (1970), where the employer was held
liable for all backpay, even though a jury had found that 40% of
this amount accrued because of the union's wrongful conduct.
See Feller, A General Theory of the Collective Bargaining
Agreement, 61 Calif.L.Rev. 663, 671-672 (1973).
The Court incorrectly states,
ante at
459 U. S.
218-220, n. 8, that the Courts of Appeals have not been
consistent on this issue. No Court of Appeals has ever required a
union to pay backpay in a case such as this. In fact, the only two
cases the Court cites that even suggest the possibility of union
liability for backpay are
St. Clair v. Local No. 515, 422
F.2d 128 (CA6 1969), and
Harrison v. Chrysler Corp., 558
F.2d 1273 (CA7 1977). In
St. Clair, the court did not
purport to decide the issue; it stated only that the union
certainly would not be liable for anything more than backpay less
interim earnings, "and perhaps for less," because, in light of
Vaca, "the Supreme Court has strongly implied that . . .
the increment of damages caused by the union's breach of duty is
virtually
de minimis." 422 F.2d at 132. In
Harrison, the court did make the comment that "a union
which breaches its duty of fair representation may be sued by an
employee for lost pay attributable to the breach," 558 F.2d at
1279, but no union was even a party to the litigation, so this
dicta can hardly be regarded as authoritative.
[
Footnote 2/2]
§ 301 of the Labor Management Relations Act, 29 U.S.C. § 185.
Because the employer in the present case is the United States
Postal Service, petitioner Bowen's action technically arises under
§ 2 of the Postal Reorganization Act, 39 U.S.C. § 1208(b), which is
identical to § 301 in all relevant respects.
[
Footnote 2/3]
Justice Stewart filed a two-paragraph concurring opinion in
Hines, in which he stated that the employer should not be
liable for backpay accruing between the time of the "tainted"
arbitral decision and a subsequent "untainted" determination that
the discharges were, after all, wrongful. 424 U.S. at
424 U. S.
572-573. No other Member of the Court joined Justice
Stewart's observations, and his opinion was founded on the
employer's good faith reliance on a favorable arbitral decision.
Here, the Court goes far beyond Justice Stewart and grants the
employer the right to rely on a nonexistent arbitration, even
though the union is by no means under a duty to the employer to
take any grievances to arbitration.
See infra at
459 U. S.
239-241.
[
Footnote 2/4]
Statistics developed by the Federal Mediation and Conciliation
Service (FMCS) show that, in 1981, the average time between the
filing of a grievance and the rendering of an arbitral award was
230.26 days. For the years between 1972 and 1980, the average
varied from a high of 268.3 in 1977 to a low of 223.5 in 1976 and
1978. 34 FMCS Ann. Rep. 39 (1981).
See generally Ross, The
Well-Aged Arbitration Case, 11 Ind. & Lab.Rel.Rev. 262 (1968);
Seitz, Delay: The Asp in the Bosom Of Arbitration, 36 Arb.J.(n.s.)
29 (Sept.1981). Also, in some industries, labor and management have
agreed to expedited arbitral proceedings that can further reduce
the average time.
See Sandver, Blaine, & Woyar, Time
and Cost Savings through Expedited Arbitration Procedures, 36
Arb.J.(n.s.) 11 (Dec.1981).
[
Footnote 2/5]
Czosek arose under the Railway Labor Act (RLA), 45
U.S.C. § 151
et seq. (1976 ed. and Supp. IV), which
permits an employee whose union fails to process his grievance to
press it himself. § 153 First (i), (j) (1976 ed., Supp. IV). The
Court seeks to limit
Czosek to the RLA context, on the
theory that, because the employee in
Czosek could have
filed a grievance without union assistance, the union's default in
that case did not "increase the damages that the employer otherwise
would have had to pay."
Ante at
459 U. S.
228-230. However, the
Czosek opinion nowhere
suggests that this distinction is relevant, and it cites only
Vaca in support of its finding on this point. We
reaffirmed in
Electrical Workers v. Foust, 442 U. S.
42,
442 U. S. 50, n.
13 (1979), that the
Czosek rule was an application of
"
Vaca's apportionment principle."
[
Footnote 2/6]
Even though
Foust requires that punitive damages not be
assessed against a union, the
Vaca rule nevertheless
provides for a credible deterrent against wrongful union conduct.
Attorney's fees and other litigation expenses have been assessed as
damages against unions, because such damages measure the extent by
which the union's breach of duty adds to the difficulty and expense
of collecting from the employer.
See, e.g., Seymour v. Olin
Corp., 666 F.2d at 216;
Scott v. Teamster Local 77,
548 F.2d 1244 (CA6),
cert. denied, 431 U.S. 968
(1977).
[
Footnote 2/7]
See, e.g., Clayton v. ITT Gilfillan, 623 F.2d 563, 565
(CA9 1980),
rev'd in part sub nom. Clayton v. Automobile
Workers, 451 U. S. 679
(1981) (discharge in February, 1975; we remand for trial in May,
1981);
Electrical Workers v. Foust, supra, at
442 U. S. 43-45
(discharge in February, 1971; trial in May, 1976; Court of Appeals'
judgment in 1978; this Court rules in 1979);
Hines v. Anchor
Motor Freight, Inc., 424 U.S. at
424 U. S.
556-559 (discharges in 1967; District Court grants
summary judgment in 1973; we remand for trial in March, 1976);
Czosek v. O'Mara, 397 U.S. at
397 U. S. 26
(discharge in 1962; we remand for trial in February, 1970);
Vaca v. Sipes, 386 U.S. at
386 U. S.
175-176 (discharge in January, 1960; trial begins in
June, 1964).
[
Footnote 2/8]
While remaining disturbingly vague about the point, the Court at
least concedes that a union may shift some or all backpay
responsibility back to the employer by "bring[ing] its default to
the employer's attention."
Ante at
459 U. S. 227,
n. 15.
[
Footnote 2/9]
Although no statute expressly imposes a duty of fair
representation upon unions, we have held, beginning with
Steele
v. Louisville & Nashville R. Co., 323 U.
S. 192 (1944), that
"the exclusive agent's statutory authority to represent all
members of a designated unit includes a statutory obligation to
serve the interests of all members without hostility or
discrimination toward any, to exercise its discretion with complete
good faith and honesty, and to avoid arbitrary conduct."
Vaca, 386 U.S. at
386 U. S. 177.
See generally Aaron, The Duty of Fair Representation: An
Overview, in The Duty of Fair Representation 8 (J. McKelvey
ed.1977).
[
Footnote 2/10]
See Edwards, Employers' Liability for Union Unfair
Representation: Fiduciary Duty or Bargaining Reality?, 27 Lab.L.J.
686, 691-692 (1976).
[
Footnote 2/11]
The Court correctly reaffirms,
ante at
459 U. S. 224,
that a collective bargaining agreement "is more than a contract; it
is a generalized code to govern a myriad of cases which the
draftsmen cannot wholly anticipate."
Steelworkers v. Warrior
& Gulf Navigation Co., 363 U. S. 574,
363 U. S. 578
(1960). This means that "[g]aps may be left to be filled in by
reference to the practices of the particular industry and of the
various shops covered by the agreement," because "[m]any of the
specific practices which underlie the agreement may be unknown,
except in hazy form, even to the negotiators."
Id. at
363 U. S.
580-581. The Court does not suggest that the union is
obliged by any "industry practice" to protect the employer from
backpay liability, or that such an obligation can be inferred in
any other way from the "gaps" in the agreement. The Court's holding
therefore inserts a new substantive term into the agreement, which
is precisely what we have forbidden the lower courts to do in our
previous holdings. The Court's mere belief that an employer
"should" be able to rely on the union because there is "no
unfairness to the union in this approach,"
ante at
459 U. S. 226,
is not a valid justification for the holding.
[
Footnote 2/12]
The Court asserts,
ante at
459 U. S. 227,
n. 16, that the view advanced in this dissent would allow the union
and the employee
"to agree to a settlement pursuant to which the union would
acknowledge a breach of its duty of fair representation in exchange
for the employee's undertaking to look to his employer for his
entire recovery."
I seriously doubt, however, that a union will lightly "concede"
a breach of its fair-representation duty to bargaining unit
employees, particularly since it may be liable for the plaintiff's
costs of collection, including attorney's fees in not
inconsiderable amounts.
See 459
U.S. 212fn2/6|>n. 6,
supra. Furthermore, the
Court's position, by exposing the union to even greater liability,
may well exert correspondingly greater pressure on the union to
settle, with or without an acknowledgment of breach of duty,
leaving the employer to defend the action alone.
[
Footnote 2/13]
The Court takes the exact opposite tack. It holds that the union
is primarily responsible for post-hypothetical-arbitration-date
backpay, and that the employer is secondarily liable for this
amount.
Ante at
459 U. S. 223,
n. 12.
[
Footnote 2/14]
It is not always proper to import common law principles into
federal labor law.
See NLRB v. Hearst Publication, Inc.,
322 U. S. 111,
322 U. S.
120-129 (1944). In the present context, however, the
trust analogy appears to be appropriate.
See Cox, Rights
under a Labor Agreement, 69 Harv.L.Rev. 601, 652 (1956);
Jenkins v. Wm. Schluderberg-T. J. Kurdle Co., 217 Md. 556,
559-560, 144 A.2d 88, 90 (1958).
[
Footnote 2/15]
The parties stipulated that Bowen lost $45,389.87 in back wages
and fringe benefits from the time of discharge until trial. 3
Record 316. Bowen's counsel misstated this figure as $47,000 in his
closing argument, and the jury apparently acted on this basis.
Id. at 660. No party has complained of the $1,610.13
discrepancy.
[
Footnote 2/16]
The union timely objected to the District Court's instructions
to the extent they allowed the jury to apportion any compensatory
damages to the union.
Id. at 611-612. The union renewed
its objection in its motion for judgment notwithstanding the
verdict, or in the alternative to alter or amend the judgment. 1
Record, Item 37, 112. The Court quotes the relevant material.
See ante at
459 U. S. 216,
n. 3.
JUSTICE REHNQUIST, dissenting.
I have joined Parts I, II, and III of JUSTICE WHITE's opinion.
However I have some doubt about the proposition advanced by
459 U. S.
ante at
459 U. S.
217-218, n. 7.
The District Court entered judgment for Bowen in the amount of
$52,954. It apportioned $30,000 of this amount against the Union,
and $22,954 against the Postal Service. When it reversed the
judgment against the Union, the Court of Appeals declined to
increase the award against the Postal Service or to remand for a
new trial. Because this Court has reversed the judgment of the
Court of Appeals, its assertion that Bowen "should not have been
deprived of the full amount of his compensatory damages because of
his failure to cross-appeal,"
ante at
459 U. S. 218,
n. 7, is dictum. Although the issue is not before us, I am writing
separately to express my doubts about the soundness of this
proposition.
The District Court observed that "there is authority suggesting
that only the employer is liable for damages in the form of back
pay,"
470 F.
Supp. 1127, 1130 (WD Va.1979), and the decisions of the Courts
of Appeals discussed both in JUSTICE WHITE's opinion and in the
Court's opinion show, at the very least, that there was substantial
doubt that a union could be held liable for damages such as those
awarded by the District Court. Under these circumstances, Bowen
could not reasonably think that he was in the sort of "safe harbor"
which the Court's opinion and JUSTICE WHITE's opinion suggest.
Appellate courts review judgments, and Bowen's judgment against the
Postal Service was for $22,954.
Prudent plaintiff's counsel would have filed a conditional
cross-appeal, seeking to increase the amount of that judgment if
the Union were held not liable. This is because an
"appellee may not attack the decree with a view either to
enlarging
Page 459 U. S. 247
his own rights thereunder or of lessening the rights of his
adversary, whether what he seeks is to correct an error or to
supplement the decree with respect to a matter not dealt with
below."
United States v. American Railway Express Co.,
265 U. S. 425,
265 U. S. 435
(1924).
It is not clear to me, and, in light of the Court's disposition
of the case, I need not decide, whether the Court of Appeals acted
properly in refusing to alter the judgment against the Postal
Service, or whether it should have remanded to the District Court
for further proceedings on the damages issue. It seems to me,
however, that the disposition suggested by the Court and by Part IV
of JUSTICE WHITE's opinion would permit plaintiffs to "attack" the
judgment of the Court of Appeals in a way prohibited by authorities
such as
American Railway Express, supra.