C irc u i t J u d g e John D an iel Tin d er recu sed him self an d d id  notpar t i c i pat e i n the dec i s i on ofthi s appe al, whi c h i s be i ng re so lv ed b y a q u o ru m o f th e p a n el
. S ee 2 8 U .S.C . § 4 6 (d ).



## In the 

# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 12

- 2964 R OBERT Y EF T I CH, et al., P la intif fs-A pp ella nts, v. N AVI S T AR, I NC ., a nd I ND IAN AP O LIS C AS T I NG C O RP ., D efend a nts-A pp ellees.

A pp eal from the United S t ates Di strictC our t fo r the S outhernDi stricto f Indian a, Indian apolisDiv isi on. No . 1:09- cv-01045

— Sarah EvansBarker, Judge .
A RGUED F EB RU AR Y 27, 2013

— D ECI DE D J UNE 18, 2013

Befo re F L A U M an d S YKES, C ircu it Judges .  S YKES, Ci r c u i tJ udg e . W e r evi ew her e the di sm i ssa l o f a co m pla i nt fi l ed by a g ro up o funi oni zed worke rs at a N av i sta r e ng i ne pl an t i n Indi an apo l i s, Indi an a. The2 N o. 12

- 2964 pla i nti ff s a l l ege d that they were l ai d offbyN avi sta r and not r ehi re d as workbec am e a vai l abl e be cause the c om pany had actually subcontr acte d thei r w or k t o no nuni o n pl an ts i n c o nt r av en ti o n o fthe g o ve r ni ng co l l ec ti ve -ba r g aini ng a g r ee m en t. The wor k er s br o ug ht th i s ac ti o n a g ains t N av i st arunder s ec ti o n 3 01 o fthe Lab orM anage m ent Rel ati ons A ct ( “LM RA ”) f orbr each ofthe col l ecti ve-bar gaini ng ag re em ent. A succe ssful sect i on 3 01 cl ai m r equi re s no t o nl y a bre ach o fco ntra ct b y the em plo yer but al so a br each b y th e pl aint i ff s’ u ni o n o fi ts dutyo ff ai r r epr es en ta ti o n. T h e la tt er is req u ire d be c au se th e u n ion is re sp on sib le f o r repre se nt i ngi ts mem be r s’ i nt er es ts a nd a ddr es sing thei r com pla i nts purs uant to wh atev ergr i evance pro cess i s s et up bythe re l evantcoll ecti ve-bar gaini ng ag re em ent. Onlyw h en the uni on f ai l s t o car ryo ut that du ty m ay u ni on m em ber s pursue sect i on 3 01 l i ti gat i on ag ains t th ei r e m pl o y er . To s at i sfy thi s re qui r ement, the pl aint i ff s al l eg ed th atthe y fi l ed g r i ev an ce s ch al l en g i ng N av i st ar ’ s su bc o nt r ac tingo fwor kb utthe uni o n int en ti onal l y f ai l ed t o proce ss the g ri evance s in br each o fi ts du ty offair repr ese ntati on. The di str i ct c ourthel d that the c o mpl a i ntl a c k e d e no ugh f a c t ua l c o nt e ntt o p l e ad a pl ausibl e cl ai m f orbr each ofthe duty off ai r re prese ntat i o n a n d th e r e f o r e d i s mi s s e d th e L MR A c l a i m. W e a ffi rm . The co m pla i nt i denti fi es th e e l em ents of a duty- of

- f ai r- rep resenta ti on cl ai m and conta i ns al l ega ti ons that each e l em ent i s s ati sfi ed. B u t we ag re e with the di str i ct c ourtthatbec ause the a l l ega ti ons ar e al m ost al l co nc lu sory, the com pla i nt l acks the necess ar y f actualN o. 12

- 2964 3 conte nt to st ate a pla usibl e c lai m under s ecti on 3 01 of th e L M R A
.
I . B a c kg r o und The pla i nti ff s are uni on m em ber s who w or ked f or N av ist ar , In c ., an d its w h o l ly ow n ed su b sid iar y In d ianapo l i s Ca s t i ngCo r p. ( c o l l e c t i v e l y, “ Nav i s t a r ” ) , a ti ts en gine-m an ufac tu r in g plan t in Ind ianap oli s. T he y w ere r epr es en te d f o r c o l l ec ti ve -ba r g aini ngpur po se s bythe Uni te d Au to W or k er s, Lo ca l Uni o n Nos
. 9 8 an d 2 26 , a nd thei r em plo ym ent was subj ect to the t er m s ofa col l ecti vebargain i nga g r ee m en t an d r el at ed l et te r s o fa g r ee m en t an d other con tract d ocu m en ts (coll ectively, th e “C B A ”). The pla i nti ffs a l l ege d that o n unidenti fi ed dates they w er e la id off from th eir j ob s a t t h e p lan t, os te n sib ly forl ack ofava i l abl e work, but N avi sta r actual l y s ubcontr acte d thei r w or k t o nonunio n pla nts in contr aventi on o fthe CB A
. T hey a l so al l ege d that Navi sta r faile d to rec all th em a s w or k b ec am e a va ilab le, als o in co nt r av en ti o n o fthe CBA. The y c l ai m t o h ave fi l ed hund re d s o fgr i evance s with the unio n and w er e a ssur ed by u nn am ed un ion offici als t h a t th e gri evan ces w ere b ein g p ro c es se d . In st ea d , th e g rie va n c e s w er e a c tu ally di ve r ted or st al l ed. On J an ua r y 2 7, 2 00 9, Nav i st ari nf or m ed the unio n that i t wo u ld b e cl osing the Ind i anapol i s pl ant; the pla i nti ff s a l l ege dlyhear d th is new s a t so m e po i nta fte r the uni o n di d. By A ugus t 20 09 the pl a ntwa s c l o s e d. The pla i nti ff s filed sui t a gainst Navi sta r und er sect i on 3 01 ofthe LM RA , 28 U
. S. C. § 1 85, all eg ing br each4 N o. 12

- 2964 ofthe CB A
. W hen unio n m em ber s s ue t hei r em plo yer f o r b r e a c h o fc o n t r a c tu n d e r s e c t i o n 3 0 1 o fthe L MRA , they m ust a l so state a prer equi si te cl ai m o fbr each o f th ei r uni o n’ s dut y o ff ai r r epr es en ta ti o n. See Vaca v. Sipes , 3 8 6 U .S. 17 1, 18 6-8 7 (1 96 7); Thom as v. U ni t e d Par ce l Serv., Inc. , 890 F .2d 90 9, 91 4- 16 ( 7th Ci r. 19 89)
. Thi s i s be cause or dinar i l y, uni on m em ber s m ust fi rs t use the gr i ev ance p ro c ed u re s s p ec ified in t h e C B A rat h er th an d ire c tly sue the em plo yer ; o nl y when the uni on has br eached i ts du ty to f ai rl y r epres ent the uni on m em ber s in that gr i evance pro cess m ay the uni on m em ber s br i ng a c laim ag ain st th eir em p loy er . Se e, e . g. , Del Cos t e l l o v. Int’l B hd . of Team sters , 46 2 U.S. 15 1, 16 3- 64 ( 1983 )
. In other wor ds, a s ec ti o n 3 01 s ui t i s a “h ybr i d” cl ai m c o ns i st i ng o fb o th a b r e a c h- o f

- f a i r - r e pr e s e nt a t i on el e men ta nd a b re ac h -of-c on tr ac t e lem en t. Id. a t 16 3- 65
. The b r ea ch -of

f ai r- re prese ntati on re quir em ent appli es w hether or n ot th e p lain tiffs n am e t h e u n ion as a d efe n d an t in th eir LM RA sui t. The dis tr i ct c ourtdi sm i sse d t h e LM RA cl ai m for fai lure to state a claim , reaso nin g tha t the plaintiff s had fa i l ed to adequatel y pl ead suffi ci ent fa c ts r egar ding the pr er equi si te el em ent o fthe unio n’s br each of i ts d ut y to f airl y repres en t i t s m em bers. Th e cou rt ex p lain ed th at m os t o f th e p lain tiffs ’ alle ga tio n s in th is r e s pe c twe r e c o nc l us o r y, a nd the c l o s e s tthingto a speci fi c f actualal l eg at i on

— that an unnam ed unio n o f fi c i a l t o l d th e p l a i n t i ff s th a tth e i r c l a i ms we r e b ei ng pr o cessed whenthi s was no t true

— w as i nsuffi ci ent t o st ate a cl ai m that the unio n bre ached i ts du ty of fa ir re prese ntati on. A se parat e inter ference- w i th-benefi tsN o. 12

- 2964 5 cl ai m und erthe Em plo ym ent Ret i re m ent Incom e S ecuri ty A c t o f 19 94 (“E R ISA ”), 29 U .S.C . §§ 1 00 1, et seq
. , was l ate r resolved by sum m ary j ud gm en t in f avor of N avistar. The pl aint i ff s appe al ed, i niti al l y s ee k i ngr ev i ew o fthe cour t’ s o rder s o n both the LM RA and ERIS A cl ai m s. Sin c e t h e n, 14 o f th e 4 3 p lain tiffs ab an d on ed th eir appeal ; we gr anted the i r counsel ’ s m oti on t o w i thdraw and di sm i sse d thei r appeal f or f ai l ure to p ro secute
. T h e r e ma i n i n gp l a i n t i ff s p r e s s o n l y th e L MR A c l a i m, f ocusi ng speci fi cal l y o n the unio n’s f ai l ure to f ai rl y r epresent them , so that is t h e s ol e i ssue w e a dd re ss here
. Because our re sol uti on o fthe du ty- of

- f air- re prese ntatio n iss u e is d i s p o sit ive , w e d o n otad d re ss N av ist ar ’s a lter n ative argu m en ts for affi rm an ce, inc lud ing fai lure to sta te a br each- of

- contr act cl ai m and f ai l ure to exhaust a dm i ni str ati ve re m edi es.
I I . An al ysi s W e r evi ew a Rule 12(b) ( 6) di sm i ssa l de nov o, const rui ng the co m pla i nt i n the l i ght m ostf avo rabl e t o the pl ai nti ff s, acc epti ng as tr ue al l well

- ple aded fa cts and draw i ng r eas onabl e infe re nces i n the pla i nti ff s’ f avor. F ED . R. C IV . P. 12(b)( 6); Ta m ayo v. Blag ojevi ch , 526 F. 3d 1074, 1081 ( 7th Ci r. 20 08)
. H owever, we need not accept as tr ue st ate m ents ofl aw o r unsup port ed c on c lu so ry fac tu al a lleg at ion s. M cCaul ey v . Ci ty of C hic ago , 671 F. 3d 611, 61 6 ( 7th Ci r. 20 11)
. To s urvi ve a m o ti o n t o di smi ss under Rul e 12 ( b) ( 6) , the c o m pl aint m ust “ sta te a cl ai m to r el i efthati s pl ausibl e o n i ts fac e.” B el l A tl
. C orp. v. Tw om bly, 550 U
. S. 544, 57 0 ( 2007 )
. “A6 N o. 12

- 2964

c l a i m ha s f a c i a l p l a us ib i l i t y w he n the p l a i nt i ffp l e a ds f actualco ntent that al l ows the c ourtto draw th e rea so nabl e i nfer en ce tha t th e defen dan t i s l i ab l e f o r the m i sco nd uct al l ege d.” Ash crof t v. Iqb al , 55 6 U.S
. 66 2, 67 8 (20 09 ). “W h er e a c om p lain t ple ad s fac ts th at ar e ‘ m e r ely consi ste nt with’ a defe nd ant’ s l i abi l i ty, i t ‘ sto ps shor t o f the l i ne be tw een pos sibi l i ty and plausibi l i ty ofenti tl em ent t o re l i ef
. ’ ” Id. ( quoti ng Twomb ly, 5 50 U
. S. at55 7) ( i nt erna l quo ta ti o n m arks o m i tt ed)
. In s ucha c as e, the i nfer en ce o fl i ab i l i tyi s m er ely s pec ul at i ve . “ [ W ] he r e th e w el l

- ple aded fa cts do not perm i t the co urt to i nfe r mo r e th a n th e me r e p o s s ib i l i t y o f mi s c o n d u c t, t he c o mpla i nt has al l ege d

—buti t ha s no t ‘ sh ow [n]’

— ’ th atthe ple ader is en ti tl ed to r el i ef
. ’ ” Id. at67 9 ( quoti ng F ED . R. C IV . P. 8(a) (2))
. H er e, the dist ri ct c ourthel d that the pl ai nti ff s fa i l ed to sta te a s ecti on 3 01 cl ai m ag ai nst thei r em plo yerbec ause they had not a dequ ate l y al l ege d the pre re quis i te bre ach bythe uni o n o fi ts duty o ff ai r r epr es en ta ti o n. “ W he n a l aboro rg ani zati on has bee n sel ecte d as th e e xcl usi ve re p re se n ta tiv e o f th e e m p loy ee s in a b a r g ain in g u n it, it has a duty .
. . to r epres ent a l l m em ber s f ai rl y. ” M a rquez v. Scree n Actors Guild, Inc. , 525 U
. S. 33, 44 (1998). This du ty exi sts thr ough the neg oti ati on o fa coll ecti vebar gaini ng ag re em ent a nd duri ng the adm i ni str ati on o f th e a gr ee m en t, s e e, e . g. , Thom as , 8 90 F. 2d at 917- 18, 92 2; S ch u ltz v. O w ens -Ill
. Inc. , 6 96 F
. 2d 50 5, 5 14 ( 7th Ci r . 1 982), an d the u nion ’ s o bl i g at i o n thr o ug ho uti s “t o s er ve the i nter est s o fall m em ber s without hos ti l i ty ordi scr i m i nati on t oward any, to exer ci se i ts disc re ti on with com ple te go od fait h an d h on es ty , an d to av oid arb itr ar y c o n d u c t,” Va ca , 386 U .S . a t 177. A un ion has w ide latitud e in per-N o. 12

- 2964 7 f o r m i ngthi s o bl i g at i o n, ho wev er . “ A br ea ch of the s ta tu
tory d uty o ff ai r r epr es en ta ti o n o cc ur s o nl y whena un ion’s cond u c t tow ard a m em ber of the coll ective ba rga in in g u n it is a rb itr ar y, d isc rim in at or y, or in ba d fait h .” Id. at19 0. “Each o fthes e pos sibi l i ti es m ust be co n sid ered separ ate l y in deter m i ni ng wh ethero r n ot a br each ha s been est abl i shed. ” Neal v. New sp a perHoldings, Inc. , 34 9 F. 3d 363, 36 9 ( 7th Ci r. 20 03)
. Fo r exam ple , de cl i ni ng to pur su e a g r i ev an ce a s f ara s a uni o n mem bermight l i ke i sn’ t byi tse l fa vi ol ati on o fthe du ty off ai r re prese n ta tio n . Ra th er , “[t]o p re va il on a c laim th at h is uni o n v i o l at ed its dutyo fr epr es en ta ti o n b y dr o ppi ng a g r i ev an ce , a pl aint i ff

- m embe r m us t s ho w tha t th e unio n’s deci si on was arbi tr ar y orbas ed on di scr i m i nato ry or b ad fait h m ot ive s.” Tr nk a v . Lo ca l U ni on N o. 68 8, UAW , 30 F. 3d 60, 61 (7th C ir. 1994). The pla i nti ffs focus on ba d fa i th and arbi tr ar i ness, argu ing th at th e all egation s in th eir com p lai n t a r e suffi ci ent to gi ve ri se to an i nfe re nce that the uni on arbitrarily a nd i n ba d f aith treate d their gri evan ces p erfunctor i l y o r not at al l
. The co m pla i nt ge nera l l y a l l ege s that the uni on knew thatN avi sta r had acted in contr aven tion of th e C B A a nd also con tains th e fol low ing su p erfi ci al l y m o r e spe ci fi c al l eg at i o ns : the pl aint i ff s fi l ed hundr eds o f g r i ev an ce s ab o ut N av i st ar ’ s ac ti o ns “in a continuo us a nd c o nt i nui ngb as i s th r o ug h t o the pr es en t” ; the uni o n “ i nt en ti o na l l y mis [ l ed] the [ p] l aint i ff s as t o the st at u s o ft h e g rie va n c es w h en in fa c t t h e [u ]n ion [] inv id io us l y di ve r te d, s ta l l ed, a nd o th er wise te r m i na te d a nd ab an do ne d the g r i ev an ce s” ; the uni o n “ m i s[ l ed] the [ p]l ai nti ff s byte l l i ng the m thathund reds ofsuch g ri ev-8 N o. 12

- 2964

ances fi l ed ove r a per i od ofy ears aw ai t furtheract i on by hi g h [ u] ni o n o ffi c i a l s wh e n i n f a c t, u po n i nfo r mati on and bel i ef, n one have been proce sse d and al l ar e dead”; and the uni on r efused to gi ve the pl ai nti ff s co pie s o f th e C B A. A gainst the Tw om b l y/Iqbal pl ausibi l i ty sta nd ar d, these al l egatio n s are i nsuffi ci ent t o sta te a cl ai m f orbr each o f th e d ut y of fai r represe nt ation. A ltho u g h th e plaintiff s gener al l y a l l ege thatthe unio n is guil ty ofbad f ai th b e c a us e i t“ di v er t e d, s t a l l e d, a nd o the r wi s e t e r mi na t e d” thei r gr i evance s, the com pla i nt l acks the f actual sp ecifi city requ ired to state a p la u sible breac h-of-f airr e p r e s e n t a t i o n c l a i m. “W hethero r not a uni on ’ s a cti ons ar e . . . i n bad f ai th cal l s fora subj ecti ve i nquir y a nd r equi re s proo fthat the uni on a cted ( orf ai l ed to act ) due to an i m p ro per m oti ve. ” Ne al , 3 49 F
. 3d at3 69
. Ba r e as se r ti o ns o fthe st at e o f m in d re q u i r e d for t h e c laim

— here “ba d f a i th”

— m u st be su p p or te d w ith su b sid iar y fa c ts
. See Iqba l , 55 6 U.S
. at68 0- 83. The pl ai nti ff s o ffernothi ng to su p p ort their c lai m of bad f aith ap art from conc lusory lab els

— th at th e u n n am ed u n ion offi c i als ac te d “in vid iou sl y” w hen theyf ai l ed to pro cess the gr i evance s, o r sim p ly th at t h e u n ion ’s a c tio n s w er e “ in te n tio n al, w illfu l, w an to n, an d m alic iou s.” T h ey su p p ly n o fa c tu al d et ail to supp or t these co n c lusor y a l l ega ti ons, such a s ( f or ex ampl e) o ffer i ngf ac ts tha t su g g es t a m o ti ve f o r the unio n’s al l ege d fa i l ure to deal with the gr i evance s. Dec ep tiv e a c tio n s c an be ev id en c e o f ba d fait h, see H um ph rey v . M o o re, 3 75 U. S
. 3 35 , 3 48 (1 96 4) ( su g g es tingN o. 12

- 2964 9 that “fra ud , decei tful acti on ordi shones t co nd uct” c an be evi dence of bad f ai th) , but the pla i nti ff s ha ve not gone bey ond thei r concl usor y s tat e- of

- m i nd al l ega ti ons. N ordo the pl ai nti ff s o fferpl ausibl e a l l egations of arbitrariness. “W he th er a un ion’s action s are arbitrary cal l s f or an obj ecti ve i nquir y. ” Ne al , 3 49 F
. 3d at3 69
. “ [ T] he arb itr ar y p ro n g of t h e fa ir re p re se n ta tio n a n aly sis is ve r y de ferent i al
. . . b ec au se Co ng r es s di d no t i nt en d cour ts t o i nt er fer e wi ththe de ci si o ns o fthe e m pl o y ee ’s chose n bar gaini ng r epres entat i ve. ” O o ley v . Sch w itz er D iv. , Household M

fg. Inc. , 961 F.2d 1 2 93, 1302 (7th C ir. 19 92 )
. “ A uni o n’ s actions a r e arbi tr ar y ‘ o nl y i f
. . . the uni o n’ s be ha vi o r i s so f aro ut si de a wi de r an g e o fr ea so nab len es s’ a s t o be i rr ati onal
. ” Fi l ippo v. N
. Ind. Pub
. Se r v. Corp
. , 141 F. 3d 744, 74 9 ( 7th Ci r. 19 98) ( quoti ng AirLi ne P il ots A ss ’n, Int’lv. O ’Nei ll, 499 U.S
. 65 , 67( 1991 ) ( om i ssi on in ori ginal) (citation and qu o t a t ion m arks om itted ))
. W hi l e “a uni o n may no t arbi tr ar i l y i g no r e a m er i to r i o us gr i evance o r proce ss i t in perfunct or y f ashi on, ” Va ca , 386 U
. S. at19 1, i t “ has di scret ion to act i n consi derat i o n o fs u c h f a c t o r s a s th e wi s e a l l o c a t i o n o fi t s o wn re sour ces, i ts re l ati ons h ip w i th o therem plo yee s, and i ts re l ati onshi p w i th t h e em plo yer, ” Ne al , 349 F. 3d at 369. “The uni on m ust pro vi de so m e m i ni m ali nvest i gat i on of e m p loy ee g r i e v a n c es , bu t t h e t h or ou gh n es s o f th is in ve st iga tio n d ep en d s o n th e p ar tic u lar ca se , an d on ly ane g r e g i o u s d i s r e g a r d f o r u n i o n me mb e r s ’ r i g h t s c o nstitutes a br each o fthe unio n’s duty. ” G arci a v. Z eni th Ele cs . Corp. , 58 F. 3d 11 71 , 11 76 ( 7th Ci r. 19 95) ( i nter nal qu otation m arks an d citations om itted ).10 N o. 12

- 2964 The pla i nti ff s g ener al l y a l l eg e an arbi tr ar y f ai l ure to act on th eir grievanc es (“up on inform ation and b e lief, none hav e be en pro cess ed and al l ar e dead”) , but f actual detai l i n supp or t o fthi s o therw ise concl usor y a l l ega ti on i s e nti re l y m i ssing. Fo r exam ple , the pla i nti ff s d o not i den ti fy who f il ed th e g r i ev an ce s, g i ve da te s o r e ve n a tim e fram e across w hich gri evan ces w ere fi led, or oth erwi s e de s c r ib e the c o nt e nt s ofth e g r i e v a nc e s . T he y do not i d en tify w hich un ion offici als tol d w hich plaintiff s tha tthe i r g r i e v a nc e s we r e b e i ngp r o c e s sed, no r do th eys pec i fy whenthe se c o nv er sa ti o ns o ccurr ed. And perhaps m osti m port antl y, theydo n ot expl ai n how l o ngthe y wai te d a fte r fi l i nga g riev an ce b efo r e co ncl ud i ng tha t i t had be en aba nd oned, o r how theyknew th at su c h a w aittim e w as a n ab n or m al a n d arb itr ar y del ay. W i thout at l eas t s o meb a c k g r o un d f a c t ua l c o nt e nt, the c o mpl a i nt ’ s a l l e g a t i o ns about“ ab a nd o ne d” or“dead” g ri evance s a re wh ol l y c oncl usor y. The com p l aintdo es a l l eg e th atthe uni o n l i ed to the pla i nti ff s, sa yi ng tha t the gr i evance s were be ing pro

cess ed w h en i n f act they w er en’ t. Dis honesty c an be evi dence ofbad f ai th, and a l ack ofact i on o n gr i evance s c an be ev id en c e o f arb itr ar in es s. B u t a b se n t s om e s p ec ific f actua l de t a i l t o c o l o r the s e b a r e c o nc l us o r y a l l e g a t i o ns, the c o mpl a i ntdo e s n o tp l a us ib l y s t a t e a c l a i m un der se ct i o n 3 01 o fthe LM RA. It bear s r epe at i ngtha t th e unio n enj oys subst anti aldi scr eti on in fu lfi l l i ng i ts du ty of fa ir re p re se n ta tio n . See N eal, 349 F. 3d at 369. A gainst thi s ba ckdro p pri nci ple , the com pla i nt’ s s kel eta l al l ega t i o ns s i mpl y mi r r o ri ng the e l e men t s o fa s e c t i o n 3 0 1 b a df ai thc l ai m a r e no t en o ug h t o t ak e th e pl aint i ff s’ c o m pl aintN o. 12

- 2964 11

ove r the l i ne fro m a “possible” t o a pl ausibl e cl ai m o f en ti tl ementt o r el ief
. Se eIq b al , 55 6 U.S
. at67 8; Tw om bly, 550 U
. S. at55 7, 57 0. The dis tr i ct c ourtpro perl y g ra nted N avi sta r’ s m oti on t o dism i ss. A FFI RMED .

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