F I L E D

United States Court of Appeals

Tenth Circuit

MAR 5 1999

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

TERRY A. GARVIN; JOHN MCGRAIL;

FERDNAND ADAMSON; EDITH

AITKEN; MARVA AKINS; DOUGLAS

R. ALLEN; SHIRLEY ALLEN; LOREN

ALM; SHEILA ALTMAN;

CORNELIOUS ANDERSON; PEGGY C.

ANDERSON; CLAUDETTE B.

ANTERIN; ESTHER ARNOLD;

KENNETH G. ARSENAULT; JERRY M.

ASHLEY; LINDY ASHLEY; JOHNICE

M. AUTREY; ROY AUTREY; WANDA

BAGLEY; WANDA BAGLLEY; W. E.

BAKER; MARJEAN BALDINI;

SUZANNE

BARKER; DOROTHY J. BASS; PEDRO

P. BEJARANO; CATHERINE A.

BELLIS; JIMMY BELVIN; STEVE

BENISEK; HELLEN J. BENNETT;

EUNICE F. BERRY; MARK BIANCHI;

MARY BIGELOW; RUSSELL

BIGELOW; ESTHER B. BILLIARD

CAROLYN K. BISHOP; FRANK

BLACK; JO ANN L. BLACK; LYNDEL

E. BLANTON; PATSY H. BLEMMEL;

RICHARD D. BLEMMEL; LETHA

No. 98-6007
2

BLEVINS; BENNIE H. BOHANNON;

LEE BOWEN; DORTHY BOWENS;

JOYCE BOYD; RUTY W. BOYER;

JEWEL L. BOYLES; HARDENIA

BRADFORD; MARGARET B. BRADY;

WYONNA BRANDT; MARY

BRANNON; FLORRIE L. BRANT;

LOUISE BRANUM; MARY BRIGGS;

PAUL C. BRIGGS; LINDA A. BRIM;

ERNEST W. BROWER JR.; CAROL

GENE BROWN; CECIL R. BROWN

CHARLES BROWN; ELSIE BROWN;

LOTTIE B. BROWN; MARION

BROWN; STEPHEN M. BROWN;

CAROLE JOAN BROWNING; J. T.

BRUNDAGE, a/k/a Jack Brundage;

GEORGIANNA BRUNO; JOHN W.

BRYANT; MARY BURTON; ELMER

RAY BUTTON; BEVERLY CAGLE;

TONY CAGLE; AL CAGLE; ROBERT

P. CAMPBELL; DANIEL T.

CANTRELL; LINDA CANTRELL;

VING DANG CAO; BERTHA R.

CARLTON; THELMA CARMICHAEL;

ADRIAN CARTER; DARLENE

CARTER; ROBERT CARTER; FRED

CASTEEL; GLENDA S. CASTEEL;

DALE O. CEASE; QUANNAH

CHADWELL; BETTY J. CHADWICK;

MAX E. CHANCE;

WILLIETTE TERESA CHILDS; MIKE

CLAY; HULSUK CLEVENGER;

RAYMOND COBB; DAVID G.

COLEMAN; TOMMY COLEMAN;

DAN COLEY; RACHEL COLWELL;

DAVE L. COMSTOCK; DIANNA

CONNER; TIM D. CONNER;

JOHN COOGLE; NORMA S. COONE;

PAUL D. COSBY; CATHERINE
3

COULTER; CHARLES L. COX;

CHARLOTTE M. COX; DEANNA J.

COX; RAY L. COX;

CHARLENE COYLE; DONALD D.

COYLE; RODGER D. CRAFT; BETTY

CRAIG; JOE F. CRAIG; BENNY

CRAMER; MICHAEL CRANDALL;

MAURICE F. CRAWFORD; WILMA M.

CRISP; BOBBIE CRUMP; TILDA

CUMMINGS; WINSTON CUTTER;

CARROLL DARNALL; MARGARET

DARNALL; ORVELLE DAVIS;

PATRICIA A. DAVIS; SANDRA L.

DAVIS; MILDRED DE BUSK;

DAVID DEERINWATER; CAROLYN

C. DEMOE; DENNIS DEMOE; GARY

DENNIS; BRENDA R. DEZARN;

JIMMY G. DEZARN; GAY L.

DIAMOND; VAN NGO DICH; MARY

DICK; WAYNE DINKINS; MOSSIE F.

DOKU; JAMES DON DERO; JOAN

DON DERO; JEAN M. DOTSON;

WESLEY P. DRABEK; ELAINE DUEK;

MARTHA L. DUNLAP; CONG THANH

DUONG; RYMON EARLS; R. L.

EDRALIN, a/k/a Eddie Edralin; FAY

LYNN EDWARDS; OTIS E.

EDWARDS, JR.; JOQUITTA EK;

MARTHA A. ELLIS;

AMANDA ELLISON; ZINA ENGLISH;

VIRGINIA ERVIN; BEVERLY

ESTLINBAUM; FRED ESTLINBAUM;

R. W. ESTLINBAUM; MARY

EUBANKS; EASTMAN JOE FACTOR;

DEBORAY FARRIOR; RAY FARRIOR;

CHARLES WAYNE FAWCETT;

AARON FELIX, SR.; JANICE FELIX;

NORMA LEE FELIX; RICHARD

FERGUSON; REGINALD FIELDS;
4

FLETCHER; MARTHA JAN FORD;

MARY ANN FORD; RITA J. FOSTER;

KAY F. FOWLER; MATTIE B.

FRAZIER; HELEN FRESHOUR, a/k/a 

C. W. Freshour; MARY D. FRYE;

PHYLLIS M. FULLER; ERMA J.

GAGE; MICHAEL A. GAGE; DANIEL

J. GAGNATH; BETTY J. GAINES;

DOMINGO J. GARCIA; RUBY

GARDENHIRE; MI SUN GARDNER;

ERIC W. GEORGE; K. C. GEORGE;

BARBARA GEORGE-REILLY;

RICHARD GERBER; MEL D.

GERING; ROBERT GIBBS; CAROLYN

GIBSON; MARY M. GIBSON; DIXIE

GILBERT; EVA JOLENE GILBERT;

JOE W. GILBERT; KAMENCITA

GISSANDANER; RICHARD W.

GLASCO; SHIRLEY

GLOVER-KNIGHT; ELSIE GOLSON;

DONACIANO S. GONZALES; JERRY

GOODNER; LEE P. GORRELL; JO

GOZA; LAVOY L. GREEN; SHIRLEY

GREEN; TOMMY GREEN;

KATHLEEN GREER; JOHNNIE

GREGORY, JR.; EMMA GRIDER; ANN

GRIFFITH; EDWARD GRIFFITH;

BETTY P. GRIGGS; ROBERT W.

GRIGGS; WESLEY GUDE; ARTHUR

GUESS; MARY HALEY; BARBARA

HALL; ROLAND E. HAMBROOK;

FRANCES COLLEEN HANNEMAN;

ELLA P. HANSON; CARLETTA

HARDON; HOPE G. HARE; FRANCIS

HARKER, SR.; IMOGENE HARRIS;

JAMES E. HARRIS; JAMES W.

HARVIN; CLAUDIA HASH; PATRICIA

B. HAUSER; ARCHIE HAWKINS;

RICK HAWKINS;
5

VIRGINIA HAYES; BELLIJIM HEAD;

MARILYN S. HEATHMAN; BETTY R.

HENSLEY; SHERRIE HERSHEL;

CAROLYN HICKS; JEANIE M. HICKS;

DOROTHY HIGNITE; JOHN

HILDERBRAND; CAROL HILL;

MARGARET S. HINTON; DUNG

NGOC HO; SHIRLEY A. HOLDEN;

HERMAN TYRONE HOLLAND; JOHN

DAVID HOLLAND; GWENDOLYN M.

HOOD; WANDA L. HOOD; CAROL A.

HORTON; MARY HOUSNER; C. R.

HOWARD; OMA HOWARD; CONNIE

HUFF; SANDRA HUGHART; SANDY

HUMPHERY; MARION HURLEY;

WILLIAM HURT; JANICE

HUTCHENS; JERRY D. HUTCHENS;

DARRELL HUTTON; SHERYL

HUTTON; C. P. IRBY; DEBORAH

JACKSON; WILLIAM L. JACKSON;

JERRY JACOBS; FRANCES L. JAMES;

LILLIAN JAMES; LINDSEY JASMER;

DOUGLAS M. JOHNSON; ETTA M.

JOHNSON; MARGARET L. JOHNSON;

MARY JOHNSON; MINOLA H.

JOHNSON; GEORGIA L. JONES; JOHN

E. JONES; MARCIA JONES; MATTIE

L. JONES; DONALD KEASLER;

ALVIN KEITH; SHIRLEY A. KELLEY;

CONNIE KELLIAN; JOAN E.

KENNEDY; A. E. KENT; CAROL

KEYLON; EDDIE KEYLON;

KATHERINE KILBY; HAZLE KING;

RUTHIE O. KING; ROY A. KLEPPER;

RONALD G. KLOPFENSTEIN;

GERTRUDE KROUTIL; JACQUELINE

KRUTZ; JACKIE LACK; MARY J.

LAMBERT; ESTHER B. LAMPKIN;

CARL J. D. LANE; RUTH M. LANE;
6

RUTH MARIE LAVALAIS;

BEVERLY LAWSON; DOUGLAS

LAWSON; RALPH LEE; AMELIA

LIGHTNER; WILLIAM C. LOCKE;

GLENN LOGAN; CARLOS P. LOPEZ;

SANDRA LORENZEN; IMA JEAN

LOVELACE; DONALD LOWE, SONJA

W. LOWERY; WANDA JEAN LOWRY;

PATRICIA W. LYTAL; DON

MADDOX; BERTHA MAKER;

LANA K. MANOR; SHARON MARINE;

MERLE A. MARSH; SHARON FAYE

MARTIN; JOE MARTINEZ; CHARLES

L. MASON; RICHARD S. MASON;

JOHN MASSINGALE; A. JOAN

MATHES; PAUL MATTINGLY; LINDA

B.

MCCLISH; JERRY L. MCCONNELL;

JOANN B. MCCRACKEN; JUDY C.

MCCRACKEN; GENEVA MCCRAW;

ROBERT A. MCDANIEL; CAROLYN

MCDONALD; MARY MCELYEA;

DOYLE D. MCENTIRE; FINES R.

MCEWEN; LOLA MCEWEN; JANET

MCGRAIL; CARY MCMILLIAN;

SAUNDRA MCMILLIAN; BRUCE

MCNENNEY; WILMA G. MCREE;

ALTER L. MEANS; LOUIS

MENDOZA;CHARLES W. MERRILL,

JR.; MELBA JEAN MERRILL;

BENJAMINEMESTANZA; JAY D.

MICHAEL; CAROLYN M. MILLER;

CHARLES S.MILLER; DWIGHT

MILLER; RALPH K. MILLER; SARA J.

MILLER; EARLK. MILLUS; MARY B.

MILLUS; WILLIAM S. MIMS; MARGA

S.MIRANDA; RICHARD B. MIRANDA;

ANTHONY D. 

MIXON; MARY B.
7

MIXON; ALFRED W. MOCK;

MARICELA H. MONTOYA; CEILIA

MOONEY; DON MOONEY; ALVIN

MOORE; BILL W. MOORE; JOHN C.

MOORE, JR.; ALBERT MOORE, JR.;

JORGE L. MORALES; WILLIAM R.

MORRIS; RAYMOND MORRISSEY;

DENNIS MORROW; MARGARET

MOSLEY; BOBBIE MOUNT; TIM

MOUNT;

SARAH A. MULKEY; WILLIAM M.

MUNCH; BURLENE MUNRO;

ROBERT J. MUNRO; RUBY P.

MURRY; ANN NALLEY; ALICE

NEALY; GENE NELSON; EMERALD

NESS; SHIRLEY NESS; CAROL

NEWMAN; TOMMY E. NEWMAN;

LONZETTA NOLEN; RONALD G.

NORRIS; JIMMY E. NOVOTNY;

HELEN NOWICKI; KENNITH

NOWICKI; JACK GARY NOWLIN;

GLORIA O'CONNER; MARCELLA

ORR; ROBERT OSBORN; JOHN D.

OWEN; CHARLES W. OWENS;

RUSSELL OWENS; LLOYD DON

OWREY; TAMMY SUE RAINS;

JOSEPH D. RAJER; JACK RAMER;

FLETCHER RAMSEY; MARIA IRMA

RANGEL; PATSY R. READNOUR;

BERTHA REAVES; ARNOLD G.

RHODES; LINDA B. RICHARDSON;

ALAN D. RIDGELY; RANDOLPH E.

RINACA; HELLEN R. ROBBINS;

JAMES R. ROBERSON; CATHERINE

ROBERTS; NORMA JEAN ROBERTS;

BEAULAH ROBINSON; JOHN E.

ROBINSON; VERNON ROBINSON;

DOROTHY ROBNETT; BOBBY JOE

ROGERS; ETHEL C. ROGERS; PAUL
8

ROY; WILLIAM D. ROY; JANIE

RUSSELL; BARBARA M. RUST;

EARNEST SAGAL; PAULA SAGAL;

EBBIE E. SANDERS; RON SANDERS;

RUTH ANN SANDERS; ALFREDO L.

SAUCEDA; JUDY PADGETT; JOHN M.

PAGE; MARTINA R. PAGE; SANDY H.

PAGE; SUSAN S. PANNELL; DONATA

PARDUE; DONALD PARKS;

FRANCES J. PARKS; COY N.

PATTERSON; DIANA PATTERSON;

FRANK PATTERSON; WILLELLA

PAULEY; E. E. PERCIVAL; RONNIE

PERKINS; JENICE PERRY; EDWARD

R. PETERS; NANCY F. PEYTON;

RONALD PFORTMILLER; ESTER B.

PICKENS; A. L. PIERCE; PEGGY

PIERCE; JAMES L. PIKE; MARGARET

PITT; CONNIE PONDS; LOU ANN

PORTER; PRISCILLA M. PORTER;

DAVID K. POWELL; BETTY PRIEST;

SHIRLEY B. PRIM; DOUGLAS A.

PUCKETT; ESTHER QUNTERO; MAX

RAGLAND; KENNITH RAINBOLT;

CONNIE E. SAULSBERRY; AVIS

SAVAGE; LEROY D. SCHEIN; LETA J.

SCHILLING; DONNA R.

SCHLEICHER; GEORGE H.

SCHLEICHER; LARRY SCHMIDT;

CONSTANCE T. SCOTT; MARTHA

SEBRING; JERRY SEXTON;

MICHAEL A. SHAVER; FAYE S.

SHAW; JUDY SHAW; CAROLYN

SHEEHAN; RICHARD B. SHEFFER;

EVELYN M.SHELDON; CARL L.

SHELTON; ALMA P. SHORE; 

MICHAEL SHROUF; AL SHULER;

EVELYN W. SHULTZ; JOSE E.

SIGALA;
9

SIGALA; OZETTA M. SLOAN; SHERL

SLOHN; LELIA M. SMILEY; MARY D.

SMILEY; BOB SMITH; DEBRA Z.

SMITH; GLEN H. SMITH; GLORIA R.

SMITH; MARY D. SMITH; MILDRED

A. SMITH; WANDA SMITH; LOIS

SOCKWELL; DENNIS SPEARS;

CLARISSA B. SPEIGHT; ROY

SPILLMAN; KATHLEEN STARR;

EMIL J. STEJSKAL; DON STEVENS;

JIM L. STEWART; EARL D. STILL;

ELIZABETH STOUT; CAROLYN W.

STRAMSKI; JOHN M. STYLES;

NUMBER R. SUTTON; SHIRLEY H.

SUTTON; JOYCE SWANEGAN; MANY

SZCZEPKA; SONJA SZCZEPKA;

CAROLL TARRANT; EVA THOMAS;

FRED TINSLEY; JOHNNY TISDEL;

MURLENE TOBLER; BILLIE M.

TODD; ROSS P. TOMBERLIN;

HOWARD TOYER; CLARENCE

TRAIL; KAREN TRAIL; RONALD

TROWER; KELLY TROYER; MARCUS

TUCK; BRUCE TURNER; MARVA J.

TURNER; DEBORAH

UPTON; PETE URIAS; GUYNELLE

USELTON; DANA VALLEY; WALTER

VALLEY; MARK VUCKNVICH;

NANCY WAIDLICH; LARRY W.

WALDEN; MARIAN J. WALDEN;

HELEN WALKER; CHARLES WALSH,

JR.; WILLIAM WALTON;

HERBERT W. WARD; DAVID WARE;

JAYNE WARE; GARY WARNKE;

CLINT WARTCHOW; HELEN

WARTCHOW; PHYLLIS J. WAY;

GARY D. WEBB; TALMAGE WEBB,

JR.; JOHN B. WEBER; HSIAOYEN

WELCH; VIOLET J.
10

WELCH; VIOLET J.WELLS; WALTER

ANDREW WELLS; GLORIA RICE

WEST; ELIZABETH WHELAN;

NATHANIEL WHITE, JR.; RONNIE

WHITE; ALICE WHITLOW;

BARBARA WICKER; CLIFFORD

WILKERSON; KAREN C. WILKINS;

DARLENE WILLIAMS; JACQUITA L.

WILLIAMS; MARTHA F. WILLIAMS;

NELDA JOSEPHINE WILLIAMS;

MINNIE WILNER; MELAINE

WILOUGHBY; STEVEN

WILOUGHBY; ARDIS D. WILSON;

FAYONA B. WILSON; FRANK

D. WILSON; JOYCE WILSON;

SAVANNAH M. WILSON; GEORGE

WINBURN; NICK WINES; MAC R.

WINKLER; GARY WINTER; GLENNA

WINTER; EDWIN C. WISE;

FREDERICK WISE; LINDA G. WISE;

ROBERT WOOD; J. H.

WOODARD; JOHN H. WOODFORD,

JR.; LENA J. WOODRUFF; BILL

WOODWARD; BOBBY G.

WOODWARD; EDDIE JOCE

WOODWARD; RANDI H.

WOODWARD; MARGARET A.

WOOLDRIDGE; NORMA

WOOLDRIDGE; BILLIE WORKMAN;

MARGIE WOSIKA; BARBARA WYSE;

GARY WYSE; PATSY YADON; FRED

E. YEAGER; EARLENE J. YOUNG;

SARAH A. YOUNG; AGNES

ZAMORA; ROGER G. ZIEGERFUSS,

Plaintiffs - Appellants,

v.
11

AMERICAN TELEPHONE &

TELEGRAPH CO., a New York

corporation as the successor in interest to

AT&T Network Systems, Inc.,

Defendant - Appellee,

-------------------------

LUCENT TECHNOLOGIES, INC.,

Intervenor - Appellee.

Appeal from United States District Court

for the Western District of Oklahoma

(D.C. No. CIV-97-412-A)

James A. Ikard, Oklahoma City, Oklahoma, (Michael A. Toups, Weller, Green, McGown

& Toups, L.L.P., Beaumont, Texas, and A. Hoyt Rowell, III, Ness, Motley, Loadholt,

Richardson & Poole, Charleston, South Carolina, with him on the briefs) for the

appellants.

Charles C. Jackson, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Illinois, (Eric J.

Gorman and Jill S. Mulderink, with him on the briefs) for the appellees.

Before TACHA, BARRETT, and HENRY, Circuit Judges.

BARRETT, Senior Circuit Judge.

Terry A. Garvin, et al., (collectively “Appellants”) appeal from the district court’s

grant of summary judgment in favor of American Telephone and Telegraph Company
1 The relevant language of the CBAs is essentially the same in all three agreements. 

See Joint App. Vol. 1 at Tab A (Local 1599); Vol. 1 at Tab B (Local 2021); Vol. 2 at Tab C

(Local 795). Citation will be to the collective bargaining agreement between AT&T and Local

1599, Joint Appendix Volume 1 at Tab A.

12

(AT&T) on their claims to recover termination allowances brought pursuant to § 301 of the

Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a).

Facts

Appellants were employees of Oklahoma City Works of AT&T Network Systems

Incorporated and were members of the International Brotherhood of Electrical Workers,

Local Union 1599, AFL-CIO, the International Brotherhood of Electrical Workers Union,

Local Union 2021, AFL-CIO, or the International Union, United Plant Workers of America,

Local Union 795 (collectively “the Unions”). In May 1995 and August 1995, the Unions and

AT&T entered into three collective bargaining agreements (CBAs).1

 These CBAs provided

in Article 18 that “[a]n employee LAID OFF shall be granted a Termination Allowance . .

..” (Joint App. Vol. 1 at 257, Art. 18 § 1.) “Laid off” is defined as “[a] termination of

employment arising out of a reduction in the force due to lack of work.” Id. at 162, Art. 3

§ 1(g). It is undisputed that an employee is not entitled to a termination allowance if “the

employee is recalled or re-employed as a regular employee by AT&T or any of its affiliates,

subsidiaries or entities.” Id. at 258, Art. 18 § 3(a)(2)(ii). See Brief of Appellants at 6 ¶c.

In November 1995, AT&T created Lucent Technologies Incorporated (Lucent), a

wholly owned subsidiary, to control AT&T’s systems and technology business and

operations. (Joint App. Vol. 2 at 861.) On February 1, 1996, AT&T transferred its rights,
2 The Appellants assert that there was no assignment clause in the CBAs permitting

AT&T to transfer its interests and obligations to Lucent and that the Unions were not involved in

the assignment and no vote was taken by the Unions’ members to ratify the assignment. (Brief of

Appellants at 6-7 ¶e-g.)

13

title, and interest in the Oklahoma City Works plant, where Appellants were employed, to

Lucent. Id. AT&T also transferred, and Lucent agreed to assume, AT&T’s rights and

obligations under the CBAs.2 Id; Vol. 1 at 91. On April 10, 1996, Lucent went public with

an initial stock offering of approximately 112,037,037 shares. Id. On September 30, 1996,

AT&T divested its remaining stock in Lucent. Thus, Lucent became an independent

corporation as of October 1, 1996. Id; Vol. 1 at 91.

On October 9, 1996, Appellants Terry A. Garvin and John McGrail requested

termination allowances, pursuant to Article 18 of the CBAs, in a letter to the President of

AT&T, with a copy to the Unions. James Ikard (Ikard) submitted a request for termination

allowances on behalf of members of the Unions generally. AT&T responded to Ikard on

October 29, 1996, directing his concerns to Lucent. Lucent notified Ikard on November 1,

1996, that the concerns should be submitted under Lucent’s open-door policy. Ikard notified

Lucent that the dispute was with AT&T, not Lucent. On November 7, 1996, AT&T

responded that concerns should be directed to either AT&T or Lucent. On February 6 and

February 14, 1997, Appellants, over 600 employees of AT&T/Lucent, submitted requests for

termination allowances to AT&T. (Joint App. Vol. I at 16.) On February 25, 1997, AT&T

denied their requests. Id.

On March 25, 1997, Appellants filed this action pursuant to § 301 of the LMRA,
3 Appellants amended their complaint on March 31, 1997, to include a class action

claim on behalf of themselves and as representative of others similarly situated. (Joint App. Vol.

I at 39-46.) The class was never certified by the district court.

14

claiming that AT&T’s divestiture of Lucent on September 30, 1996, “laid off” Appellants

as the term is defined in the CBAs, entitling them to termination allowances pursuant to

Article 18 of the CBAs.3 Id. at 8 ¶9 & 12 and 41 ¶10 &14.

On November 19, 1997, the district court granted AT&T’s motion for summary

judgment. (Joint App. Vol. 3 at 1798-1807.) The district court found that it was not clear

whether Appellants were required to submit their grievances through the Unions prior to

seeking federal relief because the arbitration procedure outlined in Article 7 of the CBAs

speaks only to disputes between the Unions and AT&T. Id. at 1800-01. Therefore, the court

denied AT&T’s motion for summary judgment based on failure to exhaust. Id. at 1801. In

addition, the district court determined that even if Appellants were required to proceed

through the grievance and arbitration procedures, raising their claims through the Unions

would have been futile because AT&T considered the claims meritless and there were no

AT&T representatives at the Oklahoma City Works facility in October, 1996. Id. at 1801-02.

On the merits, the district court granted summary judgment in favor of AT&T and

Lucent. Id. at 1803-07. The court concluded that Appellants were not entitled to termination

allowances because they were not “laid off” due to lack of work. Id. at 1806. The court

found that there was no interruption in their employment, no risk of immediate

unemployment, and their jobs before and after Lucent’s divestiture were on comparable
15

terms. Id.

On appeal, Appellants contend that the district court erred in granting summary

judgment in favor of AT&T. Appellants assert that the district court: erred in finding the

language in the CBAs regarding a termination allowance was unambiguous; improperly

disregarded the language of the CBAs in determining whether they were “laid off” within the

meaning of the CBAs; and improperly weighed the evidence in finding their employment

with Lucent before and after its divestiture from AT&T was comparable.

AT&T responds that the district court did not err in granting summary judgment in its

favor on the merits of Appellants’ claims because Appellants did not suffer a termination in

employment arising out of a reduction in force due to lack of work and, thus, had not been

“laid off.” However, AT&T contends the district court erroneously found that Appellants

exhausted the required grievance and arbitration procedures outlined in the CBAs and/or

erroneously excused Appellants’ failure to exhaust on the ground of futility.

We review the district court’s grant of summary judgment de novo. Oberndorf v. City

& County of Denver, 900 F.2d 1434, 1437 (10th Cir.), cert. denied, 498 U.S. 845 (1990).

“We review the record in the light most favorable to the non-moving party to determine if

a genuine issue of material fact was in dispute; if not, we must determine if the substantive

law was correctly applied.” Id. 

Discussion

I.
16

AT&T contends that the district court erred in determining that Appellants exhausted

the grievance and arbitration procedures set forth in the CBAs and/or erred in excusing

exhaustion based on futility. AT&T asserts Appellants failed to exhaust because the CBAs

clearly provide that Appellants “may” initiate grievances through the Unions pursuant to

Article 6 § 1(c), and the fact that it considered Appellants’ claims to be without merit and

intended to defend against the claims vigorously did not render the grievance and arbitration

procedures futile.

It is well established that “an employee can only sue [under § 301 of the LMRA] if

he or she has exhausted any exclusive grievance procedures provided in the collective

bargaining agreement.” United Food & Commercial Workers, Local Union No. 7R v.

Safeway Stores, Inc., 889 F.2d 940, 944 (10th Cir. 1989). See Reynolds v. School Dist. No.

1, Denver, Colo., 69 F.3d 1523, 1537 (10th Cir. 1995) (employee must exhaust

administrative grievance procedure or show an exception before bringing a private judicial

action). Exhaustion is excused when: (1) it would be futile; (2) the employer through its

conduct has repudiated the grievance procedure itself; or (3) the union has prevented the

employee from utilizing the grievance process by breaching its duty of fair representation.

Reynolds, 69 F.3d at 1537 n.18; United Food & Commercial Workers, Local Union No. 7R,

889 F.2d at 945. See Viestenz v. Fleming Cos., Inc., 681 F.2d 699, 701 (10th Cir.), cert.

denied, 459 U.S. 972 (1982).

Here, the district court excused exhaustion on the grounds that: (1) it was unclear
17

whether Appellants were required under the CBAs to submit their grievances through the

Unions and the arbitration process prior to seeking federal relief, and (2) exhaustion would

have been futile. (Joint App. Vol. 3 at 1800-02.)

The CBAs provide that individuals may bring grievances against AT&T personally

without involving the Unions or the individuals may have grievances presented for settlement

by the Unions. (Joint App. Vol. I at 179, Art. 6 § 1(b) and (c).)

Article 6 § 1states:

(a) To provide for the expeditious and mutually satisfactory settlement of

grievances arising with respect to the interpretation or application of

this Agreement or other terms and conditions of employment, the

following procedures shall apply.

(b) Any individual employee or group of employees shall have the right at

any time to present matters in their own interest to the COMPANY and

to have such matters adjusted, without the intervention of the UNION,

as long as the adjustment is not inconsistent with this Agreement and

provided the UNION has been given an opportunity to be present at

such adjustment. Any such grievance shall be presented to the

COMPANY’S Local Bargaining Agent.

(c) When an employee or group of employees wishes to have a grievance

presented for settlement by the UNION, such grievance shall, except as

otherwise provided in this or any other written agreement between the

COMPANY and the UNION, be presented as outlined below and

settlement sought at any one of the steps indicated.

Id. at 179, Art. 6 §1(a)-(c). Pursuant to § 1(b), Appellants individually wrote letters to

AT&T’s president requesting adjustments on the issue of termination allowances. Appellants

proceeded with their requests through the open-door policy as AT&T and Lucent requested

and their requests were denied. The issue is whether Appellants were also required to bring
18

their grievances through the Unions after their grievances directly with AT&T were denied

in order to exhaust the CBAs’ grievance and arbitration procedures.

“As a general rule in cases to which federal law applies, 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.”

Republic Steel Corp. v. Maddox, 379 U.S. 650, 652 (1965). “[U]nless the contract provides

otherwise, there can be no doubt that the employee must afford the union the opportunity to

act on his behalf.” Id. at 652-53. 

In Republic Steel, the Court concluded that the employee, Maddox, failed to exhaust

the mandatory grievance procedures of his contract. The contract provided,

It is the purpose of this Section to provide procedure for prompt, equitable

adjustment of claimed grievances. It is understood and agreed that unless

otherwise specifically specified elsewhere in this Agreement grievances to be

considered hereunder must be filed within thirty days after the date on which

the fact or events upon which such alleged grievance is based shall have

existed or occurred.

Any Employee who has a complaint may discuss the alleged complaint with

his Foreman in an attempt to settle it. Any complaint not so settled shall

constitute a grievance within the meaning of this Section, ‘Adjustment of

Grievances’. ‘Grievances shall be handled in the following manner: . . ..

Id. at 658 (emphasis added). The Court held that “the permissive ‘may’ did not of itself

reveal a clear understanding between the contracting parties that individual employees, unlike

either the union or the employer, are free to avoid the contract procedure and its time

limitations in favor of a judicial suit.” Id. at 658-59. Thus, the Court held that Maddox’s
19

suit could not be entertained because he had not exhausted the grievance procedures, i.e., by

waiting nearly three years to bring suit he had not complied with the 30-day time limitation.

However, the Court acknowledged that “[t]he federal rule would not of course preclude [the

employee’s] court suit if the parties to the collective bargaining agreement expressly agreed

that arbitration was not the exclusive remedy.” Id. at 657-58. See Viestenz, 681 F.2d at 701

(employee’s claim dismissed for failure to attempt use of mandatory, exclusive grievance

procedure set forth in the collective bargaining agreement).

Here, there is no requirement in the CBAs that individual employees who grieve

individually pursuant to Article 6 § 1(b) proceed through either the grievance steps outlined

in Article 6 for grievances handled between the Union representative and the company or the

arbitration procedures outlined in Article 7 expressly for “[a]ny dispute arising between the

UNION and the COMPANY . . ..” Id. at 184. Contrary to AT&T’s contention, although

employees “may” bring grievances through the Unions pursuant to Article 6 § 1(c), there is

no language in the CBAs which requires employees to do so after they have grieved directly

to AT&T/Lucent. See, e.g., Republic Steel, 379 U.S. at 658 (“Any complaint not so settled

[through direct discussion with the Foreman] shall constitute a grievance within the meaning

of this Section.”). Article 6 § 1(b) and § 1(c) provide the employee alternative methods of

grieving: directly to AT&T without the intervention of the Unions or through the Unions.

In interpreting the language of the contract in this manner, employees as individual grievants

are not allowed to avoid the procedures outlined in the CBAs in favor of judicial suit.
4 We do not reach the district court’s finding that exhaustion would have been futile

due to our conclusion that Appellants exhausted their claims. However, we believe that the

futility exception to exhaustion requires more than an employer’s characterization of the

grievance claims as meritless and its willingness to defend against the claims vigorously. See

Hines v. Anchor Motor Freight, Inc., 424 U.S. 554 (1976); Fizer v. Safeway Stores, Inc., 586

F.2d 182, 183 (10th Cir. 1978) (“Plaintiff's claims in this case, however, do not approach the

‘clear and positive showing of futility’ which we have stated need be made.”) (quoting Imel v.

Zohn Mfg. Co., 481 F.2d 181, 184, (10th Cir. 1973), cert. denied, 415 U.S. 915 (1974)).

20

However, employees are allowed to choose which method of grieving they wish to pursue.

To require employees to grieve through the Union after grieving directing to AT&T nullifies

the plain language of Article 6 § 1(b). If the contracting parties had wished Article 6 § 1(b)

to be an optional preliminary step in the grievance process and the grievance and arbitration

process to be the exclusive remedy for all grievances, then they were obligated to so state.

Thus, if an employee chooses to grieve pursuant to Article 6 § 1(b) and fulfils his or her

obligations thereunder, the employee may bring suit following an adverse decision. 

Therefore, we hold that Appellants exhausted the CBAs’ grievance procedures as

outlined in Article 6 § 1(b) as requested by AT&T before bringing their action pursuant to

§ 301 of the LMRA.4 We now proceed to the merits of Appellants’ claims.

II.

On the merits, Appellants contends that the district court erred in granting summary

judgment in favor of AT&T and Lucent. Appellants claim that the CBAs should be treated

as ambiguous regarding their entitlement to termination allowances because of the interplay

of the provisions of the termination allowance (Article 18), the definition of layoff (Article

3 § 1(g)), and the restrictions on payment of lump sum or periodic allowances (Article 18 §
21

3(a)) with the lack of assignment clauses in the CBAs, the lack of the Unions’ consent to the

assignments, and the unique circumstances of AT&T’s divestiture of Lucent. In the

alternative, Appellants assert that if the language of the CBAs is unambiguous, the district

court erred in disregarding the terms of the CBAs and applying case law arising out of

different circumstances and contractual contexts. 

Article 18 provides that “[a]n employee LAID OFF shall be granted a Termination

Allowance . . .” unless “[t]he employee is recalled or re-employed as a regular employee by

AT&T or any of its affiliates, subsidiaries or entities.” (Joint App. Vol. 1 at 257-58, Art. 18

§§ 1 & 3(a)(2)(ii).) “Laid off” is defined as “[a] termination of employment arising out of

a reduction in the force due to lack of work.” Id. at 162, Art. 3 § 1(g). Appellants submit

that they were “laid off” by AT&T on October 1, 1996, when AT&T divested Lucent.

Therefore, Appellants argue they were entitled to termination allowances. We are not

persuaded by Appellants’ contentions. 

By its plain language, the termination allowance provision does not entitle Appellants

to recover. Only employees “laid off due to lack of work” were entitled to termination

allowances. When an employee retains his or her job despite a transfer, he or she has not

suffered for “lack of work.” Headrick v. Rockwell Int’l Corp., 24 F.3d 1272, 1276 (10th Cir.

1994). AT&T’s divestiture of Lucent did not result in any disruption of employment. On

September 30, 1996, Appellants worked for Lucent as a subsidiary of AT&T. On October

1, 1996, Appellants worked for Lucent as an independent corporation. There was no
22

cessation in operations or unemployment due to “lack of work.” See Fuller v. FMC Corp.,

4 F.3d 255, 259 (4th Cir. 1993) (plaintiffs not “terminated” and, thus, not entitled to

severance benefits where they experienced no unemployment or loss of income by reasons

of plant’s transfer in ownership), cert. denied, 510 U.S. 1115 (1994); Allen v. Adage, Inc.,

967 F.2d 695, 701-03 (1st Cir. 1992) (“employees who, coincident with their separation from

service, began comparable employment at comparable wages” with successor company not

entitled to severance benefits for “reduction in force”); Awbrey v. Pennzoil Co., 961 F.2d

928, 931-32 (10th Cir. 1992) (employees not entitled to severance pay where none of them

missed any work or suffered any loss of income when accepted comparable jobs with

purchasing company); Bradwell v. GAF Corp., 954 F.2d 798, 800 (2d Cir. 1992) (“Where

an employee is kept in his or her job because, despite a change in ownership, there is no lack

of work, that employee cannot accurately be described as ‘permanently laid off because of

lack of work.’”); Rowe v. Allied Chemical Hourly Employees’ Pension Plan, 915 F.2d 266,

269 (6th Cir. 1990) (Employees’ “separation from Allied and immediate employment with

Armco upon the sale of the Ashland plant did not constitute a layoff.”); Sejman v. WarnerLambert Co., Inc., 889 F.2d 1346, 1347 (4th Cir. 1989) (employees transferred to successor

corporation were not “terminated by the Company as a result of job elimination”), cert.

denied, 498 U.S. 810 (1990).

In the term “laid off” is the understanding that the affected employees no longer hold

the same jobs they did prior to being laid off. Headrick, 24 F.3d at 1276. Appellants
5 Appellants also state that “retirees that never worked for any company other than

AT&T and retired prior to the creation of Lucent” receive pension checks from Lucent rather

than AT&T. (Brief of Appellants at 11.) This information is immaterial, however, to whether

Appellants’ jobs, before and after the divestiture of Lucent, are comparable as all Appellants

were employed at the time of the divestiture. See id. at 2. 

6

In fact, Appellants characterize these changes as “Minor Changes” in their

opening brief to this court. (Brief of Appellants at 10.)

23

contend that their jobs with Lucent, as an independent company, are not comparable to their

jobs with Lucent as an AT&T subsidiary, claiming that: (1) they lost the right to transfer

within AT&T’s system through a self-nomination process; (2) their risk of termination was

increased; (3) their telephone equipment discount was discontinued; (4) their $ 50.00 per

month long-distance telephone credit will not be renewed when the contract expires; and (4)

the interest rate on their AT&T credit cards increased to that of other cardholders.5

 

Appellants’ contentions show there were minor changes in their fringe benefits

received from Lucent before and after divestiture.6

 However, minor changes in fringe

benefits are not sufficient to establish a genuine issue of material fact on whether their

employment was comparable. See Awbrey, 961 F.2d at 931 (new employer’s “employment

benefits differed somewhat, but the differences are minor and do not cause the jobs to be

incomparable”). As we noted in Awbrey, “comparable” does not mean “identical.” Id.

The course of operations and Appellants’ comparative advantages and disadvantages

under either employer, however, are not the sole indicators of whether their jobs are

comparable. See Thorpe v. Retirement Plan of Pillsbury Co., 80 F.3d 439, 443 (10th Cir.

1996). In Thorpe, we examined the rights and liabilities assumed by the successor company
7 The WARN Act, 29 U.S.C. §§ 2101-2109, requires large employers who are

either closing a plant or instituting mass layoffs to provide sixty-days advance notice to those

employees who will be laid off or who will have their hours substantially reduced. Frymire v.

Ampex Corp., 61 F.3d 757, 761 (10th Cir. 1995), cert. denied, 517 U.S. 1182 (1996).

24

regarding the contractual relationship between the seller and the employees. Thorpe, 80 F.3d

at 443. We held that Thorpe’s “good fortune in finding employment in the same plant does

not change the fact that the transfer of the Ogden plant to Cargill resulted in a fundamental

shift in the rights and liabilities under [his] contractual relationship with [Pillsbury], not the

least of which was he was no longer employed by Pillsbury.” Id. We noted that the purchase

agreement between Pillsbury (the seller) and Cargill (the buyer) “did not provide for a

transfer of the collective bargaining agreements with the Union; did not require Cargill to

hire any past Pillsbury employee or observe any of Pillsbury’s past terms and conditions of

employment, . . .; and most importantly, refused to transfer the liabilities associated with

Pillsbury’s Retirement and Welfare Plans, . . ..” Id. at 443-44. In contrast, it is undisputed

that Lucent assumed all AT&T rights, interests, liabilities, and obligations, including the

CBAs, upon the transfer of the Oklahoma City Works facility to Lucent on February 1, 1996.

As such, Appellants’ jobs with Lucent before and after its divestiture from AT&T are

comparable.

In furtherance of their claim, Appellants contend that AT&T paid termination

allowances to employees upon the sale of its Phoenix Works facility regardless of whether

the employees found jobs with the buyer or another company. Appellants admit that AT&T

issued WARN Act7

 notices announcing its intention to terminate employment of its
25

employees at the Phoenix facility due to its sale of the facility to CSI. (Brief of Appellants

at 8 ¶1(b).) See Joint App. Vol. 3 at 1786-87. The notices also stated that AT&T anticipated

that all employees would be retained by CSI. (Joint App. Vol. 3 at 1786-87.)

In this case, however, Appellants were not “terminated” or “laid off” due to the

divestiture of Lucent from AT&T, no WARN Act notices were issued, and Appellants’

continued employment with Lucent was never in doubt. As the court in Bradwell explained:

The allowance of severance pay even if an employee takes another job

does not alter the basic eligibility requirement. Employees kept on by a plant

owner’s successor are in a different position from those who are laid off but

find alternate employment. The former are not faced with the same risk of

unemployment as are those who are permanently laid off because of lack of

work. The Policy provision ensures that those laid off will not be discouraged

from seeking alternative employment; it does not place appellants [who

continued their jobs with the successor company] in the same position as laid

off employees who may or may not find other jobs.

Bradwell, 954 F.2d at 800. Thus, while an employee who is “laid off” due to lack of work

but is fortunate enough to find a fully equivalent job on his own the next day is entitled to

benefits, an employee who is simply transferred from one owner to another without any of

the concomitant risks of unemployment or changes in job duties and benefits is not. See

Headrick, 24 F.3d at 1277. See e.g. Thorpe, 80 F.3d at 443 (employee laid off and then hired

by new owner entitled to severance pay).

Appellants became Lucent employees on February 1, 1996, when AT&T transferred

its assets and liabilities, including its obligations under the CBAs, to Lucent. At that time,

Appellants were not entitled to termination allowances pursuant to Article 18 § 3(a)(2)(ii)
8 Appellants concede in their reply brief in response to AT&T’s failure to exhaust

claim that “[u]ntil October 1st plaintiffs were not entitled to a termination allowance and had no

basis for such a request.” (Reply Brief of Appellants at 10.)

26

because Lucent was a wholly owned subsidiary of AT&T.8 On October 1, 1996, Appellants’

employer did not change, but their employer’s status as a subsidiary company changed to that

of an independent corporation. As such, Appellants were not “laid off” by AT&T on

October 1, 1996, inasmuch as they already worked for Lucent on that date. Their

employment with AT&T ended on February 1, 1996.

For the foregoing reasons, the district court’s order of November 20, 1997, granting

summary judgment in favor of AT&T is AFFIRMED.

AFFIRMED.