Case Name: Charles N. BUCHHOLTZ and Lester J. Tauer, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, Cross-Appellants, v. SWIFT & COMPANY, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, Defendants-Appellants, Cross-Appellees
Court: United States Court of Appeals for the Eighth Circuit
Jurisdiction: United States
Decision Date: 1979-04-25
Citations: 609 F.2d 317
Docket Number: Nos. 78-1559, 78-1573, 78-1596
Parties: Charles N. BUCHHOLTZ and Lester J. Tauer, on behalf of themselves and all others similarly situated, Plaintiffs-Ap-pellees, Cross-Appellants, v. SWIFT & COMPANY, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, Defendants-Appellants, Cross-Appellees.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 609
Pages: 317–336

Head Matter:
Charles N. BUCHHOLTZ and Lester J. Tauer, on behalf of themselves and all others similarly situated, Plaintiffs-Ap-pellees, Cross-Appellants, v. SWIFT & COMPANY, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, Defendants-Appellants, Cross-Appellees.
Nos. 78-1559, 78-1573, 78-1596.
United States Court of Appeals, Eighth Circuit.
Submitted Jan. 10, 1979.
Decided April 25, 1979.
Rehearing and Rehearing En Banc Denied Sept. 7, 1979.
Certiorari Denied Jan. 7, 1980. See 100 S.Ct. 672.
John M. Bowlus, of Cotton, Watt, Jones, King & Bowlus, Chicago, 111., for AFL-CIO.
Vance B. Grannis, Jr., of Grannis & Gran-nis, South St. Paul, Minn., for Swift & Co.; Roger N. Knutson, South St. Paul, Minn., on briefs.
Robert J. King, of Hvass, Weisman & King, Minneapolis, Minn., for Buchholtz and Tauer; Reed K. Mackenzie, Minneapolis, Minn., Thomas P. Lewis, Lexington Ky., and Robert P. Collins, Minneapolis, Minn., on brief.
Before GIBSON, Chief Judge, ROSS, Circuit Judge, and VAN SICKLE, District Judge.
The Honorable BRUCE M. VAN SICKLE, United States District Judge for the District of North Dakota, sitting by designation.

Opinion:
ROSS, Circuit Judge.
Appellants Swift & Company (Swift) and Amalgamated Meat Cutters and Butcher Workmen of North America (Amalgamated) appeal from an adverse judgment in the district court, after a trial to the court, which held them liable for over $1,000,000 in damages.
The plaintiffs are a class of former Swift employees who pursued claims against their former employer and former union for breach of the collective bargaining agreement and breach of the duty of fair representation.
This claim arose out of Swift's closing of its South St. Paul, Minnesota meat packing plant on November 29, 1969. Employees at that plant strongly reacted to Swift's announcement that it would pay no vacation benefits for the subsequent year, which employees urged had already been earned in 1969. According to Swift, because the plant would not be open on December 28, 1969, and because the contract provided that one requirement for vacation eligibility was that an employee be on the "active payroll" of the company on that date, none of the employees met the criteria and none were eligible.
While the union initially pressed these employees' vacation pay claim, it later settled with Swift by withdrawing the vacation pay claim and obtaining pension benefits for other employees who were then active union members. This "swap" resulted in the Settlement Agreement of June 30, 1971 entered into between Swift and Amalgamated, which barred the union's right to further press the vacation pay claim with the company. The trade was made without the participation of the former employees.
The plaintiffs thereafter came to federal court, urging that the trade of its valuable vacation pay claim by the union was a breach of the union's duty of fair representation to them, and further, that the company had wrongfully refused to pay the vacation benefits in violation of the collective bargaining agreement.
The district court held Amalgamated and Swift liable, and apportioned the damages between them. In reaching its final decision, the district court concluded that it was unnecessary for the plaintiffs to have exhausted intra-union appeals, that the union by arbitrary conduct and with hostile discrimination had unfairly represented the plaintiff class, and that the company, under the court's reading of the contract, owed plaintiffs the vacation benefits. We reverse, based on our interpretation of the collective bargaining agreement.
Exhaustion of Intra-union Remedies
In its first line of defense in the district court, Amalgamated moved to dismiss plaintiffs' complaint by contending that plaintiffs had not exhausted internal union remedies provided by Amalgamated's constitution. The district court denied the motion on grounds that the plaintiffs at the pertinent time were nonmembers who lacked standing to invoke remedies provided by the internal union mechanisms.
As a general rule, where a union provides its members with an appeal procedure, resort to the means of appeal is required prior to consideration of the member's unfair representation claim in federal court. If such exhaustion is required generally, however, it is certainly not the case that the courts are powerless to exercise discretion by assessing the adequacy of the remedy afforded and thus the essential utility of mandating exhaustion in a given case. "Generally, the courts will require an exhaustion of intra-union remedies in the absence of some showing that to do so would be futile or that the remedies are inadequate." Foy v. Norfolk & Western Railway Co., 377 F.2d 243, 246 (4th Cir. 1967).
The Foy case, supra, utilized a statutory section of the Labor-Management Reporting and Disclosure Act, 29 U.S.C.A. § 411(a)(4). The proviso to that section (the section primarily prohibits a union from limiting the right of a member to institute an action in any court or agency) permits the use of an exhaustion requirement of limited duration prior to a court suit or administrative action.
(4) Protection of the right to sue. — No labor organization shall limit the right of any member thereof to institute an action in any court Provided, That any such member may be required to exhaust reasonable hearing procedures (but not to exceed a four-month lapse of time) within such organization, before instituting legal or administrative proceedings against such organizations or any officer thereof .
29 U.S.C.A. § 411(a)(4).
In Detroy v. American Guild of Variety Artists, 286 F.2d 75, 78 (2d Cir. 1961) the Second Circuit concluded that "it appears clear that the proviso was incorporated in order to preserve the exhaustion doctrine as it had developed and would continue to develop in the courts, lest it otherwise appear to be Congress' intention to have the right to sue secured by § 101 abrogate the requirement of prior resort to internal procedures." (Emphasis added.)
From the § 411 jurisprudence the courts have, with varying outcomes, on a case-by-case basis, analyzed the futility, the adequacy of remedy, and the reasonableness of an exhaustion requirement in the context of a § 301 action alleging breach of contract and unfair representation. See Chambers v. Local Union No. 639, International Brotherhood of Teamsters, 188 U.S.App.D.C. 133, 578 F.2d 375 (1978); Battle v. Clark Equipment Co., 579 F.2d 1338 (7th Cir. 1978); Winter v. Local Union No. 639, International Brotherhood of Teamsters, 186 U.S.App. D.C. 315, 569 F.2d 146 (1977).
We have carefully considered the posture of this case at the time the plaintiffs allegedly should have taken an intraunion appeal, and find no adequate remedy which such an appeal could have provided the plaintiffs.
The dispositive legal issue is whether appellant had a reasonable and substantial likelihood of obtaining redress of their grievances (if their claims were meritorious) by pursuing the internal remedies of their individual craft unions. If it is clear they could, the District Court is justified in dismissing their complaint for failure to do so. The appellants should not be denied a hearing on the merits of their claim, however, unless there was a genuine possibility that they could have obtained an adequate intra-union remedy.
Frederickson v. System Federation No. 114 of Railway Employees' Department, 436 F.2d 764,768 (9th Cir. 1970). In the present case, not only did the union refuse to arbitrate the claim, it concededly gave up that claim to Swift in part for Swift's agreement to pay other claims in the amount of $928,200. The Settlement Agreement was then ratified by a vote of the then-members of the Local on June 21,1971. It is difficult to understand how an appeal to the union hierarchy could have altered a binding, bilateral agreement between the union and the company, or have reversed the process at that point.
As the court said in Chambers v. Local Union No. 639, International Brotherhood of Teamsters, supra, 188 U.S.App.D.C. 133, 578 F.2d 375, in a similar situation:
The union-company position antagonistic to appellants has hardened. Appellants are confronted with a settled decision which conforms to the contentions of the Union, and Kane [the employer] is willing to implement it. That decision, reached on the merits, if not otherwise improper, is final and binding on all parties as provided by the Agreement. Recourse to internal union procedures could not conceivably change that opinion. The seniority-roster-merger question has gone too far, and involves the company too deeply, for the plaintiff-employees to expect any reasonable chance of relief from subsequent internal union complaint proceedings.
Id. 188 U.S.App.D.C. at 136, 578 F.2d at 387.
The text of the Settlement Agreement entered into between Swift and Amalgamated described their action as "final and binding":
WHEREAS, Local P-167, the International, and the Company have now concluded a final and binding settlement of such four grievance cases in accordance with paragraph 59 of said Grievance Procedure;
NOW, THEREFORE, the International, Local P-167, and the Company agree as follows:
1. The International Local P-167 agree to withdraw from said Grievance Procedure with prejudice the following four grievance cases:
South St. Paul Grievance Case No. 69-22
South St. Paul Grievance Case No. 69-25
South St. Paul Grievance Case No. 70-01
South St. Paul Grievance Case No. 70-03
(Emphasis added.) Note also that the agreement ostensibly bound all levels of the union, both local and international, which distinguishes this case from a case Amalgamated relies upon, Johnson v. Wilson Foods Corp. & Amalgamated Meat Cutters, No. 77-2051 (D.Kan. July 5, 1978).
We conclude that on this particular set of facts the chance for a resolution, other than union affirmation of its prior action, was doubtful; neither direct relief nor renouncement of the binding agreement with the company was probable. As the Supreme Court said in NLRB v. Industrial Union of Marine & Shipbuilding Workers, 391 U.S. 418, 88 S.Ct. 1717, 20 L.Ed.2d 706 (1968), a case grounded on public policy considerations:
If the member becomes exhausted, instead of the remedies, the issues are never reached and an airing of the grievance never had.
Id. at 425, 88 S.Ct. at 1722.
We therefore agree with the trial court that plaintiffs are excused from the requirement to exhaust, based on our view that there was no reasonable likelihood of a truly effective remedy had they pursued the process.
Breach of the Collective Bargaining Agreement — Merits of the Vacation Pay Claim
We have carefully reviewed the district court's construction of the contract terms, but have reached a different conclusion.
We base our differing interpretation on the actual practice of the parties under the agreement, the bargaining history, and an alternative line of judicial and arbitral authority.
The Master Agreement of 1967 between Amalgamated and Swift provided as follows, in pertinent part:
Vacations
30. Vacation year — Vacation eligibility requirements are based upon credited service. The period December 28 through the subsequent December 27 shall be considered the vacation year.

32. Subsequent vacations — An employe who has received his (or her) first vacation (excluding an employe scheduled to be retired on January 1) is hereafter eligible for subsequent annual vacations as follows:
(1) On December 28, provided that on said December 28 he is being carried on the active payroll and provided that he has at all times since his last vacation been on either the active payroll or a benefit payroll;
OR
(2) On December 28, provided that during the preceding 365 calendar days he has not been off the payroll for more consecutive days than sixty (60), Sundays and holidays included, and provided that on said December 28 he is being carried on the active payroll;
OR
(3) On December 28, provided that during the preceding 365 calendar days he has completed 270 calendar days on the payroll and provided that on said December 28 he is being carried on the active payroll;
OR
(4) On that date in the vacation year, following the vacation year in which the employe received his last vacation, by which the employe has either:
(a) Completed 365 calendar days of credited service without having been off the payroll for more consecutive days than sixty (60), Sundays and holidays included, while accumulating this credit for service, and provided that he is on that date being carried on the active payroll;
OR
(b) During the preceding 365 days completed 270 calendar days on the payroll, and provided that he is on that date being carried on the active payroll.
We conclude, contrary to the district court, that eligibility for a vacation requires that an employee be on the active payroll on December 28 or on a date thereafter ("[o]n that date in the vacation year, following the vacation year in which the employe received his last vacation ."). In other words, employment on the 28th represents not merely an administrative device, but a requirement for vacation eligibility.
The district court concluded that "[a]n employee's presence on the active payroll on a specified annually recurring day was not designed to reflect any part of the service by which an employee earns a vacation," and, therefore, noncompliance should not defeat the right to a vacation. Implicit in this analysis is the conclusion that vacation is earned by working a requisite number of days. According to the district court, the members of the plaintiff class had completed "270 days or more on the payroll of the company, thus satisfying the annual vacation year credited service requirement for a vacation."
Our review of the exhibits shows us, however, that in practice individuals who had "earned" their vacation in this manner were, nevertheless, denied vacation benefits when they were not present in the active employment of the company on the established eligibility date. While the collective bargaining agreement specifically excludfed retirees, the practice was also to deny vacation benefits to those who were discharged, quit, had died, or who did not return to the active payroll due to sickness or layoffs, regardless of the number of days they had worked for Swift during the previous year. This denial of otherwise "earned" benefits is supported by the testimony of Irving M. King, the union's lawyer during the time the collective bargaining agreement was in effect. King told the district court that "[w]e had no pro rata vacation under any circumstances, as I recall, for any person leaving the service of Swift and Company for any reason prior to December 28 Richard Tagg, a long-time Swift executive, gave the same testimony.
This situation existed and was tolerated, but it was also from time to time the subject of union proposals for changes. Proposed changes had included eliminating a stated eligibility date (see pp. 2821 and 2806 of transcript) and establishing a pro rata system for vacations for all severed and retired employees (see p. 2815 of transcript).
In August 1964, in a document entitled Suggested Contract Changes — Swift Contract the union sought to modify provisions of the old 1961-64 contract for the new agreement in 1964-67. Among the suggested changes were proposals to permit vacation benefits for employees retiring on January 1 (which had been specifically excluded by contract) and to eliminate the "December 31st active payroll requirement" from Paragraphs 32(2) and 32(3). Another memoranda of national contract demands written at the same time sought to:
1. Establish full pro-rata system on vacations for workers retired or otherwise severed.
2. Clarify vacation eligibility.
(Emphasis added.)
In the ensuing 1964-67 contract the language was not eliminated, however, and only the date was changed: "[a]nd provided that on said December 28 he [the employee] is being carried on the active payroll."
In a July 1967 memoranda prepared to analyze suggested changes for the 1967-70 Agreement which followed, the union's position again had been: "[T]hat the requirement in Paragraph 32 of being on the payroll on December 28 be deleted." Again, however, the language appeared in the 1967-70 Master Agreement which followed.
Our job is to ascertain as authoritatively and as accurately as possible the intent of these private parties in their agreement. We have previously approved the necessity of venturing "outside the four comers of the contract itself" to ascertain intent and to determine the rights and duties of the parties. UAW v. White Motor Corp., 505 F.2d 1193, 1197 (8th Cir. 1974), cert. denied, 421 U.S. 921, 95 S.Ct. 1588, 43 L.Ed.2d 789 (1975).
We conclude that the literal language of the agreement supports the interpretation that presence on the active payroll on December 28 is a precondition to vacation eligibility, and that this interpretation of the language is supported by the practice under the agreement and the collective bargaining history. A plant closing is obviously not identical to other causes of absence from active status on the eligibility date, but we thmk it is very persuasive evidence that the parties recognized that a vacation otherwise "earned" could be lost by failure to meet that condition. We do not quarrel with the general proposition that vacation pay is compensation for work; however, the parties agreed to a system with two eligibility requirements. In operation that system frequently denied benefits to employees who might have received a pro rata or full vacation benefit were it not for the eligibility date. They abided with it as to all other types of severance.
Moreover, this interpretation of the contract is supported by the reasoning in recent arbitral authority. In Kroger Co. v. Retail Store Employees, 74-2 Lab.Arb. Awards ¶ 8633 (1975) (Goetz, Arb.), the arbitrator reviewed the contract language and the parties' practice:
Paragraph 4 provides that after an employee has qualified for his first one week's vacation, "he automatically qualifies for future one week's vacations as of January 1 of each year." Paragraphs 5 through 7 provide that after an employee has qualified for additional weeks of vacation (presumably as of his anniversary date), he "qualifies" for a future weeks vacation in the higher amount "as of January 1 of each year." Based on these provisions, it would appear that an employee has no right to any vacation pay until he has served beyond his first anniversary date, and that thereafter he does not qualify for vacation pay until January 1 of the year in which the vacation is taken. Under this interpretation, an employee who quits or who is discharged prior to January 1 of a given year cannot qualify for vacation pay for that year, regardless of how much work he may have performed for the Company during the preceding year. The uniform practice of the Company has been not to pay any vacation pay in such cases. To this extent at least, vacation pay under this agreement cannot be viewed simply as an unconditional deferred wage payable under any and all circumstances to everyone who performs any work for the Company during the preceding year.
Id. at 5370. See also Duquesne Brewing Co., 60 Lab.Arb. 642 (1973) (Altrock, Arb.) (plant close down) (emphasis added). Compare moreover, the decision in Infant Socks, Inc., 51 Lab.Arb. 402 (1968) (Moberly, Arb.) where the contract provided that: "Length of employment, for the purposes of determining eligibility for paid vacations, shall be determined as of June 30 of each year." Id. at 403. Citing this provision, the arbitrator distinguished cases with a clearly stated eligibility date. "The fact that the agreement does not require an employe to be on the employment rolls as of any particular date in order to be entitled to vacation benefits distinguishes this case from Briggs v. Electric Auto-Lite, 37 Wis.2d 275 [155 N.W.2d 32], 67 LRRM 2271 (1967) ." Id.
Similarly, in Telescope Folding Furniture Co., 49 Lab.Arb. 837 (1967) (Cox, Arb.) Arbitrator Archibald Cox granted vacation pay to three grievants, but would have denied it had the contract stated an eligibility date:
Employees to be eligible for one (1) weeks vacation with pay shall have worked one hundred forty (140) working days prior to August 1st of the vacation year.
(2) The agreement mentions August 1 only as a cut-off date for determining length of service and days worked in the vacation years. There is no clause stipulating that vacations shall be limited to workers on the payroll, or on the seniority list, or otherwise in the Company's employ, on August 1 or any other particular date. Such clauses are quite common in collective agreements, although they are probably omitted more often than they are included. If there were such a clause in the Telescope contract, the Company's position would be correct. In fact, there is none. The arbitrator cannot ignore the omission of such critical words.
Id. at 838. (Emphasis added.) See also American Zinc Co., 57 Lab.Arb. 1140 (1971) (Ray, Arb.) (plant closing). We distinguish Machinists & Aerospace Workers Local 2369 v. Oxco Brush Division, 517 F.2d 239 (6th Cir. 1975) because the court there found that denying vacation benefits in a "plant closing" would be inconsistent with the contract provisions extending benefits when employment was terminated for other reasons (release, resignation, layoff, death and retirement.) "These provisions are inconsistent with the position that employment on December 31st was an absolute requirement for vacation benefits." Id. at 245. In the present case, benefits were concededly denied for these "other reasons."
Accordingly, we conclude that in our opinion the plaintiffs were not eligible for vacation benefits under the terms of the contract to which each had agreed. We choose not to follow that line of authority which would prorate vacation benefits because the company's unilateral action in effectuating the shutdown made employ ment on the disability date impossible. Schneider v. Electric Auto-Lite Co., 456 F.2d 366,372 (6th Cir. 1972). See also Baldwin-Montrose Chemical Co. v. International Union, United Rubber, Cork, Linoleum & Plastic Workers, 383 F.2d 796, 798 (6th Cir. 1967). We so hold not only because we do not agree with the reasoning thereof, but because in neither of these cases is there any discussion of the bargaining history of the parties or the past practices in other related situations. As set forth above, it is clear from the bargaining history and past practice in this case, the facts relating to which were not seriously controverted, that the union and its members knew or should have known that the contract did not provide for vacation benefits upon the closing of the plant, bargained to obtain them, and settled without the requested change.
Although we do not interpret the collective bargaining agreement as providing for vacation benefits, clearly other sections of the contract provided specific and substantial plant closing benefits to the employees. According to an exhibit submitted at trial monetary termination benefits amounted to $4,606,901.91, including separation allowances and gratuity payments for retiring employees. Nonmonetary benefits included interplant transfer rights and placement on company-wide waiting lists for openings at new plants, plus 26 week advance notice of the plant's closing. This is a clear indication that the negotiators were aware of the many monetary consequences of closing the plant, but did not agree on an exception to the requirement of being on the payroll on December 28 for vacation pay purposes.
As to the liability of the union for unfair representation we hold that because there was no contractual obligation on the part of Swift to pay the vacation pay, that under the circumstances of this case and considering the duty of the union to fairly represent the older employees too, the union could not be held guilty of unfair representation.
Swift never conceded that the vacation pay had any merit whatsoever and in our opinion it was correct in its position. To say now, as indicated in the dissent to the denial of rehearing en banc, that the union should have proceeded to arbitration in hopes of obtaining a favorable arbitrator's decision or a compromise settlement is second-guessing of the most blatant type. It completely ignores the rights of the older employees who were paid retirement pay as a result of the settlement agreement.
Alternatively we hold that even if the result of an arbitration on the vacation pay issue might have resulted in an award to the plaintiffs, where the union is also processing claims for other employees which are arguably meritorious, and no clear showing has been made of bad faith in making a choice between the two claims, it cannot be said that in making the choice it made, the union unfairly represented the plaintiffs. The evidence adduced at the trial does not affirmatively show bad faith on the part of either Swift or the union and in a situation where, as here, the claim of one group of employees is highly doubtful it cannot be said that either Swift or the union acted arbitrarily or in bad faith in making the compromise decision that was made.
The district court held that the union acted in bad faith in refusing to process the vacation pay grievance to arbitration rather than drop it in favor of the retirement benefit claim, but the cornerstone to this finding of bad faith was the trial court's legal conclusion that Swift was contractual ly obligated to pay the vacation pay claimed. Since we have determined, as a matter of law, that Swift was not obligated under the contract to pay the claim (or at least in the alternative that the contract on its face didn't require it), the claim of bad faith must fall.
The other reasons given by the trial court for its finding of bad faith are not sufficient, even if true, absent a determination of Swift's contractual obligation to pay, to justify a determination of bad faith. These reasons include the filing of the grievance by the union and statements by its officers as to the validity of the grievance; Swift's alleged motivation in closing the plant when it did (which could not be imputed to the union and which was permitted under the contract); and the so-called swap. Rather, in our opinion, the union used its best judgment to obtain the maximum benefit for the largest number of its membership. It made the best of a contract it had been trying to change for several years without success.
Reversed and remanded with directions to dismiss the complaint of the appellees.
Concurring Statement Upon Denial of Petition for Rehearing En banc.
. Jurisdiction in this case in the district court was predicated upon 29 U.S.C. § 185.
. Article XIV
Section 3. Exhaustion of Remedies: No Local Union or other subordinate body, nor any member or officer thereof, nor any officer or member of the International Union, shall resort to any court or agency outside this International Union until all rights of membership, all forms of relief and avenues of appeal as provided by this Constitution and the Constitution of his Local Union have been exhausted.
. The district court concluded that "[i]t would be a useless act to require plaintiffs in an unfair representation suit to exhaust internal remedies when they have ceased to be members prior to discovery of the unfairness. Mendicki v. U. A. W., 61 L.R.R.M. 2142 (D.C.Kan.1965)." (Emphasis added.) We make no comment on this as a basis for excusing plaintiffs' nonexhaustion.
. "With these internal remedies so definitely available, resort to them, or an adequate reason for a failure so to do, is a prerequisite to equitable relief against the union or its officers in the federal courts." Neal v. System Board of Adjustment, 348 F.2d 722, 726 (8th Cir. 1965) (emphasis added).
. In Winter v. Local Union No. 639, International Brotherhood of Teamsters, 186 U.S.App. D.C. 315, 569 F.2d 146 (1978) the court cited two sources of possible "futility": "no adequate procedural route to the relief requested," and union hostility so great that a worker "could not hope to get a fair hearing, regardless of the procedures available." Id. 186 U.S.App. D.C. at 318, 569 F.2d at 149. Union hostility could be "inferred from the circumstances surrounding the grievance process" or shown by "citing concrete evidence of personal animus." Id. 186 U.S.App.D.C. at 318-19, 569 F.2d at 149-50. The court found no "futility" in the processes in that case.
The Seventh Circuit in Battle v. Clark Equipment Co., 579 F.2d 1338 (7th Cir. 1978) considered the issue of whether the union was capable of "granting [plaintiffs] the relief that they seek." Id. at 1343. The court also inferred that in a proper case they might consider whether the union appellate bodies were "biased or otherwise incapable of conducting an independent review of the situation." Id.
The court, however, rejected a broad attack on the exhaustion procedures on the basis that the issues in that section 301 contract case did not involve matters of union discipline and internal policy.
. In Johnson v. Wilson Foods Corp. & Amalgamated Meat Cutters, No. 77-2051 (D.Kan. July 5, 1978), the court was explaining that the plaintiffs' failure to exhaust had deprived the union of the opportunity to reverse itself.
The plaintiffs' failure to invoke intra-union grievance procedures deprived the International Union of two distinct opportunities to prevent the alleged breach of its duties of fair representation. First, under Article XIV, Section 1, of the Constitution, cited above, the International Union could have reversed or modified the challenged actions and decisions of the Local Union. Second, the International Union could have refused to approve the proposed plant closing agreement, thus precluding its ultimate execution under Article XXI, Section 2, of the Constitution.
. The district court's interpretation of the contract terms was based on the following analysis: 1. Absence from the "active payroll" on December 28, 1969 was the sole obstacle to receipt of vacation pay. 2. Presence on the active payroll on a recurring date was merely an administrative device for calculating an employee's credited service since the last vacation year. 3. Presence on the designated date was not meant to reflect any part of the service for earning a vacation. 4. Use of the phrase "active payroll" was in contrast to the status of employees on the benefit payroll or on layoff. The "active payroll" language had the effect of postponing credit for being on the benefit payroll until the employee returned to the active payroll.
Moreover: 1. The date selected by the company for closing the plant was timed to avoid the vacation pay provisions of the contract, "particularly the provision that 'vacation eligibility requirements are based on credited service.' " 2. Even if presence on the active payroll on December 28, 1969, was a condition of vacation eligibility, the company's unilateral decision to close on November 29 rendered it impossible for members of the plaintiff class to meet the conditions of eligibility. 3. In light of Swift's unilateral power to select the date of closing, requiring active payroll status on the 28th would allow the company to secure a windfall on wages owed to employees.
Further: 1. Past bargaining does not show any specific union demand for modification of the Master Agreement to provide for vacation pay for employees terminated by plant closings. Union demands "did include demands for pro rata vacation pay but such demands seemed to be focused on pro rata vacation pay for employees who retire and go on pension such exclusion being contained in Paragraph 32 of the Master Agreement." 2. "Whatever the bargaining history may have been," the union never conceded that employees terminated by a plant closing were not entitled to vacation pay during the year of closing. In the June 30, 1971 Saint Paul Settlement Agreement "the Union not only did not concede that vacation pay was not payable, but [provided] that it would be 'without precedent' on this subject." 3. A claim had been made by the employees in the Sioux City plant for vacation benefits when that plant closed. Pursuant to a settlement agreement the claim was paid.
. Our review of the exhibit shows, for example, the following cases:
Name Years of Credited Service Last Day Worked No. of Days on Payroll in Year Terminated Reason for Leaving Subsequent Year's Vacation
E. L. Alverson 12 9/27/68 270 Quit None
H. J. Barrieau 37 10/6/67 279 Pension None
C. Dochniak 38 12/14/67 348 Deceased None
G. R. Korogi 26 10/16/68 289 Discharge None
Another exhibit demonstrated a denial of vacation benefits to employees, who for reasons of sickness or accident, never returned to active status on December 28th, or thereafter, though their work record in the previous year was substantial.
Name Last Day Reason not on Years of Days On Active Payroll Active Payroll Credited Service Payroll in Last Year on Active Payroll Subsequent Vacation Received
A. J. Peltier 12/22/67 S&A 29 356 None
. Tagg testified that based on his experience with Swift, and to the best of his knowledge, Swift had never made vacation payments to an employee who was not on the active payroll on the qualifying date and who did not return thereafter due to a plant closing or for any other reason. Trial Exhibit A-3 entitled "1961-1971 Vacations Paid to U.P.W.A. or A.M.C. & B.W. Members for Years Subsequent to Closings or Partial Closings of a Swift Plant for Which Records Are Still Available" shows that no vacation payments were generally made when a plant closed, although this exhibit must be viewed in light of its facially apparent limitation. The one exception to the general rule of nonpayment, which does appear on the exhibit, were benefits paid in the Sioux City, Iowa closing. Swift entered into a Settlement Agreement with the employees of the Sioux City plant to pay them vacation pay and the union thereby promised not to transfer employees en masse for the required one week to the nearby Omaha plant. This agreement provided that: "The above does not constitute a precedent for either party." In view of that express language, applicable to both union and company, and in view of the special circumstances involving a short distance to travel and only one week of duty required, we are unwilling to consider it at all in interpreting the collective bargaining agreement between them.
. King, the union's lawyer, testified at trial that he understood this bargaining demand would create a pro rata system for "plant closing." (App. Vol. IV at 1651.)
. The July 28, 1967 memoranda read as follows:
Union Position
(c) The Union indicated at the meeting and earlier that it had certain general proposals to make on the vacation provisions. On the basis of discussions subsequent to the meeting, the Union proposes that the 60 day break period referred to in paragraphs 31 and 32 be increased to 90 days; that the provision for 270 calendar days on the payroll be reduced to 240 days, and that the requirement in Paragraph 32 of being on the payroll on December 28 be deleted.
(d) Other items in the Armour agreement: pro rata vacation on retirement at age 62 or later, an option of cash in lieu of vacation for retiree — it is not clear whether these are problems in the Swift negotiations.
. In relying on this decision the court is cognizant that the Kroger arbitration involved a sale of a business where the former employees were reemployed, and not a plant close down, and that the arbitrator noted that the equities were stronger when employees were terminated by a plant shutdown.
However, the arbitrator also distinguished some of the plant close down cases from his own case on another factor: "[I]n most of the cases cited by the Union, the applicable agreements included provisions not present here providing contractual support for the conclusion that pro rata vacation pay should be paid." ¶ 8633, at 5371. (Emphasis added.)
In our view, the arbitrator's decision was grounded primarily on the contract language, which stated a vacation eligibility date, and which contained "no provision whatsoever for pro rata vacation pay." Although the present case involves a plant close down, our analysis based on the contract language is similar.
. See Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 96 S.Ct. 1048, 47 L.Ed.2d 231 (1976).
To prevail against either the company or the Union, petitioners must not only show that their discharge was contrary to the contract but must also carry the burden of demonstrating breach of duty by the Union.
petitioners, if they prove an erroneous discharge and the Union's breach of duty tainting the decision of the joint committee, are entitled to an appropriate remedy against the employer as well as the Union.
Id. at 570, 572, 96 S.Ct. at 1059-60 (emphasis added).
. We have carefully considered the claims raised in the cross-appeal by the early retirees, the employees on the benefit payroll when the plant closed, and the remaining subclasses of plaintiffs who were denied vacation pay benefits. However, we conclude that the district court correctly denied these claims.