Opinion ID: 493292
Heading Depth: 2
Heading Rank: 3

Heading: Arbitration During Hybrid Section 301 Suit

Text: 20 Fearn contends that the district court erred by ordering arbitration between Local 744 and Fearn while both were named defendants in the hybrid section 301 suit brought by Niro. Apart from a ten-year-old district court decision, Wyatt v. Interstate & Ocean Trans. Co., 439 F.Supp. 1310 (E.D.Va.1977), 2 we have found no case confronting this situation. 21 In general, once we determine that the subject matter of the dispute before us is covered by an arbitration agreement, we order arbitration without an evaluation of procedural questions such as the timeliness of the request for arbitration, exhaustion of grievance procedures and like matters usually left to the arbitrator. See supra at 175-76. Fearn contends, nonetheless, that this case is different, because an order to arbitrate would effectively deprive Fearn of a valid defense to liability for any wrongful discharge, would violate policies announced by the Supreme Court in Bowen v. United States Postal Serv., 459 U.S. 212, 103 S.Ct. 588, 74 L.Ed.2d 402 (1983), and would disrupt labor relations by encouraging unions to avoid arbitration until coerced by a section 301 suit against them. A consideration of Bowen and its predecessors, and an inquiry into how section 301 suits affect private arbitration agreements, reveals, however, that the filing of a hybrid section 301 suit should not preclude the possibility of arbitration pursuant to a collective bargaining agreement. 22 The hybrid section 301 suit evolved in Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967). The Court there held that an employee could sue his employer and union under section 301--either separately or in a single suit--and that, after proving that the employer violated the labor agreement and the union breached its duty of fair representation, he might be entitled to recover damages from both the employer and the union. Vaca, 386 U.S. at 186-87, 87 S.Ct. at 914-15. Since Vaca the Court has made it clear that the claim alleging a breach of the labor agreement is a statutory claim deriving from section 301, while the claim alleging a breach of the union's duty of fair representation is a judicially implied claim necessitated by the special relationship that labor law creates between union and employee. See DelCostello, 462 U.S. at 164 & n. 14, 103 S.Ct. at 2290 & n. 14. While formally two separate causes of action, an employee's two claims in a hybrid section 301 suit are also inextricably interdependent and comprise a departure from the private settlement of disputes pursuant to a collective bargaining agreement. See id. at 165, 103 S.Ct. at 2291. 23 By focusing on the hybrid section 301 action as a unique remedy available to protect employees from unfair injury resulting from the operation of the private settlement of disputes between the union and employers, the Supreme Court has refined the outline of the 301 action in several significant ways. See Bowen, 459 U.S. at 222, 103 S.Ct. at 595, (Of paramount importance is the right of the employee ... to be made whole.). For example, the Court has relaxed, in certain circumstances, the requirement that an employee exhaust internal union procedures before bringing a section 301 claim requiring proof of a breach of the duty of fair representation. See Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965); Vaca, 383 U.S. at 186, 87 S.Ct. at 914; Hines v. Anchor Motor Freight, 424 U.S. 554, 96 S.Ct. 1048, 47 L.Ed.2d 231 (1976); Bowen, 459 U.S. at 222, 103 S.Ct. at 594. The Court has also concluded that, in order to protect a wrongfully discharged employee, section 301 must be construed to permit a claim against an employer even where the employer relied innocently on private arbitration that failed only because of union malfeasance. See Hines, 424 U.S. at 572, 96 S.Ct. at 1060 (an employer who proves an erroneous discharge and the Union's breach of duty tainting the decision of the joint committee, [is] entitled to an appropriate remedy against the employer as well as the Union). 24 And, most dramatically, the Court has recently determined that in hybrid section 301 actions the damages should be apportioned between the union and the employer in accordance with their respective responsibilities for the delay in the employee's reinstatement (or other remedy pursuant to the collective bargaining agreement). Bowen, 459 U.S. at 220-28, 103 S.Ct. at 593-98. Apportionment was established in Vaca, but only in Bowen did the Court, by a five-to-four vote, make it clear that the union is primarily liable for the damages it caused in delaying the employee's remedy by breaching the duty of fair representation. The Court emphasized that the employer necessarily relies on the union's performing its function in the private grievance/arbitration process and that the employer should not suffer greater liability to the employee because of the union's misconduct. See Bowen, 459 U.S. at 224-28, 103 S.Ct. at 595-98. 3 25 Fearn insists that Bowen's emphasis on apportionment of damage requires that we prohibit a union from seeking to compel arbitration once a hybrid section 301 suit has commenced against the employer and the union. We disagree. Bowen held that when the private arbitration procedure has failed and injured the employee, the employee should be compensated under section 301, and, to the extent possible, should recover damages from each responsible party in proportion to the damage each caused. Apportionment, according to the Court, best protects the interests both of the employer and the union, and ultimately the interest of the employee. 26 Fearn suggests, and the Court has agreed, see Bowen, 459 U.S. at 227 n. 15, 103 S.Ct. at 597 n. 15, that, if the union is permitted to agree to a settlement with the employee after a hybrid section 301 suit is brought (pursuant to which the union would acknowledge a breach of its duty of fair representation in exchange for a pledge from the employee to seek recovery only from the employer), the employer might be unfairly saddled with the whole liability for a wrongful discharge. The Court also recognized, however, the need to permit a union to reevaluate its representation of a member employee, to bring a potential breach of its duty to the attention of the employer and, perhaps, to mitigate liability for subsequent damages. See id. at 227 n. 15, 103 S.Ct. at 597 n. 15 (if union changed its position and supported the employee's claim, [o]ur holding today would not prevent a jury from taking such action into account). Clearly there exists a tension between permitting a union to pull back from litigation in a manner unfair to the employer and locking parties into positions at odds with subsequent events or economic realities. 27 We conclude that in the circumstances of this case the balance must be struck in favor of permitting Local 744 to seek arbitration. When we consider the central (and, in fact, exalted) position that private dispute resolution plays in labor relations, we must be hesitant to prohibit any party from seeking to invoke these private procedures. We believe that no strict rule is appropriate that would bar either defendant in a hybrid section 301 suit from bringing a timely claim alleging that the underlying dispute is subject to arbitration. To prohibit such claims would unnecessarily shackle both courts and litigants. We must instead follow the guidance of the Supreme Court and ensure that the place of privately established grievance procedures is a secure one. The step we take today enhances the efficiency of private procedures by concluding that the filing of a hybrid section 301 suit does not slam the door on arbitration if a party thereafter seeks to compel it. 28 In line with the apparent directions of the Supreme Court, the dynamics of labor relations suggest that we allow parties to seek arbitration even after hybrid section 301 suits are brought. Any conflict between the federal policy of apportionment in hybrid section 301 suits and the requirements of particular labor contracts can, of course, be eliminated by subjecting the contracts to collective bargaining. If the union and the employer agree, apportionment of damages may be written into the arbitration provisions. In addition, any concern that the union and the employee could violate the policies of section 301 by conspiring to soak the employer for the full damages may not be realistic. In the context of a section 301 suit, it is far from clear that a union would likely protect itself from liability by admitting it breached its duty to the employee in exchange for a promise from the employee not to sue it for damages. Cf. Bowen, 459 U.S. at 227 n. 15, 103 S.Ct. at 597 n. 15. An employer who was sued could very likely either implead the union in the section 301 suit on a theory of contribution or, with the union's admission of breach of duty in hand, bring a later separate action for contribution. 4