Opinion ID: 457776
Heading Depth: 2
Heading Rank: 2

Heading: The Directed Verdict in Favor of Berthelsen

Text: 41 The district court issued a directed verdict in favor of Berthelsen, concluding that Peterson's malpractice claim against the union attorney was subsumed in and precluded by the breach of duty claim asserted against the union. We review a directed verdict under the same standard as that which we apply when reviewing a JNOV. A directed verdict is proper when the evidence permits only one reasonable conclusion as to the verdict. See, e.g., Shakey's Inc. v. Covalt, 704 F.2d 426, 430 (9th Cir.1983). It is inappropriate if there is substantial evidence to support a verdict for the non-moving party. See, e.g., Id.; Fabrica Inc. v. El Dorado Corp., 697 F.2d 890, 892 (9th Cir.1983). We consider all of the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in favor of that party. Id. 42 The material facts are uncontested. As it customarily did for its members, the NFLPA undertook Peterson's grievance free of charge to him. Berthelsen, as chief staff counsel for the NFLPA, was the union official ultimately responsible for the handling of Peterson's grievance. Dating back to 1972, Berthelsen had been employed as a full-time salaried member of the union's staff. The evidence is undisputed that Berthelsen's sole involvement with Peterson's grievance was in the capacity of staff counsel for the NFLPA; he was not privately retained by Peterson to pursue the grievance. 43 The district court dismissed the damage claim against Berthelsen, concluding that Peterson could not proceed against him for alleged misconduct that occurred during the course of Berthelsen's employment as the union's staff attorney. Peterson contends that, as an attorney, Berthelsen remains subject to liability for professional malpractice independent of the union's potential liability for breach of its duty of fair representation. He claims that the district court erred in concluding that his malpractice claim against Berthelsen was subsumed in his claim against the union. We reject Peterson's contention. We believe that sound policy reasons as well as established precedent compel the conclusion that attorneys who perform services for and on behalf of a union may not be held liable in malpractice to individual grievants where the services the attorneys perform constitute a part of the collective bargaining process. 44 1. The Atkinson Rule: Union Officers and Employees Are Immune From Personal Liability For Acts Undertaken As Union Representatives 45 It has long been recognized that union officers and employees are not individually liable to third parties for acts performed as representatives of the union in the collective bargaining process. In Atkinson v. Sinclair Refining Co., 370 U.S. 238, 82 S.Ct. 1318, 8 L.Ed.2d 462 (1962), the Supreme Court held that individual damage claims may not be maintained against union officials for acts that are undertaken on behalf of the union. In Atkinson, the employer brought an action against the union and against certain designated union officers for the defendants' alleged breach of a no-strike agreement. The Court concluded that the union as an entity ... should in the absence of agreement be the sole source of recovery for injury inflicted by it ..., and emphasized specifically that [t]his policy cannot be evaded or truncated by the simple device of suing union agents or members, whether in contract or in tort, or both, in a separate count or in a separate action for damages.... Id. at 249, 82 S.Ct. at 1325. The Atkinson Court explained the historical basis for its refusal to permit third party damage claims to be asserted against a union's officers or employees: 46 When Congress passed Sec. 301, it declared its view that only the union was to be made to respond for union wrongs, and that the union members were not to be subject to levy. Section 301(b) has three clauses. One makes unions suable in the courts of the United States. Another makes unions bound by the acts of their agents according to conventional principles of agency law (cf. Sec. 301(e) ). At the same time, however, the remaining clause exempts agents and members from personal liability for judgments against the union (apparently even when the union is without assets to pay the judgment). The legislative history of Sec. 301(b) makes it clear that this third clause was a deeply felt congressional reaction against the Danbury Hatters case (Loewe v. Lawlor, 208 U.S. 274 [28 S.Ct. 301, 52 L.Ed. 488 (1908) ]; Lawlor v. Loewe, 235 U.S. 522 [35 S.Ct. 170, 59 L.Ed. 341 (1915) ], and an expression of legislative determination that the aftermath (Loewe v. Savings Bank of Danbury, 236 F. 444 (C.A.2d Cir. [1916] of that decision was not to be permitted to recur. 47 Id. at 247-48, 82 S.Ct. at 1324-25. 48 In Complete Auto Transit, Inc. v. Reis, 451 U.S. 401, 101 S.Ct. 1836, 68 L.Ed.2d 248 (1981), the Supreme Court reaffirmed and extended the holding of Atkinson. The Court ruled that a damage claim may not be brought against individual union officers or members even if the individual's conduct was unauthorized by the union and was in violation of an existing collective bargaining agreement. Id. at 402, 101 S.Ct. at 1838. The Court reiterated that the legislative history of Sec. 301 clearly reveals Congress' intent to shield individual employees from liability for damages arising from their breach of ... a collective bargaining agreement. Id. at 407, 101 S.Ct. at 1840; accord Hardline Electric, Inc. v. International Brotherhood of Electrical Workers, Local 1547, 680 F.2d 622, 624 n. 1 (9th Cir.1982), cert. denied, 459 U.S. 1170, 103 S.Ct. 814, 74 L.Ed.2d 1013 (1983). 49 We have read Atkinson to preclude employees from maintaining a state tort claim against union officials in conjunction with a section 301 breach of duty claim against a union. In Williams v. Pacific Maritime Association, 421 F.2d 1287 (9th Cir.1970), the petitioners brought a state tort claim against union officials, alleging that the officials conspired to bring about their wrongful deregistration and discharge, in addition to a federal claim against the union, alleging that the officials' conduct amounted to a breach of the union's duty of fair representation. We ruled that, in light of Atkinson, the state tort claim could not be maintained against the individual union officials. Id. at 1289. 50 Other courts similarly have read Atkinson to prohibit claims, both state and federal, tort and otherwise, against individuals who are employees of or acting as agents or representatives of their unions. See, e.g., United Steelworkers of America v. Lorain, 616 F.2d 919, 924 (6th Cir.1980) (union officers not individually liable for damages resulting from alleged breach of collective bargaining agreement), cert. denied, 451 U.S. 983, 101 S.Ct. 2313, 68 L.Ed.2d 839 (1981); Universal Communications Corp. v. Burns, 449 F.2d 691, 693-94 (5th Cir.1971) (per curiam) (section 301 forbids recovery of damages from individual union members even if the claim purports to be based exclusively on state law. (emphasis in original) ); Balestreri v. Western Carloading, 530 F.Supp. 825, 830 (N.D.Cal.1980); Suwanchai v. International Brotherhood of Electrical Workers, 528 F.Supp. 851, 862 (D.N.H.1981); Henry v. Radio Station KSAN, 374 F.Supp. 260, 267 (N.D.Cal.1974). 51 2. The Atkinson Rule Applies To and Bars Malpractice Claims Against Attorneys Representing the Union 52 We do not agree with Peterson's contention that an exception to the Atkinson rule should be fashioned for union employees who happen to be attorneys. Where, as here, the attorney performs a function in the collective bargaining process that would otherwise be assumed by the union's business agents or representatives, the rationale behind the Atkinson rule is squarely applicable. 53 In handling Peterson's labor grievance, Berthelsen assumed a function that often is performed by a union's business agents or representatives. Labor grievances and arbitrations frequently are handled by union employees or representatives who have not received any professional legal training at all. A union may, on the other hand, choose to have its interests in any part of the collective bargaining process represented by a professionally trained attorney. If so, the union will either utilize the services of its in-house staff of attorneys, if it has one, or the services of its regularly retained outside law firm, or may even on occasion employ special outside counsel. When the union uses its regular outside counsel, the services are sometimes covered under an overall retainer agreement, and there is no additional fee or charge to the union for the law firm's handling of the matter. In any event, whether it be house counsel or outside union counsel, where the union is providing the services, the attorney is hired and paid by the union to act for it in the collective bargaining process. 9 54 We recognize that there are cases in which an attorney represents the union in an arbitration proceeding, but the underlying grievance belongs to a particular union member who has a very real interest in the manner in which the grievance is processed. That union member surely is justified in expecting the attorney to perform in a competent and professional manner; a portion of his dues is paid to enable the union to represent his interests vis-a-vis his employer effectively in all stages of the collective bargaining process. Nevertheless, when the union is providing the services, it is the union, rather than the individual business agent or attorney, that represents and is ultimately responsible to the member. 55 We do not believe that an attorney who is handling a labor grievance on behalf of a union as part of the collective bargaining process has entered into an attorney-client relationship in the ordinary sense with the particular union member who is asserting the underlying grievance. Although the attorney may well have certain ethical obligations to the grievant, his principal client is the union; it is the union that has retained him, is paying for his services, and is frequently the party to the arbitration proceedings. 56 The legal theory we describe tracks the practical realities of labor-management relations in the United States today. The union member looks to his union to save his job, gives it credit when a dispute is resolved in his favor, and holds it responsible when his discharge is upheld or he loses other important rights. He views the union attorney as an arm of his union rather than as an individual he has chosen as his lawyer. In fact, it is not uncommon for the union member to be completely unaware, at least prior to the arbitration hearing, of who on the union's staff is actually handling his grievance. 57 Although all of the considerations we have mentioned are important, the rule we adopt is based primarily on a functional assessment of the attorney's role as a union representative within the collective bargaining process. Union officers, employees and agents are not subject to individual liability for acts performed on behalf of the union in the collective bargaining process. See text supra pp. 1256-57. A different result is not warranted or permissible merely because a union chooses to employ an attorney rather than a business agent to perform collective bargaining functions. 58 Our decision does not mean that union members are necessarily without a remedy when attorneys employed by the union fail to process grievances adequately. If an attorney's conduct falls within the arbitrary, discriminatory or bad faith test we have described in section III.A., supra, the union member may sue the union for breach of the duty of fair representation. We also note that nothing we have said limits a union's right to sue its attorney for malpractice or for breach of contract, and to compensate a union member out of the recovery for any damages he may have suffered. 59 There are other instances in which union members whose grievances are improperly handled may recover damages from an attorney. Our decision does not preclude malpractice suits by union members who have themselves retained counsel to process grievances on their behalf, even though the individual or firm also serves as the union's regular outside counsel and is employed at the union's suggestion, see text infra pp. 1259-60. Union members may also sue attorneys whether or not the attorneys are employed by the union where the legal services provided are wholly unrelated to the collective bargaining process; e.g., drafting a will, handling a divorce or litigating a personal injury suit. In such cases the Atkinson rule is inapplicable. 60 3. Other Policy Reasons Why Attorneys Representing the Union Should Not Be Subject To Malpractice Liability For Collective Bargaining Activity 61 Our reluctance to impose malpractice liability on union attorneys for conduct undertaken as the union's collective bargaining agents stems in part from policy considerations independent of the Atkinson rule. Negligence is the essence of a malpractice action. See, e.g., Raddatz v. United States, 750 F.2d 791, 795 (9th Cir.1984) (medical malpractice). However, negligence is insufficient to support a breach of the duty of fair representation suit against a union; a union's conduct must be arbitrary, discriminatory, or in bad faith. See supra section III.A. Holding that union attorneys are subject to malpractice suits by individual grievants for actions undertaken as the union's representative would give rise to an anomalous result: certain agents or employees of the union would be held to a far higher standard of care than the union itself. 62 Equally important, permitting recovery against union counsel would destroy the rationality and symmetry the Supreme Court has finally brought to the law with respect to the time for the filing of suits in cases involving claims by union members that their grievances were mishandled. If union attorneys were subject to malpractice liability in such cases, litigants would be able to proceed against the attorney long after the expiration of the statutory period for suits against both the union and the employer. 10 Thus, the union attorney would often be the only defendant against whom a disappointed grievant could proceed. He would become the natural, and only, target in large numbers of what would normally be breach of the duty of fair representation suits. 63 We find such a prospect not only unsettling but also inconsistent with the considerations that prompted the Supreme Court to apply the NLRA's six-month time limit to hybrid suits against labor unions and employers. Instead of bringing labor-management quarrels to a quick termination so that peace and harmony may be restored and all parties may know the meaning of the particular contractual provision at issue, allowing malpractice suits to be brought against a union attorney for two, three, or even four years beyond the time for filing suit against the union or the employer would serve to shift the forum for the dispute and create a new target defendant. In the long run, the cost of legal services to unions would rise, and the ultimate financial burden resulting from such suits would fall on them. 4. Our Past Precedents 64 Peterson contends that two of our prior decisions stand for the proposition that a union member may bring a state malpractice claim against the union's attorney in addition to a federal breach of duty claim against the union. We read those decisions differently. 65 In Weitzel v. Oil Chemical & Atomic Workers, 667 F.2d 785 (9th Cir.1982), we ruled that the district court erred in concluding that, as a matter of law, a malpractice action could not be maintained against a private law firm to which a union member had been referred by his union. In that case, the record before us contained only fragmentary facts; we held that they were insufficient to permit the district court to conclude, at the summary judgment stage, that an attorney-client relationship had not been formed between the union member and the law firm. Of course, if such a relationship had been formed, the firm would not have been acting primarily on behalf of the union or as the union's agent in the collective bargaining process. Rather, it would have been serving as private counsel to the individual grievant. Although our opinion did not deal with the precise point, we indicated that such was our view when we explained why Weitzel might ultimately be entitled to recover. We spoke in terms of [c]omplainants who retain private counsel ..., and added, [h]aving bargained for private counsel's services, they are entitled to receive them. Id. at 787. 66 Nor did our recent decision in Aragon v. Federated Department Stores, Inc., 750 F.2d 1447 (9th Cir.1985), hold that a law firm that is employed or retained by a labor union may be liable to an individual grievant for malpractice committed in connection with its union representation. In Aragon, a discharged employee brought suit against her former employer for breach of its collective bargaining agreement, against her former union for breach of its duty of fair representation, and against the union's outside law firm for professional malpractice. We construed the malpractice claim against the law firm as based on its alleged unsatisfactory work on her behalf. Id. at 1448 (emphasis added). The district court dismissed the malpractice claim pursuant to Fed.R.Civ.Proc. 12(b)(6) for failure to state a claim. We reversed, concluding that summary dismissal was inappropriate. 11 In remanding, we said that [i]t is the province of the [lower] court to determine whether Aragon has alleged facts sufficient to withstand a motion to dismiss. Id. at 1458. Thus, Aragon stands for the proposition that a malpractice claim against a union's outside law firm for its work in connection with a labor grievance may not be dismissed summarily if triable questions of fact exist. Among the factual questions that must be answered where outside union counsel represents the grievant is whether counsel was retained by and was working on behalf of the union or the individual member. If the former, a malpractice suit may not be brought by the grievant; if the latter, the answer will often be to the contrary. 67 Neither in Weitzel nor in Aragon did we decide what facts or circumstances a union member would be required to show in order to establish the existence of a private attorney-client relationship between himself and a law firm that is retained generally to represent his union. Certainly, at the least, it would be necessary for him to prove that in his particular case the law firm was not acting pursuant to its obligation to provide representation for or on behalf of the union and that it had specifically agreed, instead, to provide direct representation to him as an individual client. 68 We have little difficulty in reconciling our holdings in Weitzel and in Aragon with the conclusion that we reach in this case. Unlike the earlier cases, it is clear here that the attorneys involved were acting on behalf of the union in carrying out the union's obligation to represent its members in the collective bargaining process. We thus affirm the district court's judgment that a malpractice action against Berthelsen will not lie.