Opinion ID: 895305
Heading Depth: 3
Heading Rank: 2

Heading: Standing under the CBA

Text: The City asserts two arguments to defeat the Firefighters’ claim to standing under the CBA: failure to establish a breach of the duty of fair representation by the Firefighters’ Union, and failure to exhaust the CBA’s grievance procedures. We reject both objections, and conclude the Firefighters have standing as third-party beneficiaries to sue for breach of the CBA. The court of appeals held the Firefighters lack standing under the CBA because they failed to establish that their Union breached its duty of fair representation. The court of appeals reasoned that showing such a breach “is an ‘indispensable predicate’ to an employee’s action against the City for violation of the collective bargaining agreement.” 290 S.W.3d at 271 (quoting Metro. Transit Auth. v. Burks , 79 S.W.3d 254, 257 (Tex. App.—Houston [14th Dist.] 2002, no pet.)). However, that “predicate” only applies to “hybrid” suits—cases in which the employee alleges both breach of the collective bargaining agreement by the employer, and breach of the duty of fair representation by the union, as when the union has mishandled grievance and arbitration proceedings. See Reed v. United Transp. Union , 488 U.S. 319, 328 (1989). It typically is an issue in suits under federal labor law, such as when an employee who is covered by a collective bargaining agreement sues for wrongful termination after losing under grievance and binding arbitration procedures. See United Parcel Serv., Inc. v. Mitchell , 451 U.S. 56, 62 (1981). Here, no grievance or arbitration occurred at all, so whether the Union breached its duty is not an issue. See id. As such, the Firefighters are not required to establish the predicate of any breach of duty. In short, the rule invoked by the court of appeals does not apply to this case. The City argues in the alternative the Firefighters have no standing under the CBA because they have not exhausted the administrative remedies required by it. 2 4 This argument ignores the undisputed fact that the Firefighters are no longer active employees or members of the bargaining unit, but are retirees. As retirees, the CBA’s grievance procedures by their own plain language no longer apply to the Firefighters. Once employees retire, they cease to be employees and become retirees. See Allied Chem. & Alkali Workers, Local Union No. 1 v. Pittsburgh Plate Glass Co. , 404 U.S. 157, 168 (1971). “The ordinary meaning of ‘employee’ does not include retired workers; retired employees have ceased to work for another for hire.” Id. Indeed, such retirees are no longer even a part of the collective bargaining unit. Id. at 175–76. This is so not only because they are no longer employees, but because their interests are no longer adequately aligned with that of active employees so as to be jointly represented as a unit. Id. at 172–73. The CBA’s plain language does not include retired firefighters in the class of persons who are bound by the Agreement. 2 5 Article 14 of the CBA makes the grievance procedure available only to the Union and active firefighters: “The Association or any bargaining unit Firefighter may file a grievance under the terms of this Agreement.” (Emphasis added.) Article 1 of the CBA defines both “Member of the Bargaining Unit” and “Firefighter” as “any full time, permanent paid employee” of the Fire Department. As retirees, the Firefighters do not meet that definition: they are no longer full-time employees, nor are they paid employees. See id. at 168. Therefore they do not fall within the class of persons to whom the grievance procedure is made available. Moreover, the terms of the grievance procedures confirm that they do not logically apply to retirees like the Firefighters. Article 14, section 2, of the CBA encourages an aggrieved firefighter to “verbally inform his/her immediate supervisor of the grievance.” As retirees, the Firefighters have no immediate supervisors to inform. Further, because the Firefighters’ cause of action only accrued when they received their allegedly deficient termination payments, which was after they retired, they had no grievance to assert during the time period when they were employees governed by the CBA’s grievance procedures. Accordingly, we conclude the Firefighters’ failure to exhaust the CBA’s administrative remedies is not a bar to their standing to sue. Finally, as with the MCAs, the Firefighters have standing as third-party beneficiaries under the CBA. Like the MCAs, it was negotiated by the Union with the clear intent to benefit the Firefighters. Significantly, collective bargaining agreements are recognized as a type of third-party beneficiary contract. See Restatement (Second) of Contracts § 302 cmt. d, illus. 14 (“A, a labor union, enters into a collective bargaining agreement with B, an employer, in which B promises not to discriminate against any employee because of his membership in A. All B’s employees who are members of A are intended beneficiaries of the promise.”). The CBA states: It is the intent and purpose of this Agreement to achieve and maintain harmonious relations between the parties, adjust and to establish the rates of pay, hours of work, and other conditions of employment for all Bargaining Unit Members and provide for the equitable and orderly adjustment of grievances which may arise during the term of this Agreement. In its references to rates of pay, hours of work, and conditions of employment, this is a clear statement of an intent to benefit parties other than the Union and the City. As former Bargaining Unit Members, the Firefighters became entitled to rights under the agreement by performing in accordance with it. Like the MCAs, the CBA made specific promises to the Firefighters when they were active employees. In particular, these included terms concerning salary, 2 6 overtime pay, 2 7 sick leave, 2 8 and vacation leave. 2 9 All these provisions in the CBA demonstrate a manifest intent to benefit the Firefighters by guaranteeing certain terms of compensation to them. As such, we conclude the Firefighters have standing as third-party beneficiaries to enforce the CBA.