Republic Steel Corporation v. Maddox/Opinion of the Court

by John Marshall Harlan II

United States Supreme Court

379 U.S. 650

Republic Steel Corporation  v.  Maddox

 Argued: Nov. 18, 1964. --- Decided: Jan 25, 1965

Respondent Maddox brought suit in an Alabama state court against his employer, the Republic Steel Corporation, for severance pay amounting to $694.08, allegedly owed him under the terms of the collective bargaining agreement existing between Republic and Maddox' union. Maddox had been laid off in December 1953. The collective bargaining agreement called for severance pay if the lay-off was the result of a decision to close the mine, at which Maddox worked, 'permanently.' ^[1] The agreement also contained a three-step grievance procedure to be followed by binding arbitration, ^[2] but Maddox made no effort to utilize this mode of redress. Instead, in August 1956, he sued for breach of the contract. At all times material to his claim, Republic was engaged in interstate commerce within the meaning of the Labor Management Relations Act, ^[3] and Republic's industrial relations with Maddox and his union were subject to the provisions of that Act.

The case was tried on stipulated facts without a jury. Judgment was awarded in favor of Maddox, and the appellate courts of Alabama affirmed on the theory that state law applies to suits for severance pay since, with the employment relationship necessarily ended, no further danger of industrial strife exists warranting the application of federal labor law. ^[4] Moore v. Illinois Central R. Co., 312 U.S. 630, 61 S.Ct. 754, 85 L.Ed. 1089 (1941), and Transcontinental & Western Air, Inc. v. Koppal, 345 U.S. 653, 73 S.Ct. 906, 97 L.Ed. 1325 (1953), cases decided under the Railway Labor Act, ^[5] were cited to support the proposition. Furthermore, it was held that under Alabama law Maddox was not required to exhaust the contract grievance procedures. We granted Republic's petition for certiorari, 377 U.S. 904, 84 S.Ct. 1168, 12 L.Ed.2d 175, to determine whether the rationale of Moore v. Illinois Central R. Co. carries over to a suit for severance pay on a contract subject to § 301(a) of the Labor Management Relations Act. ^[6] We conclude that the state judgment must be reversed.

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. ^[7] If the union refuses to press or only perfunctorily presses the individual's claim, differences may arise as to the forms of redress then available. See Humphrey v. Moore, 375 U.S. 335, 84 S.Ct. 363, 11 L.Ed.2d 370; National Labor Relations Board v. Miranda Fuel Co., 2 Cir., 326 F.2d 172. ^[8] But unless the contract provides otherwise, ^[9] there can be no doubt that the employee must afford the union the opportunity to act on his behalf. Congress has expressly approved contract grievance procedures as a preferred method for settling disputes and stabilizing the 'common law' of the plant. LMRA § 203(d), 29 U.S.C. § 173(d); § 201(c), 29 U.S.C. § 171(c) (1958 ed.). Union interest in prosecuting employees grievances is clear. Such activity complements the union's status as exclusive bargaining representative by permitting it to participate actively in the continuing administration of the contract. In addition, conscientious handling of grievance claims will enhance the union's prestige with employees. Employer interests, for their part, are served by limiting the choice of remedies available to aggrieved employees. And it cannot be said in the normal situation, that contract grievance procedures are inadequate to protect the interests of an aggrieved employee until the employee has attempted to implement the procedures and found them so.

A contrary rule which would permit an individual employee to completely sidestep available grievance procedures in favor of a lawsuit has little to commend it. In addition to cutting across the interests already mentioned, it would deprive employer and union of the ability to establish a uniform and exclusive method for orderly settlement of employee grievances. If a grievance procedure cannot be made exclusive, it loses much of its desirability as a method of settlement. A rule creating such a situation 'would inevitably exert a disruptive influence upon both the negotiation and administration of collective agreements.' Local 174, Teamsters etc. v. Lucas-Flour Co., 369 U.S. 95, 103, 82 S.Ct. 571, 577, 7 L.Ed.2d 593.

Once it is established that the federal rule discussed above applies to grievances in general, it should next be inquired whether the specific type of grievance here in question-one relating to severance pay-is so different in kind as to justify an exception. Moore v. Illinois Central R. Co., and Transcontinental & Western Air, Inc. v. Koppal, supra, are put forward for the proposition that it is.

In Moore, the Court ruled that a trainman was not required by the Railway Labor Act to exhaust the administrative remedies granted him by the Act before bringing suit for wrongful discharge. Mr. Justice Black, for the Court, based the decision on the use of permissive language in the Act-disputes 'may be referred * * * to the * * * Adjustment Board * * *.' ^[10] Mr. Justice Black wrote again in Slocum v. Delaware, L. & W.R. Co., 339 U.S. 239, 70 S.Ct. 577, 94 L.Ed. 795 (1950), a declaratory judgment suit brought in a state court by a railroad company against two unions to resolve a representation dispute. The Court held that jurisdiction of the Adjustment Board to resolve such disputes was exclusive. Moore was distinguished thus:

'Moore was discharged by the railroad. He could have challenged the validity of his discharge before the Board, seeking reinstatement and back pay. Instead he chose to accept the railroad's action in discharging him as final, thereby ceasing to be an employee, and brought suit claiming damages for breach of contract. As we there held, the Railway Labor Act does not bar courts from adjudicating such cases. A common-law or statutory action for wrongful discharge differs from any remedy which the Board has power to provide, and does not involve questions of future relations between the railroad and its other employees.' 339 U.S. 239, at 244, 70 S.Ct. 577, at 580.

This distinction was confirmed in Transcontinental & Western Air, Inc. v. Koppal, supra:

'Such (a wrongfully discharged) employee may proceed either in accordance with the administrative procedures prescribed in his employment contract or he may resort to his action at law for alleged unlawful discharge if the state courts recognize such a claim. Where the applicable law permits his recovery of damages without showing his prior exhaustion of his administrative remedies, he may so recover, as he did in the Moore litigation, supra, under Mississippi law.' ^[11] 345 U.S. 653, at 661, 73 S.Ct. 906, at 910.

Federal jurisdiction in both Moore and Koppal was based on diversity; federal law was not thought to apply merely by reason of the fact that the collective bargaining agreements were subject to the Railway Labor Act. Since that time the Court has made it clear that substantive federal law applies to suits on collective bargaining agreements covered by § 204 of the Railway Labor Act, International Assn. of Machinists v. Central Airlines, Inc., 372 U.S. 682, 83 S.Ct. 956, 10 L.Ed.2d 67, and by § 301(a) of the LMRA, Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972. Thus a major underpinning for the continued validity of the Moore case in the field of the Railway Labor Act, and more importantly in the present context, for the extension of its rationale to suits under § 301(a) of the LMRA, has been removed.

We hold that any such extension is incompatible with the precepts of Lincoln Mills and cannot be accepted. Grievances depending on severance claims are not critically unlike other types of grievances. Although it is true that the employee asserting the claim will necessarily have accepted his discharge as final, it does not follow that the resolution of his claim can have no effect on future relations between the employer and other employees. Severance pay and other contract terms governing discharge are of obvious concern to all employees, and a potential cause of dispute so long as any employee maintains a continuing employment relationship. Only in the situation in which no employees represented by the union remain employed, as would be the case with a final and permanent plant shutdown, is there no possibility of a work stoppage resulting from a severance-pay claim. But even in that narrow situation, if applicable law did not require resort to contract procedures, the inability of the union and employer at the contract negotiation stage to agree upon arbitration as the exclusive method of handling permanent shutdown severance claims in all situations could have an inhibiting effect on reaching an agreement. If applicable law permitted a court suit for severance pay in any circumstances without prior recourse to available contract remedies, an employer seeking to limit the modes of redress that could be used against him could do so only by eliminating contract grievance procedures for severance-pay claims. The union would hardly favor the elimination, for it is in the union's interest to afford comprehensive protection to those it represents, to participate in interpretations of the contract, and to have an arbitrator rather than a court decide such questions as whether the company has determined to 'close permanently.' ^[12]

There are, then, positive reasons why the general federal rule should govern grievances based on severance claims as it does others. Furthermore, no positive reasons appear why the general federal rule should not apply. 'Comprehensiveness is inherent in the process by which the law is to be formulated under the mandate of Lincoln Mills,' and 'the subject matter of § 301 (a) 'is peculiarly one that calls for uniform law." Local 174, Teamsters etc. v. Lucas Flour Co., 369 U.S., at 103, 82 S.Ct., at 576. Maddox' suit in the present case is simply on the contract, and the remedy sought, award of $694.08, did not differ from any that the grievance procedure had power to provide. Federal law governs 'Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter * * *.' ^[13] Section 301(a) of the LMRA, 29 U.S.C. § 185(a) (1958 ed.), Textile Workers v. Lincoln Mills, supra. The suit by Maddox clearly falls within the terms of the statute and within the principles of Lincoln Mills, and because we see no reason for creating an exception, we conclude that the general federal rule applies. ^[14]

The federal rule would not of course preclude Maddox' court suit if the parties to the collective bargaining agreement expressly agreed that arbitration was not the exclusive remedy. ^[15] The section of this contract governing grievances provides, inter alia:

'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:

'STEP 1. Between the aggrieved Employee, his Grievance Committeeman or Assistant Grievance Committeeman and the Foreman.'

The procedure calls for two more grievance-committee steps capped with binding arbitration of matters not satisfactorily settled by the initial steps.

The language stating that an employee 'may discuss' a complaint with his foreman is susceptible to variout interpretations; the most likely is that an employee may, if he chooses, speak to his foreman himself without bringing in his grievance committeeman and formally embarking on Step 1. Use of the permissive 'may' does 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. Any doubts must be resolved against such an interpretation. See United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409; Belk v. Allied Aviation Service Co., 315 F.2d 513, cert. denied, 375 U.S. 847, 84 S.Ct. 102, 11 L.Ed.2d 74.

Finally, Maddox suggests that it was not possible for him to make use of the grievance procedure, the first step of which called for a discussion within 30 days of his discharge with his foreman, because a mine that has permanently closed has no foreman indeed, no employees of any kind. This casuistic reading of the contract cannot be accepted. The foreman did not vanish; and it is unlikely that the union grievance procedure broke down within 30 days of Maddox' discharge. In any event, the case is before us on stipulated facts; in neither the facts nor the pleadings is there any suggestion that Maddox could not have availed himself of the grievance procedure instead of waiting nearly three years and bringing a court suit.

Reversed.

Mr. Justice BLACK, dissenting.

Notes

1. The section of the contract dealing with severance allowance provided in relevant part:
2. See infra, p. 658.
3. 61 Stat. 136 (1947), as amended, 29 U.S.C. § 141 et seq. (1958 ed.).
4. 275 Ala. 685, 158 So.2d 492.
5. 48 Stat. 1185 (1934), 45 U.S.C. § 151 et seq. (1958 ed.).
6. See infra, p. 657.
7. Smith v. Evening News Assn., 371 U.S. 195, 196, n. 1, 83 S.Ct. 267, 9 L.Ed.2d 246 (by implication); Belk v. Allied Aviation Service Co., 2 Cir., 315 F.2d 513, cert. denied, 375 U.S. 847, 84 S.Ct. 102, 11 L.Ed.2d 74; see Cox, Rights Under a Labor Agreement, 69 Harv.L.Rev. 601, 647-648 (1956). The proviso of § 9(a) of the National Labor Relations Act, as amended, 29 U.S.C. § 159(a) (1958 ed.), is not contra; Black-Clawson Co. v. International Ass'n of Machinists etc., 2 Cir., 313 F.2d 179.
8. See, eG., Summers, Individual Rights in Collective Agreements and Arbitration, 37 N.Y.U.L.Rev. 362 (1962); Cox, Rights Under a Labor Agreement, 69 Harv.L.Rev. 601 (1956); Note, Federal Protection of Individual Rights Under Labor Contracts, 73 Yale L.J. 1215 (1964).
9. See infra, pp. 657-658.
10. 45 U.S.C. § 153(i) (1958 ed.).
11. Mississippi law, which controlled in Moore v. Illinois Central R. Co., did not require exhaustion (but see Illinois Central R. Co. v. Bolton, 240 Miss. 195, 126 So.2d 524 (1961)). Missouri law controlled in Koppal and did require exhaustion. The suing employee therefore lost.
12. See n. 1, supra.
13. 'Between' in the statute refers to 'contracts,' not 'suits.' Smith v. Evening News Assn., 371 U.S. 195, 200, 83 S.Ct. 267, 270, 9 L.Ed.2d 246.
14. By refusing to extend Moore v. Illinois Central R. Co. to § 301 suits, we do not mean to overrule it within the field of the Railway Labor Act. Consideration of such action should properly await a case presented under the Railway Labor Act in which the various distinctive features of the administrative remedies provided by that Act can be appraised in context, e.g., the make-up of the Adjustment Board, the scope of review from monetary awards, and the ability of the Board to give the same remedies as could be obtained by court suit.
15. Of course a court suit on the collective bargaining agreement would still be governed by federal law. Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912.