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Griesmann v. Chemical Leaman Tank Lines Inc.

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT


October 29, 1985

GRIESMANN, DONALD H.; HENDERSON, RICHARD H.; HARRISON, JESSE L.; BARNDT, LESLIE R.; FULS, NORMAN W.; QUINTON, CHARLES D.; LIPPINCOTT, JOHN L. SR.; HARHART, DAVID J.; NELSON, ROBERT S.; GURINKO, MICHAEL G.; MANIERI, ERNEST J.; MCKELBEY, GERALD J.; KUTZLER, BARRY R.; WIDEMANN, WALDEMAR W.; KUTZLER, ROGER W.; LEH, RICHARD W.; QUIGLEY, JOHN M.; HEISERMAN, MELVIN G.; BOGER, DURRELL M.; LIPPINCOTT, JOHN J. JR., DONALD H. GRIESMANN, ET AL., APPELLANTS IN NO. 84-1747
v.
CHEMICAL LEAMAN TANK LINES, INC., NAZARETH TERMINAL, TEAMSTERS LOCAL 773, CHEMICAL LEAMAN TANK LINES, INC., APPELLANT IN NO. 84-1748

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 83-0909)

Author: Hunter

Before HUNTER, GARTH, and HIGGINBOTHAM, Circuit Judges.

Opinion OF THE COURT

HUNTER, Circuit Judge:

This case arises from a suit brought under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185(a) (1982). Essentially, this appeal requires us to determine three things: whether the district court correctly characterized an agreement between Chemical Leaman Tank Lines, Inc. ("Chemical Leaman") and Local 773 of the International Brotherhood of Teamsters ("the Union") as a collective bargaining agreement; if not, whether disputes as to the meaning and application of the agreement were encompassed within the arbitration provisions of the Union's collective bargaining agreements with Chemical Leaman; and if so, whether the grievance committee's decision concerning the application of the agreement should be set aside in a § 301 action against Chemical Leaman and the Union. Appellate jurisdiction is based upon 28 U.S.C. § 1292(b) (1982). For the reasons stated below, we will vacate and remand.

I.

Chemical Leaman is a trucking concern that hauls liquid and dry products as a common and contract liquid and dry products as a common and contract carrier. Prior to December 31, 1975, Chemical Leaman operated a liquid and two cement products terminals in Northeastern Pennsylvania. Chemical Leaman's two cement terminals were located in Stockertown and Nazareth; its liquid terminal was located across the street from the Nazareth cement terminal. Although teamsters Local 773 represents all of the cement and liquid drivers in collective bargaining, they are organized into two bargaining units. During the relevant period, the cement drivers at Stockertown and Nazareth were covered by a succession of multi-employer, multi-union collective bargaining agreements, known as the "Eastern Area Cement Haul Agreement" or "Cement CBA." A separate succession of multi-union agreements, known as the "Eastern Area Tank Haul Agreement," or "Liquid CBA," covered the Nazareth liquid drivers. The collective bargaining agreements covering the two bargaining units are nearly identical.

As a result of the dwindling cement hauling market, Chemical Leaman closed its Nazareth cement terminal on December 31, 1975, and moved the cement drivers to the Nazareth liquid terminal. Because the drivers belonged to different bargaining units, the cement and liquid drivers retained their separate identity and assigned work at the terminal according to separate seniority lists.*fn1 Chemical Leaman desired the eventual combination of the two seniority lists to reduce both the administrative burden and the threat of strikes presented by the two list system.

Although its cement work continued to decline, by early 1977 Chemical Leaman's liquid hauling business increased to the point where it required additional liquid drivers at Nazareth. Believing this increase presented the opportunity to consolidate the two seniority lists, Chemical Leaman representative Raymond Snyder met with one of the Union's business agents, Edward Tonkay, to draft a proposal allowing the Nazareth cement drivers to transfer to the bottom of the liquid seniority list before the company hired additional liquid drivers. An April 27, 1977 letter from Mr. Snyder to Mr. Tonkay outlines the proposal, and provides, in relevant part:

1. As agreed, we will post a bid allowing cement drivers to move on a permanent transfer to the bottom of the Nazareth Liquid seniority list.

2. Their position on the liquid list shall be in keeping with their company seniority, however, Tank seniority shall prevail for all purposes and no "dovetailing" shall take place.

3. Daily dispatch shall be by Tank seniority and men bidding from cement to liquid shall be dispatched from the bottom of the liquid list.

There will be no claim to cement work beyond what is commonly recognized as "on-call" status. Men remaining on the cement list will be dispatched, as in the past, in keeping with the cement contract.

Mr. Snyder then dictated a notice addressed to the Nazareth cement drivers that was subsequently posted in the Nazareth terminal on May 20, 1977. The May 20 notice stated:

As agreed between Local Union #773 and Chemical Leaman Tank Lines, Inc., the Company is posting this notice before hiring additional liquid drivers to allow present cement drivers the opportunity to transfer on a permanent basis to the bottom of the liquid list. The terms of this transfer will be governed by the Company's letter of April 27, 1977. In the future, no additional men will be added to the cement list. Anybody interested in this permanent transfer shall contact Bob Ranck or Don Sawyer before 8 AM, May 31.

This notice shall come down at 8 AM, May 31, 1977.

Snyder sent copies of the April 27 letter and May 20 notice to the Union and the shop stewards. A number of less senior cement drivers accepted the cement -- liquid transfer opportunity. Chemical Leaman subsequently hired new tank drivers, adding them to the liquid list under the transferred drivers. At the time, Chemical Leaman hoped to achieve its goal of a single list system through the attrition of the remaining Nazareth cement drivers.

5. In July 1982, however, Chemical Leaman closed its Stockertown cement terminal and transferred the Stockertown drivers and cement work to the Nazareth terminal, precipitating the instant dispute. Pursuant to Article 5*fn2 of the Cement CBA then in effect, the Stockertown cement drivers were "dovetailed"*fn3 into the Nazareth cement seniority list. According to the Griesmann plaintiffs, who are all liquid list drivers, the dovetailing of the Stockertown drivers violated the company's promise in the May 20, 1977 notice that "no additional men will be added to the cement list," and harmed plaintiffs by ensuring that there would be little, if any, cement overflow work for the liquid haulers.*fn4

On August 25, 1982, eight of the original eighteen plaintiffs*fn5 in this action filed grievances with the Joint Committee, a grievance panel composed of equal numbers of union and management members provided for in Article 7 of the Cement and Liquid CBAs.*fn6 Both the April 27, 1977 letter from Snyder to Tonkay and the May 20, 1977 notice were submitted to the Joint Committee for consideration in the grievance procedure. Neither the Union nor Chemical Leaman argued that the documents evidenced a contract "not to add" drivers to the cement seniority list, however. On January 25, 1983, the committee denied the grievance petitions.

Plaintiff-appellees filed this suit, alleging that Chemical Leaman breached its CBA with the Union and that the Union breached its duty of fair representation by failing to advocate plaintiffs' contractual rights under the May 20, 1977 notice. The parties agreed to bifurcate the trial into liability and damages phases to permit an interlocutory appeal after the liability phase; trial on the liability issue commenced in late January, 1984. Prior to jury trial, the district court granted plaintiffs' motion for partial summary judgment, concluding that the 1977 notice reflected a contract characterized by the court as a collective bargaining agreement ("the 1977 Agreement") between Chemical Leaman and Local 773. The court determined that the 1977 Agreement obliged Chemical Leaman to refrain from any future additions to the cement seniority list, and that Chemical Leaman breached the 1977 Agreement as a matter of law when it dovetailed the Stockertown drivers. The judge refused to instruct the jury about the plaintiffs' rights under the 1977 Agreement, but permitted plaintiffs to argue that the May 20, 1977 notice constituted a contract. The jury found that the Union did not breach its duty of fair representation, and the district court entered a judgment order on June 20, 1984, finding Chemical Leaman liable for breach of the 1977 Agreement. Upon application by the parties, the district court allowed an interlocutory appeal pursuant to 28 U.S.C. 1292(b) (1982).*fn7 We granted this appeal on December 12, 1984.

II.

The district court found that the May 20, 1977 notice reflected a contract also evidenced by the April 27 letter and that that contract was a collective bargaining agreement. In so finding, the court reasoned that "where the union has taken 'a leading role in representing the employees and in negotiating the ... agreement,' it is likely that a collective bargaining agreement exists" quoting Davis v. Ohio Barge Line, Inc., 697 F.2d 549, 553 (3d Cir. 1983). The lower court's reliance upon Davis is misplaced, however, because the cited language concerns only whether a labor contract within the meaning of § 301 of the Labor Management Relations Act exists. Davis does not purport to distinguish between a labor contract and a collective bargaining agreement, but instead distinguishes labor contracts, i.e., contracts between an employer and a union, from contracts between an employer and a union, from contracts between employers and employees outside the ambit of § 301.

9. A collective bargaining agreement is the paradigmatic labor contract, covering a wide array of contingencies that may arise in the employment relationship, and distinguished by provisions for the arbitration of disputes concerning the agreement's meaning and application. In United Steelworkers v. Warrior and Gulf Navigation Co., 363 U.S. 574, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960), Justice Douglas, speaking for the Court, described the collective bargaining agreement:

The collective bargaining agreement states the rights and duties of the parties. It is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. ... The collective bargaining agreement covers the whole employment relationship. It calls into being a new common law -- the common law of a particular industry or plant. ... A collective bargaining agreement is an effort to erect a system of industrial self-government. ... [T]he grievance machinery under a collective bargaining agreement is at the very heart of the system of self government. Arbitration is the means of solving the unforseeable by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties. The processing of disputes through the grievance machinery is actually a vehicle by which meaning and content are given to the collective bargaining agreement.

363 U.S. at 578-81. Thus defined, a collective bargaining agreement differs "in nature, scope, and purpose from the ordinary commercial contract." Syufy Enterprises v. Northern California State Association of IATSE Locals, 631 F.2d 124 (9th Cir. 1980) (per curiam), cert. denied, 451 U.S. 983, 68 L. Ed. 2d 839, 101 S. Ct. 2314 (1981). The April letter and May notice reflect, at most, a contract between Local 773 and Chemical Leaman. Although the district court erred in characterizing the 1977 Agreement as a collective bargaining agreement, we cannot say that it erred in finding the 1977 Agreement to be an enforceable labor contract.

10. Chemical Leaman argues that the 1977 Agreement is simply an informational notice, unilaterally drafted and posted by the company, and suggests that this case is similar to Local 1330, United States Steel Workers v. United States Steel Corp., 631 F.2d 1264 (6th Cir. 1980), where the court refused to enforce the employer's oral promises because the promises lacked some of the minimum features of a formal legal contract required by the steel workers' collective bargaining agreement. Id. at 1269. Although Mr. Snyder dictated and posted the notice, the April 27, 1977 letter outlining the terms of the cement-liquid transfer opportunity indicates that the Union and Chemical Leaman agreed to the posting of a notice and fairly suggests that the terms of the notice, like the terms of the letter, were the subject of negotiations between the Union and Chemical Leaman. Appellant's contention that the notice could not be a legal contract under the Cement CBA also fails; we have been shown no provision of the 1977 -- 1980 Cement CBA that invalidates the contract.*fn8

Chemical Leaman argues that the trial court erred by refusing to consider parol evidence that the parties intended the 1977 Agreement only to prevent the company from hiring new cement drivers and not to proscribe additions by dovetailing. Under the rule of Mellon Bank, N.A. v. Aetna Business Credit, 619 F.2d 1001 (3d Cir. 1980), trial courts are bound to interpret contractual terms to give effect to the parties' "objective manifestations of their intent" rather than attempt to ascertain their subjective intent. Id. at 1009. Only if the terms used are ambiguous, id. at 1011, or if the contract is not fully integrated, id. at 1010 n.9, should the trial judge allow the finder of fact to consider evidence that might vary or add to the contract's express terms.*fn9 Id. at 1011.

We believe that the Union and Chemical Leaman must be permitted to introduce extrinsic evidence to support their contention that the contract only bars adding new hires to the cement list. The court's construction of the 1977 Agreement involved a lengthy inquiry into the circumstances surrounding the April 27 letter and May 20 notice, suggesting that contract is not integrated. Indeed, if not for the court's reliance upon the parties' testimony concerning the Union's and Chemical Leaman's negotiations and the state of the trucking industry in northeastern Pennsylvania, the court would not have found a contract at all. Thus, even were we to conclude that the 1977 Agreement's terms are unambiguous, we would find that the trial court erred in refusing to admit the parties' proffer of extrinsic evidence. We find, however, that the parties advanced "a reasonable alternative interpretation," Mellon Bank, 619 F.2d at 1011 (emphasis in the original), of the term "add," and therefore that the trial judge erred by refusing to admit parol evidence that might prove a different meaning for "add" than the one ascribed by the court. Because the April 27 letter and the May 20 notice do not integrate all the contractual terms, and because in the particular context in which it is used, the term "add" is ambiguous, we believe that the jury, as the finder of fact, should have considered extrinsic evidence regarding the parties' alleged specialized use of the term "add" and that the jury should determine whether Chemcial Leaman breached its obligation not to "add" drivers to the cement list. Accordingly, we vacate the district court's finding that Chemical Leaman breached the 1977 Agreement.

III.

It is well recognized that individual employees can bring suit against their employers in federal court for breach of a contract between an employer and a union. Davis, 697 F.2d at 552. Federal labor policy requires employees to exhaust any grievance procedure provided in the union's collective bargaining agreement when that agreement governs the manner in which the employee's rights may be enforced. Vaca v. Sipes, 386 U.S. 171, 184, 17 L. Ed. 2d 842, 87 S. Ct. 903 (1967); see Republic Steel Corp. v. Maddox, 379 U.S. 650, 653, 13 L. Ed. 2d 580, 85 S. Ct. 614 (1965). Because judicial review of arbitration proceedings is limited,*fn10 see The Steelworkers Trilogy: United Steelworkers v. American Manufacturing Co., 363 U.S. 564, 568, 4 L. Ed. 2d 1403, 80 S. Ct. 1343 (1960); United Steelworkers v. Warrior & Gulph Navigation Co., 363 U.S. 574, 582, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960); United Steelworkers v. Enterprise Wheel & Car Co., 363 U.S. 593, 596, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960), the employee usually will be bound to the result by the agreement's language making the arbitration award "final and binding" upon the employee. W.R. Grace & Co. v. Rubber Workers, 461 U.S. 757, 765, 76 L. Ed. 2d 298, 103 S. Ct. 2177 (1983). Thus, to bring a successful suit, the employee must challenge the validity of the grievance procedure as well as allege a breach of the collective bargaining agreement by the employer. A successful § 301 suit usually entails two independent but intertwined causes of action: one against the employer for breach of the collective bargaining agreement, the other against the union for breach of the duty of fair representation. See DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 163-64, 103 S. Ct. 2281, 76 L. Ed. 2d 476 (1983); Vaca, 386 U.S. at 185.

The district court found the Joint Committee decision invalid because the court believed the committee lacked jurisdiction over the dispute. According to the court, the 1977 Agreement is a collective bargaining agreement, albeit one without a grievance procedure vesting jurisdiction in the Joint Committee or a finality clause precluding review of the Joint Committee's decisions. Our conclusion that the 1977 Agreement reflects a contract dealing with the seniority rights of drivers under the Cement and Tank CBAs indicates that the dispute should be settled according to the resolution procedures detailed in those agreements. Indeed, we believe that these agreements vest the Join Committee with mandatory jurisdiction over the dispute.*fn11 Section 5.7 of the Cement CBA, governing seniority in the event of terminal closings, provides that displaced employees "shall be dovetailed in accordance with the procedures outlined in Article 5, Section 5.5." Section 5.5 provides that "any controversy with respect to [the seniority of affected employees] shall be submitted to the Joint Grievance Procedure in Article 7." Section 7.2 then locks in the Joint Committee's jurisdiction over this dispute: "all grievances, or disputes involving any controversy, complaint, dispute or misunderstanding arising as to the meaning, application or observance of any provisions of this Agreement" shall be subject to the collective bargaining agreement's grievance procedures. It is clear that the Joint Committee had jurisdiction over the dispute, as the dispute involves the application of the CBA's dovetailing provisions in light of the 1977 Agreement.*fn12

Thus, the district court must defer to the Joint Committee's decision unless (i) the committee's decision "fails to draw its essence from the collective bargaining agreement;" or (ii) the decision is tainted by fraud or misconduct; or (iii) the Union breached its duty of fair representation of the plaintiffs before the Joint Committee. See Enterprise Wheel, 363 U.S. at 597; Bieski v. Eastern Automotive Forwarding Co., 396 F.2d 32, 38 (3d Cir. 1968).*fn13

IV.

Plaintiffs raise no contention that the Joint Committee decision exceeded the authority granted by the Cement and Tank CBAs, nor do they allege fraud or misconduct in the proceedings.*fn14 The jury found that the union did not breach its duty of fair representation. Ordinarily, we would defer to the jury's finding. Indeed, on the record, this case appears substantially similar to Humphrey v. Moore, 375 U.S. 335, 11 L. Ed. 2d 370, 84 S. Ct. 363 (1965) where the Supreme Court held that the union, representing two groups of employees in a seniority dispute resulting from the merger of two transport lines, did not breach its duty simply because it advocated dovetailing the employees instead of favoring one group by arguing that the transferred employees had no right to employment. "Conflict between employees represented by the same union is a recurring fact," the Court noted, adding that it was unwilling to weaken the collective bargaining and grievance process by preventing the union from taking a position in the seniority dispute "in good faith and without hostility or arbitrary discrimination." Humphrey, 375 U.S. at 349-50.

Plaintiffs maintain that the trial court abused its discretion, however, in refusing to instruct the jury that the 1977 Agreement was a binding contract.*fn15 In refusing to give the proffered instruction, the trial court correctly observed that the two causes of action in a successful § 301 suit are conceptually distinct. Yet we are mindful also that these claims are "inextricably interdependent." DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 164-65, 76 L. Ed. 2d 476, 103 S. Ct. 2281 (1983) (quoting United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 66, 67 L. Ed. 2d 732, 101 S. Ct. 1559 (1981) (Stewart, J., concurring in judgment)). That a judge or a jury later finds that the company breached a labor contract does not constitute a per se breach of the duty of fair representation simply because the union failed to grieve, see Vaca, 386 U.S. at 192-93, or failed to be sufficiently prescient to allege before the Joint Committee that the Stockertown dovetail constituted a breach of contract. In either case, "[a] breach of the statutory duty of fair representation occurs only when a union's conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith." Vaca v. Sipes, 386 U.S. 171, 190, 17 L. Ed. 2d 842, 87 S. Ct. 903 (1967).

Nevertheless, the existence of contractual rights and the duty of fair representation are intertwined; the Union's failure to suggest plaintiffs had contractual rights under the 1977 Agreement, in the face of the court's finding that 1977 Agreement gave the employees enforceable contractual rights, is evidence that generally should be considered by the finder of fact in a duty of fair representation case.*fn16 By directing the district court to submit to the jury the interpretation and breach issues, the jury must decide, in light of that evidence of the grievance proceedings before the Joint Committee, whether the Union breached its duty of fair representation. By vacating the trial court's rulings construing the 1977 Agreement and finding Chemical Leaman's breach of that contract, we leave it to the jury to determine the true meaning of the agreement and whether either party breached its duty with respect to it.

V.

Our discussion contemplates that the meaning of the 1977 Agreement, Chemical Leaman's breach of the 1977 Agreement, and the Union's breach of its duty of fair representation will be decided by the jury on remand. In light of our holding that the Joint Committee properly exercised jurisdiction over the dispute, the court should instruct the jury that the Union may be held liable if its representation of the Griesmann plaintiffs "has been dishonest, in bad faith, or discriminatory." Hines v. Anchor Motor Freight, 424 U.S. 554, 571, 47 L. Ed. 2d 231, 96 S. Ct. 1048 (1976), i.e., conduct that "seriously undermines the integrity of the arbitral process." Id. at 567. Finally, our finding of Joint Committee jurisdiction compels the district court to reinstate its order dismissing those plaintiffs who failed to avail themselves of the grievance procedures.*fn17

20. The district court's order will be vacated and the case will be remanded for disposition in accordance with this opinion.


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