174 F.3d 1087 160 L.R.R.M. (BNA) 2650, 137 Lab - Cas. P 10,390, 23 Employee Benefits Cas. 1073, 1999 CJ C.A.R. 1703
174 F.3d 1087 160 L.R.R.M. (BNA) 2650, 137 Lab - Cas. P 10,390, 23 Employee Benefits Cas. 1073, 1999 CJ C.A.R. 1703
174 F.3d 1087 160 L.R.R.M. (BNA) 2650, 137 Lab - Cas. P 10,390, 23 Employee Benefits Cas. 1073, 1999 CJ C.A.R. 1703
3d 1087
160 L.R.R.M. (BNA) 2650, 137 Lab.Cas. P 10,390,
23 Employee Benefits Cas. 1073, 1999 CJ C.A.R. 1703
Carolyn
McDonald; Mary McElyea; Doyle D. McEntire; Fines R.
McEwen; Lola McEwen; Janet McGrail; Cary McMillian;
Saundra McMillian; Bruce McNenney; Wilma G. McRee;
Alter
L. Means; Louis Mendoza; Charles W. Merrill, Jr.; Melba
Jean Merrill; Benjaminemestanza; Jay D. Michael; Carolyn
M. Miller; Charles S. Miller; Dwight Miller; Ralph K.
Miller; Sara J. Miller; Earl K. Millus; Mary B. Millus;
William S. Mims; Marga S. Miranda; Richard B. Miranda;
Anthony D. Mixon; Alfred W. Mock; Maricela H. Montoya;
Ceilia Mooney; Don Mooney; Alvin Moore; Bill W. Moore;
John C. Moore, Jr.; Albert Moore, Jr.; Jorge L. Morales;
William R. Morris; Raymond Morrissey; Dennis Morrow;
Margaret Mosley; Bobbie Mount; Tim Mount; Sarah A.
Mulkey; William M. Munch; Burlene Munro; Robert J.
Munro;
Ruby P. Murry; Ann Nalley; Alice Nealy; Gene Nelson;
Emerald Ness; Shirley Ness; Carol Newman; Tommy E.
Newman; Lonzetta Nolen; Ronald G. Norris; Jimmy E.
Novotny; Helen Nowicki; Kennith Nowicki; Jack Gary
Nowlin; Gloria O'Conner; Marcella Orr; Robert Osborn;
John D. Owen; Charles W. Owens; Russell Owens; Lloyd Don
Owrey; Tammy Sue Rains; Joseph D. Rajer; Jack Ramer;
Fletcher Ramsey; Maria Irma Rangel; Patsy R. Readnour;
Bertha Reaves; Arnold G. Rhodes; Linda B. Richardson;
Alan D. Ridgely; Randolph E. Rinaca; Hellen R. Robbins;
James R. Roberson; Catherine Roberts; Norma Jean Roberts;
Beaulah Robinson; John E. Robinson; Vernon Robinson;
Dorothy Robnett; Bobby Joe Rogers; Ethel C. Rogers; Paul
R. Rolfes; Jo S. Ross; Mary A. Roy; William D. Roy;
Janie Russell; Barbara M. Rust; Earnest Sagal; Paula
Sagal; Ebbie E. Sanders; Ron Sanders; Ruth Ann Sanders;
Alfredo L. Sauceda; Judy Padgett; John M. Page; Martina
R. Page; Sandy H. Page; Susan S. Pannell; Donata Pardue;
Facts
2
President of AT & T, with a copy to the Unions. James Ikard (Ikard) submitted
a request for termination allowances on behalf of members of the Unions
generally. AT & T responded to Ikard on October 29, 1996, directing his
concerns to Lucent. Lucent notified Ikard on November 1, 1996, that the
concerns should be submitted under Lucent's open-door policy. Ikard notified
Lucent that the dispute was with AT & T, not Lucent. On November 7, 1996,
AT & T responded that concerns should be directed to either AT & T or Lucent.
On February 6 and February 14, 1997, Appellants, over 600 employees of AT
& T/Lucent, submitted requests for termination allowances to AT & T. (Joint
App. Vol. I at 16.) On February 25, 1997, AT & T denied their requests. Id.
5
On March 25, 1997, Appellants filed this action pursuant to 301 of the
LMRA, claiming that AT & T's divestiture of Lucent on September 30, 1996,
"laid off" Appellants as the term is defined in the CBAs, entitling them to
termination allowances pursuant to Article 18 of the CBAs.3 Id. at 8 & 9 & 12
and 41 & 10 & 14.
On November 19, 1997, the district court granted AT & T's motion for
summary judgment. (Joint App. Vol. 3 at 1798-1807.) The district court found
that it was not clear whether Appellants were required to submit their
grievances through the Unions prior to seeking federal relief because the
arbitration procedure outlined in Article 7 of the CBAs speaks only to disputes
between the Unions and AT & T. Id. at 1800-01. Therefore, the court denied
AT & T's motion for summary judgment based on failure to exhaust. Id. at
1801. In addition, the district court determined that even if Appellants were
required to proceed through the grievance and arbitration procedures, raising
their claims through the Unions would have been futile because AT & T
considered the claims meritless and there were no AT & T representatives at
the Oklahoma City Works facility in October, 1996. Id. at 1801-02.
On the merits, the district court granted summary judgment in favor of AT & T
and Lucent. Id. at 1803-07. The court concluded that Appellants were not
entitled to termination allowances because they were not "laid off" due to lack
of work. Id. at 1806. The court found that there was no interruption in their
employment, no risk of immediate unemployment, and their jobs before and
after Lucent's divestiture were on comparable terms. Id.
On appeal, Appellants contend that the district court erred in granting summary
judgment in favor of AT & T. Appellants assert that the district court: erred in
finding the language in the CBAs regarding a termination allowance was
unambiguous; improperly disregarded the language of the CBAs in determining
whether they were "laid off" within the meaning of the CBAs; and improperly
weighed the evidence in finding their employment with Lucent before and after
its divestiture from AT & T was comparable.
9
AT & T responds that the district court did not err in granting summary
judgment in its favor on the merits of Appellants' claims because Appellants did
not suffer a termination in employment arising out of a reduction in force due to
lack of work and, thus, had not been "laid off." However, AT & T contends the
district court erroneously found that Appellants exhausted the required
grievance and arbitration procedures outlined in the CBAs and/or erroneously
excused Appellants' failure to exhaust on the ground of futility.
10
Discussion
I.
11
AT & T contends that the district court erred in determining that Appellants
exhausted the grievance and arbitration procedures set forth in the CBAs and/or
erred in excusing exhaustion based on futility. AT & T asserts Appellants failed
to exhaust because the CBAs clearly provide that Appellants "may" initiate
grievances through the Unions pursuant to Article 6 1(c), and the fact that it
considered Appellants' claims to be without merit and intended to defend
against the claims vigorously did not render the grievance and arbitration
procedures futile.
12
It is well established that "an employee can only sue [under 301 of the
LMRA] if he or she has exhausted any exclusive grievance procedures provided
in the collective bargaining agreement." United Food & Commercial Workers,
Local Union No. 7R v. Safeway Stores, Inc., 889 F.2d 940, 944 (10th
Cir.1989). See Reynolds v. School Dist. No. 1, Denver, Colo., 69 F.3d 1523,
1537 (10th Cir.1995) (employee must exhaust administrative grievance
procedure or show an exception before bringing a private judicial action).
Exhaustion is excused when: (1) it would be futile; (2) the employer through its
conduct has repudiated the grievance procedure itself; or (3) the union has
prevented the employee from utilizing the grievance process by breaching its
duty of fair representation. Reynolds, 69 F.3d at 1537 n. 18; United Food &
Commercial Workers, Local Union No. 7R, 889 F.2d at 945. See Viestenz v.
Fleming Cos., Inc., 681 F.2d 699, 701 (10th Cir.), cert. denied, 459 U.S. 972,
103 S.Ct. 303, 74 L.Ed.2d 284 (1982).
13
Here, the district court excused exhaustion on the grounds that: (1) it was
unclear whether Appellants were required under the CBAs to submit their
grievances through the Unions and the arbitration process prior to seeking
federal relief, and (2) exhaustion would have been futile. (Joint App. Vol. 3 at
1800-02.)
14
The CBAs provide that individuals may bring grievances against AT & T
personally without involving the Unions or the individuals may have
grievances presented for settlement by the Unions. (Joint App. Vol. I at 179,
Art. 6 1(b) and (c).) Article 6 1 states:
15
16
(b) Any individual employee or group of employees shall have the right at any
time to present matters in their own interest to the COMPANY and to have such
matters adjusted, without the intervention of the UNION, as long as the
adjustment is not inconsistent with this Agreement and provided the UNION
has been given an opportunity to be present at such adjustment. Any such
grievance shall be presented to the COMPANY'S Local Bargaining Agent.
17
18
19
"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." Republic Steel Corp. v. Maddox, 379 U.S. 650,
652, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965). "[U]nless the contract provides
otherwise, there can be no doubt that the employee must afford the union the
opportunity to act on his behalf." Id. at 652-53.
20
In Republic Steel, the Court concluded that the employee, Maddox, failed to
exhaust the mandatory grievance procedures of his contract. The contract
provided,
21is the purpose of this Section to provide procedure for prompt, equitable
It
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.
22 Employee who has a complaint may discuss the alleged complaint with his
Any
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:....'
23
Id. at 658 (emphasis added). The Court held that "the permissive 'may' did 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." Id. at
658-59. Thus, the Court held that Maddox's suit could not be entertained
because he had not exhausted the grievance procedures, i.e., by waiting nearly
three years to bring suit he had not complied with the 30-day time limitation.
However, the Court acknowledged that "[t]he federal rule would not of course
preclude [the employee's] court suit if the parties to the collective bargaining
agreement expressly agreed that arbitration was not the exclusive remedy." Id.
at 657-58. See Viestenz, 681 F.2d at 701 (employee's claim dismissed for
failure to attempt use of mandatory, exclusive grievance procedure set forth in
the collective bargaining agreement).
24
II.
26
On the merits, Appellants contends that the district court erred in granting
summary judgment in favor of AT & T and Lucent. Appellants claim that the
CBAs should be treated as ambiguous regarding their entitlement to termination
allowances because of the interplay of the provisions of the termination
allowance (Article 18), the definition of layoff (Article 3 1(g)), and the
restrictions on payment of lump sum or periodic allowances (Article 18 3(a))
with the lack of assignment clauses in the CBAs, the lack of the Unions'
consent to the assignments, and the unique circumstances of AT & T's
divestiture of Lucent. In the alternative, Appellants assert that if the language of
the CBAs is unambiguous, the district court erred in disregarding the terms of
the CBAs and applying case law arising out of different circumstances and
contractual contexts.
27
By its plain language, the termination allowance provision does not entitle
Appellants to recover. Only employees "laid off due to lack of work" were
entitled to termination allowances. When an employee retains his or her job
despite a transfer, he or she has not suffered for "lack of work." Headrick v.
Rockwell Int'l Corp., 24 F.3d 1272, 1276 (10th Cir.1994). AT & T's divestiture
of Lucent did not result in any disruption of employment. On September 30,
1996, Appellants worked for Lucent as a subsidiary of AT & T. On October 1,
1996, Appellants worked for Lucent as an independent corporation. There was
no cessation in operations or unemployment due to "lack of work." See Fuller v.
FMC Corp., 4 F.3d 255, 259 (4th Cir.1993) (plaintiffs not "terminated" and,
thus, not entitled to severance benefits where they experienced no
unemployment or loss of income by reasons of plant's transfer in ownership),
cert. denied, 510 U.S. 1115, 114 S.Ct. 1062, 127 L.Ed.2d 382 (1994); Allen v.
Adage, Inc., 967 F.2d 695, 701-03 (1st Cir.1992) ( "employees who, coincident
with their separation from service, began comparable employment at
comparable wages" with successor company not entitled to severance benefits
for "reduction in force"); Awbrey v. Pennzoil Co., 961 F.2d 928, 931-32 (10th
Cir.1992) (employees not entitled to severance pay where none of them missed
any work or suffered any loss of income when accepted comparable jobs with
purchasing company); Bradwell v. GAF Corp., 954 F.2d 798, 800 (2d
Cir.1992) ("Where an employee is kept in his or her job because, despite a
change in ownership, there is no lack of work, that employee cannot accurately
be described as 'permanently laid off because of lack of work.' "); Rowe v.
Allied Chemical Hourly Employees' Pension Plan, 915 F.2d 266, 269 (6th
Cir.1990) (Employees' "separation from Allied and immediate employment
with Armco upon the sale of the Ashland plant did not constitute a layoff.");
Sejman v. Warner-Lambert Co., Inc., 889 F.2d 1346, 1347 (4th Cir.1989)
(employees transferred to successor corporation were not "terminated by the
Company as a result of job elimination"), cert. denied, 498 U.S. 810, 111 S.Ct.
43, 112 L.Ed.2d 19 (1990).
29
In the term "laid off" is the understanding that the affected employees no longer
hold the same jobs they did prior to being laid off. Headrick, 24 F.3d at 1276.
Appellants contend that their jobs with Lucent, as an independent company, are
Appellants' contentions show there were minor changes in their fringe benefits
received from Lucent before and after divestiture.6 However, minor changes in
fringe benefits are not sufficient to establish a genuine issue of material fact on
whether their employment was comparable. See Awbrey, 961 F.2d at 931 (new
employer's "employment benefits differed somewhat, but the differences are
minor and do not cause the jobs to be incomparable"). As we noted in Awbrey,
"comparable" does not mean "identical." Id.
31
32
In this case, however, Appellants were not "terminated" or "laid off" due to the
divestiture of Lucent from AT & T, no WARN Act notices were issued, and
Appellants' continued employment with Lucent was never in doubt. As the
court in Bradwell explained:
34
The allowance of severance pay even if an employee takes another job does not
alter the basic eligibility requirement. Employees kept on by a plant owner's
successor are in a different position from those who are laid off but find
alternate employment. The former are not faced with the same risk of
unemployment as are those who are permanently laid off because of lack of
work. The Policy provision ensures that those laid off will not be discouraged
from seeking alternative employment; it does not place appellants [who
continued their jobs with the successor company] in the same position as laid
off employees who may or may not find other jobs.
35
Bradwell, 954 F.2d at 800. Thus, while an employee who is "laid off" due to
lack of work but is fortunate enough to find a fully equivalent job on his own
the next day is entitled to benefits, an employee who is simply transferred from
one owner to another without any of the concomitant risks of unemployment or
changes in job duties and benefits is not. See Headrick, 24 F.3d at 1277. See
e.g. Thorpe, 80 F.3d at 443 (employee laid off and then hired by new owner
entitled to severance pay).
36
37
For the foregoing reasons, the district court's order of November 20, 1997,
granting summary judgment in favor of AT & T is AFFIRMED.
38
AFFIRMED.
The relevant language of the CBAs is essentially the same in all three
agreements. See Joint App. Vol. 1 at Tab A (Local 1599); Vol. 1 at Tab B
(Local 2021); Vol. 2 at Tab C (Local 795). Citation will be to the collective
bargaining agreement between AT & T and Local 1599, Joint Appendix
Volume 1 at Tab A
The Appellants assert that there was no assignment clause in the CBAs
permitting AT & T to transfer its interests and obligations to Lucent and that the
Unions were not involved in the assignment and no vote was taken by the
Unions' members to ratify the assignment. (Brief of Appellants at 6-7 p e-g.)
We do not reach the district court's finding that exhaustion would have been
futile due to our conclusion that Appellants exhausted their claims. However,
we believe that the futility exception to exhaustion requires more than an
employer's characterization of the grievance claims as meritless and its
willingness to defend against the claims vigorously. See Hines v. Anchor Motor
Freight, Inc., 424 U.S. 554, 96 S.Ct. 1048, 47 L.Ed.2d 231 (1976); Fizer v.
Safeway Stores, Inc., 586 F.2d 182, 183 (10th Cir.1978) ("Plaintiff's claims in
this case, however, do not approach the 'clear and positive showing of futility'
which we have stated need be made.") (quoting Imel v. Zohn Mfg. Co., 481
F.2d 181, 184, (10th Cir.1973), cert. denied, 415 U.S. 915, 94 S.Ct. 1411, 39
L.Ed.2d 469 (1974))
Appellants also state that "retirees that never worked for any company other
than AT & T and retired prior to the creation of Lucent" receive pension checks
from Lucent rather than AT & T. (Brief of Appellants at 11.) This information
is immaterial, however, to whether Appellants' jobs, before and after the
divestiture of Lucent, are comparable as all Appellants were employed at the
time of the divestiture. See id. at 2
The WARN Act, 29 U.S.C. 2101-2109, requires large employers who are
either closing a plant or instituting mass layoffs to provide sixty-days advance
notice to those employees who will be laid off or who will have their hours
substantially reduced. Frymire v. Ampex Corp., 61 F.3d 757, 761 (10th
Cir.1995), cert. denied, 517 U.S. 1182, 116 S.Ct. 1588, 134 L.Ed.2d 685 (1996)
8