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

Terry A. GARVIN; John McGrail; Ferdnand Adamson; Edith

Aitken; Marva Akins; Douglas R. Allen; Shirley Allen;
Loren Alm; Sheila Altman; Cornelious Anderson; Peggy C.
Anderson; Claudette B. Anterin; Esther Arnold; Kenneth G.
Arsenault; Jerry M. Ashley; Lindy Ashley; Johnice M.
Autrey; Roy Autrey; Wanda Bagley; Wanda Baglley; W.E.
Baker; Marjean Baldini; Suzanne Barker; Dorothy J. Bass;
Pedro P. Bejarano; Catherine A. Bellis; Jimmy Belvin;
Steve Benisek; Hellen J. Bennett; Eunice F. Berry; Mark
Bianchi; Mary Bigelow; Russell Bigelow; Esther B.
Billiard; Carolyn K. Bishop; Frank Black; Jo Ann L.
Black; Lyndel E. Blanton; Patsy H. Blemmel; Richard D.
Blemmel; Letha Blevins; Bennie H. Bohannon; Lee Bowen;
Dorthy Bowens; Joyce Boyd; Ruty W. Boyer; Jewel L.
Boyles; Hardenia Bradford; Margaret B. Brady; Wyonna
Brandt; Mary Brannon; Florrie L. Brant; Louise Branum;
Mary Briggs; Paul C. Briggs; Linda A. Brim; Ernest W.
Brower Jr.; Carol Gene Brown; Cecil R. Brown Charles
Brown; Elsie Brown; Lottie B. Brown; Marion Brown;
Stephen M. Brown; Carole Joan Browning; J.T. Brundage,
A/K/A Jack Brundage; Georgianna Bruno; John W. Bryant;
Mary Burton; Elmer Ray Button; Beverly Cagle; Tony Cagle;
Al Cagle; Robert P. Campbell; Daniel T. Cantrell; Linda
Cantrell; Ving Dang Cao; Bertha R. Carlton; Thelma
Carmichael; Adrian Carter; Darlene Carter; Robert Carter;
Fred Casteel; Glenda S. Casteel; Dale O. Cease; Quannah
Chadwell; Betty J. Chadwick; Max E. Chance; Williette
Teresa Childs; Mike Clay; Hulsuk Clevenger; Raymond Cobb;
David G. Coleman; Tommy Coleman; Dan Coley; Rachel
Colwell; Dave L. Comstock; Dianna Conner; Tim D. Conner;
John Coogle; Norma S. Coone; Paul D. Cosby; Catherine

Coulter; Charles L. Cox; Charlotte M. Cox; Deanna J. Cox;

Ray L. Cox; Charlene Coyle; Donald D. Coyle; Rodger D.
Craft; Betty Craig; Joe F. Craig; Benny Cramer; Michael
Crandall; Maurice F. Crawford; Wilma M. Crisp; Bobbie
Crump; Tilda Cummings; Winston Cutter; Carroll Darnall;
Margaret Darnall; Orvelle Davis; Patricia A. Davis;
Sandra L. Davis; Mildred De Busk; David Deerinwater;
Carolyn C. Demoe; Dennis Demoe; Gary Dennis; Brenda R.
Dezarn; Jimmy G. Dezarn; Gay L. Diamond; Van Ngo Dich;
Mary Dick; Wayne Dinkins; Mossie F. Doku; James Don Dero;
Joan Don Dero; Jean M. Dotson; Wesley P. Drabek; Elaine
Duek; Martha L. Dunlap; Cong Thanh Duong; Rymon Earls;
R.L. Edralin, a/k/a Eddie Edralin; Fay Lynn Edwards; Otis
E. Edwards, Jr.; Joquitta Ek; Martha A. Ellis; Amanda
Ellison; Zina English; Virginia Ervin; Beverly
Estlinbaum; Fred Estlinbaum; R.W. Estlinbaum; Mary
Eubanks; Eastman Joe Factor; Deboray Farrior; Ray
Farrior; Charles Wayne Fawcett; Aaron Felix, Sr.; Janice
Felix; Norma Lee Felix; Richard Ferguson; Reginald
Fields; Doretha Sue Fike; Reginald J. Fike; Gerald
Fincham; Abilene Fletcher; Martha Fletcher; Martha Jan
Ford; Mary Ann Ford; Rita J. Foster; Kay F. Fowler;
Mattie B. Frazier; Helen Freshour, A/K/A C.W. Freshour;
Mary D. Frye; Phyllis M. Fuller; Erma J. Gage; Michael A.
Gage; Daniel J. Gagnath; Betty J. Gaines; Domingo J.
Garcia; Ruby Gardenhire; Mi Sun Gardner; Eric W. George;
K.C. George; Barbara George-Reilly; Richard Gerber; Mel
D. Gering; Robert Gibbs; Carolyn Gibson; Mary M. Gibson;
Dixie Gilbert; Eva Jolene Gilbert; Joe W. Gilbert;
Kamencita Gissandaner; Richard W. Glasco; Shirley
Glover-knight; Elsie Golson; Donaciano S. Gonzales; Jerry
Goodner; Lee P. Gorrell; Jo Goza; Lavoy L. Green;
Shirley Green; Tommy Green; Kathleen Greer; Johnnie
Gregory, Jr.; Emma Grider; Ann Griffith; Edward Griffith;
Betty P. Griggs; Robert W. Griggs; Wesley Gude; Arthur

Guess; Mary Haley; Barbara Hall; Roland E. Hambrook;

Frances Colleen Hanneman; Ella P. Hanson; Carletta Hardon;
Hope G. Hare; Francis Harker, Sr.; Imogene Harris; James
E. Harris; James W. Harvin; Claudia Hash; Patricia B.
Hauser; Archie Hawkins; Rick Hawkins; Virginia Hayes;
Bellijim Head; Marilyn S. Heathman; Betty R. Hensley;
Sherrie Hershel; Carolyn Hicks; Jeanie M. Hicks; Dorothy
Hignite; John Hilderbrand; Carol Hill; Margaret S.
Hinton; Dung Ngoc Ho; Shirley A. Holden; Herman Tyrone
Holland; John David Holland; Gwendolyn M. Hood; Wanda L.
Hood; Carol A. Horton; Mary Housner; C.R. Howard; Oma
Howard; Connie Huff; Sandra Hughart; Sandy Humphery;
Marion Hurley; William Hurt; Janice Hutchens; Jerry D.
Hutchens; Darrell Hutton; Sheryl Hutton; C.P. Irby;
Deborah Jackson; William L. Jackson; Jerry Jacobs;
Frances L. James; Lillian James; Lindsey Jasmer; Douglas
M. Johnson; Etta M. Johnson; Margaret L. Johnson; Mary
Johnson; Minola H. Johnson; Georgia L. Jones; John E.
Jones; Marcia Jones; Mattie L. Jones; Donald Keasler;
Alvin Keith; Shirley A. Kelley; Connie Kellian; Joan E.
Kennedy; A.E. Kent; Carol Keylon; Eddie Keylon;
Katherine Kilby; Hazle King; Ruthie O. King; Roy A.
Klepper; Ronald G. Klopfenstein; Gertrude Kroutil;
Jacqueline Krutz; Jackie Lack; Mary J. Lambert; Esther B.
Lampkin; Carl J.D. Lane; Ruth M. Lane; Ernie Lang;
Genera M. Lattimore; Ruth Marie Lavalais; Beverly Lawson;
Douglas Lawson; Ralph Lee; Amelia Lightner; William C.
Locke; Glenn Logan; Carlos P. Lopez; SandraLorenzen; Ima
Jean Lovelace; Donald Lowe, Sonja W. Lowery; Wanda Jean
Lowry; Patricia W. Lytal; Don Maddox; Bertha Maker; Lana
K. Manor; Sharon Marine; Merle A. Marsh; Sharon Faye
Martin; Joe Martinez; Charles L. Mason; Richard S. Mason;
John Massingale; A. Joan Mathes; Paul Mattingly; Linda
B. McClish; Jerry L. McConnell; Joann B. McCracken; Judy
C. McCracken; Geneva McCraw; Robert A. McDaniel;

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;

Donald Parks; Frances J. Parks; Coy N. Patterson; Diana

Patterson; Frank Patterson; Willella Pauley; E.E.
Percival; Ronnie Perkins; Jenice Perry; Edward R. Peters;
Nancy F. Peyton; Ronald Pfortmiller; Ester B. Pickens;
A.L. Pierce; Peggy Pierce; James L. Pike; Margaret Pitt;
Connie Ponds; Lou Ann Porter; Priscilla M. Porter; David
K. Powell; Betty Priest; Shirley B. Prim; Douglas A.
Puckett; Esther Quntero; Max Ragland; Kennith Rainbolt;
Connie E. Saulsberry; Avis Savage; Leroy D. Schein; Leta
J. Schilling; Donna R. Schleicher; George H. Schleicher;
Larry Schmidt; Constance T. Scott; Martha Sebring; Jerry
Sexton; Michael A. Shaver; Faye S. Shaw; Judy Shaw;
Carolyn Sheehan; Richard B. Sheffer; Evelyn M. Sheldon;
Carl L. Shelton; Alma P. Shore; Michael Shrouf; Al
Shuler; Evelyn W. Shultz; Jose E. Sigala; Ozetta M.
Sloan; Sherl Slohn; Lelia M. Smiley; Mary D. Smiley; Bob
Smith; Debra Z. Smith; Glen H. Smith; Gloria R. Smith;
Mary D. Smith; Mildred A. Smith; Wanda Smith; Lois
Sockwell; Dennis Spears; Clarissa B. Speight; Roy
Spillman; Kathleen Starr; Emil J. Stejskal; Don Stevens;
Jim L. Stewart; Earl D. Still; Elizabeth Stout; Carolyn
W. Stramski; John M. Styles; Number R. Sutton; Shirley H.
Sutton; Joyce Swanegan; Many Szczepka; Sonja Szczepka;
Caroll Tarrant; Eva Thomas; Fred Tinsley; Johnny Tisdel;
Murlene Tobler; Billie M. Todd; Ross P. Tomberlin; Howard
Toyer; Clarence Trail; Karen Trail; Ronald Trower; Kelly
Troyer; Marcus Tuck; Bruce Turner; Marva J. Turner;
Deborah Upton; Pete Urias; Guynelle Uselton; Dana Valley;
Walter Valley; Mark Vucknvich; Nancy Waidlich; Larry W.
Walden; Marian J. Walden; Helen Walker; Charles Walsh,
Jr.; William Walton; Herbert W. Ward; David Ware; Jayne
Ware; Gary Warnke; Clint Wartchow; Helen Wartchow;
Phyllis J. Way; Gary D. Webb; Talmage Webb, Jr.; John B.
Weber; Hsiaoyen Welch; Violet J. Welch; Violet J. Wells;
Walter Andrew Wells; Gloria Rice West; Elizabeth Whelan;

Nathaniel White, Jr.; Ronnie White; Alice Whitlow;

Barbara Wicker; Clifford Wilkerson; Karen C. Wilkins;
Darlene Williams; Jacquita L. Williams; Martha F.
Williams; Nelda Josephine Williams; Minnie Wilner;
Melaine Wiloughby; Steven Wiloughby; Ardis D. Wilson;
Fayona B. Wilson; Frank D. Wilson; Joyce Wilson; Savannah
M. Wilson; George Winburn; Nick Wines; Mac R. Winkler;
Gary Winter; Glenna Winter; Edwin C. Wise; Frederick
Wise; Linda G. Wise; Robert Wood; J. H. Woodard; John H.
Woodford, Jr.; Lena J. Woodruff; Bill Woodward; Bobby G.
Woodward; Eddie Joce Woodward; Randi H. Woodward;
Margaret A. Wooldridge; Norma Wooldridge; Billie
Workman; Margie Wosika; Barbara Wyse; Gary Wyse; Patsy
Yadon; Fred E. Yeager; Earlene J. Young; Sarah A. Young;
Agnes Zamora; Roger G. Ziegerfuss, Plaintiffs-appellants,
v.
AMERICAN TELEPHONE & TELEGRAPH CO., a New
York corporation
as the successor in interest to AT & T Network
Systems, Inc., Defendant-Appellee,
Lucent Technologies, Inc., Intervenor-Appellee.
No. 98-6007.

United States Court of Appeals,

Tenth Circuit.
March 5, 1999.

James A. Ikard, Oklahoma City, Oklahoma, (Michael A. Toups, Weller,

Green, McGown & Toups, L.L.P., Beaumont, Texas, and A. Hoyt Rowell,
III, Ness, Motley, Loadholt, Richardson & Poole, Charleston, South
Carolina, with him on the briefs) for the appellants.
Charles C. Jackson, Seyfarth, Shaw, Fairweather & Geraldson, Chicago,
Illinois, (Eric J. Gorman and Jill S. Mulderink, with him on the briefs) for
the appellees.

Before TACHA, BARRETT, and HENRY, Circuit Judges.

BARRETT, Senior Circuit Judge.

Terry A. Garvin, et al., (collectively "Appellants") appeal from the district

court's grant of summary judgment in favor of American Telephone and
Telegraph Company (AT & T) on their claims to recover termination
allowances brought pursuant to 301 of the Labor Management Relations Act
(LMRA), 29 U.S.C. 185(a).

Facts
2

Appellants were employees of Oklahoma City Works of AT & T Network

Systems Incorporated and were members of the International Brotherhood of
Electrical Workers, Local Union 1599, AFL-CIO, the International
Brotherhood of Electrical Workers Union, Local Union 2021, AFL-CIO, or the
International Union, United Plant Workers of America, Local Union 795
(collectively "the Unions"). In May 1995 and August 1995, the Unions and AT
& T entered into three collective bargaining agreements (CBAs).1 These CBAs
provided in Article 18 that "[a]n employee LAID OFF shall be granted a
Termination Allowance...." (Joint App. Vol. 1 at 257, Art. 18 1.) "Laid off" is
defined as "[a] termination of employment arising out of a reduction in the
force due to lack of work." Id. at 162, Art. 3 1(g). It is undisputed that an
employee is not entitled to a termination allowance if "the employee is recalled
or re-employed as a regular employee by AT & T or any of its affiliates,
subsidiaries or entities." Id. at 258, Art. 18 3(a)(2)(ii). See Brief of Appellants
at 6 p c.

In November 1995, AT & T created Lucent Technologies Incorporated

(Lucent), a wholly owned subsidiary, to control AT & T's systems and
technology business and operations. (Joint App. Vol. 2 at 861.) On February 1,
1996, AT & T transferred its rights, title, and interest in the Oklahoma City
Works plant, where Appellants were employed, to Lucent. Id. AT & T also
transferred, and Lucent agreed to assume, AT & T's rights and obligations under
the CBAs.2 Id ; Vol. 1 at 91. On April 10, 1996, Lucent went public with an
initial stock offering of approximately 112,037,037 shares. Id. On September
30, 1996, AT & T divested its remaining stock in Lucent. Thus, Lucent became
an independent corporation as of October 1, 1996. Id ; Vol. 1 at 91.

On October 9, 1996, Appellants Terry A. Garvin and John McGrail requested

termination allowances, pursuant to Article 18 of the CBAs, in a letter to the

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

We review the district court's grant of summary judgment de novo. Oberndorf

v. City & County of Denver, 900 F.2d 1434, 1437 (10th Cir.), cert. denied, 498
U.S. 845, 111 S.Ct. 129, 112 L.Ed.2d 97 (1990). "We review the record in the
light most favorable to the non-moving party to determine if a genuine issue of
material fact was in dispute; if not, we must determine if the substantive law
was correctly applied." Id.

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

(a) To provide for the expeditious and mutually satisfactory settlement of

grievances arising with respect to the interpretation or application of this
Agreement or other terms and conditions of employment, the following
procedures shall apply.

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

(c) When an employee or group of employees wishes to have a grievance

presented for settlement by the UNION, such grievance shall, except as
otherwise provided in this or any other written agreement between the
COMPANY and the UNION, be presented as outlined below and settlement
sought at any one of the steps indicated.

18

Id. at 179, Art. 6 1(a)-(c). Pursuant to 1(b), Appellants individually wrote

letters to AT & T's president requesting adjustments on the issue of termination
allowances. Appellants proceeded with their requests through the open-door
policy as AT & T and Lucent requested and their requests were denied. The
issue is whether Appellants were also required to bring their grievances through
the Unions after their grievances directly with AT & T were denied in order to
exhaust the CBAs' grievance and arbitration procedures.

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

Here, there is no requirement in the CBAs that individual employees who

grieve individually pursuant to Article 6 1(b) proceed through either the
grievance steps outlined in Article 6 for grievances handled between the Union
representative and the company or the arbitration procedures outlined in Article
7 expressly for "[a]ny dispute arising between the UNION and the

COMPANY...." Id. at 184. Contrary to AT & T's contention, although

employees "may" bring grievances through the Unions pursuant to Article 6
1(c), there is no language in the CBAs which requires employees to do so after
they have grieved directly to AT & T/Lucent. See, e.g., Republic Steel, 379
U.S. at 658 ("Any complaint not so settled [through direct discussion with the
Foreman] shall constitute a grievance within the meaning of this Section.").
Article 6 1(b) and 1(c) provide the employee alternative methods of
grieving: directly to AT & T without the intervention of the Unions or through
the Unions. In interpreting the language of the contract in this manner,
employees as individual grievants are not allowed to avoid the procedures
outlined in the CBAs in favor of judicial suit. However, employees are allowed
to choose which method of grieving they wish to pursue. To require employees
to grieve through the Union after grieving directing to AT & T nullifies the
plain language of Article 6 1(b). If the contracting parties had wished Article
6 1(b) to be an optional preliminary step in the grievance process and the
grievance and arbitration process to be the exclusive remedy for all grievances,
then they were obligated to so state. Thus, if an employee chooses to grieve
pursuant to Article 6 1(b) and fulfils his or her obligations thereunder, the
employee may bring suit following an adverse decision.
25

Therefore, we hold that Appellants exhausted the CBAs' grievance procedures

as outlined in Article 6 1(b) as requested by AT & T before bringing their
action pursuant to 301 of the LMRA.4 We now proceed to the merits of
Appellants' claims.

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

Article 18 provides that "[a]n employee LAID OFF shall be granted a

Termination Allowance ..." unless "[t]he employee is recalled or re-employed

as a regular employee by AT & T or any of its affiliates, subsidiaries or

entities." (Joint App. Vol. 1 at 257-58, Art. 18 1 & 3(a)(2)(ii).) "Laid off" is
defined as "[a] termination of employment arising out of a reduction in the
force due to lack of work." Id. at 162, Art. 3 1(g). Appellants submit that they
were "laid off" by AT & T on October 1, 1996, when AT & T divested Lucent.
Therefore, Appellants argue they were entitled to termination allowances. We
are not persuaded by Appellants' contentions.
28

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

not comparable to their jobs with Lucent as an AT & T subsidiary, claiming

that: (1) they lost the right to transfer within AT & T's system through a selfnomination process; (2) their risk of termination was increased; (3) their
telephone equipment discount was discontinued; (4) their $ 50.00 per month
long-distance telephone credit will not be renewed when the contract expires;
and (4) the interest rate on their AT & T credit cards increased to that of other
cardholders.5
30

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

The course of operations and Appellants' comparative advantages and

disadvantages under either employer, however, are not the sole indicators of
whether their jobs are comparable. See Thorpe v. Retirement Plan of Pillsbury
Co., 80 F.3d 439, 443 (10th Cir.1996). In Thorpe, we examined the rights and
liabilities assumed by the successor company regarding the contractual
relationship between the seller and the employees. Thorpe, 80 F.3d at 443. We
held that Thorpe's "good fortune in finding employment in the same plant does
not change the fact that the transfer of the Ogden plant to Cargill resulted in a
fundamental shift in the rights and liabilities under [his] contractual relationship
with [Pillsbury], not the least of which was he was no longer employed by
Pillsbury." Id. We noted that the purchase agreement between Pillsbury (the
seller) and Cargill (the buyer) "did not provide for a transfer of the collective
bargaining agreements with the Union; did not require Cargill to hire any past
Pillsbury employee or observe any of Pillsbury's past terms and conditions of
employment, ...; and most importantly, refused to transfer the liabilities
associated with Pillsbury's Retirement and Welfare Plans,...." Id. at 443-44. In
contrast, it is undisputed that Lucent assumed all AT & T rights, interests,
liabilities, and obligations, including the CBAs, upon the transfer of the
Oklahoma City Works facility to Lucent on February 1, 1996. As such,
Appellants' jobs with Lucent before and after its divestiture from AT & T are
comparable.

32

In furtherance of their claim, Appellants contend that AT & T paid termination

allowances to employees upon the sale of its Phoenix Works facility regardless
of whether the employees found jobs with the buyer or another company.
Appellants admit that AT & T issued WARN Act7 notices announcing its

intention to terminate employment of its employees at the Phoenix facility due

to its sale of the facility to CSI. (Brief of Appellants at 8 & 1(b).) See Joint
App. Vol. 3 at 1786-87. The notices also stated that AT & T anticipated that all
employees would be retained by CSI. (Joint App. Vol. 3 at 1786-87.)
33

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

Appellants became Lucent employees on February 1, 1996, when AT & T

transferred its assets and liabilities, including its obligations under the CBAs, to
Lucent. At that time, Appellants were not entitled to termination allowances
pursuant to Article 18 3(a)(2)(ii) because Lucent was a wholly owned
subsidiary of AT & T.8 On October 1, 1996, Appellants' employer did not
change, but their employer's status as a subsidiary company changed to that of
an independent corporation. As such, Appellants were not "laid off" by AT & T
on October 1, 1996, inasmuch as they already worked for Lucent on that date.
Their employment with AT & T ended on February 1, 1996.

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.)

Appellants amended their complaint on March 31, 1997, to include a class

action claim on behalf of themselves and as representative of others similarly
situated. (Joint App. Vol. I at 39-46.) The class was never certified by the
district court

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

In fact, Appellants characterize these changes as "Minor Changes" in their

opening brief to this court. (Brief of Appellants at 10.)

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

Appellants concede in their reply brief in response to AT & T's failure to

exhaust claim that "[u]ntil October 1st plaintiffs were not entitled to a
termination allowance and had no basis for such a request." (Reply Brief of
Appellants at 10.)