Michael Zemonick v. Consolidation Coal Company, a Corporation , 762 F.2d 381 ( 1985 )

HAYNSWORTH, Senior Circuit Judge:

Plaintiffs, eleven former employees of Consolidation Coal Company, were discharged for allegedly instigating a wildcat strike. Each plaintiff took his discharge to arbitration, where the dismissals were upheld. In July 1981, approximately sixteen months after the discharges and thirteen months after the last of the arbitration decisions upholding the discharges, the plaintiffs commenced this action in a state court against the employer and the union. They asserted Vaca-Hines¹ hybrid claims, charging the employer with a breach of the collective bargaining agreement and the union with failure to discharge its duty of fair representation in the grievance and arbitration proceedings.

The employer removed the case to the United States District Court for the Northern District of West Virginia where the parties commenced extensive discovery and pretrial proceedings, culminating in cross motions for summary judgment. There was no suggestion that the commencement of the proceedings were untimely until July 11, 1983, after the decision of the Supreme Court of the United States in DelCostello v. Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983). In DelCostello, the Supreme Court held for the first time that such hybrid § 301/DFR claims are subject to the six months period of limitations in § 10(b) of the National Labor Relations Act² which governs the filing of charges of unfair labor practices with the National Labor Relations Board. Noting that this court, in Murray v. Branch Motor Express Co., 723 F.2d 1146 (4th Cir.1983), had held that DelCostello was to be applied retroactively, the district court dismissed this action as having been barred by the six months limitation period.

Because the circumstances of this case are quite different from those presented in Murray and because, with respect to these West Virginia plaintiffs, DelCostello represented an abrupt change from what appeared to have been settled law, we think DelCostello was improperly given retroactive effect in this case.

I.

Since there was no federal statute of limitations directly applicable to actions against an employer under § 301(a) of the Labor Management Relations Act,³ the Supreme Court held in United Auto Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966), that the court should borrow from state law the period of limitations most analogous to such an action. Accordingly, this court held in Kennedy v. Wheeling-Pittsburgh Steel Corp., 81 L.R.R.M. 2349, 69 CCH Labor Cases P 12,980 (4th Cir.1972), that the applicable period of limitations for hybrid actions such as this was supplied by West Virginia’s statute limiting actions on oral contracts to five years. See also Howard v. Aluminum Workers International Union, 589 F.2d 771 (4th Cir.1978).

In the interim between the decisions of the Supreme Court in Hoosier Cardinal Corp. and DelCostello, there was another significant decision of that Court. United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981). The United States District Court for the Eastern District of New York had held that Mitchell’s claim was governed by New York’s ninety day statute of limitations applicable to actions to overturn an arbitration award. The United States Court of Appeals for the Second Circuit had reversed, 624 F.2d 394 (1980). The Court of Appeals had held that the relevant statute was New York’s six year statute applicable to actions on contracts. The employer, but not the union, sought and obtained a writ of certiorari, and the Supreme Court, agreeing with the district court, held that the action against the employer was barred by New York’s ninety day limitation upon actions to set aside an arbitration award. Mr. Justice Stewart, in a separate concurrence, embraced the position of the AFL-CIO, as amicus curiae, that the controlling limitations period should be taken from § 10(b) of the National Labor Relations Act, but the other members of the Court declined to consider that contention since it had not been advanced by either of the parties. Justice Stevens filed a separate opinion in which he emphasized the fact that the Court did not have before it the question of the applicable period of limitations to the claim against the union, and contended that the ninety day period for actions attacking an arbitration award should not be applied to the claim against the union.

So matters stood when this action was filed in West Virginia. Most of the states have very short periods of limitation, typically ninety days, for actions seeking to overturn an arbitration award, but West Virginia is one of the few states that has no statute specifically applicable to such actions. Thus, the holding of the Supreme Court in Mitchell had no relevance to the question of timeliness of the commencement of this action in West Virginia. A careful lawyer might have given some consideration to the straw in the wind to be found in Justice Stewart’s concurring opinion in Mitchell and the declination of the other justices to consider the contention, but the controlling authority remained Hoosier Cardinal Corp. The applicable period of limitations was to be borrowed from state law, and, since West Virginia had no statute specifically applicable to suits to overturn arbitration awards, our earlier decision holding that the timeliness question was governed by West Virginia’s five year statute for the commencement of an action on an oral contract was controlling.

II.

Nothing the Supreme Court did in Del-Costello forecloses our consideration of the retroactive application of that decision, in the circumstances of this case, under the standards of Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). In DelCostello, the Supreme Court applied the new rule to the plaintiffs in the two consolidated eases before it, but in neither case was there a potential problem with retroactive application under the Chevron standards.

DelCostello, himself, brought his action in the District Court of Maryland, and, under Mitchell, the district court properly held that the applicable limitations period was that contained in Maryland’s thirty day statute for actions to vacate an arbitration award. 524 F.Supp. 721 (D.Md.1981). This court affirmed on the district court’s opinion. 679 F.2d 879 (4th Cir.1982) (Mem.). Thus, the “retroactive” application of Del-Costello’s new rule to DelCostello, himself, had the effect of increasing the limitations period, not decreasing it. Indeed, the Supreme Court remanded DelCostello’s case for consideration of possible tolling so as to make the filing of the complaint timely under the new six months rule. DelCostello thus benefited from the retroactive application of the new rule, and in no sense was hurt by it.

Flowers, the plaintiff in the consolidated case decided with DelCostello, suffered a dismissal of his action in the Western District of New York. That court held that the relevant limitations period was the ninety day period provided by New York’s statute for the commencement of actions to vacate an arbitration award. The Court of Appeals for the Second Circuit reversed, holding that the relevant period for both branches of the claim was New York’s six year statute for the commencement of actions on contracts. 622 F.2d 573 (2d Cir.1980) (Mem). That decision, however, was vacated by the Supreme Court, which remanded the case to the Court of Appeals for reconsideration in the light of Mitchell. Upon reconsideration, that court held, as required by Mitchell, that the action against the employer was barred by the ninety day statute for actions to vacate arbitration awards but that the claim against the union was governed by New York’s three year statute for the commencement of actions for malpractice. Flowers v. United States Steel Workers of America, 671 F.2d 87 (2d Cir.1982). The Supreme Court’s application of the new six month rule to both branches of the claim thus enlarged the applicable period of limitations for the claim against the employer. It reduced the limitations period held to be applicable by the Court of Appeals for the Second Circuit, but enlarged the limitations period initially held to be applicable by the district court. In any event, from the outset, Flowers was aware of New York’s ninety day limitation period for the commencement of an action to set aside an arbitration award, and was chargeable with knowledge that the ninety day period might be held to be the relevant one, just as the district court had held.

Neither DelCostello nor Flowers was in a position to claim that the decision in Del-Costello, in application to him, would substantially and unfairly disadvantage him. No one would have perceived any retroactivity problem if, when the case first came before it, the Supreme Court had reversed the Court of Appeals for the Second Circuit in Flowers and held that the district court was correct initially in applying the ninety day period for actions to vacate arbitration awards.

Application of the new rule to the two cases before the Court simply does not suggest that, in other cases, application of the new rule, under quite different circumstances, might not appropriately call for consideration of a retroactive application under the Chevron standards.

Nevertheless, two courts of appeals have held that the Supreme Court's decision in DelCostello, itself, forecloses any consideration of a contention that its rule be applied only prospectively. Welyczko v. U.S. Air, Inc., 733 F.2d 239 (2d Cir.1984), cert. denied — U.S. -, 105 S.Ct. 512, 83 L.Ed.2d 402 (1984), Smith v. General Motors Corp., 747 F.2d 372 (6th Cir.1984). See also Gray v. Amalgamated Meat Cutters Local 540, 736 F.2d 1055 (5th Cir.1984).

The plaintiff in Welyczko had waited five years to commence his action, and he should have known that a much shorter limitations period might be held applicable to him, particularly New York’s ninety day period for the commencement of an action to vacate an arbitration award. The case simply presented no occasion for a detailed analysis under Chevron.

The position of at least some of the plaintiffs in Smith seems to have been different, but the majority of the en banc court for the Sixth Circuit chose to follow Welyczko and what it understood to be the lead of other circuits, including this one, in giving retroactive application to DelCostello, apparently without noticing that in those cases, application of the DelCostello rule had had the effect of enlarging, rather than shortening, the applicable period of limitations. One judge concurred in the judgment, but not in the reasoning of the majority. He had been through a Chevron analysis in Lawson v. Truck Drivers, 698 F.2d 250 (6th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 69, 78 L.Ed.2d 83 (1983), and he thought that case required a retroactive application of DelCostello in Smith.⁴ Two judges dissented.

In any event, in this case, under circumstances in which a retroactive application of DelCostello presents manifest unfairness, we decline to follow Welyczko and Smith.

III.

Resolution of the question of retrospective application of the decision of the Supreme Court in DelCostello is controlled by the guidelines laid down in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). Under those guidelines, we are to consider whether the decision in DelCostello overruled “clear past precedent on which litigants may have relied,” whether “retrospective operation would further or retard [the new law’s] operation” and whether an “inequity [is] imposed by retroactive application.” Applying these guidelines we think the Del-Costello decision should not be applied retroactively in this case.

A.

In the context of West Virginia’s statutes, the decision in DelCostello was a clean break with the past. It overruled direct precedent in this court upon which the plaintiffs in this case justifiably relied.

Since, as we have noted, West Virginia, unlike the great majority of the states, has no statute of limitations expressly applicable to actions to vacate arbitration awards, we had determined that the applicable statute under the rule of United Auto Workers v. Hoosier Cardinal Corp. was West Virginia’s five year statute applicable to actions upon oral contracts. Kennedy v. Wheeling-Pittsburgh Steel Corp., 81 L.R. R.M. 2349, 69 CCH Labor Cases P. 12,980 (4th Cir.1972). See also Howard v. Aluminum Workers International Union, 589 F.2d 771 (4th Cir.1978). That appears to have been the settled rule which remained unquestioned until after the Supreme Court’s decision in DelCostello came down. Indeed, in their responsive pleadings, the defendants in this case raised no question of the timeliness of the filing of the complaint. They responded to the merits, and both the plaintiffs and defendants proceeded with extensive pre-trial discovery and preparation until the filing of cross-motions for summary judgment on the merits.

Neither party seems to have thought that the decision of the Supreme Court in United Parcel Service v. Mitchell created any possible question of timeliness. In retrospect, we cannot say that it did. Since West Virginia had no statute expressly dealing with limitations upon actions for the vacation of arbitration awards, the holding in Mitchell had no direct application to an action commenced two months later, as this one was, in West Virginia. The only possible relevance of the opinions in Mitchell stems from the concurring opinion of Justice Stewart in which he expressed the thought that the courts in these hybrid actions should not borrow state statutes of limitations but should borrow the six months limitation for the filing of charges of unfair labor practices under § 10(b) of the National Labor Relations Act. No other justice joined him in that suggestion; they simply declined to consider it. From Justice Stewart’s opinion and the circumstances under which the other justices declined to even consider the suggestion that § 10(b) was controlling, one might have speculated that in some later case other justices might join Justice Stewart, but the opinions in Mitchell hardly gave fair warning of what was to come in DelCostello. A lawyer in West Virginia still might have placed reasonable reliance upon the still controlling authority of United Auto Workers v. Hoosier Cardinal Corp. and the decisions of this court holding that the most relevant of West Virginia’s statutes of limitations was the limitation upon actions upon oral contracts. We simply do not think that the lawyers for the plaintiffs and defendants in this case can be faulted for not having found in the opinions in Mitchell a clear foreshadowing of the decision in DelCostello.⁵

At the time this action was filed, therefore, the applicable precedents clearly gave the plaintiffs five years within which to commence their action. The action was filed well within that time by the third lawyer retained by the plaintiffs; the first two having been dismissed for failure to proceed with the alacrity expected of them by the plaintiffs.

In Murray v. Branch Motor Express Co., 723 F.2d 1146 (4th Cir.1983), we held that the decision in DelCostello was to be applied retroactively, approving a statement in Perez v. Dana Corp., Parish Frame Div., 718 F.2d 581 (3rd Cir.1983), that the decision in DelCostello was not an abrupt break with past precedent upon which the plaintiff might reasonably have relied. The law as it existed before Del-Costello was described as erratic and inconsistent. In the context of Murray, the description was appropriate. The case had arisen in Maryland, and the district court had applied Maryland’s thirty day statute applicable to actions to vacate arbitration awards. By early 1983 it might have been thought that the question, under Maryland’s statutes, had been settled by the Supreme Court’s decision in Mitchell, but the course of decision there, and in most of the rest of the country, had certainly been erratic. Nor had Mitchell settled all of the problems, because a few of the states had no statutes expressly applicable to actions to vacate arbitration awards, and some of those that had such statutes had an unreasonably short period of limitation, such as Maryland's thirty day period.

Similarly, in Sine v. Local No. 992 International Brotherhood of Teamsters, 730 F.2d 964 (4th Cir.1984), we held DelCostello retroactively applicable to an action commenced in the District of Maryland. The district court had dismissed the action as untimely under Maryland’s thirty day statute for the commencement of actions to vacate arbitration awards. The action had been commenced within six months of its accrual, so that the retroactive application of DelCostello did not introduce the question of timeliness but eliminated it.

Nothing in Murray or Sine, therefore, is applicable to the problem we face. In West Virginia, the prior law had neither been erratic nor inconsistent. Indeed, the responses of the defendants in this ease indicate that in June 1981, West Virginia lawyers did not think that any limitations period shorter than West Virginia’s five year contract claim statute was, or might be, applicable to this action. Established precedent justified that belief.

B.

A conclusion that DelCostello should be applied prospectively only in the circumstances of this case would not be disruptive of any great design of the laws of the United States.

Unquestionably one of the underlying policies of the laws of the United States favors relatively quick resolution of labor disputes and controversies arising out of collective bargaining agreements. This is strongly suggested by the six month limitation for the filing of unfair labor practice charges under § 10(b) of the National Labor Relations Act. The Court’s specific endeavor in DelCostello, however, was to enlarge the short period of limitations authorized by Mitchell in states having statutes of limitations specifically applicable to actions to vacate arbitration awards. Maryland’s thirty day period and the typical ninety day period were simply too short to permit inexperienced and uncounseled employees to obtain lawyers and to file their complaints. The Court, too, was impressed by the fact that § 10(b) provided a more apt analogy than state statutes enacted without regard to controversies arising under federal labor relations laws. Borrowing the federal limitations period contained in § 10(b) would also provide a uniform rule applicable throughout the country and without regard to varying state statutes.

None of these general policies or considerations would be furthered or promoted by a holding that the new rule should not be retroactively applied in the circumstances of this case. Equally strong or stronger, however, is the federal policy exemplified by DelCostello itself, that aggrieved employees should have a fair opportunity to file their Vaca-Hines complaints. That policy would surely be subverted by retroactive application of the DelCostello six months limitation to an action that had been filed without extraordinary delay and which had proceeded to a development of the issues on the merits to the point of decision on cross-motions for summary judgment without any question of timeliness having been raised.

Moreover, those other general considerations would not be subverted by a limitation of DelCostello to prospective application in the circumstances of this case. The implementation of those policies would not be significantly retarded. There are only a few states which have no statutes limiting commencement of actions to vacate arbitration awards. Recognition that actions arising in those states require separate consideration would occasion some slight delay in complete implementation of the DelCostello rule in those states, but that delay is not of great moment, and, in those states, Del-Costello ’s bar would unerringly and indisputably finally fall a few months after Del-Costello was announced in June of 1983. Hence, a holding that DelCostello should not be retrospectively applied in this case favors the general policy of fairness without substantially detracting from early implementation of other federal policies underlying the decision in DelCostello.

C.

A retroactive application of DelCostello in the circumstances of this case shouts of inequity. If we assume, as we must, that the plaintiffs have meritorious claims upon which they were entitled to prevail, or, at least, to a reasoned decision on the merits, belated erection of a procedural bar is an unwarranted frustration of their reasonable expectations of adjudication on the merits.

When the complaint was filed, it was well within the alloted time under the established precedent of this court. We had borrowed the most analogous of West Virginia’s statutes of limitations under the direction of the Supreme Court in Auto Workers. Neither defendant raised any question of timeliness, for, under the state of law as it existed in June 1981, the filing of a motion to dismiss would have appeared only a futile and wasteful imposition upon the court and counsel. Instead, for almost two years before DelCostello came down, the parties devoted themselves to pretrial discovery and preparation. Before any suggestion of untimeliness was made, cross motions for summary judgment had been filed. The case apparently was ready for final determination on the merits. The plaintiffs have expended considerable time and effort in the development of their case on the merits; they had a considerable investment in the prosecution of their claims. Under these circumstances, it is difficult to imagine a greater inequity than to have the courthouse door suddenly slammed in the faces of the plaintiffs at a time when they apparently stood on the eve of decision on the merits. They had been long in the court, and their cases were fully developed when the district judge announced, in effect, that he was closing the book because the plaintiffs should never have crossed the threshhold of the courthouse door more than two years earlier.

Given the reasonable reliance of the plaintiffs upon what appeared to be established and solid precedent and the full development by the parties of their proofs on the merits, equity and fairness required that the court not abruptly turn a deaf ear to them.

Another panel of this court considered a comparable situation in Peterson v. Air Line Pilots Assn., 759 F.2d 1161 (4th Cir.1985). It refused to apply the DelCostello bar on the ground that the defendant had waived its right to assert the bar. In doing so, however, it emphasized the inequity of enforcing a time bar in a case in which there had been extensive pretrial discovery and preparation with no suggestion of a problem of timeliness. In this case, the plaintiffs did not contend that the defendants had waived their right to assert the time bar, but the inequity of applying the six months time bar here is equally as apparent as it was in Peterson. We reach the same result under a Chevron analysis.

IV.

There are a number of cases applying DelCostello retroactively in which the plaintiff would otherwise have been held barred by a shorter period of limitations or in which there was reasonable notice that a shorter period might be held applicable.⁶ Those cases do not bear upon our problem, for there was no inequity involved.

The Ninth Circuit has held DelCostello not to be applied retroactively in cases in which there had been substantial development of the merits. Barina v. Gulf Trading & Transportation Co., 726 F.2d 560 (9th Cir.1984), Edwards v. Teamsters Local No. 36, 719 F.2d 1036 (9th Cir.1983), cert. denied, — U.S.-, 104 S.Ct. 1599, 80 L.Ed.2d 130 (1984).

The District Court for the Northern District of West Virginia similarly held that DelCostello was not to be applied retroactively to require the dismissal of a West Virginia claim such as this. Sole v. Thorofare Markets, Inc., 571 F.Supp. 1233 (N.D.W.Va.1983).

Moreover, after anticipating the Supreme Court’s holding in DelCostello, in Badon v. General Motors Corp., 679 F.2d 93 (6th Cir.1982), the Court of Appeals for the Sixth Circuit held, in Pitts v. Frito Lay, Inc., 700 F.2d 330 (6th Cir.1983), that the new six months limitation borrowed from § 10(b) of the NLRA should not be applied retroactively.

There are a few cases going the other way. Graves v. Smith’s Transfer Corp., 736 F.2d 819 (1st Cir.1984), Rogers v. Lockheed-Georgia Co., 720 F.2d 1247 (11th Cir.1983), cert. denied, — U.S.-, 105 S.Ct. 292, 83 L.Ed.2d 227 (1984), and Edwards v. Sea-Land Service, Inc., 720 F.2d 857 (5th Cir.1983). In those cases, however, the Chevron analysis was not so clearly weighted in favor of a prospective limitation. In one, there was no apparent reliance upon clearly established earlier precedent. Edwards. In another, there had been no substantial investment in time or money in the preparation of the case on the merits since the motion to dismiss on limitation grounds had been filed promptly after the filing of the complaint. Graves.

In this case in which the equities weigh so strongly against a retroactive application of DelCostello and in which defense counsel as well as plaintiffs’ counsel saw no problem about timeliness until after DelCostello was decided and this case was ready for disposition on the merits, we think that the Chevron analysis properly leads to a conclusion against retroactive application of DelCostello.

This problem will shortly go away, if it is not already gone, but we think these plaintiffs should have “a satisfactory opportunity” to have their cases decided on the merits, an opportunity" which the Supreme Court in DelCostello clearly sought to protect.

V.

The judgment of the district court dismissing the complaints is reversed and the case remanded for further proceedings.

REVERSED AND REMANDED.

1 . Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967); Hines v. Anchor Motor Freight, 424 U.S. 554, 96 S.Ct. 1048, 47 L.Ed.2d 231 (1976).

2 . 29 U.S.C.A. § 160.

3 . 29 U.S.C.A. § 185(a).

4 . Earlier, the Court of Appeals for the Sixth Circuit in Badon v. General Motors Corp., 679 F.2d 93 (6th Cir.1982), after the Supreme Court’s decision in Mitchell but before its decision in DelCostello, picked up Justice Stewart’s position in Mitchell and held that the six month period of § 10(b) of the National Labor Relations Act applied to the hybrid claim. In Pitts v. Frito Lay, Inc., 700 F.2d 330 (6th Cir.1983), the Sixth Circuit held that its decision in Badon was a significant departure from earlier precedent and, under the Chevron standards, would not be applied retroactively.

5 . It may bear mention that the complaint in this action was filed just over two months after the decision in Mitchell was announced. The decision in Mitchell was announced on April 20, 1981, and the complaint in this case was filed on June 26, 1981.

6 . Perez v. Dana Corp., Parish Frame Div., 718 F.2d 581 (3rd Cir.1983);

Storck v. International Brotherhood of Teamsters, Local Union No. 600, 712 F.2d 1194 (7th Cir.1983);

Andres v. Local 600, International Brotherhood of Teamsters, 724 F.2d 73 (8th Cir.1983);

Askew v. F & W Express, Inc., 723 F.2d 624 (8th Cir.1983), cert. denied, — U.S.-, 105 S.Ct. 292, 83 L.Ed.2d 228 (1984);

Arrow v. Pulitzer Pub. Co., 723 F.2d 622 (8th Cir.1983);

Hand v. International Chemical Workers Union, 712 F.2d 1350 (11th Cir.1983).