Teamsters Local 171 v. Keal Driveaway Co ( 1999 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
TEAMSTERS LOCAL UNION NO. 171, a
labor organization,
Plaintiff-Appellant,
v. No. 98-1292
KEAL DRIVEAWAY COMPANY, an Ohio
Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Virginia, at Roanoke.
Jackson L. Kiser, Senior District Judge.
(CA-97-536-R)
Argued: January 25, 1999
Decided: March 29, 1999
Before WILKINSON, Chief Judge, and WILLIAMS and
MOTZ, Circuit Judges.
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Affirmed by published opinion. Chief Judge Wilkinson wrote the
opinion, in which Judge Williams and Judge Motz joined.
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COUNSEL
ARGUED: James Francis Wallington, BAPTISTE & WILDER, P.C.,
Washington, D.C., for Appellant. R. Ian Hunter, DEAN & FULKER-
SON, P.C., Troy, Michigan, for Appellee. ON BRIEF: Patricia M.
Morrow, DEAN & FULKERSON, P.C., Troy, Michigan, for Appel-
lee.
OPINION
WILKINSON, Chief Judge:
Two local affiliates of the International Brotherhood of Teamsters
-- Local 171 and Local 964 -- and Keal Driveaway Company
appeared before a joint grievance committee to settle the seniority
treatment of employees transferring from one local to the other. Upon
the committee's decision, the losing local -- Local 171 -- filed suit
against the employer to vacate the arbitral award. Local 171 charged
that the employer breached its collective bargaining agreement and
the union members of the grievance committee breached their duty of
fair representation. By suing only the employer and not Local 964,
however, Local 171 seeks to vacate an arbitral award without the
presence of the winning party. We hold that Local 964 is an indis-
pensable party to the dispute under Rule 19 of the Federal Rules of
Civil Procedure, and we affirm the dismissal of this case without prej-
udice.
I.
Keal Driveaway Company is an Ohio corporation in the business
of transporting motor vehicles for their manufacturers. This contro-
versy involves employees of two of Keal Driveaway's transportation
terminals: an active terminal in Dublin, Virginia, and a former termi-
nal in Orrville, Ohio.
At the time this dispute arose the unionized drivers and deckers of
the two terminals were represented by two local affiliates of the Inter-
national Brotherhood of Teamsters. Local 171, located in Roanoke,
Virginia, represented the Dublin employees, while Local 964, based
in Cleveland, Ohio, represented the Orrville employees. Keal
Driveaway, Local 171, Local 964, and the Teamsters National Nego-
tiating Committee were all signatories to a multi-employer, multi-
union collective bargaining agreement, the National Master Automo-
bile Transporters Agreement. This contract provided the seniority
rules for the members of the two locals, as well as a grievance and
arbitration procedure for the resolution of disputes.
2
The Dublin and Orrville terminals were each located next to assem-
bly plants operated by Volvo Trucks of North America. In October
1996 Volvo notified Keal Driveaway that it was closing its Orrville
plant and consolidating its production in Dublin. As a result, Keal
Driveaway decided to close its Orrville facility.
Upon notification of the terminal closing Local 964 filed a griev-
ance requesting a determination of the seniority rights of the Orrville
employees. Under the National Agreement, such grievances are con-
sidered by the National Joint Standing Seniority Committee (NJSSC),
which is composed of an equal number of union and management
members. The Committee docketed Local 964's grievance for consid-
eration on March 12, 1997, and named Local 171 and Keal
Driveaway as defending parties.
At the NJSSC hearing Local 964 argued, under Article 5, section
7(b)(2) of the National Agreement, that the Orrville employees should
be able to transfer to the Dublin terminal to the extent work was avail-
able and that they should take their seniority with them. In other
words, Local 964 contended that transferring employees should be
dovetailed, or merged in seniority order, into the Dublin seniority list.
Local 171 agreed that the Orrville employees could transfer to Dublin
but argued that transferring employees should lose their seniority and
be endtailed, or tacked onto the bottom of the list. Rather than take
a position, Keal Driveaway merely reiterated the positions of the local
unions and asked the NJSSC panel to provide the company with an
interpretation of the contract.
In May 1997 the NJSSC panel entered a decision for Local 964.
The panel found that the Orrville employees could transfer to the
Dublin terminal to the extent work was available and held that trans-
ferring employees would be dovetailed. In the ensuing months Keal
Driveaway implemented the NJSSC's decision by transferring all
willing Orrville employees to Dublin. Local 171 asked the panel for
reconsideration of its award in August 1997, but the panel declined.
Local 171 then filed this suit in the United States District Court for
the Western District of Virginia, charging under section 301 of the
Labor Management Relations Act (LMRA), 29 U.S.C.§ 185, that
Keal Driveaway had breached its contract with Local 171 and that the
3
union members of the NJSSC had breached their duty of representa-
tion and asking the court to vacate the panel's award. Local 171
named only Keal Driveaway as a defendant in the case-- it did not
name Local 964, the NJSSC, or the Teamsters National Negotiating
Committee. On Keal Driveaway's motion the district court found that
Local 964 was a necessary party to the suit that could not be joined
for want of personal jurisdiction. Holding that it could not in equity
or good conscience proceed in the absence of Local 964, the court
dismissed the case without prejudice pursuant to Rule 19(b) of the
Federal Rules of Civil Procedure. Local 171 appeals.
II.
By forcing a court to examine the effects of a suit on parties not
before it, Rule 19 of the Federal Rules of Civil Procedure "takes . . .
account of the very real, very substantive claims to fairness on the
part of outsiders that may arise in some cases." Provident Tradesmens
Bank & Trust Co. v. Patterson, 390 U.S. 102, 125 (1968). Rule 19
creates a two-step inquiry: first, whether a party is necessary to a pro-
ceeding because of its relationship to the matter under consideration;1
and second, if a necessary party is unavailable, whether the proceed-
ing can continue in that party's absence.2 Fed. R. Civ. P. 19(a), (b).
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1 A party is necessary and "shall be joined" if
(1) in the person's absence complete relief cannot be accorded
among those already parties, or (2) the person claims an interest
relating to the subject of the action and is so situated that the dis-
position of the action in the person's absence may (i) as a practi-
cal matter impair or impede the person's ability to protect that
interest or (ii) leave any of the persons already parties subject to
a substantial risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of the claimed interest.
Fed. R. Civ. P. 19(a).
2 Under this second inquiry,
[i]f a person as described in subdivision (a)(1)-(2) hereof cannot
be made a party, the court shall determine whether in equity and
good conscience the action should proceed among the parties
before it, or should be dismissed, the absent person being thus
regarded as indispensable. The factors to be considered by the
4
If it cannot, the party is indispensable and the action should be dis-
missed.
Dismissal of a case is a drastic remedy, however, which should be
employed only sparingly. When an action will affect the interests of
a party not before the court the ultimate question is this: Were the
case to proceed, could a decree be crafted in a way that protects the
interests of the missing party and that still provides adequate relief to
a successful litigant? Provident Tradesmens Bank & Trust Co., 390
U.S. at 112 n.10. Although framed by the multi-factor tests of Rule
19(a) & (b), "a decision whether to dismiss must be made pragmati-
cally, in the context of the substance of each case, rather than by pro-
cedural formula." Id. at 119 n.16 (internal quotation marks omitted).
A court must examine the facts of the particular controversy to deter-
mine the potential for prejudice to all parties, including those not
before it. Schlumberger Indus., Inc. v. National Sur. Corp., 36 F.3d
1274, 1285-86 (4th Cir. 1994).
In the instant case, the district court properly held that Local 964
is an indispensable party whose absence requires dismissal. After los-
ing a grievance before what is essentially an arbitral panel, Local 171
sought to vacate the result of that proceeding without the presence of
its victorious adversary. It is plain not only that Local 964 should
have been joined in this action "if feasible," but also that the district
court could not "in equity and good conscience" have proceeded in
that party's absence. Fed. R. Civ. P. 19 (a), (b).
A.
Local 964 is necessary to this litigation for two reasons. First, per-
mitting the action to proceed would impair the interests of Local 964.
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court include: first, to what extent a judgment rendered in the
person's absence might be prejudicial to the person or those
already parties; second, the extent to which, by protective provi-
sions in the judgment, by the shaping of relief, or other mea-
sures, the prejudice can be lessened or avoided; third, whether a
judgment rendered in the person's absence will be adequate;
fourth, whether the plaintiff will have an adequate remedy if the
action is dismissed for nonjoinder.
Fed R. Civ. P. 19(b).
5
Fed. R. Civ. P. 19(a)(2)(i). Like many suits under section 301 of the
LMRA, this action at bottom concerns the joint grievance panel's
interpretation of the collective bargaining agreement -- an interpreta-
tion ultimately made in favor of Local 964 as a result of a grievance
that Local 964 filed. See Vaca v. Sipes, 386 U.S. 171, 183-87 (1967).
Since the very purpose of Local 171's suit is to vacate the contract
interpretation for which Local 964 fought, permitting this suit to pro-
ceed to judgment could "impair or impede" Local 964's ability to pro-
tect its interests under its contract with Keal Driveaway. Id.; see Delta
Fin. Corp. v. Paul D. Comanduras & Assocs., 973 F.2d 301, 305-06
(4th Cir. 1992) (parties to a contract are necessary parties to a suit on
that contract); see also General Warehousemen & Helpers Local 767
v. Standard Brands, Inc., 579 F.2d 1282, 1289-91 (5th Cir. 1978) (en
banc) (noting that a union has "a not insubstantial interest in the main-
tenance of its contractual right" to bargain, but deferring the Rule 19
issue).
Second, permitting this suit to continue could subject Keal
Driveaway to conflicting legal obligations. Fed. R. Civ. P. 19(a)(ii).
If Local 964 were to file suit in another forum to protect its interests,
that action could subject Keal Driveaway to the double-bind of a
judgment in this case vacating the NJSSC ruling and a judgment in
another case ordering that the same ruling be enforced. See
Schlumberger Indus., Inc., 36 F.3d at 1286-87 (potential for "whip-
saw" favored a finding that a party is necessary); see also Window
Glass Cutters League v. American St. Gobain Corp. , 428 F.2d 353,
354-55 (3d Cir. 1970) (potential for inconsistent results made each of
two disputing unions necessary parties to an action seeking an order
to arbitrate). Fairness to both Keal Driveaway and Local 964 thus
requires the joinder of the other disputing local union in this case.
B.
Since Local 964 is a necessary party to this litigation, and since no
party challenged the finding that Local 964 is not subject to suit in the
United States District Court for the Western District of Virginia, we
must next inquire pursuant to Rule 19(b) whether the action could
proceed without Local 964's presence. The first point of consideration
under that rule -- the extent to which "a judgment rendered in the
person's absence might be prejudicial to the person or those already
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parties" -- addresses the same concerns as does Rule 19(a)(2). As we
have noted, if this suit were to proceed without Local 964, that local
could be deprived of the victory it won in arbitration, while Keal
Driveaway could be whipsawed by inconsistent obligations. See
Schlumberger Indus., Inc., 36 F.3d at 1287-88. As to the second fac-
tor, the district court could not have tailored its relief to lessen or
avoid that prejudice -- indeed, in order to reach a judgment on the
merits of the case, the court could not have avoided addressing the
validity of the NJSSC's decision. Finally, Local 171 could secure an
adequate remedy simply by bringing an action in Ohio, where Local
964 is amenable to suit. See Ranger Fuel Corp. v. Youghiogheny &
Ohio Fuel Co., 677 F.2d 378, 381 (4th Cir. 1982). With these three
factors weighing so heavily in favor of a finding of indispensability,
a court could not "in equity and good conscience" proceed in the
absence of Local 964.
C.
Several additional points merit mention. Local 171 argues that it
now represents the employees who have transferred from Orrville and
therefore that Local 964 no longer has an interest in this litigation. We
disagree. To permit Local 171 to nullify Local 964's arbitral victory
in court by the ploy of absorbing and silencing the transferring
employees would be to give little effect to the private dispute resolu-
tion mechanism chosen by the parties -- a mechanism that Congress
intended to be the primary method for solving these employment dis-
putes. See, e.g., Hines v. Anchor Motor Freight, Inc., 424 U.S. 554,
562-63 (1976). We recognize that unions and their subdivisions nor-
mally enjoy broad discretion in their resolution of the conflicting
interests of their members. See Humphrey v. Moore, 375 U.S. 335,
349-50 (1964). But for those employees that transferred in reliance on
the NJSSC's order, Local 171's assurance that it will now consider
their interests, which it previously opposed, must provide little solace.3
Local 171 further contends that in a hybrid suit under section 301
of the LMRA a plaintiff may at its discretion sue the employer, the
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3 In resolving this case, we in no way imply rejection of Local 171's
claim that it represents the transferred employees in matters other than
those arising out of the NJSSC panel's May 1997 decision.
7
union, or both, see, e.g., DelCostello v. International Bhd. of
Teamsters, 462 U.S. 151, 164 (1983), and thus by implication that
other labor organizations such as Local 964 are not necessary parties
to such cases. This is simply incorrect. It is true that an employee or
local union may maintain separate actions for distinct injuries result-
ing from an employer's breach of contract and a union's breach of its
duty of representation in the handling of a subsequent grievance.
Czosek v. O'Mara, 397 U.S. 25, 28-29 (1970). But the mechanism of
the hybrid suit does not override the fundamental principle that "no
court can adjudicate directly upon a person's right, without the party
being either actually or constructively before the court." Shields v.
Barrow, 58 U.S. (17 How.) 130, 141 (1855) (internal quotation marks
omitted); see, e.g., DelCostello , 462 U.S. at 168 n.17 (noting that
even when one sues the union, the inability to sue the employer would
"foreclose use of such equitable remedies as an order to arbitrate").
Here, Local 964 initiated a grievance proceeding to obtain an inter-
pretation of a seniority provision in a contract to which it was a party.
That proceeding, styled Local 964 v. Keal Driveaway Company &
Local 171, ended in favor of Local 964, and this suit ensued. Local
964, however, is not now present, and no party to this case shares its
incentive to defend the joint panel's result. The only defendant in this
action, Keal Driveaway, was indifferent to the result of the grievance
proceeding. At most a nominal party to a dispute between two locals,
the company expressly declined to take a position before the NJSSC.
Keal Driveaway's obvious concern extended only to the settlement of
this seniority question with a minimum of labor strife. Rather than
rely on what is at best a disengaged, nominal party to defend Local
964's victory in the underlying arbitration, the district court found
that Local 964 was an indispensable party to this action. This was not
error.
III.
For the foregoing reasons, we affirm the judgment of the district
court.
AFFIRMED
8