Patrick P. Staudner v. Robinson Aviation, Inc. , 910 F.3d 141 ( 2018 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-1928
PATRICK P. STAUDNER,
Plaintiff - Appellant,
v.
ROBINSON AVIATION, INC.; PROFESSIONAL AIR TRAFFIC
CONTROLLERS ORGANIZATION,
Defendants - Appellees.
Appeal from the United States District Court for the Eastern District of North Carolina, at
Greenville. Terrence W. Boyle, Chief District Judge. (4:15-cv-00098-BO)
Argued: September 27, 2018 Decided: December 7, 2018
Before DIAZ, THACKER, and HARRIS, Circuit Judges.
Reversed and remanded by published opinion. Judge Harris wrote the opinion, in which
Judge Diaz and Judge Thacker joined.
Tracy Humphrey Stroud, COLOMBO, KITCHIN, DUNN, BALL & PORTER, LLP,
Greenville, South Carolina, for Appellant. Lance Michael Geren, FREEDMAN &
LORRY, PC, Philadelphia, Pennsylvania, for Appellee Professional Air Traffic Controllers
Organization. Michael Coghlan Lord, WILLIAMS MULLEN, Raleigh, North Carolina,
for Appellee Robinson Aviation, Inc.
PAMELA HARRIS, Circuit Judge:
Patrick Staudner brought suit under § 301(a) of the Labor Management Relations
Act, 29 U.S.C. § 185(a), alleging that his union and his former employer breached the
collective bargaining agreement that governed his employment. Specifically, he claims
that his former employer wrongfully terminated him, and that his union breached its duty
of fair representation in its handling of his resulting grievance.
The district court found that the collective bargaining agreement required Staudner
to exhaust the agreement’s grievance procedures before filing suit in federal court, and that
Staudner had failed to do so. Interpreting this exhaustion requirement as a prerequisite to
its jurisdiction over the case, the district court dismissed Staudner’s action. We find that
the district court erred in two respects: first, in treating exhaustion as a matter of
jurisdiction; and second, in holding that this collective bargaining agreement in fact
required exhaustion. Accordingly, we reverse.
I.
A.
Patrick Staudner worked for Robinson Aviation, Inc., as an air traffic controller for
fourteen years. During that time, he regularly received successful performance reviews.
According to Staudner, however, toward the end of his tenure, his relationship with his
direct supervisor soured. Staudner contends that the resulting personal animosity caused
Robinson Aviation to fire him in November 2014 – roughly a month after his latest
successful performance review. Robinson Aviation justified Staudner’s termination by
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pointing to a number of minor breaches of airport policy: Staudner parked (partially) in
the wrong spot, did not stop when entering the parking lot, and did not lock his car.
Robinson Aviation also indicated that Staudner twice failed to lock the air traffic control
tower following a shift, allegations that Staudner denies.
Under the collective bargaining agreement negotiated between Robinson Aviation
and Staudner’s union, the Professional Air Traffic Controllers Organization, Staudner may
be terminated only “for just cause.” J.A. 38. Because Staudner believes that his supervisor
fired him for personal reasons, and that Robinson Aviation’s stated reasons are pretextual,
he argues that his termination violated the collective bargaining agreement. For support,
Staudner points to his consistently positive performance reviews, as well as his supervisor’s
admission that he had never before disciplined an employee for failing to park in the correct
spot or lock his car.
Staudner filed a grievance to appeal his termination under the four-step process set
out by the collective bargaining agreement. As described by the agreement, the first three
steps involve filing written grievances with Robinson Aviation officials of escalating
authority, culminating with a decision from the chief executive officer or a designee. At
step four, the grievance goes to arbitration.
Robinson Aviation denied Staudner’s grievance at each of the first three steps of
this process. Although the union offered some assistance with Staudner’s claim in the
earlier steps, when Staudner attempted to initiate the fourth and final step, the union
informed him that it did not believe his case warranted arbitration. Staudner contacted the
designated arbitration service on his own, and reached out to Robinson Aviation to begin
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the arbitrator selection process – the first step of arbitration under the agreement. Robinson
Aviation refused to participate, informing Staudner that only the union could force it to
arbitrate. After the union gave Staudner express permission to proceed individually,
Staudner attempted again to initiate arbitration. Again Robinson Aviation refused to
arbitrate, and Staudner filed suit in federal court in the Eastern District of North Carolina.
B.
Staudner’s complaint included claims against both Robinson Aviation and his union
under § 301(a) of the Labor Management Relations Act, 29 U.S.C. § 185(a). He claimed
that Robinson Aviation violated the collective bargaining agreement by firing him without
just cause, and that the union breached its duty of fair representation by declining to take
his grievance to arbitration.
In their answers, neither defendant asserted that Staudner failed to exhaust the
collective bargaining agreement’s grievance procedures. Instead, the union moved for
summary judgment on the merits, contending that Staudner failed to raise a genuine dispute
of material fact regarding his § 301(a) claims. The district court denied the union’s motion.
The court held that Staudner had introduced sufficient evidence to suggest that his wrongful
discharge claim had merit, and that the union’s pursuit of that claim was so minimal that a
genuine dispute existed as to whether the union had breached its duty of fair representation
by declining to arbitrate that claim.
At that point, the union raised the exhaustion issue in a motion to dismiss Staudner’s
action under Rule 12(b)(1). According to the union, the district court lacked subject matter
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jurisdiction over the suit because Staudner had failed to exhaust his remedies under the
collective bargaining agreement.
This time, the district court granted the union’s motion. The court began by
recognizing that the Supreme Court has established an exhaustion requirement under
§ 301(a), under which an “employer cannot be held liable for breach of a collective
bargaining agreement unless it can be shown that the employee unsuccessfully sought relief
through the union grievance procedure.” Staudner v. Robinson Aviation, Inc., 267 F. Supp.
3d 679, 682 (E.D.N.C. 2017) (quoting Vaca v. Sipes, 386 U.S. 171, 185 (1967)). That
requirement, the court presumed, is jurisdictional: “In labor cases, it is proper for the Court
to analyze a motion to dismiss for failure to meet the exhaustion requirement as one that
challenges the subject matter jurisdiction of the Court.” Id. at 683. Without identifying
any provision of the agreement requiring exhaustion, the court concluded that Staudner
failed to exhaust because he “voluntar[ily] ended the arbitration process before
completion.” Id. at 684.
Most of the district court’s exhaustion analysis was devoted to two exceptions the
Supreme Court has made to the exhaustion requirement in this context. Under the first, an
employee may forego exhaustion where the union “breached its duty of fair representation
in its handling of the employee’s grievance.” Vaca v. Sipes, 386 U.S. 171, 186 (1967).
Under the second, an employee need not exhaust “when the conduct of the employer
amounts to a repudiation of those contractual procedures.” Id. at 185. The district court
considered each exception and determined that Staudner qualified for neither.
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First, the district court rejected Staudner’s argument that the union’s refusal to take
his claim to arbitration amounted to a breach of its duty of fair representation, excepting
him from the need to exhaust. As the district court read the collective bargaining
agreement, Staudner was permitted to arbitrate his grievance even without the union’s
participation. It followed, the court reasoned, that Staudner could not invoke the exception
for union breach of duty, because any breach by his union did not have the effect of
preventing him from arbitrating his claim and thus exhausting the agreement’s grievance
procedures. See Groves v. Commc’n Workers of Am., 815 F.3d 177, 182 (4th Cir. 2016)
(exception for union breach applies only when there is “some causal nexus between a
union’s breach of its duty of fair representation and an employee’s failure to exhaust
contractual remedies”).
The court then turned to the second exception, for cases in which an employer
repudiates contractual grievance procedures. According to the district court, Robinson
Aviation’s repeated refusals to arbitrate with Staudner without his union’s participation did
not amount to a “repudiation” for purposes of this exception. Although the court had ruled
that Staudner in fact could arbitrate without his union, it found that Robinson Aviation
nevertheless “was acting on what it perceived to be its right to decline [Staudner’s]
invitation to arbitrate,” rather than repudiating the agreement’s grievance procedures.
Staudner, 267 F. Supp. 3d at 685 (emphasis added).
Having concluded that Staudner failed to exhaust, and that no exception to the
exhaustion requirement applied, the district court granted the union’s motion to dismiss for
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lack of subject matter jurisdiction. 1 This appeal followed.
II.
A.
We turn first to the district court’s assumption that the exhaustion requirement at
issue here is jurisdictional. This assumption carries significant consequences. “Branding
a rule as going to a court’s subject-matter jurisdiction alters the normal operation of our
adversarial system.” Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011).
Although “courts are generally limited to addressing the claims and arguments advanced
by the parties[,] . . . [they] have an independent obligation to ensure that they do not exceed
the scope of their jurisdiction, and therefore they must raise and decide jurisdictional
questions that the parties either overlook or elect not to press.” Id. (citation omitted).
Recognizing “the consequences that attach to the jurisdictional label,” the Supreme
Court has “tried in recent cases to bring some discipline to the use of this term.” Id. at 435.
This case requires that we clarify “the distinction between two sometimes confused or
conflated concepts: federal-court ‘subject-matter’ jurisdiction over a controversy; and the
essential ingredients of a federal claim for relief.” Arbaugh v. Y & H Corp., 546 U.S. 500,
1
Before the district court, Robinson Aviation filed a separate motion to dismiss for
lack of subject matter jurisdiction, arguing that Staudner’s claim was moot. According to
Robinson Aviation, it already had offered to settle that claim for an amount, it alleged, that
represented the full amount of damages owed, so that there no longer was a live controversy
between the parties. Because the district court granted the union’s motion to dismiss, it
declined to address Robinson Aviation’s motion. In light of our decision today, that motion
remains to be addressed by the district court on remand.
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503 (2006). The specific question is whether the judicially mandated exhaustion
requirement is a jurisdictional prerequisite to filing suit under § 301(a) or a
nonjurisdictional precondition to suit. We conclude that it is the latter.
Section 301(a) confers federal jurisdiction over claims, like Staudner’s, that allege
violations of collective bargaining agreements. See Textron Lycoming Reciprocating
Engine Div., Avco Corp. v. United Auto., Aerospace, Agric. Implement Workers of Am.,
523 U.S. 653, 654–57 (1998). We thus begin with the “starting presumption that when
jurisdiction is conferred, a court may not decline to exercise it.” Union Pac. R.R. Co. v.
Bhd. of Locomotive Eng’rs & Trainmen Gen. Comm. of Adjustment, Cent. Region, 558
U.S. 67, 71 (2009). Congress can rebut this presumption if it “clearly states that a threshold
limitation on a statute’s scope shall count as jurisdictional.” Arbaugh, 546 U.S. at 515–16.
But “when Congress does not rank a statutory limitation on coverage as jurisdictional,
courts should treat the restriction as nonjurisdictional.” Id. at 516.
One result of this rule is that “[a] statutory condition that requires a party to take
some action before filing a lawsuit is not automatically ‘a jurisdictional prerequisite to
suit.’” Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 166 (2010) (quoting Zipes v. Trans
World Airlines, Inc., 455 U.S. 385, 393 (1982)). Indeed, as the Supreme Court explained
in Reed, it has “treated as nonjurisdictional” other pre-filing exhaustion requirements. Id.at 166 & n.6 (citing Jones v. Bock, 549 U.S. 199, 216 (2007)).
Here, of course, Congress has not “clearly stated” that § 301(a)’s exhaustion
requirement goes to a court’s subject matter jurisdiction. In fact, Congress has said nothing
at all about this exhaustion requirement, because the Supreme Court, not Congress, created
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it. See Republic Steel Corp. v. Maddox, 379 U.S. 650, 652–53 (1965). This alone is enough
to establish that exhaustion is not jurisdictional in this instance. Basic separation-of-
powers principles dictate that “[o]nly Congress may determine a lower federal court’s
subject-matter jurisdiction.” Kontrick v. Ryan, 540 U.S. 443, 452 (2004) (citing U.S.
Const. art. III, § 1). And what Congress has provided for in § 301(a) is broad federal
jurisdiction over claims for violations of collective bargaining agreements, without any
mention of an exhaustion requirement, jurisdictional or otherwise. See 29 U.S.C. § 185(a)
(conferring jurisdiction over suits for violations of collective bargaining agreements
“without respect to the amount in controversy” or “the citizenship of the parties”); cf.
Arbaugh, 546 U.S. at 505–06 (Congress intended to enlarge federal courts’ jurisdiction by
eliminating any amount-in-controversy requirement in Title VII cases).
The Supreme Court’s own treatment of the exhaustion requirement confirms that it
is nonjurisdictional in nature. First, as the district court recognized in this case, the
Supreme Court has carved out multiple exceptions to its exhaustion requirement. See Vaca,
386 U.S. at 185–86; see also Glover v. St. Louis-S.F. Ry. Co., 393 U.S. 324, 330 (1969)
(identifying a third exception “where the effort to proceed formally with contractual or
administrative remedies would be wholly futile”). Those exceptions, designed to avoid the
“great injustice” that would result if a union or employer’s wrongful conduct prevented an
employee from exhausting and then left him “remediless,” Vaca, 386 U.S. at 185–86,
clearly rest on equitable grounds. But the Court has “no authority to create equitable
exceptions to jurisdictional requirements.” Bowles v. Russell, 551 U.S. 205, 214 (2007).
Because a court may not excuse a lack of jurisdiction on equitable grounds, see Arbaugh,
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546 U.S. at 514, it follows that the exceptions to § 301(a) exhaustion are exceptions to a
nonjurisdictional rule.
Moreover, the Supreme Court has described exhaustion under § 301(a) – not in
jurisdictional terms – but in prudential ones, as a rule crafted by the Court to advance
Congress’s preference for private resolution of labor disputes. It is “federal labor policy,”
the Court has explained, that “requires [] individual employees wishing to assert contract
grievances” at least to “attempt use” of contractual grievance processes. Maddox, 379 U.S.
at 652 (emphasis in original). Because contract grievance procedures are “a preferred
method for settling disputes and stabilizing the ‘common law’ of the plant,” id. at 653,
exhaustion will be required – but only where, as discussed above, the benefits for labor
stability are not outweighed by countervailing employee equities, see Vaca, 386 U.S. at184–87. Even if the Supreme Court could expand or contract federal court jurisdiction, in
other words, it has not purported to do so here.
Accordingly, we conclude that the exhaustion requirement under § 301(a) is a
nonjurisdictional precondition to suit rather than a jurisdictional limit. 2 We need not decide
in this case the precise form that requirement takes – whether, that is, exhaustion is an
element of an employee’s cause of action or an employer’s affirmative defense. Compare
2
We recognize that our holding conflicts with a recent decision of the Fifth Circuit
describing the exhaustion requirement as jurisdictional. See Nat’l Football League Players
Ass’n v. Nat’l Football League, 874 F.3d 222, 226–27 (2017) (per curiam). For the reasons
stated above, however, we cannot agree that the Supreme Court has “treated the exhaustion
of grievance procedures provided for in collective bargaining agreements as jurisdictional,”
id. at 227. Instead, the Supreme Court’s cases make exhaustion “a prudential consideration
and not a strict jurisdictional prerequisite.” Id. at 232 (Graves, J., dissenting).
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Youseff v. Ford Motor Co., 225 F.3d 660, at *3 n.3 (6th Cir. 2000) (unpublished table
decision) (“This court has apparently treated motions to dismiss for failure to exhaust
remedies in § 301 cases as Rule 12(b)(6) motions.”), with Sellers v. M.C. Floor Crafters,
Inc., 842 F.2d 639, 642 n.2 (2d Cir. 1988) (“Failure to exhaust union grievance procedures
is an affirmative defense.”). Sometimes this is important, because a defendant’s failure to
plead an affirmative defense waives that issue for the remainder of the litigation, see Fed.
R. Civ. P. 8(c)(1), whereas a defendant retains through trial the right to file a motion for
failure to state a claim, see Fed. R. Civ. P. 12(h)(2). In this case, however, it makes no
difference: Even if exhaustion were an element of Staudner’s claim, so that the defendants
were entitled to raise failure to exhaust late in the proceedings, the defendants cannot
prevail on their exhaustion argument for the reasons we turn to now.
B.
The district court, as described above, focused its exhaustion analysis on the
exceptions to the exhaustion requirement. But before we reach the matter of exceptions,
we must determine whether this agreement requires exhaustion at all. As the Supreme
Court has explained, the exhaustion requirement is not a freestanding rule of law, but rather
a matter of contract enforcement, holding parties to their agreement to make a contractual
grievance process the “exclusive remedy” for breaches of that contract. Vaca, 386 U.S. at
184. So the threshold question is whether the parties here in fact have agreed to a
mandatory and exclusive grievance process.
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We conclude that they have not. 3 This agreement’s plain language does not make
its grievance procedures exclusive. Instead, Article 19, Section 4 of the agreement –
entitled “Dispute Resolution” – provides to the contrary, and expressly so: “An employee
shall have the option of utilizing the unfair labor practice procedures as provided by law
or other such avenues as provided by law or the grievance/ arbitration procedures
contained in this Article.” J.A. 48 (emphases added). Staudner contends that this language
makes the agreement’s grievance procedures optional, not mandatory, and we agree. By
plain terms, it is up to the employee to choose the forum in which to resolve a dispute –
and those choices include “other such avenues as provided by law,” id., a formulation broad
enough to encompass Staudner’s current § 301(a) action. And consistent with the clear
import of Section 4, the agreement throughout uses only permissive, not mandatory,
language to describe an employee’s grievance-procedure options. See, e.g., J.A. 49 (“[A]n
employee who chooses to use this grievance procedure shall indicate . . . whether or not
the employee shall be represented by the Union.” (emphasis added)); J.A. 50 (“Within
seven (7) days of an event giving rise to a grievance . . . , an employee may submit a written
grievance.” (emphasis added)).
The defendants do not dispute this plain reading of their agreement. They do,
however, suggest that even if the agreement does not require that all employees use the
grievance procedures, it does require that an employee who initiates a grievance (as
3
In light of our holding that the agreement does not require exhaustion, we have no
occasion to reach the parties’ arguments regarding application of exceptions to the
exhaustion requirement.
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Staudner did here) take that grievance all the way through arbitration. But again, the clear
terms of the agreement are to the contrary. At each step of the grievance process, the
agreement gives employees the option of escalating to the next; there is no requirement
that they do so. See J.A. 50 (providing that employee dissatisfied with determination at
step one or two “may appeal”). And arbitration is no exception: “If dissatisfied with the
decision [at step three], the employee may present the grievance . . . for arbitration.” J.A.
51 (emphasis added). Nothing in this agreement commits employees – even those who
have initiated the grievance process – to mandatory arbitration. 4
We note that even if the agreement did put employees to the all-or-nothing choice
envisioned by defendants – allowing employees either to forgo the grievance process
altogether or to complete all its steps – it is not clear that it would establish a single
“exclusive remedy” for purposes of the Supreme Court’s exhaustion doctrine. See Vaca,
386 U.S. at 184. A central concern of the exhaustion doctrine is that when parties have
agreed to make grievance procedures the exclusive means for settling their disputes, they
should not be permitted to circumvent that agreement by going to court instead. See
Maddox, 379 U.S. at 652–53; Vaca, 386 U.S. at 184. But an agreement under which
4
The agreement expressly accounts for cases in which an employee exercises his or
her choice to start and then stop the grievance procedure, providing that the internal process
will be treated as complete at the last step to which the employee escalates: “If an employee
initiates a grievance procedure and fails to appeal a decision to a higher level, the decision
rendered prior to failure to appeal shall be final and binding.” J.A. 49. Whether and how
a “failure to appeal” under this provision – or any other alleged failure to comply with the
agreement’s internal procedures – would affect an employee’s ultimate right to recover in
a contract action is a separate question that we do not address. The only issue before us is
whether this agreement makes exhaustion mandatory, and we conclude that it does not.
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employees may choose as an initial matter to bring their claims directly to court has not
made the internal grievance procedure an “exclusive remedy,” and does not implicate that
concern.
That brings us to defendants’ more fundamental argument: that federal law requires
Staudner to exhaust even if the agreement does not. That argument misconceives the nature
of the exhaustion requirement, which is grounded in contract principles and, as noted
above, applies only when “the bargaining agreement contains grievance and arbitration
provisions which are intended to provide the exclusive remedy for breach of contract
claims.” Vaca, 386 U.S. at 184. From the exhaustion requirement’s inception, the
Supreme Court has recognized that “[i]f a grievance and arbitration procedure is included
in the contract, but the parties do not intend it to be an exclusive remedy, then a suit for
breach of contract will normally be heard even though such procedures have not been
exhausted.” Id. at 184 n.9 (citing Maddox, 379 U.S. at 657–58). Based on this agreement’s
language, it is evident that the parties did not intend its grievance procedures to be an
employee’s “exclusive remedy,” and so exhaustion is not required.
III.
We hold that the Supreme Court’s § 301(a) exhaustion requirement is not
jurisdictional, and that the agreement at issue in this case does not require exhaustion.
Accordingly, we reverse the judgment of the district court and remand the case for further
proceedings consistent with this opinion.
REVERSED AND REMANDED
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