Arnold, Mark v. United Mine Workers ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 01-2057
MARK ARNOLD, et al.,
Plaintiffs-Appellants,
v.
UNITED MINE WORKERS OF AMERICA,
INTERNATIONAL UNION,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Evansville Division.
No. EV 00-103-C—Richard L. Young, Judge.
____________
ARGUED DECEMBER 3, 2001—DECIDED JUNE 7, 2002
____________
Before POSNER, EVANS, and WILLIAMS, Circuit Judges.
WILLIAMS, Circuit Judge. The plaintiffs sued their union,
the United Mine Workers of America, under the Labor Man-
agement Relations Act (LMRA), 29 U.S.C. § 301, et seq., for
breach of the duty of fair representation, promissory estop-
pel, and breach of contract arising out of a dispute over
distribution of proceeds from a settlement with an employ-
er. The district court granted summary judgment in favor
of the union based on the plaintiffs’ failure to exhaust inter-
nal union procedures before bringing suit. The plaintiffs
appeal, arguing that the district court should have excused
their failure to exhaust union procedures either because of
the union’s alleged hostility to the plaintiffs’ claims or be-
2 No. 01-2057
cause exhausting union procedures would unduly delay
their opportunity for a judicial hearing. We reject these ar-
guments and affirm.
I. BACKGROUND
The United Mine Workers of America is the exclusive col-
lective-bargaining representative for individuals employed
in the coal industry throughout the United States and Can-
ada. The union obtained a $1.3 million settlement from the
Peabody Holding Company arising from hiring practices at
a coal mining facility in Farmersburg, Indiana, which al-
legedly was contrary to an agreement between Peabody and
the union granting preferential job opportunities to certain
active and laid-off miners. The union initially decided to
divide the settlement proceeds among the 78 members who
would have been entitled to employment at the Farmers-
burg mine if the agreement had not been breached, but
complaints from other members, coupled with mass layoffs
in the coal industry in Indiana, caused the union to recon-
sider the fairness of that plan. The union then decided to
spread the settlement proceeds among the 905 members
that had employment or recall rights at the Farmersburg
facility. As a result, the expected shares of the original 78
members slated to receive the settlement decreased from
the more than $15,000 they initially expected to about
$1,500. Unhappy with the new distribution, 61 of those 78
members sued the union.
The union moved to dismiss the complaint, arguing that
the plaintiffs had not exhausted the union’s internal griev-
ance procedures. The court allowed the parties to submit
additional documentation and treated the union’s mo-
tion as one for summary judgment. It granted judgment in
favor of the union, finding that the undisputed evidence
showed that the plaintiffs had failed to initiate a prop-
er appeal under the procedures required by the union’s con-
No. 01-2057 3
stitution and had not demonstrated any basis for excus-
ing their failure to exhaust those procedures before filing
suit.1
II. ANALYSIS
In Clayton v. UAW, 451 U.S. 679, 685 (1981), the Su-
preme Court held that plaintiffs are ordinarily required to
exhaust union appeals procedures before bringing suit
against their union concerning internal union affairs. See
Stevens v. Northwest Ind. Dist. Council, United Bhd. of
Carpenters, 20 F.3d 720, 729 (7th Cir. 1994); Frandsen v.
Bhd. of Ry., Airline, and S.S. Clerks, 782 F.2d 674, 679 (7th
Cir. 1986). The Supreme Court recognized, however, that
internal procedures may be lengthy and sometimes inade-
quate to address the employees’ grievances, and held that,
in the context of LMRA claims against the union, flexibility
in imposing the exhaustion requirement is necessary. Clay-
ton, 451 U.S. at 689; see Fulk v. United Transp. Union, 108
F.3d 113, 116-17 (7th Cir. 1997); Stevens, 20 F.3d at 731.
Balancing the policy of providing a judicial forum to en-
force the duty of fair representation against the competing
policy of encouraging nonjudicial resolution of labor dis-
putes, see Frandsen, 782 F.3d at 679, the Court held that
“courts have discretion to decide whether to require exhaus-
tion of internal union procedures.” Clayton, 451 U.S. at
689 (citing NLRB v. Marine Workers Local 22, 391 U.S. 418,
426 n.8 (1968)). This discretionary exhaustion requirement
for intra-union disputes fosters “ ‘private resolution of dis-
putes, responsible union self-regulation, union assistance
in the interpretation of its governing document, [and]
robust union processes,’ while at the same time giving
1
The plaintiffs do not contend that any of their claims survive if
we affirm the district court on the exhaustion issue, so we confine
our analysis to that issue.
4 No. 01-2057
the district court the flexibility to allow a case to continue
despite the plaintiff’s failure to exhaust internal remedies.”
Fulk, 108 F.3d at 116-17 (quoting Stevens, 20 F.3d at 732).
In this case, the union’s constitution requires that de-
cisions and actions of the district executive boards or Inter-
national Union officers be appealed to the International
Executive Board (IEB), which must meet once every four
months. The decision of that board may then be appealed
to the International Convention, which meets once every
four years. The district court concluded that because plain-
tiffs did not initiate the first-level appeal (to the IEB), they
failed as a matter of law to exhaust the required union
procedures. The plaintiffs do not dispute this point on ap-
peal, but argue instead that the district court erred in de-
clining to excuse their failure to exhaust.
A. Standard of Review
The union argues that we should review the district
court’s decision regarding whether to excuse the plaintiffs’
failure to exhaust remedies for abuse of discretion. We have
never explicitly identified the applicable standard in this
context, although it is clear from the cases that our review
has generally been deferential. See Stevens, 20 F.3d at 733;
Hammer v. UAW, 178 F.3d 856, 858 (7th Cir. 1999); accord
Maddolone v. Local 17, United Bhd. of Carpenters, 152 F.3d
178, 182 (2d Cir. 1998). The plaintiffs suggest, however,
that because we are reviewing the court’s decision at sum-
mary judgment, we should review the decision de novo, and
at least one case has hinted that the usual summary
judgment standard applies when the question of exhaustion
is presented in this context. See Sosbe v. Delco Elec. Div. of
General Motors Corp., 830 F.2d 83, 85 (7th Cir. 1987).
The district court concluded that there were no disputed
issues of fact material to the exhaustion requirement, a
conclusion we review de novo. See, e.g., Farmer v. Brennan,
No. 01-2057 5
81 F.3d 1444, 1449 (7th Cir. 1996) (“[W]e review a district
court’s grant of summary judgment under Rule 56 de novo,
to the extent the question is whether there were genuine
disputes of material facts or whether the moving party
should prevail as a matter of law.”). But the district court’s
further conclusion that, given the undisputed facts, the
plaintiffs’ failure to follow union procedures should not be
excused is an exercise of the court’s discretion under Clay-
ton, and deferential appellate review is necessary to pre-
serve that discretion, even when exercised at the summary
judgment stage. See Hot Wax, Inc. v. Turtle Wax, Inc., 191
F.3d 813, 819 (7th Cir. 1999) (when material facts are
not in dispute, the district court’s decision that laches bars
the action is reviewed for abuse of discretion); Bradley v.
Work, 154 F.3d 704, 708-09 (7th Cir. 1998) (evidentiary
rulings are reviewed for abuse of discretion, even when the
court is reviewing the grant of summary judgment).2 Given
2
Plaintiffs do not contend that they were entitled to an eviden-
tiary hearing to resolve any factual disputes, but maintain that
the district court must draw all reasonable inferences from the
undisputed facts in favor of the plaintiffs. Our review of the record
convinces us that the district court did just that, but even if the
district court strayed from the summary judgment model and
drew inferences adverse to the plaintiffs, we see little reason to
substitute our judgment for the district court’s, given the case-
specific nature of the decision whether to excuse exhaustion. See
Frandsen, 782 F.2d at 682 (“The different factors and fact pat-
terns in these cases . . . make it clear that it is virtually impossi-
ble to predict when the futility exception will apply.”). Even when,
as in this case, the question may be answered on a paper record,
there is little to be gained by duplicating the district court’s efforts
through de novo appellate review. Cf. Mars Steel Corp. v. Cont’l.
Bank, 880 F.2d 928, 934-35 (7th Cir. 1989) (en banc) (discussing
considerations supporting deferential review of decision to impose
Rule 11 sanctions); Anderson v. Bessemer City, 470 U.S. 564, 574-
75 (1985) (deferential review of district court’s resolution of fact-
(continued...)
6 No. 01-2057
the nature of the district court’s decision in this case,
we confine our review to determining whether the district
court abused the discretion afforded it under Clayton.
B. Excusing the Failure to Exhaust Union Procedures
In Clayton, the Court identified three factors to guide a
court’s discretion in deciding whether to excuse exhaustion:
First, whether union officials are so hostile to the
employee that he could not hope to obtain a fair
hearing on his claim; second, whether the internal
union appeals procedures would be inadequate
either to reactivate the employee’s grievance or to
award him the full relief he seeks under § 301; and
third, whether exhaustion of internal procedures
would unreasonably delay the employee’s opportu-
nity to obtain a judicial hearing on the merits of his
claim.
Clayton, 451 U.S. at 689. If any of these factors are present,
the court may properly excuse the employee’s failure to
exhaust. Id.
Plaintiffs claim that the first and third factors apply, and
also that the district court erred in employing the Clayton
factors as if they were exclusive. Although we agree that
the Clayton factors are not exclusive, see Hammer, 178 F.3d
at 858, all of the facts and arguments relied upon by the
plaintiffs relate squarely to two of the Clayton factors—
hostility and unreasonable delay—so we focus our attention
on those factors.
2
(...continued)
intensive issues appropriate even when based on documentary
evidence or inferences from other facts).
No. 01-2057 7
1. Union hostility to the plaintiffs’ claim
Plaintiffs argue that it would have been futile to take
their case to the union because: (1) the union’s general
counsel, Deborah Stern, stated that the union would fight
the plaintiffs “to the end,” and (2) the union executives who
made the decision to distribute the settlement more broadly
were the same people who would hear the plaintiffs’ appeal.
Plaintiffs conclude that these facts show that the union’s
decision had become “fixed,” rendering any appeal futile.
We agree with the district court that the plaintiffs failed to
show that union procedures were so infected with hostility
as to warrant excusing the exhaustion requirement.
Ms. Stern is not a member of any appellate review board
within the union. Plaintiffs do not take issue with the dis-
trict court’s observation that “Ms. Stern would not be in-
volved in any decision rendered by the IEB or International
Convention.” Stern’s statement that the union would fight
“to the end” therefore tells us nothing about whether the
plaintiffs would receive a fair hearing before the IEB or
International Convention. Similarly, although one member
of the IEB, Vice President Jerry Jones, was involved in the
decision to increase the number of recipients of the settle-
ment, there is no evidence that any other member of the
eleven-member IEB was involved in that decision. Plaintiffs
complain that the district court failed to take Vice President
Jones’s participation into consideration, but even giving
the plaintiffs the benefit of all reasonable inferences, the
presence of one potentially hostile member on the IEB
does not, without more, demonstrate hostility so pervasive
that the plaintiffs could not hope to receive a fair hearing
on their claim. The district court was within its discre-
tion in refusing to excuse exhaustion on the basis of the
union’s alleged hostility to the plaintiffs’ claims.
8 No. 01-2057
2. Unreasonable delay
Plaintiffs next argue that requiring exhaustion would
unreasonably delay their opportunity to obtain judicial re-
view of their claim because the International Convention,
to which an adverse decision by IEB must be appealed, is
required to meet only once every four years. But because
the plaintiffs failed to initiate even the first-level appeal
at the IEB—which takes only four months and might
have resolved their claim—their delay argument is entire-
ly speculative. To excuse exhaustion based on the possi-
bility that a second-level appeal would be unreasonably
lengthy would pre-empt any opportunity for intra-union
resolution at the first level. This is contrary to one of the
policies behind the exhaustion requirement—to encourage
nonjudicial resolution of labor disputes. See Frandsen, 782
F.2d at 679. Because the district court concluded that there
was no basis to excuse the plaintiffs’ failure to exhaust the
first-level appeal, it was within its discretion in refusing
to excuse exhaustion based on the plaintiffs’ argument
about the second-level appeal. Cf. Sosbe, 830 F.2d at 86
(holding that plaintiff must establish futility “at every step
of the relevant grievance procedure”).
III. CONCLUSION
The district court did not abuse its discretion in refus-
ing to excuse the plaintiffs’ failure to exhaust union proce-
dures. Accordingly, the judgment of the district court is
AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-97-C-006—6-7-02