DeGrandis v. Children's Hospital Boston

United States Court of Appeals
For the First Circuit
No. 15-1657
PAUL DEGRANDIS,
Plaintiff, Appellant,
v.
CHILDREN'S HOSPITAL BOSTON,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor, IV, U.S. District Judge]
Before
Howard, Chief Judge,
Lynch and Kayatta, Circuit Judges.
Jennifer A. O'Brien, with whom Law Firm of Attorney Jennifer
A. O'Brien was on brief, for appellant.
Katherine Y. Fergus, with whom Tracey E. Spruce and Spruce
Law LLC were on brief, for appellee.
November 18, 2015
LYNCH, Circuit Judge. Paul DeGrandis was fired from his
job as a carpenter at Children's Hospital Boston ("Hospital") in
2008. The Hospital's stated reason for firing DeGrandis was his
"failure to meet job performance standards." Days short of six
years later, DeGrandis sued the Hospital, asserting that it did
not have cause to fire him. The district court dismissed his
complaint. He now appeals the dismissal of one of the counts in
his complaint, a claim under section 301 of the Labor Management
Relations Act ("LMRA") for breach of a Collective Bargaining
Agreement ("CBA"). The ultimate question here is whether a six-
year statute of limitations for breach of contract or a six-month
limitations period for hybrid claims applies. The district court
held that DeGrandis was required to bring a hybrid claim, one that
alleges breach of contract by the Hospital as well as breach of
the duty of fair representation by his union. We disagree and
find that DeGrandis was not required to bring a hybrid claim, so
the six-year statute of limitations applies. Accordingly, we
reverse.
At the heart of this appeal is a Memorandum of Agreement
("MOA") that DeGrandis, the Hospital, and DeGrandis's union had
entered into after a previous grievance filed by DeGrandis in 2007.
Under the plain language of the MOA, the grievance and arbitration
procedures set forth in the CBA could not be invoked in the event
that DeGrandis was terminated for "failure to comply with the
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[Hospital]'s generally applicable work standards." Because this
MOA provision amounts to a waiver of the typical rule that before
proceeding to federal court a plaintiff must exhaust a CBA's
grievance and arbitration procedures and abide by its finality
provisions, we find that the district court erred in dismissing
DeGrandis's complaint.
I.
Because this case is before us on the district court's
grant of a motion to dismiss for failure to state a claim, see
Fed. R. Civ. P. 12(b)(6), we summarize "the relevant facts based
upon the well-pleaded allegations in the . . . complaint."
Eldredge v. Town of Falmouth, MA, 662 F.3d 100, 102 (1st Cir.
2011). We may also consider "documents annexed to [the complaint]
or fairly incorporated into it, and matters susceptible to judicial
notice." Centro Medico del Turabo, Inc. v. Feliciano de Melecio,
406 F.3d 1, 5 (1st Cir. 2005).
In September 2003, DeGrandis was hired by the Hospital
to work as a carpenter. At all relevant times, the Hospital was
party to a CBA with the International Union of Operating Engineers,
Local 877, AFL-CIO. DeGrandis was a member of the union. Pursuant
to the CBA, the Hospital recognized the union as the exclusive
bargaining representative for purposes of collective bargaining.
The CBA requires that the Hospital have "just cause"
before it can "discharge, suspend, or discipline any employee."
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It also provides for a mandatory grievance procedure. If a
grievance is settled during this process, "it shall be considered
closed and shall not thereafter be subject to the grievance
procedure or to arbitration." If a grievance "has not been settled
after being fully processed through the grievance procedure," it
may be arbitrated, and "[t]he award of the arbitrator on any
grievance properly submitted to him hereunder shall be final and
binding upon the parties."
DeGrandis's 2004, 2005, and 2006 performance reviews all
stated that he was meeting the Hospital's overall job performance
standards. DeGrandis claims that even though he was meeting these
performance standards, his supervisor, William Connelly,
repeatedly harassed him and used foul language with him. Over
time, it became clear to DeGrandis that Connelly did not like him
and wanted to fire him. DeGrandis claims that Connelly went so
far as to report false and misleading information about DeGrandis
to the Hospital.
After DeGrandis suffered two on-the-job injuries between
June and July of 2007, both of which required him to miss work,
the Hospital proposed terminating his employment. DeGrandis,
represented by the union, filed a grievance regarding this proposed
action. On July 30, 2007, DeGrandis suffered another on-the-job
injury, causing him to miss more work. On July 31, 2007,
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DeGrandis, the Hospital, and a union representative entered into
a Memorandum of Agreement,1 which provides:
All parties hereby agree as a full and final
resolution of the Union's grievance for Mr.
Paul DeGrandis over proposed discipline for
poor work performance, that any further
failure to comply with the Employer's
generally applicable work standards during the
12 month period following the date of this
agreement shall be grounds for immediate
termination, and that termination on that
basis shall not be subject to the grievance
and arbitration provision of the parties'
collective bargaining agreement.
DeGrandis continued to work for the Hospital after
signing the MOA. On October 23, 2007, DeGrandis was given his
2007 performance review, which covered the period from September
30, 2006 to September 8, 2007. This performance review was the
first time during his employment with the Hospital that he was
rated as not meeting the Hospital's overall job performance
standards.
On January 23, 2008, DeGrandis was injured again,
returning to work in early February. Upon DeGrandis's return,
1 The Hospital refers to the MOA as a "last chance
agreement." "Once an employee is exposed to severe disciplinary
jeopardy, usually discharge, a 'last chance' agreement may be
offered by the employer or sought by a union representing the
employee in an attempt to salvage the individual's job and
rehabilitate him. Such agreements are common in areas of drug and
alcohol abuse, and generally provide that further instances of
specified misconduct by the employee will result in termination."
Bailey v. Ga.-Pac. Corp., 306 F.3d 1162, 1165 n.2 (1st Cir. 2002).
However, this MOA differed in language from others, as described
in footnote 4.
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Connelly assigned him to repair a broken shelf. DeGrandis
contacted a lead carpenter, who was also his immediate supervisor,
to inform him that the shelf could not be repaired and instead had
to be replaced, which would take more time than had been allotted.
The next day, Connelly complained to DeGrandis that the shelf was
still broken. DeGrandis claims that although he did nothing to
merit termination, after the shelf incident, Connelly contacted
his supervisor, Paul Williams, to seek DeGrandis's termination.
According to DeGrandis, Connelly lied to his supervisor regarding
the shelf incident in order to establish cause for his termination.
DeGrandis was fired on February 29, 2008 for "failure to meet job
performance standards."
Because, as the parties agree, grievance and arbitration
procedures were unavailable to DeGrandis under the MOA, he brought
suit against the Hospital in federal district court. DeGrandis's
complaint was filed on February 25, 2014, just shy of six years
after his termination. The complaint sets forth three causes of
action, only one of which is before us.2 At issue here is
2 DeGrandis brought two state-law claims against the
Hospital, one for breach of contract and the other for breach of
the covenant of good faith and fair dealing. Both of those claims
were dismissed by the district court because they were completely
preempted by the LMRA, and there was no need to convert them into
LMRA claims because DeGrandis had already asserted a separate LMRA
claim. DeGrandis does not appeal the dismissal of these two
claims.
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DeGrandis's breach of contract claim against the Hospital brought
under section 301 of the LMRA.
The Hospital filed a Rule 12(b)(6) motion to dismiss.
After initially denying the motion as to DeGrandis's LMRA claim,
the district court granted the Hospital's motion to reconsider
and, after reconsideration, dismissed the LMRA claim. The district
court concluded on reconsideration that the only way DeGrandis
could bring his LMRA claim against the Hospital was by bringing a
so-called hybrid claim, for which "the plaintiff 'must prove both
that the employer broke the [CBA] and that the union breached its
duty of fair representation,'" Balser v. Int'l Union of Elec.,
Elec., Salaried, Mach. & Furniture Workers (IUE) Local 201, 661
F.3d 109, 118 (1st Cir. 2011) (alteration in original) (quoting
Chaparro-Febus v. Int'l Longshoremen Ass'n, Local 1575, 983 F.2d
325, 330 (1st Cir. 1992)). Because DeGrandis had not brought a
claim against the union, the district court concluded that he was
barred from bringing his LMRA claim. The district court also found
that even if DeGrandis's complaint could be construed as alleging
the union's breach of the duty of fair representation, the
complaint was filed well outside the six-month statute of
limitations for hybrid claims established by the Supreme Court in
DelCostello v. International Brotherhood of Teamsters, 462 U.S.
151, 169–72 (1983).
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II.
We review de novo an order of dismissal for failure to
state a claim. Eldredge, 662 F.3d at 104. "While a complaint
does not need 'detailed factual allegations' to survive a motion
to dismiss, a plaintiff's factual allegations 'must be enough to
raise a right to relief above the speculative level.'" Gorelik v.
Costin, 605 F.3d 118, 121 (1st Cir. 2010) (quoting Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007)). The district court may
grant a motion to dismiss based on a defendant's affirmative
defense of a statute of limitations "when the pleader's allegations
leave no doubt that an asserted claim is time-barred." LaChapelle
v. Berkshire Life Ins. Co., 142 F.3d 507, 509 (1st Cir. 1998); see
also Centro Medico del Turabo, 406 F.3d at 6.
Section 301 of the LMRA provides that "[s]uits for
violation of contracts between an employer and a labor organization
representing employees in an industry affecting commerce . . . may
be brought in any district court of the United States having
jurisdiction of the parties." 29 U.S.C. § 185(a). The Supreme
Court has read section 301 to permit individual employees to bring
these suits against their employers. Hines v. Anchor Motor
Freight, Inc., 424 U.S. 554, 562 (1976).
But before an employee can bring a breach of contract
claim against his employer under section 301, he must "exhaust the
CBA's grievance procedures" and "abide by the CBA's finality
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provisions." Ramírez-Lebrón v. Int'l Shipping Agency, Inc., 593
F.3d 124, 131 (1st Cir. 2010). We have previously noted that "[a]
CBA generally provides for the final, binding resolution of labor
disputes through grievance procedures in which the union fairly
represents the aggrieved employee(s)."3 Id.When the Hospital proposed terminating DeGrandis in
2007, DeGrandis pursued the grievance process outlined in the CBA.
The result was the MOA, which constituted the "full and final
resolution of the Union's grievance for Mr. Paul DeGrandis over
proposed discipline for poor work performance." In the MOA, the
parties waived, for a twelve-month period, use of the CBA's
grievance and arbitration procedures for any complaints DeGrandis
might bring in the event that he was terminated for "failure to
comply with the [Hospital]'s generally applicable work standards."
Seven months later, the Hospital terminated DeGrandis,
asserting that he had "fail[ed] to meet job performance standards."
DeGrandis disagrees. He argues that the Hospital did not have
3 As a result, "courts have not allowed employees to
challenge the underlying merits of arbitration awards by way of
Section 301 absent circumstances that have impugned the integrity
of the arbitration process, for instance, 'fraud, deceit, or breach
of the duty of fair representation or unless the grievance
procedure was a sham, substantially inadequate or substantially
unavailable.'" Ramírez-Lebrón, 593 F.3d at 131 (quoting Harris v.
Chem. Leaman Tank Lines, Inc., 437 F.2d 167, 171 (5th Cir. 1971)
(per curiam)).
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cause to fire him and that he did comply with its generally
applicable work standards.
If the MOA had not contained the waiver of grievance and
arbitration provision, this claim would have proceeded as normal
under the CBA. DeGrandis would then have been required to file a
new grievance and follow the procedures set forth in the CBA.
After exhausting the CBA's grievance and arbitration procedures,
DeGrandis would have been bound by the CBA's finality provision
and would have been barred from bringing a section 301 claim unless
he could show "circumstances that have impugned the integrity of
the arbitration process." Id. (emphasis omitted). Indeed, under
this hypothetical, if DeGrandis were not to have followed the CBA's
grievance procedures and had instead proceeded directly to federal
court with an LMRA claim, the Hospital no doubt would have moved
to dismiss for failure to exhaust his contractual remedies.
But under the plain language of the MOA, DeGrandis and
the Hospital waived the CBA's grievance and arbitration procedures
for precisely the type of grievance at issue in this case.4 Since
4 Not all last chance agreements preclude grievance and
arbitration of the employer's underlying charge of misconduct, as
the MOA did here. In fact, other last chance agreements have
"bifurcate[d] the question of guilt from the question of the
appropriate penalty," permitting grievance and arbitration of the
former. United Steelworkers of Am., AFL-CIO-CLC v. Lukens Steel
Co., Div. of Lukens, Inc., 969 F.2d 1468, 1477 (3d Cir. 1992).
For example, in Merck & Company, Inc. v. International Chemical
Workers Union Council of the United Food and Commercial Workers
Union, Local 94C, the last chance agreement provided that the
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DeGrandis was precluded by the MOA from bringing his challenge
through grievance and arbitration, the only procedural reason for
closing the courthouse doors, failure to exhaust, is simply not
involved. The exhaustion rule -- and by extension the finality
rule -- could not prevent DeGrandis from bringing his claim in
federal court if there were no grievance or arbitration procedures
to exhaust in the first place. See Daigle v. Gulf State Utils.
Co., Local Union No. 2286, 794 F.2d 974, 977 (5th Cir. 1986) ("[I]f
the collective bargaining agreement does not provide that the
grievance and arbitration procedure is the exclusive and final
remedy for breach of contract claims, the employee may sue his
employer in federal court under § 301, and the state statute of
employee's failure to comply with the specified contractual
requirements would render him "subject to immediate termination
and such termination [would] not be subject to the contractual
grievance and arbitration procedures." 335 F. App'x 300, 301 (4th
Cir. 2009) (per curiam) (alteration in original). However, the
agreement went on to state "that in the event of a termination,
[the employee] may file a grievance challenging the facts upon
which the Company determined that [the employee] was non-compliant
or otherwise in violation of this Agreement." Id.; see also United
Food & Commercial Workers, Local 1546 v. Ill.-Am. Water Co., 569
F.3d 750, 752 (7th Cir. 2009) ("The Union and the Employee
expressly waive any right to file a grievance or other claim
regarding Employee's discharge under this Agreement, except to
contest the fact of what occurred. If the conduct occurred, an
Arbitrator will not have any authority to modify the discharge to
a lesser penalty."); Summers v. Keebler Co., 133 F. App'x 249, 250
(6th Cir. 2005) ("The last chance agreement specifically provides
that '[i]t is understood and agreed that should [the employee] be
terminated for violation of the Substance Abuse Policy, the parties
may grieve the appropriateness of the charge only and cannot
contest the degree of penalty.'" (first alteration in original)).
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limitations applicable to contract breaches applies." (citation
omitted)). DeGrandis's only option for obtaining review was to
bring a claim in federal court. And that is precisely what he did
when he brought this straightforward breach of contract claim under
section 301 of the LMRA.
The Hospital argues that DeGrandis already exhausted the
CBA's grievance procedures after he filed his 2007 grievance. It
urges us to find that the MOA itself constituted the final
resolution of DeGrandis's 2008 grievance and triggered the
finality provision of the CBA, thereby severely restricting
federal court review. According to the Hospital, allowing
DeGrandis to prosecute his claim in federal court would amount to
a "second bite of the apple." But what the Hospital fails to
realize is that there are two apples on the table. The MOA was
the final resolution of DeGrandis's 2007 grievance for his then-
proposed termination; his 2008 grievance for actual termination is
an entirely distinct matter. DeGrandis is not getting a second
bite at the apple; he is getting a first bite at a new apple.
Since DeGrandis could not under the MOA take advantage
of the CBA's grievance and arbitration procedures, for us to find
that he cannot challenge his termination in federal court would
amount to giving the Hospital an unreviewable right to fire
DeGrandis for any reason so long as it claimed that it was firing
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him for failure to abide by its work requirements. The MOA gives
the Hospital no such right.
The Hospital argues that DeGrandis could bypass the
CBA's finality provision and obtain review if he brought a hybrid
claim. But DeGrandis has no reason to sue his union. We decline
to adopt a rule that would require DeGrandis to manufacture a
fictitious claim against his union in order to obtain some measure
of review of the Hospital's decision.5 Because the waiver
provision in the MOA renders the exhaustion and finality rules
inapplicable to DeGrandis's second grievance, he faces no
procedural bar to bringing his section 301 breach of contract claim
against the Hospital, and his claim is timely.
III.
The dismissal is reversed and the case remanded for
further proceedings consistent with this opinion.
5 "[C]ircumstances may arise, like those alleged here,
where the union has not wrongfully refused to process the
employee's grievance, and thus the employee has no cause of action
against the union for breach of the duty of fair representation.
But such circumstances do not in themselves foreclose the
employee's breach of contract action against the employer under
Section 301." Ramírez-Lebrón, 593 F.3d at 134 (citing Vaca v.
Sipes, 386 U.S. 171, 185 (1967)).
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