John Rutherford v. Judge & Dolph, L

In the
United States Court of Appeals
For the Seventh Circuit
No. 09-3706
JOHN R UTHERFORD , et al.,
Plaintiffs-Appellants,
v.
JUDGE & D OLPH L TD. n/k/a
JUDGE & D OLPH LLC, et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:09-cv-02122—Harry D. Leinenweber, Judge.
A RGUED A PRIL 5, 2012—D ECIDED F EBRUARY 4, 2013
Before R OVNER, W OOD , and W ILLIAMS, Circuit Judges.
W ILLIAMS, Circuit Judge. In this suit brought under
Section 301 of the Labor-Management Relations Act, 29
U.S.C. § 185, Plaintiffs-Appellants sue their former em-
ployer, Judge & Dolph, for terminating their employ-
ment on grounds forbidden by a collective bargaining
agreement, and their union, Local 705, for settling their
grievances for an unsatisfactory sum, allegedly violating
its duty of fair representation. The district court granted
Defendants’ motions to dismiss, and Plaintiffs appealed.
2 No. 09-3706
But we lack jurisdiction over the employees’ claim
against Local 705. “Hybrid” claims for violations of a
collective bargaining agreement pursuant to 29 U.S.C.
§ 185(a) may be asserted against an employer and a
union when the employee needs the union to litigate his
grievance. See Vaca v. Sipes, 386 U.S. 171 (1967). But the
employees in this case did not need Local 705 to litigate
their grievance, because as soon as Judge & Dolph repudi-
ated the arbitration procedure mandated by the con-
tract, the employees could have gone straight to federal
court with a claim solely against the employer. So the
claim against the union is not part of a “hybrid” at all,
and is outside Section 301’s jurisdictional scope. Left
with the employees’ freestanding claim against the em-
ployer, we find that it fails on the merits because the
collective bargaining agreement expired before Plain-
tiffs were terminated, so no agreement was violated.
Where, as here, a union has provided an unambiguous,
timely notice to terminate the collective bargaining agree-
ment, that agreement expires pursuant to its terms even
if the employer’s payroll continues to reflect the pay-
ment of union wages and the deduction of union dues.
We therefore affirm.
I. BACKGROUND
Plaintiffs, eight members in good standing with Team-
sters Local Union 705 (“Local 705”), were employed as
truck drivers with Judge & Dolph Ltd. n/k/a Judge &
Dolph LLC (“J&D”). J&D entered into a collective bar-
gaining agreement (“CBA”) with Local 705 and its
No. 09-3706 3
parent organization, the International Brotherhood of
Teamsters. Among other things, the CBA set specific
wages, provided for the deduction of union dues from
paychecks, and prohibited J&D from firing employees
without “just cause.” In addition, Article 18 generally
required that any grievance “regarding the application,
meaning or interpretation of this Agreement” be subject
to arbitration. And importantly, Article 23 included an
evergreen clause which provided: “This Agreement
shall be in full force and effect from April 1, 2003 to
and including March 31, 2007 and shall continue from
year to year thereafter unless written notice of desire
to cancel or terminate the Agreement is served by
either party upon the other at least sixty (60) days prior
to date of expiration.”
On November 16, 2006 (before 60 days prior to March 31,
2007), Local 705 served a notice which provided:
Pursuant to the provision of the current, April 1,
2003 through March 31, 2007 Collective Bar-
gaining agreement (CBA) Article 23, Sections 1
and 2 between Judge & Dolph, LTD, and the
Union, please accept this letter as official notice
to both terminate and negotiate modifications. In
order to clarify the Union’s bargaining position,
relative to successor contract negotiations, it is
the Union’s desire to negotiate modifications to
the current CBA, but Local 705 does not desire
to continue or extend the current CBA beyond
its expiration date of March 31, 2007.
J&D and Local 705 began negotiating a new CBA, and
continued negotiations through the March 31, 2007 ex-
4 No. 09-3706
piration date. J&D also continued paying the union
wages required under the old CBA and deducting
union dues after that date. Negotiations ended in
August 2008, and no new CBA was signed.
Meanwhile, in June and July 2008, Plaintiffs were
each terminated without “just cause”—for example, for
refusing to sign new at-will employment agreements,
among other reasons—in alleged violation of the CBA.
J&D, however, refused to participate in arbitration con-
cerning these alleged violations because it considered
the CBA to have expired. Plaintiffs then asked Local 705
to bring unfair labor practices charges based on these
alleged violations before the National Labor Relations
Board (“NLRB”) on their behalf, which it did. Around
April 2009, however, Local 705 and J&D agreed to a
settlement, which would give Plaintiffs about 25% of
their claimed damages ($104,000 out of $409,709 total).
But Plaintiffs refused to consent to the settlement, and
Local 705 did not continue pursuing the NLRB action.
And the parties seem to have assumed that Plaintiffs
could not litigate their claims before the NLRB on
their own without Local 705.
Plaintiffs filed suit in federal district court under
Section 301 of the Labor-Management Relations Act
(“LMRA”), 29 U.S.C. § 185, raising claims against J&D
for allegedly violating the CBA, and against Local 705
for violating its duty of fair representation when it
settled the grievances that were brought before the
NLRB for an amount unsatisfactory to Plaintiffs, among
other claims not at issue here. Defendants moved to
dismiss under Rule 12(b)(6). Plaintiffs filed evidence in
No. 09-3706 5
opposition to those motions, but the district court did
not formally convert the motions into motions for sum-
mary judgment. The district court then dismissed the
claims because it found the CBA to have expired by
the time of the terminations, and because it found that
the complaint failed to allege facts plausibly establishing
that Local 705 acted arbitrarily, irrationally, or in bad
faith when it settled the grievances. Plaintiffs appealed.
II. ANALYSIS
A. The Motions to Dismiss Should Have Been Con-
verted into Motions for Summary Judgment Pursu-
ant to Rule 12(d)
We first address the proper posture of this case.
Rule 12(d) provides:
If, on a motion under Rule 12(b)(6) or 12(c), matters
outside the pleadings are presented to and not
excluded by the court, the motion must be
treated as one for summary judgment under
Rule 56. All parties must be given a reasonable
opportunity to present all the material that is
pertinent to the motion.
Appellants submitted evidence before the district court
in response to the Rule 12(b)(6) motions, including af-
fidavits attesting that J&D continued to pay union
wages and deduct union dues even after the March 2007
expiration date. Such evidence is not part of the pleadings,
as it is not “referred to in the plaintiff[s’] complaint . . . .”
188 LLC v. Trinity Indus. Inc., 300 F.3d 730, 735 (7th Cir.
6 No. 09-3706
2002). Yet the district court considered this evidence
when ruling on J&D’s motion to dismiss without con-
verting the motions into motions for summary
judgment pursuant to Rule 12(d), and it applied the
Rule 12(b)(6) standard rather than the summary judg-
ment standard. This was error, and the district court
should have adhered to Rule 12(d). See Gen. Elec. Cap.
Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th
Cir. 1997).
Nonetheless, in this case that is not cause for reversal
or remand. Appellants were the ones who first sub-
mitted evidence outside the pleadings (J&D did
initially submit a copy of the CBA, but that was the
cornerstone of Appellants’ complaint and may be con-
sidered part of the pleadings, see 188 LLC, 300 F.3d at
735). J&D and Local 705 discuss this confused pro-
cedural posture in their briefs, and Appellants have
not suggested that they would have been, or would
be, prejudiced by consideration of these motions as mo-
tions for summary judgment. We therefore treat this
appeal as if the motions had been converted into
motions for summary judgment, because we too rely on
evidence submitted outside the pleadings, and because
we do not reach the adequacy-of-pleading issue for
reasons discussed below. Cf. Fleischfresser v. Dirs. of Sch.
Dist. 200, 15 F.3d 680, 684-85 (7th Cir. 1994) (district
court decision to treat motion to dismiss as motion
for summary judgment is not reversible error if there
is no prejudice).
No. 09-3706 7
B. We Lack Jurisdiction to Consider Appellants’
Claim Against Local 705 Because It Is Not a “Hy-
brid” Claim Under Section 301
Appellants’ claims against Local 705 must be
dismissed for lack of jurisdiction.1 Section 301 of the
LMRA provides for federal subject-matter jurisdiction
“without respect to the amount in controversy or
without regard to the citizenship of the parties,” but only
over “[s]uits for violation of contracts between an
employer and a labor organization . . . .” 29 U.S.C. § 185(a).
The language of this statute clearly contemplates claims
by employees against the employer for violations of a
CBA (or perhaps also between other parties, so long as
the claim alleges a CBA violation). And it would also
seem to exclude claims by employees against a union (or
between other parties) that lack an allegation that the
union or other party itself has violated the CBA.
In Vaca v. Sipes, 386 U.S. 171 (1967), however, the Su-
preme Court recognized a narrow exception to the
statute’s jurisdictional bar. Acknowledging that the
statute permits suits by employees against employers
for CBA violations, it recognized that as a practical
1
The parties did not explicitly raise this issue in their briefs,
but after oral argument, J&D filed a Fed. R. App. P. 28(j) letter
citing Copeland v. Penske Logistics LLC, 675 F.3d 1040 (7th Cir.
2012) and explicitly arguing that we lack jurisdiction of the
claim against Local 705. Appellants did not respond. Because
of our independent obligation to consider subject-matter
jurisdiction, we do so here.
8 No. 09-3706
matter, an employee often cannot go straight to federal
court with such a claim because many CBAs (like the
one in this case) have mandatory provisions that
require the employee, represented by his union, to
pursue his grievances through arbitration. As the
Supreme Court explained, if the union then decides,
for whatever reason, not to arbitrate on behalf of the
employee pursuant to the mandatory arbitration
clause, only then may the employee allege a CBA viola-
tion in federal court. In doing so however, the
employee may—indeed must—sue not only the
employer for violating the CBA, but also the union for
violating its duty of fair representation in refusing to
arbitrate (for whatever arbitrary or irrational reason).
See Vaca, 386 U.S. at 185 (“[A] situation when the
employee may seek judicial enforcement of his con-
tractual rights arises[ ] if . . . the union has sole power
under the contract to invoke the higher stages of the
grievance procedure, and if . . . the employee-plaintiff
has been prevented from exhausting his contractual
remedies by the union’s wrongful refusal to process
the grievance.”); see also Copeland v. Penske Logistics
LLC, 675 F.3d 1040, 1042 (7th Cir. 2012) (“[E]mployees
must demonstrate both that the employer violated a
collective bargaining agreement and that the union
breached its duty of fair representation in the course of
failing to hold the employer to its promise.” (citing
Vaca)); id. at 1044 (“Section 301 is limited to suit on a
contract; an asserted violation of a union’s duty of fair
representation by failing to enforce the contract can be
ancillary to the claim that a promise in a CBA has been
No. 09-3706 9
broken.” (citing Motor Coach Emps. v. Lockridge, 403 U.S.
274, 298-301 (1971)). This is what is referred to as a “hy-
brid” Section 301 claim against both employer and union.
See, e.g., Nemsky v. ConocoPhillips Co., 574 F.3d 859, 864
(7th Cir. 2009). Without the availability of this hybrid
claim, unions would have “unlimited discretion to
deprive injured employees of all remedies for breach of
contract.” Vaca, 386 U.S. at 186. In the situation authorized
by Vaca, the unfair labor practice claim against the union
is “necessar[il]y” a “part and parcel” of the underlying
claim against the employer. Id. See Nemsky, 574 F.3d
at 864 (“hybrid 301” actions are “inextricably interdepen-
dent” because the plaintiff “must establish both parts
of his hybrid claim in order to prevail”).
Appellants’ claim against Local 705 does not,
however, fit into this narrow hybrid exception to the
strict jurisdictional bar of Section 301. In Vaca, union-
initiated arbitration was the employee’s only avenue
of relief because the CBA required it, whereas here, a
union-initiated NLRB action was not the only avenue
of relief because the CBA in this case did not require it.
Nor is there a statutory obligation to exhaust NLRB
remedies for this kind of claim—indeed, as we have
recently explained, to the extent that a violation of the
CBA can also be considered an unfair labor practice, the
NLRB and the federal courts actually have concurrent
jurisdiction over such claims. See Copeland, 675 F.3d at1044 (citing Smith v. Evening News Assoc., 371 U.S. 195(1962)). So the very reason for Vaca’s creation of the
hybrid exception does not exist here. Furthermore, we
have explicitly recognized that when, as here, the
10 No. 09-3706
employer refuses to arbitrate pursuant to a mandatory
arbitration provision, the only obstacle to going directly
to federal court has been removed. See McLeod v. Arrow
Marine Transp., Inc., 258 F.3d 608, 616 (7th Cir. 2001)
(“Generally, an employee must exhaust the CBA’s griev-
ance procedures before pursuing judicial remedies;
however, an employee may be excused from doing so if:
(1) resorting to the grievance procedure would be futile;
(2) the employer through its conduct repudiated the grievance
procedure itself; or (3) the union breached its duty of fair
representation.” (emphasis added)); see also Vaca, 386
U.S. at 185 (“An obvious situation in which the em-
ployee should not be limited to the exclusive remedial
procedures established by the contract occurs when the
conduct of the employer amounts to a repudiation of
those contractual procedures.”); Roman v. U.S. Postal Serv.,
821 F.2d 382, 388 (7th Cir. 1987) (“The Supreme
Court has held that an employee may be excused from
exhausting contractual remedies where . . . the conduct
of the employer amounts to a repudiation of the con-
tractual remedies so that the employer ‘is estopped by
his own conduct to rely upon unexhausted grievance
and arbitration procedures as a defense to the em-
ployee’s cause of action’[.]” (citation omitted)).
Section 301 only provides jurisdiction over “[s]uits for
violation of contracts between an employer and a labor
organization,” and because it was unnecessary for the
employees to ask the union to bring an NLRB action
once the employer repudiated the mandatory arbitra-
tion provision, it is also unnecessary—and there-
fore, impermissible jurisdictionally—for us to resolve
No. 09-3706 11
whether or not Local 705 acted improperly when it
settled the NLRB proceeding. The claim against Local 705
simply is not part of a legitimate Section 301 “hybrid”
claim, and so we dismiss the claim against Local 705
for lack of jurisdiction and do not reach whether the
district court correctly found that the claim was inade-
quately pled. See Copeland, 675 F.3d at 1044 (dismissing
unfair labor practice claim against union for lack of juris-
diction since it was not really part of a Section 301 hy-
brid). In other words, Appellants’ federal lawsuit—now
consisting of a straightforward breach of CBA claim
against the employer—turned out to be more com-
plicated than it needed to be.
C. Because Local 705 Provided Notice to Terminate,
J&D Did Not Breach the CBA
We turn next to Appellants’ claim against J&D for
violating the CBA and readily conclude that it fails on
the merits. The evergreen clause in Article 23 of the CBA
expressly provided that the CBA would continue after
March 31, 2007 “unless written notice of desire to cancel
or terminate the Agreement is served by either party
upon the other at least sixty (60) days prior to date of
expiration.” On November 16, 2006—well before 60 days
prior to the expiration date of March 31, 2007—Local 705
served a notice which explicitly provided that it was a
“notice to . . . terminate,” and that “Local 705 does not
desire to continue or extend the current CBA beyond
its expiration date of March 31, 2007.” We cannot
imagine a “notice of desire to cancel or terminate the
12 No. 09-3706
Agreement” that is any more clear. Because the terms
of the notice were unambiguous, it is unnecessary to
turn to parol evidence, such as the fact that J&D
continued deducting union dues or continued paying
union wages.2
The two cases to which the employees devote most
of their attention, OPEIU v. Wood Cnty. Telephone Co., 408
F.3d 314 (7th Cir. 2005) and Baker v. Fleet Maintenance,
Inc., 409 F.2d 551 (7th Cir. 1969), involved essentially
identical evergreen clauses to the one in this case but
are easily distinguishable. In Wood County, the union
served notice of a “desire to reopen this Agreement and
to negotiate on wages, hours and conditions of employ-
ment for a successor agreement,” and did not include
the word “terminate” or any similar such word.
Observing that “ ‘[r]eopen’ and ‘terminate’ are different
ideas as well as different words,” Wood Cnty., 408 F.3d
at 315, we found that this was not a notice to terminate.
See id. at 315-17. Here, the notice in this case did contain
the word “terminate,” and unambiguously identified
itself as an “official notice to both terminate and negotiate
modifications” (emphasis added).
2
It is not clear why J&D continued deducting union dues
or continued paying union wages after the expiration of the
CBA. Counsel for J&D suggested at oral argument that it
may have been to keep labor peace, or that it may have simply
been the result of the payroll systems being on auto-pilot.
(J&D later asserted in another Fed. R. App. P. 28(j) letter that
the NLRB now requires employers to continue deducting
union dues even after the CBA has expired.) The reasons
are not relevant.
No. 09-3706 13
In Baker, the union served notice of a desire to
negotiate a “new contract wage agreement . . . modifying
the current contract wage agreement . . . , which
terminates March 31, 1967.” We said that the word “termi-
nates” was ambiguous in this context because the
word “could have been read to emphasize the word
‘modify,’ ” Wood Cnty., 408 F.3d at 316 (discussing
Baker), instead of an expression of an intent to terminate.
Id. Here, however, the word “terminates” was not used
in such a passive voice; it was clear that the union
actively sought to terminate the CBA.
We lastly reject Appellants’ request for leave to
amend their complaint. They never moved for leave to
amend the latest complaint before the district court or
filed a Rule 59(e) or 60(b) motion, and Appellants do not
argue that they lacked any opportunity to ask for such
leave. See Sharp Elecs. Corp. v. Metro. Life Ins. Co., 578 F.3d
505, 513 (7th Cir. 2009). It is clear in any event that
granting such leave would be futile.
III. CONCLUSION
For the above-stated reasons, we A FFIRM the judgment
of the district court.
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