# Harrison v. Arrow Metal Products Corp.

> Michigan Court of Appeals · February 24, 1970 · 20 Mich. App. 590

URL: https://www.frixlaw.com/law-library/cases/9519678

## Case

- **Full name:** Harrison v. Arrow Metal Products Corporation
- **Court:** Michigan Court of Appeals
- **Decided:** February 24, 1970
- **Citations:** 20 Mich. App. 590; 174 N.W.2d 875
- **Precedential status:** Published
- **Opinion:** Concurring in part by Gillis
- **Judges:** Burns, Gillis, Gtllis, Kelley
- **Cited by:** 25 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9519678

## How later opinions describe it (automated extraction)

- holding that the defendant was not entitled to any qualified privilege for false accusations of theft given under the guise of “employment references,” despite earlier holdings by Michigan courts that had extended the privilege to statements of reference from a prior to a pros…

## Opinion text

J. H. Gillis, P. J.
(concurring in part and dissenting in part). I am in entire agreement with my colleagues that the trial court erred in concluding that plaintiff’s complaint alleged conduct within the exclusive jurisdiction of the National Labor Relations Board. I also agree that the applicable statute of limitation in this ease is the one-year limitation period for libel or slander. I treat the remaining issues under separate headings.
*617 I
Failure to Utilise or Exhaust Remedies Available Under the Union’s Constitution
However inartistieally drawn, count I of plaintiff’s complaint attempts to state a claim based upon breach by defendant employer of its collective bargaining agreement and breach by defendant union of its duty of fair representation. See Humphrey v. Moore (1964), 375 US 335 ( 84 S Ct 363 , 11 L Ed 2d 370 ); Vaca v. Sipes (1967), 386 US 171 ( 87 S Ct 903 , 17 L Ed 2d 842 ). It contains the following well-pleaded allegations which, for purposes of this appeal, we must accept as true. See Cortez v. Ford Motor Co. (1957), 349 Mich 108 .
On August 13, 1964, plaintiff Ivanhoe Harrison was discharged from his job by his employer, defendant Arrow Metal Products, for alleged theft of company property. He was accused of stealing several pairs of cloth gloves which were discovered by company officials after a search of plaintiff’s automobile. Plaintiff denied the company’s accusation and asserted that he had purchased the gloves from his union representative. That gloves were found in plaintiff’s car was not unusual, since many employees regularly purchased several pairs of gloves a day from their union for use in their work and stored the gloves in their automobiles because of insufficient locker space.
At the time of plaintiff’s discharge there was in effect a collective bargaining agreement between defendant company and defendant local 155, UAW, plaintiff’s collective bargaining representative. The agreement prohibited unjust discharge and contained provisions establishing grievance procedure *618 in cases involving alleged unjust dismissal. 1 Plaintiff requested his union to prosecute a grievance on his behalf. However, the union failed to invoke the contractual grievance procedure. 2
For purposes of this appeal, we must likewise assume that defendant union breached its duty of fair representation when it refused to invoke the contractual grievance procedure on behalf of plaintiff. 3 Several reasons require this assumption. First, as this case reaches us, the sufficiency of plaintiff’s complaint to state a breach by defendant union of its duty of fair representation has not been tested. 4 Because a defense of failure to state a claim must be asserted by motion for summary judgment under GCR 1963, 117, and may not be made by motion for accelerated judgment under GCR 1963, 116, Drouillard v. City of Roseville (1967), 9 Mich App 239 , no opinion can be expressed as to whether plaintiff sufficiently alleged bad faith, arbitrary ac *619 tion, or fraud on the part of defendant union. 5 Furthermore, defendant union has proceeded hoth in the trial court and on this appeal upon the assumption that it breached its duty of fair representation. 6 Thus, the’ issue of law presented is: may a union member sue his union for allegedly not properly processing his grievance without first utilizing or attempting to exhaust his intraunion remedies? For reasons hereafter discussed, I agree with my colleagues that plaintiff’s failure to utilize available intraunion remedies does not bar institution of a court action seeking damages for breach of contract and for breach of the duty of fair representation.
It is well settled that a wrongfully discharged employee must attempt to exhaust contractual grievance procedure before resorting to the courts in an attempt to assert rights under a collective bargaining agreement. Republic Steel Corp. v. Maddox (1965), 379 US 650 ( 85 S Ct 614 , 13 L Ed 2d 580 ); Field v. Local 652 UAW AFL-CIO (1967), 6 Mich App 140 ; see annotation “Exhaustion of grievance procedures or of remedies provided in collective bargaining agreement as condition of employee’s resort to civil courts for assertedly wrongful discharge,” 72 ALR2d 1439. The prerequisite of exhaustion of contractual grievance procedure is designed to encourage union responsibility and to protect employers who, acting in good faith and in accordance *620 with their bargaining agreements, are entitled to rely upon the contract’s grievance procedure, rather than court litigation, for settlement of employee claims. See Field v. Local 652 UAW AFL-CIO, supra, at 146. However, since it is the union that controls the grievance procedure through which an employee’s contract rights are enforced, 7 application of the exhaustion doctrine “would work an injustice in situations where the union is unwilling to press the claim because of indifference or reluctance to suffer the expense.” Cox, “Rights under a Labor Agreement” (1956), 69 Harv L Rev 601, 652. Only in those situations in which the union has in good faith made an adjustment of the grievance, see Cortez v. Ford Motor Co., supra, at 120, or is satisfied that the grievance lacks merit, see Vaca v. Sipes, supra, at 193 ( 87 S Ct at 918 , 17 L Ed 2d at 859, 860 ), is application of the doctrine of exhaustion sound. Otherwise there are grave risks in giving to the union untrammelled control over grievance prosecution. “[T]he individual employee * * * may be caught in the middle between a powerful union and a powerful employer.” Field v. Local 652 UAW AFL-CIO, supra, at 145.
In Vaca v. Sipes, supra, the United States Supreme Court provided a measure of relief for those who, like plaintiff in this case, are precluded from resort to the contract’s grievance machinery by the wrongful refusal of their union to process an employee grievance. It was there held:
“We think that another situation when the employee may seek judicial enforcement of his contractual rights arises if, as is true here, the union has *621 sole power raider the contract to invoke the higher stages of the grievance procedure, and if, as is alleged here, the employee-plaintiff has been prevented from exhausting his contractual remedies by the union’s ivrongful refusal to process the grievance. It is true that the employer in such a situation may have done nothing to prevent exhaustion of the exclusive contractual remedies to which he agreed in the collective bargaining agreement. But the employer has committed a wrongful discharge in breach of that agreement, a breach which could be remedied through the grievance process to the employee-plaintiff’s benefit were it not for the union’s breach of its statutory duty of fair representation to the employee. To leave the employee remediless in such circumstances would, in our opinion, be a great injustice.” Vaca v. Sipes, supra, at 185-186 ( 87 S Ct at 914 , 18 L Ed 2d at 855).
However, the defense considered by the Court in Vaca , failure to secure relief through contractual remedial procedures, see Vaca v. Sipes, supra, at 185 ( 87 S Ct at 914 , 17 L Ed 2d at 855 ), is not that which is here asserted. The union in its brief concedes that in this case plaintiff had exhausted his contractual remedies: “We agree that plaintiff could no longer pursue his contractual remedies against employer because his union withdrew his contractual grievance.” Both defendants in this case attempt to shield themselves from suit by emphasizing plaintiff’s failure to resort to available intraunion remedial procedures. 8 Arguably, Vaca v. Sipes, supra, is distinguishable, for nowhere in Vaca is this defense discussed.
In support of their position, defendants cite our decisions in Kennedy v. UAW AFL-CIO Local 659 (1966), 3 Mich App 629 , and Field v. Local 652 UAW *622 AFL-CIO, supra. While those decisions can be distinguished from the present case, 9 I agree that, standing alone, they would require dismissal of plaintiff’s action for failure to exhaust intraunion remedies. I am of the view, however, that recent pronouncements of the United States Supreme Court indicate that Federal law would permit plaintiff’s action in this case and, in light of those decisions, I examine anew the issue presented in Kennedy, Field, and this case. 10
The subject matter of plaintiff’s suit against defendant Arrow is breach of a collective bargaining agreement. Although state courts have jurisdiction over such suits, Charles Dowd Box Co., Inc. v. Courtney (1962), 368 US 502 ( 82 S Ct 519 , 7 L Ed 2d 483 ); Smith v. Evening News Association (1962), 371 US 195 ( 83 S Ct 267 , 9 L Ed 2d 246 ), it is Federal law which must be applied. Local 174, Teamsters, Chauffeurs, Warehousemen & Helpers of America v. Lucas Flour Co. (1962), 369 US 95 ( 82 S Ct 571 , 7 L Ed 2d 593 ); Humphrey v. Moore, supra; Field v. Local 652 UAW AFL-CIO, supra. While plaintiff joined the union as a defendant, the gravamen of his complaint is defendant Arrow’s wrongful discharge. His action remains a suit for breach of contract, and the situation is not substantially changed. Vaca v. Sipes, supra, at 187 ( 87 S Ct at 915 , 17 L Ed 2d at 856 ).
Section 101(a)(4) of the Labor-Management Be-porting and Disclosure Act of 1959 11 provides:
*623 “No labor organization shall limit the right of any member thereof to institute an action in any court, or in a proceeding before any administrative agency * * * or the right of any member of a labor organization to appear as a witness in any judicial, administrative, or legislative proceeding, or to petition any legislature or to communicate with any legislator; Provided, That any such member may be required to exhaust reasonable hearing procedures (but not to exceed a four-month lapse of time) within such organization, before instituting legal or administrative proceedings.” (Emphasis supplied.)
Recently, the United States Supreme Court interpreted this provision as installing in the field of labor-management relations a doctrine of exhaustion of intraunion remedies comparable to that which prevails in other areas of law before the federal courts. In its discretion, a court may require that an aggrieved employee first seek relief within his union. However, it is the responsibility of that same court to determine whether the available intraunion remedies are “reasonable” in the light of the circumstances of each case. National Labor Relations Board v. Industrial Union of Marine and Shipbuilding Workers of America, AFL-CIO (1968), 391 US 418, 426-428 ( 88 S Ct 1717, 1722-1723 , 20 L Ed 2d 706, 713-714 ). If it appears that the relief available through intraunion remedies is inadequate, see Greene v. United States (1964), 376 US 149 ( 84 S Ct 615 , 11 L Ed 2d 576 ); McNeese v. Board of Education for Community Unit School District 187, Cahokia, Illinois (1963), 373 US 668 ( 83 S Ct 1433 , 10 L Ed 2d 622 ), the defense of failure to utilize those remedies is unsound as a matter of law. Moreover,
*624 “When the complaint * * * raises a matter that is in the public domain and beyond the internal affairs of the union, the union’s internal procedures are * * * plainly inadequate.” National Labor Relations Board v. Industrial Union of Marine and Shipbuilding Worhers of America, AFL-CIO, supra, n 8 at 426 ( 88 S Ct at 1723 , 20 L Ed 2d at 713 ).
I .would hold that the intraunion remedies available to plaintiff in this case were “plainly inadequate.”
Article 32 of the UAW Constitution guarantees to every member of the UAW local the right of appeal from any action of his local union. Specifically, intraunion appellate procedure is available in cases of “inaction relative to the processing of a grievance, in which the appellant has alleged * * * that the grievance was improperly handled because of fraud, discrimination, or collusion with management.” UAW Constitution, art 32, § 9. Impartial review in such cases is provided by the Public Review Board (PRB), a body independent of the UAW. UAW Constitution, art 31. Under this provision, it is apparent that plaintiff could have carried his cause to intraunion appellate authorities. Moreover, the jurisdictional limitation upon the intraunion review available — that, in order to invoke the aid of the PRB, an aggrieved member must first allege “fraud, discrimination, or collusion with management” — is consonant with the requirement that, in order to invoke the aid of a court, a wrongfully discharged employee must first allege and prove bad faith representation by his union. Vaca v. Sipes, supra. A holding of inadequacy cannot rest upon this ground. 12
Additional limitations, however, upon the scope of the intraunion review available present more serious problems. Suppose, for example, that the charge *625 of unfair representation concerns the policies pursued by a union in negotiating a particular bargaining agreement. It is alleged that the agreement reached is discriminatory — that the union arbitrarily favored one group of union members. See Cortez v. Ford Motor Co., supra, at 114. Adequate review of this charge would require review of the substantive positions taken and policies pursued by the union in negotiating the resulting agreement. See Vaca v. Sipes, supra, at 181 ( 87 S Ct at 912 , 17 L Ed 2d at 852-853 ). It is clear, however, that impartial intraunion review would not be available under such circumstances. The PBB is precluded by article 32, § 12 of the UAW Constitution from reviewing “in any way an official collective bargaining policy of the international union.” Moreover, the PBB has adhered to a strict construction of the term “collective bargaining policy.” Appeal of John Considine (1962), PBB Case No 73 (CCH, 62 ABB ¶ 8744, p 5718), “[I]t has even refused to make a determination as to whether the particular policy involved was articulated by reason of discriminatory motivations.” Klein, “UAW Public Beview Board Beport” (1964), 18 Butgers L Rev 304, 316. Hnder these circumstances, the intraunion review available is plainly inadequate.
The jurisdictional limitation of Article 32, § 12, would likewise bar review of many cases charging improper grievance processing. The claim of an individual worker may frequently have broad repercussions upon the union as an organization and upon other employees. Settlement of the claim necessarily involves delicate balancing of a multitude of interests, see Cox, “Bights under a Labor Agreement” (1956), 69 Harv L Rev 601, 606-616, balancing easily characterized as “collective bargaining policy.” Beview of the charge of unfair representa *626 tion would again require review of the substantive positions taken by the union in its handling of the grievance. 13 Vaca v. Sipes, supra, at 181 ( 87 S Ct at 912 , 17 L Ed 2d at 852, 853 ). Here too, intraunion review is inadequate.
In Vaca v. Sipes, supra, the court considered a contention analogous to that raised by defendants in this case. It was there urged that the existence of an administrative remedy, namely, review of a charge of unfair representation before the National Labor delations Board, precluded judicial review of an employee suit for breach of contract and breach of the duty of fair representation. The Court rejected the contention. It was noted that the issues raised by fair representation suits require review of the substantive policies pursued by a union. Since such review was not normally within the jurisdiction of the Board, the Court concluded that courts were not precluded from exercising their traditional jurisdiction to curb arbitrary conduct by the individual employee’s statutory representative. Vaca v. Sipes, supra, at 181-183 ( 87 S Ct at 912, 913 , 17 L Ed 2d at 852, 853 ). A fortiori, since the PBB has no jurisdiction to review the substantive policies pursued by a union, we should not compel an aggrieved employee to engage in an exercise of futility.
Limitations upon the extent of the relief available through utilization of union appeal procedure also require that a court entertain plaintiff’s action. It is true that in this case an intraunion appeal could remedy Local 155’s bad faith conduct. 14 The redress *627 provided might include damages for the full extent of plaintiff’s injury. However, the gravamen of plaintiff’s complaint is breach of contract. As in Vaca , all or most of plaintiff’s damages in this case would be attributable to his allegedly wrongful discharge by defendant Arrow. Nevertheless, the employer could not involuntarily be made a party to the intraunion appeal, since the PRB has no jurisdiction over nonunion members. 15 Because the governing principle in this case is apportionment of liability between employer and union according to the damages caused by the fault of each, see Vaca v. Sipes, supra, at 197 ( 87 S Ct at 920 , 17 L Ed 2d at 862 ), it is doubtful whether in fairness Local 155 should be forced to pay for damage attributable only to Arrow’s wrongful discharge.
“These remedy problems are difficult enough when one tribunal has all parties before it; they are impossible if two independent tribunals with different procedures, time limitations, and remedial powers, must participate.” Vaca v. Sipes, supra, n 12 at 188 ( 87 S Ct at 915 , 17 L Ed 2d at 856 ).
Only resort to a judicial forum offers plaintiff the comprehensive and coordinated remedies necessary to redress his injury.
In the present case, plaintiff’s complaint raised issues beyond the “plainly internal affairs” of the union. See National Labor Relations Board v. Industrial Union of Marine and Shipbuilding Workers of America, AFL-CIO, supra, at 424 ( 88 S Ct at 1722 , 20 L Ed 2d at 712 ). I am led to this conclusion *628 because of the absence, as previously discussed, of complete relief in an intraunion appeal. This, I believe, is the test we are to apply in determining whether utilization of intraunion remedies is necessary. See, Comment, “Exhaustion of Intraunion Appellate Procedures Subjected to the Control of the NLRB and the Courts,” 1969 Utah L Rev 140, 151. Since plaintiff’s complaint implicated not only the union but also the employer, I would hold that exhaustion of intraunion remedies was unnecessary.
“There cannot be any justification to make the public processes wait until the union member exhausts internal procedures plainly inadequate to deal with all phases of the complex problem concerning employer, union, and employee member. If the member becomes exhausted, instead of the remedies, the issues of public policy are never reached and an airing of the grievance never had.” National Labor Relations Board v. Industrial Union of Marine and Shipbuilding Workers of America, AFL-CIO, supra, at 425 ( 88 S Ct at 1722 , 20 L Ed 2d at 712, 713 ).
n
Privilege
I am of the opinion that defendant Arrow’s communication, if made in good faith, was qualifiedly privileged.
It is the general rule that an employer is privileg’ed if, in response to an inquiry from a prospective employer, he falsely reports the character of a former employee, so long as that communication is made in good faith.
“Statements made by a former employer of á servant, as to the character of the employee, are privileged when given to one interested in employing the person defamed, since the circumstances are such *629 as to make it proper that the information he given.” 1 Harper & James, Torts, § 5.26, p 447.
“It is permissible to warn a * * * prospective employer of the misconduct or bad character of an employee * * * Prosser, Torts, § 110 at p 807, 808.
The subject is extensively annotated in 66 ALR 1499 .
■ In this case, the interest protected by the privilege is the interest of a prospective employer in not hiring thieves or those who are suspected in good faith of being thieves.
My colleagues cite Bacon v. The Michigan Central Railroad Company (1887), 66 Mich 166 . In that case, defendant railroad employed agents at different points along its line who were authorized to hire men for defendant company. Plaintiff, an employee of defendant, was discharged for alleged theft. The company maintained discharge lists which were sent to all employing agents along the line. Plaintiff learned that his name was included on such a list with the annotation that he was discharged for stealing. Suit was commenced for an alleged libel. The Court held that the communication was qualifiedly privileged.
“If the agents of the defendant honestly believed that the plaintiff took the coat in question under the circumstances detailed to them, with the intention of appropriating it to his own use, the defendant is protected in having listed plaintiff as having been discharged for stealing.” 66 Mich at 175 .
In Carroll v. Owen (1914), 178 Mich 551 , plaintiff alleged that her former employer had libeled and slandered her by reporting to her present employer plaintiff’s disreputable character. It was there said at 553, 554:
*630 “There is no controversy between counsel about the facts, neither is there any material variance between them as to the law. Both admit that the communications were qualifiedly privileged * * * .
“[I]t was defendant’s right to inform her [plaintiff’s present employer] as to [a former servant’s] qualifications, morals, and habits, if she did so in good faith.”
I think it clear that Arrow’s letter of April 20, 1966 concerned plaintiff’s “qualifications, morals, and habits.” Since I am of the view that Bacon and Carroll are controlling, I would hold Arrow’s communication qualifiedly privileged.
The trial court ruled that plaintiff’s amended complaint failed to allege facts showing malice or facts from which malice might be inferred. The court was of the view that “the only allegation of actual malice is the conclusion without allegation of fact * * * .” This was error, since malice may be averred generally. GCR 1963, 112.2. There remains in this case, unlike the situation in Carroll v. Owen, supra, a controversy about the facts.
In his pleadings, plaintiff alleged that Arrow’s communications were malicious, that Arrow knew the statements to prospective employers were false. This constituted an allegation of actual malice. Arber v. Stahlin (1969), 382 Mich 300 . Nor has defendant Arrow challenged the genuineness of plaintiff’s allegations, see GCR 1963, 117.2(3); it has merely asserted that its communication was made without malice. I would remand with the instruction that if at trial plaintiff can prove his allegation of actual malice, he is entitled to recover against defendant Arrow.
Article III of the collective bargaining agreement established a five-step procedure for the handling of all complaints or grievances. In step one, either the aggrieved employee or the union representative presents the grievance to the company’s department foreman. If settlement is not readied, the grievance is reduced to writing and further prosecuted by union representatives. Under article III, it is apparent that only the union had the right to invoke the higher steps of the grievance procedure.
In his affidavit in support of his answer to defendants’ motions for aeeelerated judgment of dismissal, plaintiff swore that his union steward was present when he was discharged and that his steward knew the eharge was false. Plaintiff was told that the union would “push it;” however, after the union membership voted not to strike in support of plaintiff’s grievance, plaintiff was informed that nothing could be done for him.
Prom the record in this case, it does not appear whether any grievance was actually filed on plaintiff’s behalf. However, for purposes of this appeal, we must accept as true plaintiff’s allegation that, although requested to do so, the defendant failed to invoke the contractual grievance procedure. See Cortez v. Ford Motor Co. (1957), 349 Mich 108 .
See note 2, supra. Cf. Cox, “Eights under a Labor Agreement” (1956), 69 Harv L Rev 601, 652; Vaca v. Sipes (1967), 386 US 171, 191, 194 ( 87 S Ct 903, 917, 919 , 17 L Ed 2d 842, 858, 860 ).
Cf. Field v. Local 652 UAW AFL-CIO (1967), 6 Mich App 140, 143 .
Cf. Kennedy v. UAW AFL-CIO Local 659 (1966), 3 Mich App 629, 632 .
“While plaintiff has not pleaded a eanse of action against defendant union, for purposes of defendants’ amended motion only, defendant local union assumes arguendo that it somehow did wrong to plaintiff.” Brief for defendant local 155. On oral argument counsel for the union stated: “Nevertheless, even though it is our belief that there is absolutely no cause of action against the union here, we have not made that defense, because that’s a different motion. We are willing to assume that somehow local 155 wronged the plaintiff.”
“As a matter of practice, if not in legal theory, the union also controls the grievance procedure through which a man’s contract rights are enforced.” Cox, “The Role of Law in Preserving Union Democracy” (1959), 72 Harv L Rev 609, 611. And see note 1, supra.
It is evident from the reeord in this ease that plaintiff did not pursue intraunion relief,
In Kennedy , plaintiff had not pleaded bad faith, arbitrary action, or fraud on the part of his union. In Field , the defense of failure to plead facts upon which relief could be granted was raised by the defendants.
See Sachs, “Labor Law” (1967), 14 Wayne L Rev 161.
29 USCA (1965) § 411(a) (4). In its brief, the union contends that the LMRDA is not an issue in this ease. I agree to the extent that plaintiff’s complaint eharges no violation of rights secured by Title I of the Act. See Allen v. Local 820 Armored Car Chauffeurs and Guards (D NJ, 1960), 185 F Supp 492 . This should not, how *623 ever, preelude resort to judicial analysis of tbe exhaustion requirement under the LMRDA where, as in this ease, the reasoning of sueli analysis likewise applies.
See Brooks, “Impartial Public Review of Internal Union Disputes: Experiment in Democratic Self-Discipline” (1961), 22 Ohio St L Rev 64, 91-92.
“If the PKB were to review official collective bargaining policies in the context of article 32 appeals involving grievance handling, it would be delving into the substantive aspects of the ease before it.” Brodhs, supra, at 92, 93. “In respect to substantive issues, the PEB has unmistakably exhibited a reluctance to superimpose its judgment upon that of the international executive board and any subordinate bodies whieh earlier considered the matter. Id. at 94.
It is unlikely that intraunion review of plaintiff’s grievance would involve review of the substantive position taken by the de *627 fendant nnion in processing plaintiff’s grievance. The controlling question would be one of faet, not policy; namely, did the union take any position at all? See also Cox, “Rights under a Labor Agreement” (1956), 69 Harv L Rev 601, 613.
At the hearing on defendants’ motions for accelerated judgment, counsel for defendant nnion stated: “I am not sure what would happen if the company voluntarily submitted itself under our jurisdiction. As far as I know, no company has ever done that.”

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9519678. Public record. Not legal advice.