Amicus Curiae Brief — Teamsters v. Terry

Supreme Court brief1990

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TABLE OF CONTENTS

SE Se QF CNR cecteecsinenntivcninsnistsiainitaitinintann

STATEMENT OF INTEREST AND SUMMARY OF

ETE ccsnsatsitenssiersemssteanennisintenninnyyiamentanaamatin

ea E E TTS

Be NIE sircccccalcceniesstesiasiectisinansintnnitnisineiiaaii

BACKGROUND LEGAL PRINCIPLES ............

Il.

Ill.

The Exclusivity and Finality of Arbitration..

The Hybrid Case Exception to the Finality

of Arbitration Awards..............-...................

ih: Rr eh op oo) Tees tp toe .

. Handling the Underlying Grievance in Hy-

TE RETR ee ieee a NEA Pn eS a

RE aero rere Par

I ee reese aa ey

Damages Against the Union............00..0000000.....

. Atypical Cases Where the Employee Brings

the DFR Claim Alone, Rather Than as Part

Oe ae I E iictiecch inte diiauce abe

THERE IS NO SEVENTH AMENDMENT

RIGHT TO A JURY TRIAL WITH RESPECT

TO THE KIND OF DFR CLAIM AT ISSUE

IN THIS CASE BECAUSE IT IS EQUITABLE

IN NATURE AND INVOLVES EQUITABLE

III -ctetescnienniveeeennnionamsnesasticnitbineiaainnitienmatesininitinen

The DFR Claim at Issue Is Most Analogous

to a Pre-Merger Action for Breach of

Fiduciary Duty, Which Was Equitable in

TE inci acts techacedadebacsadadiibanaineen iota

TABLE OF CONTENTS—Continued

2. Standards of Conduct ................................

4. Atypical Cases Where the Underlying

Grievance Is Litigated in Court as Part

of the DFR Claim........ ae

B. The Remedies Involved in this Type of Fair

Representation Claim Are Equitable Reme-

a sieminennsnapons

1. Relief in the Typical Hybrid Case...

2. Relief in a Non-Hybrid Case Not Involv-

EES US

SE Sa scneaintanadnies

ee 8

iii

TABLE OF AUTHORITIES

CASES:

Page

Adams v. Budd Co., 846 F.2d 428 (7th Cir. 1988),

cert. denied, 109 S. Ct. 791 (1989) ......................- 9

Andrews v. Louisville & N. R.R., 406 U.S. 320

GO REE ee a EE ee 7,13

AT&T Technologies, Inc. v. CWA, 475 U.S. 643

AE aN ae 1l

Barnett v. United Air Lines, 738 F.2d 358 (10th

Cir.), cert. denied, 469 U.S. 1087 (1984) —........ 10

Bautista v. Pan American World Airlines, 828 F.2d

A AANA EE ETE ARE Se 23

Beacon Theatres, Inc. v. Westover, 359 U.S. 500

| ERE aS SA OR ea 22

Black v. Dahl, 625 P.2d 876 (Alaska 1981) ............. 17

Bowen v. United States Postal Service, 459 U.S.

EE RE « AR a a aa passim

Brisson v. Williams, 345 S.E.2d 432 (N.C. App.

1 a an et ep RD AR a 16

Brotherhood of R.R. Trainmen v. Chicago River

EE A LE , | y Conese 2

Brotherhood of R.R. Trainmen v. Jacksonville

Terminal Co., 394 U.S. 369 (1969) ......00000 2,3

Brown v. Foulks, 657 P.2d 501 (Kan. 1983).......... 16

Bukoskey v. Shuham, 666 F. Supp. 181 (D. Alaska

EE aS ER a se 18

Burnett v. First National Bank of Waco, 567

S.W.2d 873 (Tex. Civ. App. 1978) ....................... 17

Childs v. Pennsylvania Fed’n BMWE, 831 F.2d

SRS ne eee 10

Chrysler Workers Ass’n v. Chrysler Corp., 663 F.

Supp. 11384 (N.D. Ohio 1986) ...................222.2.......- 22

Consolidated Rail Corp. v. Railway Labor Execu-

tives’ Ass’n, 109 S. Ct. 2477 (1989) ...00. eu... 13

Cook v. National Maritime Union, 617 F. Supp.

1052 (S.D.N.Y. 1985) ............ ERS RN, 20

Cox v. C.H. Masland & Sons, Inc., 607 F.2d 138

gE a A Se Le 20

Cox v. Kansas City, 76 F.R.D. 459 (W.D. Mo.

RE EET 21

TABLE OF AUTHORITIES—Continued

Page

Crusos v. United Transp. Union, 786 F.2d 970

(9th Cir.), cert. denied, 479 U.S. 934 (1986) ...... 9

Curtis v. Loether, 415 U.S. 189 (1974) ........--........ 20

Curtis v. United Transportation Union, 486 F.

Supp. 966 (E.D. Ark. 1979), rev’d on other

grounds, 648 F.2d 492 (8th Cir. 1981) -............. 13

Czosek v. O’Mara, 397 U.S. 25 (1970) ~............... 9,14

Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962)... 22

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213

| EEE SEUR Ae ae at wee NA Rae O Ear IO 12

DelCostello v. Int’l Brotherhood of Teamsters, 462

Ss ee is teenie passim

Deringer v. Columbia Transp. Div., 866 F.2d 859

SEERA ar eee CS 5, 20

Galler v. Galler, 238 N.E.2d 274 (Ill. App. 1968) .. 17

Granfinanciera, S.A. v. Nordberg, 109 S. Ct. 2782

raat erie a INARI sie iar Ro ee SSIs 4, 6,19

Great American Fed. Sav. & Loan Ass’n v. No-

votny, 442 U.S. 366 (1979) ...............................-2- 21

H-B Limited Partnership v. Wimmer, 257 S.E.2d

I I ae 16

Herbolsheimer v. Herbolsheimer, 328 N.E.2d 529

ae 16

Hines v. Anchor Motor Freight, Inc., 424 U.S. 554

IE STITT scsi seasons esetenaneaneninighadmenesaiemetbesediesta tits tasiseicarninada passim

Hoffman v. First Virginia Bank, 263 S.E.2d 402

a 17

Horizon House-Microwave, Inc. v. Bazzy. 486

pe & & es 0 Ree 21

Hunt v. Hunt, 718 P.2d 560 (Idaho 1986)... 16

In re Estate of Coyle, 308 N.Y.S.2d 899 (App. Div.

| RRA ESET EAS EOC 18

In re Evangelist, 760 F.2d 27 (1st Cir. 1985)... 4,18

Johnson v. Georgia Highway Express, Inc., 417

ef Bs) A Ree rere 21

Kaitz v. District Court, 650 P.2d 553 (Colo. 1982) .. 18, 21,

Kaschak v. Consolidated Rail Corp., 707 F.2d 902

SEE GUS UNI cx ccracteicccnansahcusnbivnindsmsbentianaritabe 13

TABLE OF AUTHORITIES—Continued

Page

King v. Fox Grocery Co., 678 F. Supp. 1174 (W.D.

ede ee ees aR ae ne oe 17, 21

Kissinger v. United States Postal Service, 801

y 2 &§ 4 § se 1l

Krinsk v. Fund Asset Mgmt., Inc., 875 F.2d 404

I el 5, 21, 23

Leach v. Pan American World Airways, 842 F.2d

I Rn scnpemerennnentendil passim

Long v. Towne, 639 P.2d 528 (Nev. 1982) ............. 16

Mersky v. Multiple Listing Bureau, 437 P.2d 897

Sal Sa aS oe eae 17

Middleton v. CSX Corp., 694 F. Supp. 941 (N.D.

i 13

Mitsubishi Motors Corp. v. Soler Chrysler-Ply-

mouth, Inc., 473 U.S. 614 (1985) .........0.0002022222... 11

Newman v. Silver, 553 F. Supp. 485 (S.D.N.Y.

1982), aff'd in relevant part, 713 F.2d 14 (2d

EE a ee ES eee lal Ean 18

NLRB v. Local 282, IBT, 740 F.2d 141 (2d Cir.

a eaanceaianalaenmaims 17

Nobile v. Pension Committee, 611 F. Supp. 725

Nn aaiaeaeiineninne 17, 18, 21

Nolde Bros., Inc. v. Local No. 358, 4830 U.S. 243

i 12

Pastan v. Pastan, 390 N.E.2d 253 (Mass. 1979).... 17

Pennsylvania R.R. v. Day, 360 U.S. 548 (1959)... 13

Pennsylvania R.R. v. Rychlik, 352 U.S. 480

PEER A SIRES SEBS ello ap ate ewe 4,17

Quinn v. DiGiulian, 739 F.2d 637 (D.C. Cir.

REIS A AA RINE neces ee ANI eras I DER 20

Republic Steel Corp. v. Maddox, 379 U.S. 650

ERTS RRR ee rg Ea 2 SS 7

Rodriquez de Quijas v. Shearson/American Ex-

press, Inc., 109 S. Ct. 1917 (1989).......000000000.. 11

Ross v. Bernhard, 396 U.S. 5381 (1970).............0000.-- 22

Santos v. American Broadcasting Co., 866 F.2d

nr a a nsuednaieuiaunie 11

Seminole Nation v. United States, 316 U.S. 286

BRE ERASER SEAR tle SERS eee SEES 18

TABLE OF AUTHORITIES—Continued

Page

Shearson/American Express, Inc. v. McMahon, 482

en esas 11

Short v. United States, 719 F.2d 1133 (Fed. Cir.

1983), cert. denied, 467 U.S. 1256 (1984) ........... 17

Slack v. Havens, 522 F.2d 1091 (9th Cir. 1975).... 5, 21

Slocum v. Delaware, L. & W. R.R., 339 U.S. 239

DN icehccem eet eta RR Ee ee. a 13

Stanton v. Delta Air Lines, 669 F.2d 833 (1st Cir.

RA Te RIES PETS SRN ASC, 10, 13

Steele v. Louisville & N. R.R., 323 U.S. 192 (1944) ..passim

Towers v. Titus, 5 Bankr. 786 (N.D. Cal. 1979).... 22

Trustees v. Journeymen Plasterers’ Protective and

Benevolent Society, 794 F.2d 1217 (7th Cir.

a RR YE in TSO, AEE een Me ee 18

Tull v. United States, 481 U.S. 412 (1987)... 6

Union Pacific R.R. v. Sheehan, 439 U.S. 89 (1978) ..passim

United Paperworkers Int’l Union v. Misco, Inc.,

iE: PRR TTS RRS Er 7,11, 28

United Parcel Service, Inc. v. Mitchell, 451 U.S. 56

RRS, ONE A SES ER SER RRR NS” SCORE Re passim

United Steelworkers of America v. Enterprise

Wheel & Car Corp., 363 U.S. 593 (1960)... 8, 12, 23

United Steelworkers of America v. Union R.R.,

648 F236 906 (36 Cir. 1061)................................. 9

United Steelworkers of America v. Warrior & Gulf

Nav. Co., 368 U.S. 574 (1960) ............................... 22-23

Vaca v. Sipes, 386 U.S. 171 (1967)... passim

Varra v. Dillon Companies, Inc., 615 F.2d 1315

na 11

Wood v. International Brotherhood of Teamsters,

807 F.2d 493 (6th Cir. 1986), cert. denied, 483

ne i wii nabeiaeentios 10

Wyatt v. Interstate & Ocean Transp. Co., 623 F.2d

a SIA SN ta, 11

STATUTES:

Federal Arbitration Act, 9 U.S.C. §10(c).. 23

vii

TABLE OF AUTHORITIES—Continued

Page

Labor Management Relations Act § 301, 29 U.S.C.

a i a alain laiabaetiniaiihaaninl 7,13

Railway Labor Act:

ete eaiaiagnelibacianael 13

a eileminatnntennel passim

emer 2,7

Uniform Fiduciaries Act (U.L.A.) § 1(2) .............. 17

MISCELLANEOUS:

R. Maller & J. Smith, Legal Malpractice § 11.1

i alleen 18

IN THE

Suprenv Court of the United States

OCTOBER TERM, 1989

No. 88-1719

CHAUFFEURS, TEAMSTERS AND HELPERS, LOCAL No. 391,

Petitioner,

Vv.

THOMAS C. TERRY et al.,

Respondents.

On Writ of Certiorari to the United States

Court of Appeals for the Fourth Circuit

BRIEF OF

NATIONAL RAILWAY LABOR CONFERENCE

AS AMICUS CURIAE IN SUPPORT OF PETITIONER

STATEMENT OF INTEREST AND

SUMMARY OF ARGUMENT

The National Railway Labor Conference (“NRLC”’) is

an unincorporated association whose members include al-

most all the nation’s Class I railroads. Together those

railroads employ more than 90% of all rail employees.

The NRLC represents its member railroads both in na-

tional collective bargaining with unions pursuant to the

Railway Labor Act (“RLA’’) and in regard to, inter alia,

issues impacting on the statutorily-mandated grievance,

arbitration process for the resolution of all grievances

arising out of railroad and airline collective bargaining

agreements.’

This case concerns the applicability of the Seventh

Amendment right to jury trial in an action, brought un-

der the Labor Management Relations Act (“LMRA”),

by a group of employees against their union alleging

that the union breached its duty of fair representation

(“DFR”) by mishandling the employees’ grievance against

their employer during contractually-mandated arbitra-

tion proceedings. It must be emphasized at the outset

that the instant case presents that DFR claim in a

highly unusual posture. Typically this type of DFR claim

is joined with a claim against the employer based on the

employees’ underlying grievance, resulting in a so-called

“hybrid” action. In these hybrid actions, the DFR claim

is used primarily as a lever to vacate the adverse arbitra-

tion award and reopen the merits of the employees’ un-

derlying grievance. See infra p. 6. In this case, how-

ever, the employer declared bankruptcy during the pend-

ency of proceedings, and hence the employees’ DFR claim

against the union is being litigated on its own.

The nation’s railroads have an acute interest in en-

suring that the Court’s opinion in this case does not un-

dermine the statutorily mandated system for arbitration

of employee grievances under the RLA, which applies to

both the railroad and airline industries. See 45 U.S.C.

§$§ 153, 184. While this Court has warned against the

wholesale importation of LMRA rules into the RLA, see

Brotherhood of R.R. Trainmen v. Jacksonville Terminal

Co., 394 U.S. 369, 383-84, 395 (1969) ; Brotherhood of R.R.

Trainmen v. Chicago River & I. R.R., 353 U.S. 30, 31

n.2 (1957), both this Court and the lower courts have

sometimes looked to the NLRA and LMRA in construing

1 Letters of consent from counsel for the parties to the filing of

this brief are being lodged with the Clerk of this Court.

the Railway Labor Act, see Jacksonville Terminal Co.,

394 U.S. at 383; Steele v. Louisville & N. R.R., 323

U.S. 192, 200-01 (1944).

In the present case there are three issues crucial to

the dispute resolution process under the RLA that, while

not directly raised by the question presented to this

Court, could be affected by the Court’s opinion. First,

because the employer in this case has declared bank-

ruptcy, the Court is not presented with deciding whether

employees have a right to a jury trial on their DFR

claim where that claim is part of a hybrid case that also

seeks an order vacating an arbitration award and re-

opening the underlying grievance against the employer.

Second, because this case arises under the LMRA, the

Court is not presented with the question whether “hybrid”

cases even properly exist under the RLA. Although rail

unions are subject to a duty of.fair representation, it

is unresolved whether proof of a DFR breach is a basis

for vacating arbitration awards under the RLA, which,

unlike the LMRA, expressly lists three exclusive grounds

for reopening arbitration awards—not including a DFR

breach by the union. Finally, and again because the in-

stant case does not arise under the RLA, the Court is not

presented with the question whether, even if hybrid cases

may be brought under the RLA, a court that finds that

the union committed a DFR breach in handling the initial

grievance/arbitration proceeding must refer the case

back to arbitration for a new arbitration proceeding,

rather than resolving the merits of the underlying griev-

ance itself, given that arbitration of all employee griev-

ances under the RLA is mandated by statute.

The NRLC accordingly urges the Court to take note

that these important issues remain unresolved and, while

not directly raised by this case, could be affected by the

Court’s opinion: here. In the rest of this brief we show

that, with respect to the issues directly raised herein, the

court_ below erred in holding that the employees in this

case have a Seventh Amendment right to a jury trial. The

existence of such a right turns on a two-pronged test ask-

ing (1) whether the nature of the claim is more closely

analogous to claims that lay at law or in equity prior

to their merger, and (2) whether the remedy sought is

—tegal or equitable in nature. Granfinanciera, S.A. v.

Nordberg, 109 S. Ct. 2782, 2790 (1989).

First, a claim that the union committed a DFR breach

by mishandling a grievance/arbitration proceeding is

most closely analogous to a common law suit for breach

of a fiduciary duty. Leach v. Pan American World Air-

ways, 842 F.2d 285, 290 (11th Cir. 1988) ; Pennsylvania

R.R. v. Rychlik, 352 U.S. 480, 498 (1957) (Frankfurter,

J., concurring). Both spring from the same equitable

principles that apply where there is a special relation-

ship of trust and confidence reposed by one person in

another. Steele v. Louisville & N. R.R., 323 U.S. 192

(1944). Further, the standards of conduct for fiduciaries

and unions are directly parallel, in that each may be

found to have breached their duty if they act ima “dis-

criminatory, dishonest, arbitrary, or perfunctory fash-

ion,” DelCostello v. International Brotherhood of Team-

sters, 462 U.S. 151 (1983). Because a suit for breach

of a fiduciary duty has historically been viewed as an

equitable claim, In re Evangelist, 760 F.2d 27, 29 (1st

Cir. 1985), the kind of DFR claim at issue in this case

must likewise be deemed to be equitable in nature for

Seventh Amendment purposes.

Second, the remedies associated with a DFR claim that

the union mishandled the grievance/arbitration process are

equitable in nature. In the typical situation where such

a claim is brought as part of a hybrid case, the primary,

and indeed indispensible, relief sought through the DFR

claim is vacation of the arbitration aw rd adverse to the

employees’ grievance. Hines v. Anchor Motor Freight,

Inc., 424 U.S. 554 (1976). It is settled that orders va-

cating arbitration awards are equitable in nature. Der-

inger v. Columbia Transp. Div., 866 F.2d 859, 863 (6th

Cir. 1989). The employees’ claim for monetary damages

against the union does not affect the conclusion that

the remedy is equitable for Seventh Amendment purposes.

Because a claim for a breach of fiduciary duty lies solely

in equity, plaintiffs asserting such claims are not en-

titled to jury trials even if they seek monetary damages

—indeed, even if they seek only monetary damages—as

a remedy for the alleged fiduciary breach. Krinsk v.

Fund Asset Mgmt., Inc., 875 F.2d 404, 414 (2d Cir.

1989). The same rule applies to the kind of DFR claim

at issue in this case—both where it arises in the normal

hybrid case context and where, as here, it is brought on

its own—since the DFR action, by analogy to the fi-

duciary duty action, lies solely in equity. Likewise, it is

settled that where monetary damages may be awarded

solely as an incident to equitable relief, the damages are

consideicd equitable for Seventh Amendment purposes.

Slack v. Havens, 522 F.2d 1091, 1094 (9th Cir. 1975).

That too applies to this kind of a DFR action in the

typical hybrid case setting, since any award of damages

from the union on the DFR claim is necessarily inci-

dental to the more fundamental, and predicate, order

vacating the initial arbitration award. Accordingly, the

remedies for the kind of DFR breach at issue here, both

in a hybrid case seeking an order vacating arbitration in

addition to monetary damages and in an atypical case

seeking monetary damages alone, must be deemed equi-

table for Seventh Amendment purposes.

ARGUMENT

I. INTRODUCTION

Under this Court’s precedent, the applicability of the

Seventh Amendment to a statutory cause of action, such

as a claim that a union has breached its duty of fair

representation, turns on a two-pronged analysis. First,

the Court must “compare the statutory action to 18th-

century actions brought in the courts of England prior -

to the merger of the courts of law and equity” to deter-

mine whether the present action is more closely analogous

to actions that historically could only have been brought

at law or to those that lay in equity. Granfinanciera,

S.A. v. Nordberg, 109 S. Ct. 2782, 2790 (1989); Tull v.

United States, 481 U.S. 412, 417-18 (1987). Second, the

Court must examine “the remedy sought and determine

whether it is legal or equitable in nature.” Tull, 481

U.S. at 418. As this Court has recently said, the nature

of the remedy is generally the “more important” of these

factors. Nordberg, 109 S. Ct. at 2790.

In applying these principles to the kind of DFR claim

at issue here—alleging that the union mishandled a

grievance/arbitration procedure—it is essential to recog- |

nize that the instant case arrives in this Court in a most

unusual posture. Typically such a DFR claim will be

joined in a so-called “hybrid” lawsuit with a claim

against the employer to reopen the merits of the em-

ployees’ underlying collective bargaining agreement griev-

ance. See, e.g., Hines v. Anchor Motor Freight, Inc., 424

U.S. 554 (1976); Bowen v. United States Postal Service,

459 U.S. 212 (1983); DelCostello v. International Broth-

erhood of Teamsters, 462 U.S. 151 (1983); United Parcel

Service, Inc. v. Mitchell, 451 U.S. 56 (1981). Although

the complaint in this case included such a claim, the

employer declared bankruptcy during the pendency of

district court proceedings. See 863 F.2d at 335 n.1. Ac-

cordingly, because the claim against the employer was

stayed and the employees proceeded on their DFR claim

against the union alone, this case presents this Court

with the DFR claim removed from its ordinary context.

We show in this brief that the right to jury trial does

not apply to the kind of DFR claim at issue in this case

regardless of whether it is the sole claim in the case—

as it is here—or is instead part of a hybrid case—as is

normally the case. However, because the analysis is some-

what different—and indeed even clearer—in the case

where the DFR claim is part of a hybrid action, we dis-

cuss both situations separately below.

II. BACKGROUND LEGAL PRINCIPLES

A. The Exclusivity and Finality of Arbitration

Employees who believe that they have been injured

by their employer’s alleged violation of a collective bar-

gaining agreement generally cannot bring their claim

against the employer in federal court. Although § 301 of

the Labor Management Relations Act (“LMRA’”), 29

U.S.C. § 185, provides a cause of action in federal court

for breaches of collective bargaining agreements arising

under that Act, almost all collective bargaining agree-

ments contain mandatory grievance/arbitration clauses

that make union-initiated arbitration the sole remedy for

such breaches and thus prevent the employees from suing

the employer directly in federal court. See, e.g., United

Paperworkers Int’l Union v. Misco, Inc., 108 S. Ct. 364,

370 (1987) ; Republic Steel Corp. v. Maddox, 370 U.S. 650

(1965). The exclusivity of arbitration is even more pro-

nounced under the RLA, which statutorily mandates ar-

bitration of all grievances arising out of railroad and

airline collective bargaining agreements. See 45 U.S.C.

§§ 153 First (i), 184; Andrews v. Louisville & N. R.R.,

406 U.S. 320, 322 (1972). In general, once an arbi-

trator has resolved the employees’ grievance or has held

that the time limits for bringing the grievance have ex-

pired, the results are “[s]ubject to [only] very limited

judicial review” and the employees are “bound by the

result.” DelCostello, 462 U.S. at 164; see also United

Steelworkers of America v. Enterprise Wheel & Car

Corp., 363 U.S. 593 (1960); Union Pacific R.R. v. Shee-

han, 439 U.S. 89, 94 (1978).

B. The Hybrid Case Exception to the Finality of Arbi-

tration Awards

1. The LMRA. This Court has implied a limited ex-

ception to the finality of the arbitration process under

the LMRA in cases where the employees prove that “the

union representing the employee in the grievance/arbitra-

tion procedure acts in such a discriminatory, dishonest,

arbitrary, or perfunctory fashion as to breach its duty

of fair representation.” DelCostello, 462 U.S. at 164;

see Hines v. Anchor Motor Freight, Inc., 424 U.S. 554,

567, 572 (1976); Vaca v. Sipes, 386 U.S. 171, 185

(1967). In cases where the union has “wrongful [ly]” re-

fused to pursue a claim to arbitration, the court may,

inter alia, compel the union to arbitrate the claim. Vaca,

386 U.S. at 185. In cases where a prior arbitration

award has been “tainted” by the union’s breach, and

where the employer is joined as a defendant, the courts

must “remove” any “bar” to reopening the merits of

the employees’ underlying grievance against their em-

ployer. Hines, 424 U.S. at 567.

In this regard, this Court has also recognized that,

under the LMRA, the DFR claim against the union may

be joined together, in a single action, with a claim against

the employer based on the underlying labor grievance,

creating a so-called hybrid case. Hines, 424 U.S. 554;

DelCostello, 462 U.S. 151. However, because the results

of the arbitration process are final and binding on the

employee unless and until they are set aside by the court

in order to remedy the union’s DFR breach, the employee

must “show that the [u]nion’s duty to represent him

fairly at the arbitration ha[s] been breached before he

[is] entitled to reach the merits of his contract claim.”

Mitchell, 451 U.S. at 62 (emphasis added); see, e.g.,

Adams v. Budd Co., 846 F.2d 428, 434 (7th Cir. 1988).

2. The RLA. Although rail unions are also subject to

DFR claims for mishandling grievances under the RLA,

see Czosek v. O’Mara, 397 U.S. 25 (1970), the Court

has not addressed the issue of whether proof of such a

breach provides a basis for undoing the binding nature

of arbitration awards under the RLA. Unlike the LMRA,

which provides no express limitations on the scope of

judicial review of arbitration awards, the RLA expressly

states that arbitration orders may be set aside or re-

manded only in three specific situations: (1) where the

arbitration board failed “to comply with the requirements

of [the Act]”; (2) where the arbitration board failed

“to conform, or confine itself, to matters within the scope

of the division’s jurisdiction”; or (3) where a member

of the arbitration board is guilty of “fraud” or “cor-

ruption.” See 45 U.S.C. §153 First (q). This Court

has “time and again emphasized that this statutory

language means just what it says” and that railroad

arbitration awards “may be set aside only for the three

reasons specified” in the statute. Sheehan, 439 U.S. at

93 (emphasis added).? Accordingly, because a DFR

breach is not one of the three enumerated grounds

for vacating an RLA arbitration award, we believe that

the DFR exception to the finality of arbitration awards

implied under the LMRA in Vaca and Hines is not ap-

plicable under the RLA. See Crusos v. United Transp.

Union, 786 F.2d 970, 972 (9th Cir. 1986) (Kennedy,

J.); United Steelworkers of America v. Union R.R., 648

F.2d 905, 913 (3d Cir. 1981). However, because several

lower courts have (without addressing this analysis) im-

2 Moreover, as this Court has noted, because the RLA gives em-

ployees a statutory right to process their grievance themselves,

without union participation, 45 U.S.C. § 153 First (j), rail and

airline unions cannot “prevent” arbitration from taking place,

unlike unions with the sole power to process grievances under the

LMRA. Bowen, 459 U.S. at 229.

ported such an exception from the LMRA context* and

this Court has not resolved the issue as yet, the existence

of such an exception under the RLA remains unresolved

at this time. And since vacation of the arbitration award

is a necessary predicate to relitigating the grievance

against the employer, it is similarly unsettled whether

“hybrid” cases of the kind recognized under the LMRA

may properly be brought under the RLA.

C. Handling the Underlying Grievance in Hybrid Cases

1. The LMRA. As this Court has recognized, the

threshold determination in a hybrid case as to whether

the union has breached its duty of fair representation

during the grievance/arbitration process does not involve

resolution of the merits of the employees’ underlying

grievance. In Mitchell this Court expressly distinguished

between “a demonstration that the [u]nion breached its

duty of fair representation” and “a showing under tra-

ditional contract law that the [employer’s action] was a

breach of the cc'lective-bargaining agreement.” 451 U.S.

at 62. Specifically, in order to prevail on their DFR

claim, the employees need only show that the union’s

conduct was “arbitrary, discriminatory, or in bad faith”

and either “tainted” the arbitration or “prevented” ar-

bitration from taking place. Vaca, 386 U.S. at 185, 190

(citations omitted) ; Hines, 424 U.S. at 571, 572. While

resolution of this issue may require determination that

the employee “had a plausible claim on the merits, per-

haps even a fairly strong claim,” it does not require a

decision that the employee “had a claim that he was

bound to win.” Stanton v. Delta Air Lines, 669 F.2d

833, 838-39 & n. 7 (Ist Cir. 1982) (Breyer, J.) (em-

phasis in original) ; accord Wood v. International Broth-

erhood of Teamsters, 807 F.2d 493, 500 (6th Cir. 1986).

3 £.g., Barnett v. United Air Lines, 738 F.2d 358, 362 (10th Cir.

1984); Childs v. Pennsylvania Fed’n BMWE, 831 F.2d 429, 439

(3d Cir. 1987). .

The question thus arises as to whether, once a DFR

breach has been found and the initial arbitration award

has been vacated, the underlying grievance against the

employer is to be resolved in court or by referral

back to arbitration. Although this Court has never

squarely addressed that issue,* the lower courts have

generally either assumed or held that the grievance should

be resolved in court.® We believe that the courts’ assump-

tion of jurisdiction in such circumstances to resolve these

otherwise-arbitrable disputes arising out of collective bar-

gaining agreements under the LMRA is erroneous and

runs contrary to recent precedent from this Court.

In particular, this Court has reaffirmed its strong support

for resolving disputes in arbitration wherever possible,*

particularly in the labor context,’ and has express: held

*In Vaca, the Court expressly indicated that referral tc arbitra-

tion is “one of the available remedies when a breach of the union’s

duty is proved.” 386 U.S. at 196. In Hines, the Court held that a

tainted arbitration award should be vacated, but did not decide

whether the grievance should be relitigated in court or referred

back to arbitration.

5 F.g., Kissinger v. United States Postal Service, 801 F.2d 551

(1st Cir. 1986); Wyatt v. Interstate & Ocean Transp. Co., 623 F.2d

888 (4th Cir. 1980). In Varra v. Dillon Companies, Inc., 615 F.2d

1315, 1317-18 (10th Cir. 1980), and Santos v. American Broad-

casting Co., 866 F.2d 892 (6th Cir. 1989), though, the courts

properly recognized a presumption in favor of arbitration.

® See Rodriguez de Quijas v. Shearson/Americon Express, Inc.,

109 S. Ct. 1917 (1989) (claims under Securities Act of 1933);

Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987)

(claims under Securities Exchange Act of 1934 and RICO); Mitsu-

bishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614

(1985) (claims under antitrust laws). Just last term, this Court

reaffirmed the need to “discourage litigants” from trying to bring

arbitrable disputes into court by “manipulating their allegations,”

and accordingly overruled a 1953 precedent that allowed certain

securities claims to be brought in court instead of arbitration.

Rodriguez de Quijas, 109 S. Ct. at 1922.

7 See, e.g., Misco, 108 S. Ct. 364; AT&T Technologies, Inc. v.

CWA, 475 U.S. 643 (1986).

that the federal policies favoring arbitration are suffi-

ciently strong to justify bifurcating federal court actions

in order to refer arbitrable claims to arbitration.* Of

course, the strong policies in favor of arbitration of labor

grievances, including particularly the need for expertise

in the interpretation of collective bargaining agreements,

are equally applicable where the union’s DFR breach

requires that the merits of an employee’s grievance be

resolved a second time.

In sum, this Court has held that, under the LMRA,

employees should not suffer, and employers should not

profit, as a result of a union’s DFR breach. Vaca, 386

U.S. at 195-96; Hines, 424 U.S. at 569-70. But requiring

that the employees rearbitrate their grievance against the

employer (before a new arbitrator and with representa-

tion of their own choosing) would simply put them back

in the position that they were in prior to any misconduct

by the union. Accordingly, rearbitration would afford

them a full and fair remedy for the union’s DFR breach

without depriving the blameless employer of its right to

arbitration and without undermining the strong federal

interests in favor of the arbitration of labor disputes by

experts familiar with the law of the shop.

2. The RLA. Under the RLA, as noted at pp. 9-10

above, it is unsettled whether proof of a DFR breach

8 Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218-21 (1985)

(involving the Federal Arbitration Act, whose pro-arbitration poli-

cies are comparable to those in the labor law context).

® As this Court has recognized, those policies include (1) secur-

ing the “prompt,” “inexpensive,” and “final” settlement of griev-

ances, Nolde Bros., Inc. v. Local No. 358, 430 U.S. 243, 254 (1977) ;

see also Bowen v. United States Postal Service, 459 U.S. 212, 226

(1983); (2) providing the expertise necessary to properly interpret

collective bargaining agreements, Nolde Bros., Inc., 430 U.S. at 253-

54; United Steelworkers of America v. Enterprise Wheel & Car

Corp., 363 U.S. 593, 596 (1960); and (3) ensuring uniformity of

dispute resolution, Bowen, 459 U.S. at 226.

justifies vacating an arbitration award, and hence whether

hybrid actions seeking to reopen arbitration awards may

properly be brought at all. Even assuming arguendo that

such actions can be filed, we think it clear that, if a

DFR breach is proved, the only proper course in an RLA

case would be to refer the underlying grievance back to

arbitration for an untainted determination by a new

arbitrator. Unlike § 301 of the LMRA, which generally

povides a federal court forum for the resolution of em-

ployee grievances absent a contractual arbitration clause,

§ 3 of the RLA statutorily mandates that all railroad and

airline grievances be resolved exclusively in arbitration.

45 U.S.C. § 153; see p. 7 supra. This Court has repeatedly

held that that provision must be strictly enforced,” in

order to fulfill the strongly pro-arbitration goals of the

RLA."' For these reasons, several courts have properly

held that, where a DFR breach is shown in an RLA case,

“the burden .. . rests on those opposed to arbitration as

a remedy to demonstrate why it is unsuitable.” Stanton,

669 F.2d at 836-37; accord Curtis v. United Transp.

Union, 486 F. Supp. 966, 972, 979 (E.D. Ark. 1979),

rev'd on other grounds, 648 F.2d 492 (8th Cir. 1981).

10 See Consolidated Rail Corp. v. Railway Labor Executives’ Ass’n,

109 S. Ct. 2477, 2484 (1989); Union Pacific R.R. v. Sheehan, 439

U.S. 89 (1978); Andrews v. Louisville & N. R.R., 406 U.S. 320

(1972).

1! Requiring arbitration of RLA grievances is essential to secure

that Act’s goals of (1) the “prompt and orderly” settlement of dis-

putes, 45 U.S.C. §151a(5); Sheehan, 439 U.S. at 94; (2) the

use of arbitrators possessing the “specialized technical knowledge”

needed to interpret railway labor contracts, Pennsylvania R.R. v.

Day, 360 U.S. 548, 553 (1959); Slocum v. Delaware, L. & W. R.R.,

339 U.S. 239, 243 (1950); and (3) the assurance of uniformity of

contract interpretation, Day, 360 U.S. at 553.

12 But see, e.g., Kaschak wv. Consolidated Rail Corp., 707 F.2d

902 (6th Cir. 1983) ; Middleton v. CSX Corp., 694 F. Supp. 941, 947

(N.D. Ga, 1988).

D. Damages Against the Union

If, following a finding that the union breached its duty

of fair representation, it is determined (either in court

or back in arbitration) that the employees’ underlying

grievance is valid,’* the employees may be entitled to re-

cover, in court,'* additional relief from the union for the

“increase, if any, in. . . damages” caused by the union’s

conduct. Vaca, 386 U.S. at 195-98 (LMRA) ; see Bowen,

459 U.S. at 223 (LMRA); Czosek, 397 U.S. at 29

(RLA). In this way, the employees can be fully returned

to the position they would have occupied if the union

had not breached its duty.”

E. Atypical Cases Where the Employees Bring the

DFR Claim Alone, Rather than as Part of a Hybrid

Case

In rare situations, such as the situation in the present

case, employees may be forced (or may choose) to pursue

a DFR claim arising out of their union’s alleged mis-

handling of a grievance/arbitration proceeding as their

only claim, rather than as part of a hybrid case against

both their union and employer. In the present case,

for example, the employer has gone into bankruptcy;

similar situations could arise where the employer has

been liquidated or has reached a separate settlement with

the employees. This Court has recognized that, in such

13 It is settled that the employees cannot recover damages from

the union without proving that their underlying grievance was

valid. DelCostello, 462 U.S. at 165.

4If the underlying grievance is referred to arbitration, the

arbitrator generally will not have power to award relief against

the union. See, e.g., Vaca, 386 U.S. at 196; Czosek, 397 U.S. at

27-28.

15 Where the employees allege and prove that the union “affirma-

tively caused” the employer to commit the alleged breach of the

labor contract. the union also may be held jointly and severally

liable for any damages found owing to the employees because of

the employer’s breach. Vaca, 386 U.S. at 197 n.18.

circumstances, the employees still have the right to pro-

ceed with their claim against the union for its alleged

DFR breach, although as just shown the damages recover- |

able from the union generally cannot include the injury

directly attributable to the underlying contract breach.

“As noted above, once a DFR breach is proved, the em-

ployees must show that their underlying grievance was

valid in order to show that the union’s DFR breach led

to injury entitling them to monetary damages from the

union. In these atypical non-hybrid cases where the em-

ployer is absent, it may well be impossible for the under-

lying grievance to be referred to arbitration. Under such

circumstances, and solely for purposes of disposing of the

DFR claim against the union, the court must itself de-

termine whether the employees’ underlying grievance was

in fact valid. Of course, because the employer is absent,

that determinaticn is not binding on the employer, and

its resolution in court therefore does not contravene the

policy considerations, discussed at pp. 11-12 supra, that

support arbitration whenever possible.

Il. THERE IS NO SEVENTH AMENDMENT RIGHT

TO A JURY TRIAL WITH RESPECT TO THE KIND

OF DFR CLAIM AT ISSUE IN THIS CASE BE-

CAUSE IT IS EQUITABLE IN NATURE AND IN-

VOLVES EQUITABLE REMEDIES

We show in this Part that the kind of DFR claim at

issue in this case—alleging the mishandling of grievance/

arbitration proceedings—carries no Seventh Amendment

right to a trial by jury, because the claim is equitable in

nature and involves equitable remedies.

A. The DFR Claim at Issue Is Most Analogous to a

Pre-Merger Action for Breach of Fiduciary Duty,

Which Was Equitable in Nature

As noted above, the first prong of the Seventh Amend-

ment test requires an examination of whether the cause

of action is legal or equitable in nature. The duty of fair

representation owed by a union to its members was im-

plied by this Court from the federal labor statutes, see

Steele v. Louisville & N. R.R., 323 U.S. 192 (1944);

Vaca v. Sipes, 386 U.S. at 177, and has no precise 18th

ceuitury counterpart at either common law or equity, see

Leach v. Pan American World Airways, 842 F.2d 285,

290 (11th Cir. 1988). However, as we now show, the

union’s duty is derived from the same equitable principles

that gave rise to actions for breach of fiduciary duties

in 18th century courts of equity, and the standards of

conduct applied te the union are identical to those ap-

plicable in fiduciary relationships. ~

1. Source of the duty. The common law recognizes the

existence of a fiduciary duty where “special confidence

[is] reposed” in a party that “is bound to act in good

faith and with due regard to the interests of [the person |

reposing [the] confidence.” ** The same underlying equita-

bie principles led to recognition of a union’s duty of fair

representation. As this Court expressly said, the duty is

derived from the “principle of general application that

the exercise of a grarted power to act in behalf of others

involves the assumption toward them of a duty to exer-

cise the power in their interest and behalf... .” Steele,

323 U.S. at 202. As the flip side of the confidence em-

ployees repose in their unions, there is a need to protect

employees who have been “stripped of traditional forms

of redress.” Vaca, 386 U.S. at 182; Hines, 424 U.S. at

564. Thus both common law fiduciary duties and a

union’s duty of fair representation arise from the same

kind of relationship and the same equitable principles.

2. Standards of conduct. A union’s duty of fair rep-

resentation is “equal in scope to its authority,” and re-

16 Hunt v. Hunt, 718 P.2d 560, 576 (Idaho 1986); Brisson v.

Williams, 345 S.E.2d 432, 485 (N.C. App. 1986); Brown v. Foulks,

657 P.2d 501, 506 (Kan. 1983); Long v. Towne, 639 P.2d 528, 530

(Nev. 1982): H-B Ltd. Partnership v. Wimmer, 257 S.E.2d 770,

773 (Va. 1979) ; Herbolsheimer v. Herbolsheimer, 328 N.E.2d 529,

530 (Ill. 1975).

quires it to act with “complete good faith and honesty-of

purpose in the exercise of its discretion.” Hines, 424

U.S. at 564. As noted above, this Court has held that the

duty may be violated, in a case of this kind, where the.

union acts in a particularly “discriminatory, dishonest,

arbitrary, or perfunctory fashion.” DelCostello, 462 U.S.

at 164. The same standards of review apply to clainis

for breach of a fiduciary duty. As is well established,

fiduciaries must not act in an arbitrary," dishonest,'*

discriminatory,” or perfunctory manner, but instead

must exercise the “utmost good faith.” 2" Thus the stand-

ards of conduct for a union are the same as those ap-

plicable to a fiduciary at common law.

3. The DFR claim is therefore equitable in nature.

In short, the DFR claim at issue here most closely

resembles a common law claim for breach of fiduciary

duty. See Leach, 842 F.2d at 290; NLRB v. Local 282,

IBT, 740 F.2d 141, 147 (2d Cir. 1984); King v. Fox

Grocery Co., 678 F. Supp. 1174, 1176 (W.D. Pa. 1988) ;

accord Pennsylvania R.R. v. Rychlik, 352 U.S. 480, 498

(1957) (Frankfurter, J., concurring) (union representa-

tives handling grievance/arbitration procedures “are in

what amounts to a fiduciary position’’) .”

17 Nobile v. Pension Comm., 611 F. Supp. 725, 729 (S.D.N.Y.

1985); Pastan v. Pastan, 390 N.E.2d 258, 256 (Mass. 1979);

Galler v. Galler, 238 N.E.2d 274, 277 (Ill. App. 1968).

Uniform Fiduciaries Act (U.L.A.) §1(2); Hoffman v. First

Virginia Bank, 263 S.E.2d 402, 408 (Va. 1980). ~

19 Short v. United States, 719 F.2d 1133, 1137 (Fed. Cir. 1983).

20 Burnett v. First Na-ional Bank of Wacc, 567 3.W.2d 873, 876

(Tex. Civ. App. 1978).

*1 Black v. Dahl, 625 P.2d 876, 880-81 (Alaska 1981), quoting

Mersky v. Multiple Listing Bureau, 437 P.2d 897, 899 (Wash.

1968).

22 In DelCostello, this Court suggested that a DFR claim might

be considered most analogous to a claim for legal malpractice.

462 U.S. at 167. But evidently breach of fiduciary duty was not

Historically, cases seeking to redress a breach of fiduci-

ary duty could be brought only in courts of equity and

were not subject to trial by jury. See In re Evangelist,

760 F.2d 27, 29 (1st Cir. 1985) ; Nobile v. Pension Com-

mittee, 611 F. Supp. 725, 729 (SD.N.Y. 1985) (claim

for “arbitrary and capricious” conduct restates “tra-

ditional standard of judicial review of fiduciaries’

determinations” which has “traditionally been done by

judges rather than juries”); Kaitz v. District Court,

€50 P.2d 553, 555 (Colo. 1982); In re Estate of Coyle,

308 N.Y.S.2d 899, 902 (App. Div. 1970); ef. Seminole

Nation v. United States, 316 U.S. 286, 298 (1942);

Trustees v. Journeymen Plasterers’ Protective and Benevo-

lent Society, 794 F.2d 1217, 1220 (7th Cir. 1986). Because

the DFR claim at issue in this case is most closely anal-

ogous to premerger actions for breach of fiduciary duty,

therefore, the DFR claim must be classified as equitable

“for Seventh Amendment purposes.

4. Atypical cases where the underlying grievance is

litigated in court as part of the DFR claim. As noted

above, in unusual cases, like the present one, a DFR claim

may be brought alone and the court may be required to

adjudicate the employees’ underlying grievance against

their employer in the course of resolving the employees’

entitlement to damages against the union on the DFR

presented to the Court as a possible analogy in the DelCostello

case, and in fact such an analogy is demonstrably more apt than is

an_analogy to malpractice. Most fundamentally, legal malpractice

~~ turns on whether the attorney was negligent, while a DFR claim,

like a claim against an attorney for breach of fiduciary duty, turns

on whether the union failed to act “in good faith and honesty of

purpose in the exercise of its discretion.” Hines, 424 U.S. at 564.

See R. Mallen & J. Smith, Legal Malpractice § 11.1, p. 633 (3d ed.

1989) (noting that an attorney’s fiduciary obligations involve a

standard of conduct, while malpractice actions involve a standard of

care, i.e., of skill and knowledge); Bukoskey v. Shuham, 666 F.

Supp. 181, 184 (D. Alaska 1987) (same); Newman v. Silver, 553

F. Supp. 485, 495 (S.D.N.Y. 1982) (same), aj/’d in relevant part,

713 F.2d 14 (2d Cir. 1983).

claim. See pp. 14-15 supra. But the fact that the court

may have to decide whether the collective bargaining

agreement was violated in order to determine the em-

ployees’ entitlement to damages against the union does not

make such a case primarily legal in nature. In such a

case, the cause of action is still based solely on the alleged

DFR breach, and the Merits of the underlying grievance

are addressed only as a subsidiary step in determining

whether that breach caused the employees any injury

entitling them to damages. Accordingly, even in the rare

case, like the present one, where the DFR claim also

incidenially involves resolution of the underlying griev-

ance, breach of fiduciary duty must still be viewed as

the most apt analogy for the employees’ claim, and hence

the claim still must be deemed equitable in nature.

B. The Remedies Involved in this Type of Fair Rep-

resentation Claim Are Equitable Remedies

As noted above, the nature of the remedy sought is

deemed the “more important” factor in determining

whether a party is entitled to a jury trial. Nordberg,

109 S. Ct. at 2790. As we show in this section, the relief

sought in connection with the kind of DFR claim at issue

here is equitable, both in the typical hybrid case and even

in cases, like this one, seeking only monetary relief

against the union.

1. Relief in the typical hybrid case. As discussed in

detail above, the principal relief sought by employees in

connection with a DFR claim in a typical hybrid case is

the vacation of the grievance/arbitration result atverse

to the employees’ grievance against the employer. See

pp. 6, 8 supra. Only after such relief has been granted,

and even then only after the employees have prevailed at

the subsequent proceeding involving the merits of their

underlying grievance,”* can the employees seek monetary

23 As noted above, in all cases under the RLA and, we submit,

in virtually all cases under the LMRA, a court finding a DFR breach

damages against the union for the DFR breach. See pp.

8-9, 14 supra.

It is well settled that orders vacating arbitration

awards are equitable and carry no right to a jury trial.

See, e.g., Deringer v. Columbia Transp. Div., 866 F.2d

859, 863 (6th Cir. 1989) ; Leach v. Pan American World

Airways, 842 F.2d 285, 288 (11th Cir. 1988).* It is

thus apparent that the primary—and essential—relief

sought in a DFR claim in a hybrid case is equitable in

nature. Courts focusing solely on the request for mone-

tary damages from the employer and/or the union have

simply overlooked the fact that vacation of the existing

arbitration award is a necessary equitable predicate to

moving on to the merits of the underlying grievance

against the employer, as well as to any subsequent dam-

ages claim against the union.”

The fact that, in a typical hybrid case, the employees

generally also seek monetary relief against the union in

connection with their DFR claim does not mean that the

remedies for that claim should be characterized as “legal”

for Seventh Amendment purposes. This Court has recog-

nized that monetary awards are not necessarily “legal”

in nature. Curtis v. Loether, 415 U.S. 189, 196 (1974);

in the handling of the initial grievance/arbitration proceeding must

enter an equitable order compelling arbitration. See pp. 10-13 supra.

24 Likewise, an order compelling arbitration is an equitable form

of relief. DelCostello, 462 U.S. at 168 n.17.

23 E.g., Cox v. C.H. Masland & Sons, Inc., 607 F.2d 138, 143

(5th Cir. 1979); Cook v. National Maritime Union, 617 F. Supp.

1052, 1053 (S.D.N.Y. 1985). Of course, some other cases finding

a jury trial right in DFR claims involve DFR claims outside the

context of the union’s handling of a grievance/arbitration process

and hence are inapplicable here. See, e.g., Quinn v. DiGiulian, 739

F.2d 637, 638 (D.C. Cir. 1984) (claim that union engaged in

“relentless campaign of harassment” against plaintiff due to his

decision to run against incumbent officer).

Oe Oe

accord Slack v. Havens, 522 F.2d 1091, 1094 (9th Cir.

1975) ; Cox v. Kansas City, 76 F.R.D. 459, 459 (W.D.

Mo. 1977). As shown at pp. 16-18 above, a claim for

breach of fiduciary duty is an equitable claim, and courts

have consistently held that plaintiffs asserting such

claims are not entitled to jury trials even where they

seek monetary damages as a remedy for the alleged

fiduciary breach. See, e.g., Krinsk v. Fund Asset Mgmt.,

Inc., 875 F.2d 404, 414 (2d Cir. 1989) . (seeking solely

money damages) ; Kaitz v. District Court, 650 P.2d 553,

555 (Colo. 1982) (same); Horizon House-Microwave,

Inc. v. Bazzy, 486 N.E.2d 70, 77 (Mass. App. 1985)

(seeking money damages in addition to equitable relief) .*°

It follows that, because a court’s jurisdiction in a DFR

suit is also equitable, see pp. 16-18 supra, any monetary

damages that may be awarded in the course of such an

action are necessarily equitable, and the claim for such

damages does not entitle the plaintiffs to a jury trial.

By the same token, it is well settled that where mone-

tary damages may be awarded only as an incident to pri-

marily equitable relief, the monetary damages themselves

are considered equitable and do not entitle the plaintiff to

a jury trial under the Seventh Amendment. Slack v.

Havens, 522 F.2d 1091, 1094 (9th Cir. 1975) (no jury

trial where monetary relief is an “integral part of the

equitable remedy”); Johnson v. Georgia Highway Ex-

press, Inc., 417 F.2d 1122, 1125 (5th Cir. 1969) (cited

with approval in Great American Fed. Sav. & Loan Ass’n

v. Novotny, 442 U.S. 366, 375 (1979)); King v. Fox

Grocery Co., 678 F. Supp. 1174, 1177 (W.D. Pa. 1988)

(monetary relief equitable where it “flows from” equita-

26 Put otherwise, because the claim for a breach of fiduciary duty

raises a “traditionally equitable question” and because no monetary

relief can be awarded “[u]nless and until that equitable question is

resolved in [the plaintiffs’] favor,” there is no right to a jury trial

with respect to the claim for such monetary relief. Nobile v. Pen-

sion Committee, 611 F. Supp. 725, 729 (S.D.N.Y. 1985).

ble remedy vacating arbitration order) ; Chrysler Workers

Ass’n v. Chrysler Corp., 663 F. Supp. 1134, 1142 (N.D.

Ohio 1986) (claim for monetary damages for DFR merely

an incident to equitable relief) ; Towers v. Titus, 5 Bankr.

786, 795 (N.D. Cal. 1979). This principle is likewise

applicable here, since any claim for damages against the

union based on the DFR claim in a hybrid case is inci-

dental to the primary relief of vacating the arbitration

award, see pp. 19-20 supra, again leading to the conclu-

sion that the claim for damages is itself equitable and

provides no basis for a jury trial.”

In sum, when a DFR claim is brought in a hybrid case,

both the primary relief sought through that claim—vaca-

tion of the arbitration award—and any incidental claim

for damages against the union are equitable.**

27 The fact that equitable relief is a necessary predicate to the

claim for money damages distinguishes the situation addressed

in Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510-11 (1959),

and Dairy Queen, Inc. v. Wood, 369 U.S. 469, 473 (1962), which

involved independent equitable and legal claims brought together in

the same action. In Ross v. Bernhard, 396 U.S. 531 (1970), ai-

though equitable relief was a predicate to a claim for monetary

relief, the latter claim arose out of a wholly separate cause of

action.

28 Moreover, even if it were found that the claim for monetary

relief against the union is legal in nature, that would not entitle

the employees to a jury trial on the merits of thei DFR claim that

the union mishandled the grievance/arbitration process and that

the arbitration award should be vacated. This Court has recognized

that “imperative circumstances” may justify prior determination of

equitable claims that would otherwise be subject to the right to

jury trial. Beacon Theatres, 359 U.S. at 510-11; Dairy Queen, 369

U.S. at 473; see also Leach, 842 F.2d at 289 & n.7. We submit that

the federal policies involved in deciding whether to set aside a final

arbitration award on the basis of a union’s alleged DFR breach

present such imperative circumstances.

Permitting juries to decide whether an arbitration award should

be set aside would severely undermine the grievance machinery

which this Court has recognized is “at the very heart of the system

of industrial self-government.” United Steelworkers of America

2. Relief in a non-hybrid case not involving the em-

ployer. As we have just shown, a court’s jurisdiction

over a fiduciary-type DFR claim lies in equity, and hence

any monetary relief granted in such an action is deemed

to be equitable. Indeed, that is true even where the

only relief sought in such a case is money damages. See,

e.g., Krinsk v. Fund Asset Mgmt., Inc., 875 F.2d 404,

414 (2d Cir. 1989); Kaitz v. District Court, 650 P.2d

553, 555 (Colo. 1982). It therefore follows that, even in

the atypical non-hybrid case where the employees do not

sue the employer and hence are not seeking to vacate

the adverse arbitration award, but instead are only seek-

ing money damages against the union, they still are not

seeking legal remedies and they still have no right to a

jury trial.

C. Conclusion

In sum, the present DFR claim most closely resembles

an equitable claim for breach of a fiduciary duty. The

primary relief generally sought through such claims, va-

v. Warrior & Gulf Nav. Co., 363 U.S. 574, 581 (1960) Under the

LMRA, the RLA, and the Federal Arbitration Act, the task of

reviewing arbitration awards has been assigned exclusively to

judges. Misco, 108 S. Ct. 364 (LMRA); Enterprise Wheel & Car

Corp., 363 U.S. 593 (1960) (LMRA); 45 U.S.C. § 153 First (q)

(RLA); 9 U.S.C. §10(c) (Fed. Arb. Act). Creating a special

exception to this rule in DFR cases would issue an open invita-

tion to dissatisfied employees to challenge any adverse result merely

by “tacking on a [fair representation] claim against their union

in a federal court suit against their employer.” Bautista, 828 F.2d

at 552. Any increase in such challenges would greatly disrupt

the “orderly” settlement of disputes, which the Court has recognized

is “essential to the national labor policy,” Bowen, 452 U.S. at 226,

and could well “affect{] the entire relationship between company

and union,” Mitchell, 451 U.S. at 64 (citations omitted). Increased

uncertainty would discourage labor and management from entering

into arbitration agreements in the first place, would heighten the

conflict and tension associated with labor disputes, and could ulti-

mately threaten the peaceful labor-management relations that the

national labor laws were intended to foster. See pp. 11-12 supra.

cation of an arbitration award, is equitable. Any mone-

tary relief awarded in connection with such a claim is

similarly equitable, whether or not it is incidental to a

claim for equitable relief. In result, both prongs of the

Seventh Amendment test show that the DFR claim at

issue here is equitable. Plaintiffs are therefore not en-

titled to a jury trial on that claim.

CONCLUSION

The judgment of the Court of Appeals should be

reversed. ~~

Respectfully submitted,

I. MICHAEL GREENBERGER

(Counsel of Record)

RICHARD M. WYNER

MARK S. RAFFMAN

PATRICIA I. HANSEN

SHEA & GARDNER

1800 Massachusetts Ave., N.W.

Washington, D.C. 20036

(202) 828-2000

DAVID P. LEE

Vice Chairman & General Counsel

National Railway Labor Conference

1901 L Street, N.W.

Washington, D.C. 20036

(202) 862-7200

Counsel for Amicus Curiae

August 18, 1989 National Railway Labor Conference

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.