Petition for Writ of Certiorari — Terwilliger v. Greyhound Lines, Inc.
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on. eC t2 1396S
No. ‘ pO
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‘ha ceeneneneene
In The
Supreme Court of the United States
October Term, 1989
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MARION TERWILLIGER,
Petitioner,
GREYHOUND LINES, INC.,
a foreign corporation and JAMES SELBY,
jointly and severally,
Respondents.
,™
4
ON PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS,
SIXTH CIRCUIT
a
3
PETITION FOR WRIT OF CERTIORARI
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vv
Davip R. PARKER
Counsel of Record
J. Douctas Peters
4000 Penobscot Building
Detroit, MI 48226
(313) 963-8080
Counsel for Petitioner
COCKLE LAW BRIEF PRINTING CO,, (800) 225-6964
OR CALL COLLECT (402) 342-2831
QUESTIONS PRESENTED
WHETHER PLAINTIFF’S STATE LAW FRAUD CLAIM,
ALLEGING DAMAGES CAUSED BY DEFENDANTS’
ALTERATION AND WITHHOLDING OF PLAINTIFF’S
MEDICAL RECORDS, IS PREEMPTED BY SECTION 301
OF THE LABOR MANAGEMENT RELATIONS ACT.
WHETHER, IN A CASE OF FRAUDULENT ALTER-
ATION AND WITHHOLDING OF PLAINTIFF’S MEDI-
CAL RECORDS, PLAINTIFF HAS MADE OUT A CASE
FOR THE APPLICATION OF THE DOCTRINES OF
FUTILITY AND REPUDIATION SUCH AS WOULD
DEFEAT THE DEFENSE OF FAILURE TO EXHAUST HIS
INTERNAL UNION REMEDIES.
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TABLE OF CONTENTS
Page
QUESTIONS PIEGGUCR IE oe5 6 ick ecscss duces winccs i
FABLE GF AAUP 5 vhnees teens eeeeiseaeias iii
COPTINILIGe WGAIEEs 56 iv cnn Cow bieeeu dee eacea incense 1
PUIRERI es ENO ok os vn cs tae Wee eee eee Fada eee 1
STATUTORY PROVISION INVOLVED.............. 2
STATEMEERIST CP TREE Ges eka sv scncsess kasi eeas 2
A. Statement of FG. ose od cies eas 2
D. Frocesgiage DOaW.. . «os ss s0cxugrverrue sone es 9
REASONS FOR GRANTING THE WRIT ........... 11
I. THE SIXTH CIRCUIT DECISION CONFLICTS
IN PRINCIPLE WITH THIS HONORABLE
COURT’S DECISION IN LINGLE V NORGE
DIVISION OF MAGIC CHEF, 486 US 399, AND
WITH DECISIONS APPLYING LINGLE FROM
THE THIRD AND FIFTH CIRCUITS......... 11
Il. THE SIXTH CIRCUIT DECISION IMPROP-
ERLY LIMITS THE DOCTRINES OF REPU-
DIATION AND FUTILITY. BOTH DOCTRINES
ARE APPLICABLE TO THE INSTANT CASE,
TO EXCUSE PLAINTIFF’S FAILURE TO
EXHAUST INTERNAL UNION REMEDIES, IN
A CASE INVOLVING ACTUAL FRAUD..... 18
CONCLUSION 2.5 s0:045¥e60s eae ey cee 21
on el
ili
TABLE OF AUTHORITIES
Page
CASES:
Allis-Chalmers Corp v Lueck, 471 US 202; 105 S Ct
Sees ee te Oe ae Be CIDES) .. 0... eee eee eee 12, 16
Anderson v Ford Motor Co, 803 F2d 953 (8th Cir
1986) cert den, 483 US 1011; 107 S Ct 3242; 97 L
ee aT AG aekewd.cs see dae eee a 17
Berda v. CBS, Inc, 881 F2d 20 (3d Cir 1989) ......... 14
Caterpillar, Inc v Williams, 482 US 386; 107 S Ct
eR 8S 4 ee 13, 14
Glover v St. Louis-San Francisco Railway, 393 US
sae; OP S Ct 548; 21 L Ed 2d 519 (1969) .......... 18
Lingle v Norge Division of Magic Chef, 486 US 399;
108 S Ct 1877; 100 L Ed 2d 410 (1988)........ passim
Teamsters v Lucas Flour, 369 US 95; 82S Ct 571; 7 L
ray bana 4.6 Nah ass 5's 4 bk w Sek a Cres 11
Terwilliger v. Greyhound Lines, Inc, 882 F2d 1033
a a ee 10, 15, 18
Textile Workers v Lincoln Mills, 353 US 448; 77S Ct
GOMOD ie eke hse ete ees c's 11
Vaca v Sipes, 386 US 171; 87 S Ct 903; 17 L Ed 2d
os RS a Pa na ane 19, 20
Wells v General Motors Corp, 881 F2d 166 (5th Cir
a ag Sa 14, 15, 16, 17, 21
STATUTES:
ee yea bie s'Said nes katte ne Ouse eas 1
Section 301 of the Labor Managements Relations
EE soos ssa ss cv sdad ts sens vasys
7
°
OPINIONS BELOW
The defendants’ motion for directed verdict at the
close of plaintiff’s proofs, and the trial court’s denial
thereof, are set out as Appendix A. The jury’s verdict in
favor of plaintiff in the amount of $250,000 in actual
damages, and in the amount of $500,000 in consequential
(exemplary) damages is set out as Appendix B. The order
of October 14, 1986, entering judgment against defen-
dants in the amount of $525,000 ($750,000 less a setoff for
a settlement with a previous defendant in the amount of
$225,000) is set out as Appendix C. The trial court’s ruling
from the bench, denying defendants’ subsequent motions
for JNOV and remittitur of damages, at an oral argument
on January 29, 1987, is set out as Appendix D. The court’s
order of February 24, 1987, denying these motions, is set
out as Appendix E. The Sixth Circuit’s opinion reversing
the trial court’s rulings is published at 882 F2d 1033, and
is set out as Appendix F. The Sixth Circuit’s denial of
plaintiff's motion for rehearing en banc is set out as
Appendix G.
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JURISDICTION
The decision of the Sixth Circuit Court of Appeals
was released on August 10, 1989. A timely motion for
reconsideration was filed, which was denied on Septem-
ber 25, 1989. The jurisdiction of this court is invoked
pursuant to 28 USC §1254(1).
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STATUTORY PROVISIONS INVOLVED
Section 301 of the Labor Management Relations Act,
1947, 29 USC §185.
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STATEMENT OF THE CASE
A. Statement of Facts
Marion Terwilliger began working for Greyhound in
1943. Except for two stints with the Marines, (1943 to
1946, and 1950-1951), and a medical leave in 1959-1960,
Mr. Terwilliger drove a bus for Greyhound until 1966.
In 1966, while loading industrial dies onto a Grey-
hound bus, Mr. Terwilliger felt a burning sensation in his
chest. He completed his workday, then reported the
symptoms to Greyhound and found a doctor who began
treating him. This doctor, Dr. John Kondomerkos, diag-
nosed a heart condition. On the basis of this diagnosis,
Mr. Terwilliger voluntarily went on disability. In 1970, he
passed the United States Department of Transportation
(DOT) physical, and began driving buses for Short Line -
a low-paying, local carrier.
However, Mr. Terwilliger was determined to return
to work at Greyhound. He undertook a course of action
to show to Greyhound that he was no longer suffering
from any current heart condition. He continued to treat
with Dr. Kondomerkos, who put Mr. Terwilliger through
a series of EKGs, in order to show that plaintiff was
suffering from no present heart condition, and that he
was fit to return to work.
By April of 1971, Mr. Terwilliger, as shown through
these serial EKGs, was clearly free of any present evi-
dence of heart condition. Dr. Kondomerkos, by letter of
April 13, 1971, reported to Greyhound that Mr. Ter-
williger was “free of chest pain, shortness of breath, or
fatigue”, and recommended “that he can resume work
with Greyhound.”
Dr. Kondomerkos’ letter did not achieve the desired
purpose of putting Marion Terwilliger back to work.
Instead, it touched off a series of events orchestrated by
Greyhound representatives to deliberately keep Marion
Terwilliger from returning to work for medical reasons
which were not true and which Greyhound knew not to
be true. Further, these fraudulent medical allegations
remained on Marion Terwilliger’s record long after Grey-
hound had rejected his return to work, and served to
influence all others who investigated his record for pur-
poses of determining whether to hire him. In short, Grey-
hound took deliberate steps having the effect of
destroying Marion Terwilliger’s entire life through a
series of fraudulent and untrue allegations about his
medical condition.
After receipt of the Kondomerkos letter, Greyhound,
through defendant James Selby or his assistant J.R.
Underwood, directed Mr. Terwilliger to report to May-
bury Grand Clinic to be examined by the company doc-
tor, Dr. Herman Kanter. This was pursuant to a
contractual procedure often used by Greyhound to pro-
vide physical examinations to drivers seeking return from
disability.
The Kanter examination took place on July 28, 1971.
Greyhound records include a report purportedly arising
from the examination. This report confirmed the findings
of Dr. Kondomerkos. It specifically noted that the heart
was normal, and that the cardiograph was within normal
limits. According to Greyhound records, this original
report set out two reasons for not recommending Marion
Terwilliger’s return to work. The first was vision below
standard: a common problem, with a simple remedy — the
driver simply changes his eyeglass prescription. The sec-
ond, found immediately below the line stating vision
below standard, is a nearly illegible reference to a certain
code number under the DOT regulations.
Greyhound responded to its receipt of the Kanter
report by circulating an internal “personal and confiden-
tial” memo per Al Young, a Greyhound dispatcher who
worked under the direct supervision of defendant James
Selby. This memo, dated August 13, 1971, stated that the
company was not accepting the “disqualification on
vision below standard.” The memo requested that the
company should strive to have “the following inserted
under reason for not approving: In our opinion this man
does not meet DOT requirements as set out in Part
391.41(b)(4) covering heart involvement.” Dr. Kanter was
contacted pursuant to this memo, and apparently was
requested to submit an amended form clearly showing
that Marion Terwilliger was suffering from heart disease,
per the instructions of Greyhound.
Dr. Kanter’s response must have come as quite a
shock to the company. On August 24, 1971, he sent Grey-
hound a letter stating that he had declined Mr. Ter-
williger’s return to work only on the basis of vision
below standard. Dr. Kanter further stated that at no time
was Marion Terwilliger diagnosed as suffering from a
myocardial infarction. His letter goes on to say “His EKG
at this time is within normal limits without evidence of
remote or recent myocardial disease. Clinically, the heart
is normal to auscultation and percussion.” Dr. Kanter also
submitted a corrected SD-5 form which clearly stated that
M.D. Terwilliger was being rejected for re-employment
only because his vision was below standard.
This company activity, and the dissent of Dr. Kanter,
went on unbeknownst to Marion Terwilliger or his union.
During this period, Marion Terwilliger’s union represen-
tatives, Fred Daczka, president of the local, and Walter
Koeller, union representative, were trying to reinstate Mr.
Terwilliger to his position as driver. Marion Terwilliger
had informed them that he had passed Dr. Kondomerkos’
exam, and, he thought, Dr. Kanter’s exam as well. By
letter of August 11, 1971, J.R. Underwood, assistant to
defendant James Se‘by, informed the president of plain-
tiff’s union that Terwilliger “was examined by Dr. Kanter
at the Maybury Grand Clinic, and found to be not quali-
fied to return to driving under minimum physical
requirements for drivers.” When the union attempted to
dispute this, and seek a reason why Dr. Kanter had
disqualified Marion Terwilliger, by communication from
Walter Koeller to James Selby on October 7, 1971, Mr.
Selby responded with a letter which enclosed the copy of
the original Kanter form, instead of the corrected one
which Greyhound had in its possession at that time.
The union was accordingly misled that Dr. Kon-
domerkos ane Dr. Kanter were in disagreement as to the
condition of Marion Terwilliger’s heart. Mr. Koeller has
testified that had the union known of the existence of the
corrected SD-5 form, the union would not have requested
a third doctor, but instead would have argued that Mar-
ion Terwilliger should be put back to work. Thus, in its
dealing with the union in 1971, Greyhound continually
misrepresented that the company doctor had failed plain-
tiff on his heart, and that a third doctor would be needed
pursuant to contract because of the alleged split between
plaintiff’s personal doctor and the company doctor.
The company and union, pursuant to the company’s
misrepresentations, agreed to send Mr. Terwilliger to a
third doctor. On September 22, 1971, defendant James
Selby wrote to that third doctor, Dr. Breneman, to confirm
the date of plaintiff's examination and to provide the
doctor with “background materials.” These background
materials consisted solely of Marion Terwilliger’s five
year old, 1966 medical records. Selby withheld the 1971
findings of Dr. Kondomerkos and Dr. Kanter. In addition,
pursuant to instructions, Selby advised the doctor in
details as to the onerous duties of a Greyhound driver,
including the requirement of changing tires and loading
and unloading, and carrying package express weighing in
excess of 100 pounds.
On September 24, 1971, Dr. Breneman examined the
plaintiff, and, by letter of September 30, 1971, stated that
his diagnosis was: arteriosclerotic heart disease, a history
of angina syndrome, and a history of coronary insuffi-
ciency and/or myocardial infarction. It is significant that
only the first finding constitutes a present finding; the
other two are mere reiterations of the history provided
Dr. Breneman by Greyhound, which history failed to
include the most recent examinations by Dr. Kon-
domerkos and Dr. Kanter.
At this point, Mr. Terwilliger did not know what to
think. He knew he had passed the exam of his personal
doctor, and was under the impression that he had passed
the company doctor’s exam. Yet all the physical evidence
provided the union stated the contrary. The union
informed him that the union could do nothing further on
his behalf, and that if he wanted to go further he would
have to get a lawyer.
Mr. Terwilliger did get a lawyer, who proceeded to
bungle the suit by unnecessarily delaying bringing the
cause of action. Unfortunately, Mr. Terwilliger’s personal
life paralleled the misfortunes in his lawsuit. Mr. Ter-
williger worked a number of jobs, all for at or near
minimum wage. He worked for Short Line as a driver
until the mid-1970s, then worked at Wayne-Westland
Community Schools as a probationary custodian and jani-
tor. However, his attempts to gain a permanent position
at Wayne-Westland were unsuccessful because of the his-
tory of heart disease as shown in the medical records
provided his employer by Greyhound. He went back to
minimum wage jobs, which he continued to work for the
remainder of the decade. This succession of low-paying
jobs forced Mr. Terwilliger into bankruptcy, where he lost
his home. He also suffered many marital problems, which
culminated in a divorce. A major factor in his divorce was
his continued determination to try to get his jcb back
from Greyhound, in the face of what was, to outside
observers (including his wife and family), solid evidence
of his inability to pass the necessary medical
examination.
As Mr. Terwilliger’s personal life touched bottom, so
too did his lawsuit. In 1980, after repeated unsuccessful
efforts to find out the status of his lawsuit against Grey-
hound from his attorney, Mr. Terwilliger was forced to
complain to the Michigan State Bar Association. As a
result of the State Bar’s intervention, Mr. Terwilliger dis-
covered that the attorney had never filed suit in his
behalf. Mr. Terwilliger thereafter sought further legal
assistance and the return of his file from the attorney.
He then brought a legal malpractice action against
the attorney for failure to diligently prosecute his legal
rights. This fawsuit ended in settlement after a surprising
development. On the morning that his lawsuit against the
attorney was to have gone to trial, a crucial document
was discovered —- one which Greyhound had never pro-
vided to Mr. Terwilliger or any of his representatives,
either in the union, or any of his attorneys. This docu-
ment, the Al Young memo, was only discovered through
serendipity —- Greyhound had provided the defendant
attorney in the legal malpractice action with its file in the
case. Greyhound had also provided plaintiff’s attorney a
copy of the so-called Terwilliger file. Howevei, Grey-
hound did not provide the same file to the same people —
the defendant had been given a copy of the file including
the Al Young memo, while the plaintiff was sent a copy of
the file without it. The concealment of this document
from Mr. Terwilliger and his representatives was continu-
ously ongoing through 1985. When the concealed docu-
ment was found, the suit against the attorney was settled,
and the instant fraud suit was instituted.
Defendant has consistently set forth a different ver-
sion of the above facts, and can be expected to do so
before this court as well. All of the above facts are sup-
ported by sworn testimony presented at trial. At that
trial, defendant had ample opportunity to present evi-
dence and to rebut plaintiff’s evidence. At the end of that
trial, the jury found for plaintiff. As noted by the trial
court, the Honorable Horace Gilmore of the Eastern Dis-
trict of Michigan, the jury must have found that the
particulars of the fraud alleged by plaintiff were true, or
else it could not have returned the verdict that it did. This
Honorable Court should not be misled by factual dis-
putes in reviewing this case. Defendant should only pre-
vail if, taking plaintiff's allegations as true, plaintiff’s state
law fraud claim is preempted by Section 301 of the Labor
Management Relations Act, 29 USC §185.
B. Proceedings Below
On July 8, 1985, plaintiffs Marion and Doris Ter-
williger filed a complaint in Wayne County Circuit Court
against Greyhound Lines, Inc., James Selby and M_J. Jor-
gensen. Plaintiff alleged fraud, misrepresentation, negli-
gence and breach of a labor contract. On August 26, 1985,
defendants caused this action to be removed to federal
district court.
On the first day of trial, plaintiff voluntarily dis-
missed Counts II and III of the complaint, those counts
for negligence and breach of labor contract. During the
trial, defendants moved for directed verdict at the close
of plaintiff’s proofs, which was denied by the court. This
motion was renewed at the close of trial, also to be
denied by the court. (Appendix A). Before jury delibera-
tions, defendant Jorgensen and plaintiff Doris Terwilliger
10
were dismissed from the case. The jury returned a verdict
in favor of Marion Terwilliger, the remaining plaintiff, in
the amount of $250,000 in actual damages, and $500,000
in the amount of consequential (exemplary) damages
(Appendix B), which verdict was then reduced by
$225,000, the agreed upon setoff of the amount of settle-
ment in the prior legal malpractice case.
Judgment was entered against defendants on October
14, 1986, in the amount of $525,000. (Appendix C). Defen-
dants moved for judgment notwithstanding the verdict
and for remittitur of damage, which motions were denied
by the court after argument was had on January 29, 1987,
(Appendix D), by an order dated February 24, 1987.
(Appendix E).
Defendants then appealed to the United States Court
of Appeals for the Sixth Circuit. Briefing and oral argu-
ments were had, and, by opinion dated August 10, 1989,
the United States Court of Appeals reversed the jury
verdict, stating: “Terwilliger’s state law claim is pre-
empted by Section 301 of the Labor Management Rela-
tions Act, 29 USC §185, and [we] hold that this case
should have been dismissed for Terwilliger’s failure to
exhaust the remedies available in the collective bargain-
ing agreement.” Terwilliger v Greyhound Lines, 882 F2d
10:3 (6th Cir 1989). (Appendix F, at App. 19).
Plaintiff timely filed, on August 19, 1989, a motion
for rehearing en banc, which was denied by order dated
September 25, 1989. (Appendix G).
>
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REASONS FOR GRANTING THE WRIT
I. THE SIXTH CIRCUIT DECISION CONFLICTS
IN PRINCIPLE WITH THIS HONORABLE
COURT’S DECISION IN LINGLE V NORGE
DIVISION OF MAGIC CHEF, 486 US 399, AND
WITH DECISIONS APPLYING LINGLE FROM
THE THIRD AND FIFTH CIRCUITS.
The Sixth Circuit’s application of Section 301 of the
Labor Management Relations Act, 29 USC §185, to pre-
empt plaintiff’s state law fraud claim, is based on a
flawed reading of Supreme Court rulings. Further, it con-
flicts with recent opinions from other federal circuits.
This Honorable Court should grant plaintiff’s petition so
as to clarify the law in this important area of labor
relations.
The case which governs the preemption issue, and
which the Sixth Circuit misinterpreted, is Lingle v Norge
Division of Magic Chef, 486 US 399; 108 S Ct 1877; 100 L Ed
2d 410 (1988). In Lingle, Justice Stevens, speaking for a
unanimous court, traced the history of Section 301 pre-
emption, beginning with Textile Workers v Lincoln Mills,
353 US 448; 77 S Ct 912; 1 L Ed 2d 972 (1957). The Lincoln
Mills case provided that federal courts were not only
given jurisdiction over controversies involving collective
bargaining agreements, but were also authorized to fash-
ion a “body of federal law for the enforcement of these
collective bargaining agreements.” Id at 451; 77 S Ct at
915. The next significant case, Teamsters v Lucas Flour
Company, 369 US 95; 82 S Ct 571; 7 L Ed 2d 593 (1962),
held that Section 301 mandated resort to federal rules of
law in order to insure uniform interpretation of collective
12
bargaining agreements, and thus to promote the peace-
able, consistent resolution of labor management disputes.
A more recent examination of this principle was pro-
vided in Allis-Chalmers Corp v Lueck, 471 US 202; 105 S Ct
1904; 85 L Ed 2d 206 (1985). In Lueck, the principle was
established that if, in resolution of a state law claim, the
court must ascertain the meaning of a collective bargain-
ing agreement, or if a collective bargaining agreement is
seriously implicated in the decision of the state law claim,
the state law claim is preempted and federal labor law
principles must be employed to resolve the dispute.
The Lueck ruling led directly to the holding in Lingle,
supra. The Lingle case involved a claim of retaliatory
discharge for filing a workers compensation claim. In
Lingle, defendant had argued that because a “just cause”
provision in the collective bargaining agreement prohib-
ited the retaliatory discharge of which plaintiff com-
plained, the state tort of retaliatory discharge was
inextricably intertwined with the collective bargaining
agreement, inasmuch as it would implicate the same anal-
ysis of the facts as would an inquiry under the “just
cause” provisions of the collective bargaining agreement.
This reasoning was followed by the Seventh Circuit Court
of Appeals in holding plaintiff’s claim preempted. 823 F
2d 1031, 1046 (7th Cir 1987) (en banc). This Honorable
Court reversed, engaging in the following analysis:
“In other words, even if dispute resolution
pursuant to a collective bargaining agreement, on
the one hand, and state law, on the other, would
require addressing precisely the same set of facts,
as long as the state law claim can be resolved
without interpreting the agreement itself, the claim
is “independent” of the agreement for Section 301
13
preemption purposes.” Id at 486 US 399; 108 S Ct
1883. See also Caterpillar, Inc v Williams, 482 US 386,
_» 107 5 Ct 2425, __; 96 L Ed 2d 318 (1987),
cited in footnote 10 of Lingle, supra.
Lingle holds that application of state law is pre-
empted by Section 301 only if such application requires
the interpretation of a collective bargaining agreement. Id
at 108 S Ct 1885. Further, footnote 12 of Lingle instructs
that a collective bargaining agreement may, of course, be
referenced in determining the damages suffered, but that
such would not serve to preempt an otherwise
unpreempted state law claim.
Under Lingle, which controls the instant case, the 6th
Circuit erred in holding that plaintiff’s fraud claim
should be preempted. Plaintiff’s claim is that defendant
Greyhound fraudulently altered and withheld certain
medical documents relating to the state of Marion Ter-
williger’s heart. The Sixth Circuit held that his sole rem-
edy for fourteen years of damage caused by this fraud
was to file a grievance. The Sixth Circuit failed to recog-
nize that any grievance in 1971 would have been decided
pursuant to fraudulent records, and that any grievance
decided in 1985, after the fraud was discovered, would
not have been able to compensate Marion Terwilliger for
the full range of injuries suffered. Fraud such as occurred
in this case cannot be remedied pursuant to grievance
procedure. Only by reference to a strong state policy, of
preventing fraudulent behavior, can plaintiff be made
whole.
This instant case is not one in which interpretation of
the agreement is required. The acts of which plaintiff
complains are not prohibited by, or addressed in, the
a
14
collective bargaining agreement, except by implication.
Defendants’ acts of altering and withholding plaintiff’s
medical records were neither prohibited by nor permitted
by the collective bargaining agreement. However, such
acts were tortious and actionable under Michigan state
law of fraud. The Sixth Circuit misconstrued Lingle in
holding that plaintiff’s claim was preempted by Section
301.
Significantly, the Sixth Circuit decision in Terwilliger
conflicts with post-Lingle decisions out of both the Third
and Fifth Circuits. The Third Circuit case is Berda v CBS,
Inc, 881 F2d 20 (3d Cir 1989). In Berda, the Third Circuit
faced the issue of whether:
“state contract and tort claims for monetary
relief brought by a bargaining unit employee
against his employer based upon alleged mis-
representations of job security, made before the
employee became a member of the bargaining
unit, thereby conferring additional rights to
those afforded by the collective bargaining
agreement, are preempted by Section 301.” Id at
20.
The Third Circuit answered this question in the nega-
tive, relying upon Caterpillar, Inc, supra. The Berda court
held that because Berda’s complaint did not “substan-
tially depend” on analysis of the collective bargaining
agreement, neither his pre-employment contract claims
nor his post-employment tort claims were to be pre-
empted. Similarly, in the instant case, Terwilliger’s claim
does not “substantially depend” on analysis of the collec-
tive bargaining agreement.
Similar in analysis and result to Berda, but more on
point factually, is the Fifth Circuit opinion in Wells v
15
General Motors Corp, 881 F2d 166 (5th Cir 1989). In Wells,
32 plaintiffs brought suit, alleging state law fraud and
misrepresentation claims against General Motors. In anal-
ysis which starkly conflicts with that undertaken by the
Sixth Circuit decision in Terwilliger, the Fifth Circuit
upheld the plaintiffs’ right to bring those fraud claims.
In Wells, GM announced layoffs in 1983. Concurrent
with that announcement, GM negotiated a separation
agreement with the union, under which employees could
opt for a severance payment in lieu of preserving their
seniority and rehire rights. According to the plaintiffs, at
meetings called to explain the plan to union members, a
General Motors representative told them that they could
be rehired if new jobs were created, although they would
have to apply like everyone else. According to plaintiffs’
allegations, however, when new positions opened in
1985, they were informed by management that because
they had chosen the severance plan, they were ineligible
for rehire. Wells, supra, at 168.
Plaintiffs brought suit in federal district court, alleg-
ing that GM had fraudulently misrepresented to the
employees their future rights in inducing them to opt for
the severance plan, and that plaintiffs had relied upon
those representations to their detriment. GM argued that
because future employment is a mandatory subject of
bargaining, and because GM had presented the plan
directly to the workers, rather than through the union,
any state law claims were preempted, and a claim must
be brought, if anywhere, before the National Labor Rela-
tions Board. The court first held that the district court,
not the NLRB, had subject matter jurisdiction. The Fifth
Circuit then held that, although the preemptive scope of
-
16
Section 301 of LMRA is broad, it is not so broad as to
preclude a claim of fraud, under the facts alleged by the
plaintiffs.
As stated by Wells, at 173:
“GM presents a forceful argument that resolu-
tion of plaintiff’s fraudulent misrepresentation
claims requires interpreting the terms of the col-
lectively bargained VTEP [the severance pay
agreement]. Its claim is that in order to deter-
mine whether GM falsely represented the conse-
quences of accepting the VTEP, there must be an
examination and interpretation of the VTEP to
determine what a truthful representation would
have been. In such a case, it argues, preemption
occurs.”
The court found GM’s argument to be flawed for two
reasons. First, Section 301 only preempts state law claims
when those are “substantially dependent upon analysis of
the terms of the collective bargaining agreement.” Wells,
citing Lueck, 471 US at 220; 105 S Ct at 1915. Second, the
court held that the plaintiffs’ claim was that GM fraudu-
lently induced individual employees to opt for the con-
tract by making extraneous promises outside of the
contractual language. As the court noted, this fraudulent
behavior did not have anything to do with the contents of
the contract.
On this basis, the Wells court held as follows:
“Therefore, we hold that where, as here, the
employees/plaintiffs’ state law claims are foun-
ded upon contractual rights or common law
rights independent of those which the collec-
tively bargained agreement creates, a defense
that relies upon the provisions of a collectively
bargained agreement does not invoke federal
————eO
17
ott te <<
preemption unless that agreement contains pro-
visions that govern, or reasonably might be con-
: strued as governing, the circumstances at
: hand.” Id at 881 F2d 174. See also Anderson v
Ford Motor Company, 803 F2d 953, 957 (8th Cir
1986), cert den, 483 US 1011, 107 S Ct 3242, 97 L
Ed 2d 747 (1987), where the court held that the
employee’s rights to gain redress for Ford’s
fraudulent promise of security against being
bumped by employees on the preferential hiring
list was independent of any contractually estab-
lished expectations of the parties.” Wells, foot-
note 18.
The instant case cries out for the Wells interpretation,
which accurately interprets the post-Lingle federal law.
Herein, there is no contractual provision which can be
interpreted as allowing the company to withhold certain
medical records, and to alter others, so as to create the
appearance of a conflict between the patient’s doctor and
the company doctor. Just as in Wells, the fact that defen-
dant has chosen to defend its behavior by reference to the
collective bargaining agreement does not preempt plain-
tiff’s state law fraud claims. Just as in Wells, the fact that
defendant conducted its fraud against the backdrop of
collective bargaining agreement provisoins does not pre-
empt plaintiff’s state law fraud claims.
Petitioner urges that this Honorable Court grant the
Writ of Certiorari so as to bring the Sixth Circuit in line
with the proper interpretation of Lingle, as was set forth
by the court in Wells v GMC, supra.
18
II. THE SIXTH CIRCUIT DECISION IMPROP-
ERLY INTERPRETS THE DOCTRINES OF
REPUDIATION AND FUTILITY, BOTH OF
WHICH ARE APPLICABLE TO THE INSTANT
CASE, TO EXCUSE PLAINTIFF’S FAILURE TO
EXHAUST INTERNAL UNION REMEDIES, IN
A CASE INVOLVING ACTUAL FRAUD.
The Sixth Circuit’s remarkable opinion on this subject
is as follows:
“Certainly, viewed in a light most favorable to
plaintiff, his employer, whether genuinely fear-
ing his heart was not up to the stress of his job,
or implied baser motives, pursued a course of
action to achieve its objectives which is at least
unethical, if not downright dishonest. This cir-
cumstance does not, however, lead inexorably to
the conclusion that arbitration, if pursued,
would have been futile.” Terwilliger, supra, at 882
F2d 1039. (Appendix F, at App. 30-31).
Such a reading misconstrues the futility exception, as
set forth in Glover v St. Louis-San Francisco Railway, 393 US
324, 329-30; 89 S Ct 548; 21 L Ed 2d 519 (1969). In fact, the
Sixth Circuit’s narrow reading completely swallows the
futility exception. In Glover, it would have been futile to
file a grievance because of racial discrimination, which
predictably would have led to a defeat in a useless griev-
ance procedure. Yet, under the Sixth Circuit rationale, the
Glover plaintiff was obligated to file a futile grievance,
because the mere fact of racial prejudice does not lead
inexorably to the conclusion that such grievance, if pur-
sued, would have been futile. Such an assertion would be
contrary to the overall purposes of federal labor relations
policy.
Vie Aedes bi sams mele
19
Such an interpretation is also at odds with the facts.
The facts as established at trial, as found by the jury, and
upheld by the trial court, indicate that any hearing, tak-
ing place immediately after Greyhound’s refusal to reins-
tate Marion Terwilliger as driver, would necessarily have
been undertaken with documents that were fraudulently
altered, and without documents that were fraudulently
withheld by the company. To state that a grievance would
have been anything but futile in that circumstance is to
misunderstand the nature of the common law fraud
which the company engaged in in this case, and to deny
the existence of the futility doctrine itself.
Plaintiff also proved that the other exception, repu-
diation, applied. The doctrine of repudiation was recog-
nized in Vaca v Sipes, 386 US 171; 87 S Ct 903; 17 L Ed 2d
842 (1967). Repudiation is not often found, but then facts
such as those presented by this case do not arise fre-
quently either. In the instant case, the company had repu-
diated the entire contractual bargaining agreement, and
was simply operating on a base of raw power in its
dealings with the union on this matter, as evidenced by
trial testimony of defendant Selby, who testified that a
general omnibus clause allowing the company to run
itself the way it sees fit in matters not directly contradict-
ing other specitic provisions of the union contract, should
be read to allow the company to negate any section of the
remainder of the bargaining agreement if it so chooses.
This testimony, taken in conjunction with the proof of
fraudulent behavior and concealment on the part of the
company, shows that as to Marion Terwilliger, the com-
pany had absolutely repudiated the collective bargaining
agreement, and was in fact relying only upon the so-
called grant of absolute power contained in Article 1, the
20
General Management section. The company’s position,
stripped to its essentials, is that it was free, in determin-
ing Marion Terwilliger’s status, to disregard specific con-
tractual obligations, and further was free, at the same
time, to falsely represent that it was following the pro-
cedure called for by those specific contractual obligations.
This constitutes repudiation pursuant to Vaca, supra.
The instant case involves both exceptions — repudia-
tion and futility. The company repudiated the contract,
and to file a grievance in the face of the then-undis-
covered company fraud would have been futile. Under
the circumstances of this case, Marion Terwilliger was
properly held not to have been obligated to exhaust his
union or contractual remedies. Fraud of the magnitude
engaged in by the company here stands independent of
any interpretation of any collective bargaining agree-
ment’s clause or policy. When fraud of the magnitude of
this case is discovered, mere grievance procedures cannot
begin to redress the injuries that were caused by such a
fraud, especially where such fraud lasts more than 10
years, and serves to destroy the employee’s entire life.
The defense of failure to exhaust internal union remedies
should not be available to the company here. The trial
court rejected defendant’s assertion that plaintiff’s claim
should fail as a matter of law, and allowed the jury to
determine whether plaintiff was obligated to pursue his
internal remedies. The jury, in its answer to special ques-
tion number 1, found that plaintiff was not. This Honor-
able Court should reinstate that finding, pursuant to
establishing coherent, meaningful federal labor policy.
21
CONCLUSION
The Sixth Circuit’s opinion below misconstrues Lin-
gle, supra, and directly conflicts with the proper inter-
pretation of Lingle as set forth in Wells, supra. To properly
resolve this conflict, and to set forth clear indication of
the course of federal preemption under Section 301 of the
LMRA in cases involving allegations of state law fraud
which tangentially involve reference to a collective bar-
gaining agreement, but do not substantially depend upon
interpretation of that collective bargaining agreement,
Petitioner urges this Honorable Court to grant his Peti-
tion for Writ of Certiorari.
Respectfully submitted,
CrHarroos & Crikistensen, P.C.
Davip R. PARKER
Counsel of Record
J. Douctas Peters
Counsel for Petitioner
4000 Penobscot Building
Detroit, MI 48226
(313) 963-8080
App. 1
APPENDIX A
(p. 697) THE COURT: All right, gentlemen. Thank
you very much.
The motion is a motion for directed verdict based
upon the statute of limitations, failure to exhaust union
remedies and the like.
I am going to deny the motion for the following
reasons.
Number one, there is obviously a clear duty to pur-
sue contract remedies, but I am satisfied a fact issue
arises here as to whether they should have been followed
in view of the fact that the exculpatory report of Dr.
Kanter was never furnished to the union. The only report
that was furnished to the union. The only report that was
furnished to the union by the company was the report
that had written on it section, whatever the section
number is, referring to DOT regulations. That was the
only one ever forwarded to the union and the union
readily, after receiving that report, agreed that they
would go to a third medical doctor under the terms of the
contract, a third medical examination. | think a question
of fact remains that this jury can resolve as to whether it
would have been futile to go. Certainly if there is futility
to (p. 698) exercise contract remedies, then clearly they do
not have to do so if it is shown. That is a fact question, if
it is futile.
Secondly, with reference to the fraud, the fraud is
claimed with the failure of the company to furnish that
and then the basis, the mens rea shown by Exhibit 11,
which is the memo per Al Young. | think there is suffi-
cient evidence here to go to the jury on the question of
App. 2
fraud and on the question of whether they should have
pursued their collective bargaining agreement. That, of
course, goes to whether they would have pursued it
because of the failure of the company to furnish the
proper report to the union. An argument very well could
be made and certainly can that the union could have said
we won't go because here is a report from Dr. Kanter that
says you are not qualified and we agree to go to a third
one on your behalf and there is a negative report there, so
therefore we won't grieve. On that basis generally | will
deny the motion for directed verdict.
. * *
(p. 757) (The fo'lowing occurred in chambers with all
counsel present)
THE COURT: Before the Court now is a motion by
Mr. Acho for a directed verdict as to the Plaintiff wife on
her derivative claim. | have determined that there is no
basis for the wife’s claim and therefore the motion for
directed verdict as to Mrs. Terwilliger will be granted.
MR. CHARFOOS: May I make one argument,
because I disagree with the Court’s earlier statements off
the record that there was no evidence against Jorgensen.
If Selby is guilty of fraud, which it is the Plaintiff's
position, he did make one statement that is just clear and
loud, “Whatever I did was under the direction of Mr.
Jorgensen. He was my boss.”
THE COURT: I don’t think there is sufficient evi-
dence of Jorgensen’s participation to go to the jury, so |
will grant the motions for directed verdict as to Mr
Jorgensen.
—e ee
App. 3
MR. ACHO: Your Honor, for the record, we are
renewing our earlier motion for directed verdict.
THE COURT: I have already denied that.
It is on the record.
App. 4
APPENDIX B
Marion Terwilliger v. Greyhound Lines, Inc.
Question 1
Was Mr. Terwilliger, under the facts in this case,
obligated to pursue his contractual remedies of
grievance and arbitration?
__ Yes __ No
(If the answer to Question 1 is yes, do not
answer any further questions)
Question 2
If the answer to Question 1 is no, did Defendant
Selby practice fraud upon the Plaintiff?
Yes No
Question 3
If the answer to Question 2 is yes, was that
fraud a proximate cause of the damages to
Plaintiff?
Yes __ No
Question 4
If the answer to Question 1 is no, did Defendant
Greyhound Lines, Inc. practice fraud upon the
Plaintiff?
Yes No
2 -———— st
Question 5
If the answer to Question 4 is yes, was that
fraud a proximate cause of the damages to
Plaintiff?
Question 6
If the answer to either Question 3 or Question 5 ’
is yes, did the Plaintiff suffer damages?
Question 7
If your answer to Question 6 is yes, what were
his actual damages?
$
Question 8
If you find actual damages, did the Plaintiff
suffer consequential damages?
Yes No
Question 9
If the answer to Question 8 is yes, what is the
amount of consequential damages?
$
Foreperson
Dated:
App. 6
APPENDIX C
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MARION TERWILLIGER,
PLAINTIFF, CIVIL ACTION
NO. 85 CV
VS. 73806 DT
GREYHOUND LINES, INC., Hon.
et al., Horace W. Gilmore
DEFENDANTS.
ORDER OF JUDGMENT
(Filed Oct. 15, 1986)
AT A SESSION OF SAID COURT
HELD IN THE FEDERAL COURT-
HOUSE, CITY OF DETROIT, COUNTY
OF WAYNE, MICHIGAN ON OCT 14
1986
PRESENT: HON. HORACE W. GILMORE
U. S. District Judge
This matter having been heard in open court, and the
jury having rendered its verdict on the verdict form, said
form being a part of this Order,
And further, the jury having awarded compensatory
damages in the amount of $250,000.00 and consequential
(exemplary) damages in the amount of $500,000.00, for a
total of damages in the amount of $750,000.00 against the
Defendants,
And further, pursuant to a stipulation of the parties,
the amount of $750,000.00 is to be reduced by $225,000.00,
ea tineceecieianeaiiditaiaaenedn intel
App. 7
IT IS HEREBY ORDERED AND DECREED that Judgment
is entered against Defendants Greyhound Lines, Inc. and
James R. Selby in the amount of Five Hundred Twenty-
Five Thousand (525,000.00) Dollars, with costs to be taxed
and interest to run from entry of this Judgment.
/s/ Horace W. Gilmore
U. S. District Judge
ei i
App. 8
APPENDIX D
(p. 14) THE COURT: This matter is here on a motion
for judgment notwithstanding the verdict and a motion
for remittitur. The motion for JNOV is denied.
The case tried fully last summer before the Court. It
is an action in which wrongful discharge was claimed.
This was basically a 301 action and an action for
damages.
The jury found that Plaintiff was claiming benefits
because Greyhound fraudulently concealed from him the
fact that after he had some problems, a second doctor had
cleared him to return (p. 15) to work and a Greyhound
representative had written a report to the doctor trying to
get him to change the opinion, that the union was never
informed of this letter, and that because of the fraudulent
concealment of the Greyhound Company, he did not pur-
sue union remedies and did not pursue remedies under
the collective bargaining agreement.
Many of these matters have been fully argued before
on the statute of limitations and the necessity of follow-
ing contractual provisions on motions for summary judg-
ment prior to trial which I denied. We now have a fully
developed record on the matter. The jury found that there
was fraudulent concealment by its verdict. Although
there were no specific questions answered, they had to
have found fraudulent concealment of significant facts by
Greyhound or they could not have returned the verdict
they did.
Defendant makes five grounds for granting the judg-
ment NOV. First, the failure to exhaust contract remedies,
App. 9
and they claim that the case must be dismissed as they
argued in their summary judgment motion and in the
motion for directed verdict because the Plaintiff failed to
file a grievance and exhaust grievance and arbitration (p.
16) under the collective bargaining agreement.
Of course it is a general rule that a person filing a 301
claim must attempt to use contract grievance procedure
as a general rule. However, there is an exception to that,
to the exhaustion requirement through contractual
remedies, laid out in Vaca v. Sipes which is one of the
basic cases on this, Vaca v. Sipes being 386 U.S. 171. The
Supreme Court says there at Pages 184 and 185:
“For this reason, it is settled that the employee
must at least attempt to exhaust exclusive griev-
ance and arbitration procedures established by
the bargaining agreement. However, because
these contractual remedies have been devised
and are often controlled by the union and the
employer, they may well prove unsatisfactory or
unworkable for the individual grievant. The
problem then is to determine under what cir-
cumstances the individual employee may obtain
judicial review of his breach-of- (p. 17) contract
claim despite his failure to secure relief through
the contractual remedial procedures. “An
obvious situation in which the employee should
not be limited to the exclusive remedial pro-
cedures established by the contract occurs when
the conduct of the employer amounts to a repu-
diation of those contractual procedures. In such
a situation (and there may of course be others),
the employer is estopped by his own conduct to
rely on the unexhausted grievance and arbitra-
tion procedures as a defense to the employee's
cause of action.”
App. 10
The Court went on to point out that another situation was
when an employee had been prevented from exhausting
the grievance procedure by the union’s breach of the duty
of fair representation.
The whole gravamen of the Plaintiff's Complaint and
his proofs in this case was that he did not know that
Defendant’s refusal to put him back on the job violated
the contract because the Defendant (p. 18) fraudulently
concealed the medical report and the letter of the Grey-
hound executive asking the report be changed. He there-
fore contends that the defendant should be estopped
from defending the action on the basis the Plaintiff failed
to file or process a grievance.
I think the facts of this case fit well within the Day
analysis, Day v. UAW, 466 F.2d 83, a Sixth Circuit case in
1972, where the Court said that the exhaustion require-
ment must be given a reasonable and common sense
application to the facts of the case. Here I think it is clear
that the facts of this case fit within the Day analysis and
fit within the Vaca v. Sipes analysis. It doesn’t make sense
that Plaintiff here should be barred as a matter of law
from suing Greyhound because he didn’t file a grievance
when the whole nature of his claim is that he did not
know he had a grievance because of the fraud and falsi-
fication and hidden medical report accomplished by
Greyhound, all of which was found by the jury. So cer-
tainly that is no basis for granting a JNOV.
The second argument of Plaintiff is that the failure to
sue the union for the breach of duty of fair representation
and failure to proceed that way exonerates the Defendant
in this case, but (p. 19) Vaca clearly points out that one of
App. 11
the situations where an employee is not required to
exhaust union remedies before he can sue in Court is a
situation where his union didn’t breach the duty. Here it
does not make any sense to say the Plaintiff would be
required to sue his union because of the breach of duty of
fair representation when the company breached the con-
tract and fraudulently concealed from not only the Plain-
tiff but also the union the medical report of the company
doctor which report would have allowed the Plaintitr to
go back to work. The union didn’t know about it, the
Plaintiff didn’t know about it, and it would have been a
futile gesture at that point for him to pursue a grievance
procedure because the union, based upon the medical
reports they had and not being aware of the fraudulent
concealment by the Defendant, would have dismissed the
grievance and quite properly so. So that is certainly no
basis for JNOV.
The next claim is that Plaintiff failed to prove or
establish the elements of fraud or deceit. I think there 1s
no basis whatever in that case. The record clearly sup-
ported the jury’s verdict that Greyhound knew that Plain-
tiff had passed the medical examination enabling him to
go back to work. They deliberately held this information,
submitted a mis- (p. 20) leading and incorrect medical
report showing that he had failed an examination due to
a heart problem. That clearly raises a factual question of
fraud there to go to the jury and it was properly put to
the jury.
The next claim is that the claim is barred by the
statute of limitations. Well, I don’t think there is any basis
to that. The record clearly shows that at the very earliest
date, the very earliest date the Plaintiff would have
\
App. 12
known about this medical report was in 1984 and the suit
was in 1985. There is a claim that they really didn’t know
about the fraud until they found the letter from the
officer at Greyhound and that therefore it didn’t arise
until 1985. But taking the 1984 date, there is no question
but what in this situation that is well within the statute of
limitations which is obviously a two-year statute of
limitations.
DelCostello v. International Brotherhood of Teamsters, 76
L.Ed.2d 476, does not apply in this case where they use a
six month statute of limitations in 301 claims. This is not a
hybrid case. It does not come under Badon. Looking at the
Michigan Statute of limitations and the State tolling pro-
visions, clearly there is at least a two year statute of
limitations. As the Sixth Circuit pointed out most recently
(p. 21) in Appont v. Sunshine Biscuits, No. 85-3782 and
85-3783, decided January 15, 1987, on Page 7 of the slip
opinion, the Court held:
“However, in DelCostello the Court held that the
six-month statute of limitations period of Sec-
tion 10(b) of the National Labor Relations Act,
29 U.S.C. 160(b), is applicable to hybrid section
301/fair representation actions. The Court lim-
ited its holding to the so-called hybrid action
against both employer and union, distinguish-
ing rather than overruling International Union,
UAW v. Hoosier Cardinal Corp., 383 U.S. 696,
which applied the State limitations period for
breach of contract actions to an action by a
union alleging a breach of the collective bargain-
ing agreement. Thus, Federal Courts may still
resort to the most analogous State statute of
limitations where, as here, the action does not
impli- (p. 22) cate the breach of the union’s duty
of fair representation.”
—
App. 13
That is clearly the case in this case. The State statute
tolling provisions would toll this until at least 1984 and
then a two year statute would apply and the case was
started well within that period.
Finally, it is claimed that Plaintiff misled the Court
into believing that he had his first knowledge of the fraud
in June or July of 1985. I don’t know how that is a basis
for a judgment NOV. There can be a dispute of fact there
but in all events it was 1984 clearly before the cause of
action accrued.
For those reasons I deny the motion for judgment
NOV.
With reference to the Defendant’s motion for remit-
titur, there is some kind of a strange argument made by
Defendants that Plaintiff has unclean hands because he
slept on his rights for so long. I don’t see any way to put
an equitable doctrine of clean hands into the legal ques-
tion of whether remittitur is appropriate. It just doesn’t
make any sense. The jury awarded $250,000 actual dam-
ages and $500,000 exemplary damages. Certainly, as far
as the actual damages of $250,000 is concerned, there (p.
23) was evidence at trial that the Plaintiff could have
earned $414,000 in the period involved and with the
offset for disability it still would amount to $250,000, so
clearly on the actual damages the verdict is well within
the range of the testimony.
With reference to the exemplary damages, I don’t
think the proper analysis on exemplary damages comes
under Kewin. Really what we are talking about is whether
exemplary damages can be awarded under 301 lawsuits
for breach of the collective bargaining agreement against
App. 14
employers. It appears to me that the Sixth Circuit has
never ruled specifically on that question and there is a
Circuit split. Most Circuits have held that punitive dam-
ages may not be awarded against unions in a Section 301
breach of the duty of fair representation and the Sixth |
Circuit has held that in Farmer v. ARA Services, 660 F.2d |
1096 and also in Badon, which is Badon v. General Motors,
679 F.2d 93, but Badon and Farmer do not rule on whether
punitive damages may be recovered under 301 suits )
against employers for breach of the contract. The Sixth
Circuit has never specifically ruled on that point and
there is a clear Circuit split. The Third and Ninth Circuits
in United Shoe Workers v. Brooks Shoe, 298 F.2d 277, and the
Ninth Circuit in Williams v. Pacific (p. 24) Maritime Asso-
ciation, 421 F.2d 1287, have held there is never any puni-
tive damages in any Section 301 case. Hlowever, the
Second Circuit affirmed without an opinion a ruling by a
District Court that punitive damages are recoverable
from an employer in a 301 suit for breach of contract if
the employee demonstrated both a breach of contract and
a wilful abuse of duty imposed as a result of its position
of authority and trust. That is Refino v. Feuer Transporta-
tion Company, 480 FSupp 562, affirmed without opinion
by the Second Circuit at 633 F.2d 205. In Holodnak v. Ayco,
514 F2d 285, the Second Circuit agreed with the District
Court’s statement that punitive damages were available
for breach of contract but held that they were inappropri-
ate where the District Court expressly held they were not
necessary to deter future contract violations.
Many lower Court cases have held that punitive
damages may be available. Crawford v. Pittsburgh-Des
Moines Steel Company, 386 F.Supp 290 from the District of
———————————
App. 15
Wyoming; United Steel Workers v. Butler from the District
of Michigan, 66 CCH 11 Labor Cases 707. Other Courts
have held that it is somewhat unclear whether punitive
damages could be awarded against employers, but if they
could, it could only be done in outrageous or extraordi-
nary (p. 25) circumstances. That is the Eighth Circuit in
Butler v. International Brotherhood of Teamsters, 514 F.2d
442, and Hechenberger v. Western Electric, 570 F.Supp 820.
In short, the Circuits are split but I am inclined to
follow, however, the Second Circuit, which holds that
punitive damages are recoverable when there was a
breach of contract and a wilful abuse of duty imposed
because of position of authority and trust, and | clearly
think that fits this case like a glove. That being so, | think
punitive damages are not out of line and [| will deny the
motion for remittitur.
App. 16
APPENDIX E
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MARION TERWILLIGER, and
DORIS TERWILLIGER,
Plaintiffs, sie Shs
V 85 CV 73806 DT
GREYHOUND LINES, INC., a HON:
foreign corporation, JAMES HORACE W.
SELBY and M.J. JORGENSEN, GILMORE
Individually, Jointly and
Severally,
Defendants
/
ORDER
At a session of said Court held in the
Federal Courthouse, City of Detroit,
State of Michigan on FEB 24, 1987
PRESENT: HONORABLE HORACE W.
GILMORE
United States District Judge
This matter came to be heard on the 29th day of
January, 1987, on Defendants’ Motion for Judgment Not-
withstanding the Verdict and Motion for Remittitur.
The Court having fully considered all of the argu-
ments, and based upon its oral Opinion and Decision
from the bench,
Now therefore, IT IS HEREBY ORDERED that
Defendants’ Motion for Judgment Notwithstanding the
App. 17
Verdict is DENIED, and the Motion for Remittitur is
DENIED.
/s/ Horace W. Gilmore
HONORABLE HORACE W.
GILMORE
United States District Judge
App. 18
APPENDIX F
No. 87-1236
UNITED SIATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
MARION TERWILLIGER AND Doris
TERWILLIGER,
On APPEAL
from the
United States
District Court
for the Eastern
District of
Michigan.
Plaintiffs-Appellees,
v.
GREYHOUND Lines, INc., a
foreign corporation, and James
SHELBY, jointly and severally,
Defendants-Appellants,
M.J. JORGENSEN,
Defendant.
Decided and Filed August 10, 1989
Before: ENGEL, Chief Judge*; MERRITT and KRU-
PANSKY, Circuit Judges.
ENGEL, Chief Judge, delivered the opinion of the
court, in which KRUPANSKY, Circuit Judge, joined. MER-
RITT, Circuit Judge, (pp. 16-17) delivered a separate opin-
ion concurring in part and dissenting in part.
ENGEL, Chief Judge. Defendant Greyhound Lines,
Inc. (“Greyhound”) appeals the judgment of the district
*The Honorable Albert J. Engel assumed the duties of
Chief Judge April 1, 1988.
App. 19
court awarding plaintiff Marion Terwilliger damages fol-
lowing a jury determination that Greyhound committed
fraud and misrepresentation under Michigan law against
Terwilliger by denying Terwilliger’s application for reem-
ployment in 1971. For the reasons stated below, we find
that Terwilliger’s state-law claim is preempted by Section
301 of the Labor Management Relations Act, 29 U.S.C.
§ 185, and hold that this case should have been dismissed
for Terwilliger’s failure to exhaust the remedies available
in the collective bargaining agreement.
I.
Marion Terwilliger was first employed as a bus
driver by Greyhound in 1943 and was a member of the
local chapter of the Amalgamated Transit Union
(“Union”) throughout his employment. In 1966, after Ter-
williger experienced heart problems, his doctor disqual-
ified him from employment as a bus driver with
Greyhound. Pursuant to his rights under the collective
bargaining agreement between Greyhound and the
Union, Terwilliger was then granted disability pension
status. In 1970, Terwilliger passed the Department of
Transportation physical and began driving buses for a
local carrier, and in 1971, he reapplied to Greyhound for
employment. His application included a recommendation
of fitness for employment from his personal physician.
Pursuant to the collective bargaining agreement,
Greyhound referred Terwilliger to an independent physi-
cian, Dr. Herman Kantor, for a second examination. Dr
App. 20
Kantor’s report did not recommend him for reemploy-
ment. The report listed two reasons for the recommen-
dation: Terwilliger’s vision was below standard and a
Department of Transportation code number relating to
heart disease. After Greyhound asked Dr. Kantor to clar-
ify his findings, Kantor sent a letter and a second exam-
ination report which stated that Terwilliger’s vision was
below standard, but that his heart condition met the
Department of Transportation standards, though possibly
not Greyhound’s internal standards.! Greyhound then
denied Terwilliger’s petition for reemployment. Ter-
williger wrote a letter to the Union challenging Grey-
hound’s denial of his reinstatement.
Based only on the letter from Terwilliger’s physician
and Dr. Kantor’s initial report,? the Union was faced with
disagreeing physicians regarding Terwilliger’s heart con-
dition. Article 12 of the Collective Bargaining Agreement
provides for this situation:
Employees failing to pass medical examina-
tions by competent medical authority approved
by the Company may be disqualified for service.
This disqualified employee or the Union may,
within ten (10) days after such examination
' The collective bargaining agreement does not limit Grey-
hound’s right to enact stricter medical standards for its drivers
than those adopted by the Department of Transportation.
2 Dr. Kantor’s letter and the second examination report
were not given to Terwilliger or the Union, though no express
explanation for this omission appears in the record. Therefore,
in 1971 the Union only had access to the first report by Dr.
Kantor.
Oe
pete
App. 21
make written request to the Company for fur-
ther examination by the employee and the other
by the Company... . In the event of disagree-
ment between the two physicians, a representa-
tive of the Company and a representative of the
Union shall meet within ten (10) days from the
date of written notice of disagreement between
the physicians, to select a third physician. The
third physician shall make an examination and
the findings of a majority of three shall rule.
Following this procedure, the Union and Greyhound
decided upon a third physician, Dr. Breneman, a cardiolo-
gist. Dr. Breneman determined that Terwilliger should
not be reemployed by Greyhound due to his heart condi-
tion. Based on this report, Greyhound confirmed its
denial of Terwilliger’s reapplication for employment in
1971.
The Union advised Terwilliger that it could do noth-
ing more for him and in 1973 he hired a lawyer to sue
Greyhound. In 1980, Terwilliger learned that his attorney
had not yet filed suit, and Terwilliger’s separate malprac-
tice action against the lawyer was settled for $225,000 in
1985.3 In 1981, Terwilliger again sought reinstatement
with Greyhound. Greyhound denied his request because
he refused to provide updated medical reports on his
condition. Terwilliger remained on disability status until
1983, when he reached his normal retirement age.
3 The record reveals that Terwilliger had agreed with his
lawyer to delay bringing suit in order to increase the potential
damages. In so doing, the attorney negligently let the time
period for bringing suit lapse. This negligence by the attorney
was the basis for Terwilliger’s malpractice action which ended
in a settlement for Terwilliger of $225,000.
App. 22
In the course of Terwilliger’s malpractice action
against his lawyer in 1984, Terwilliger first gained access
to the second examination report by Dr. Kantor. In July,
1985, he discovered an internal Greyhound memo? which
+ The memo, written for Greyhound’s internal files by one
of their dispatchers states:
J. Junglas telephoned and advised to call Mayberry Grand
Clinic, Doctor Kantor, and have him forward another physical
on M.D. Terwilliger. Disqualification on vision below standard
not accepted by company. Have the following inserted under
Reason for not approving:
“In our opinion this man does not meet the DOT require-
ments as set out in part 391.41(b)(4) covering heart
involvement.”
| telephoned Mr. Jorgensen and related the above informa-
tion to him. I advised him that Mr. Terwilliger had signed the
Original physical form, and what about another physical form
without Mr. Terwilliger’s signature on it should the Union
request to see the physical form. He advised to have the
Company Doctor state on the corrected physical form the
following:
“We neglected to state the patient’s heart condition, there-
fore, it is necessary to issue a corrected physical form”.
Mr. Jorgensen further advised to have the following
clarified:
On physical form under THORAX: Heart Normal to A&P
Mr. Jorgensen advised the above should be clarified on the
physical form.
I called Doctor Kantor and was advised he is on vacation
until August 23rd, and spoke to Mr: Wayne Morche. He took
the information related to us by the Safety Dept. He further
(Continued on following page)
App. 23
he claims is evidence that Greyhound fraudulently with-
held the second examination report in order to deny his
reinstatement. Terwilliger claims that discovery of this
memo in 1985 first led him to believe that Dr. Kantor had
recommeded non-reinstatement based on Terwilliger’s
vision alone and that there did exist a second report.
In August 1985, Terwilliger filed the present suit
seeking back pay and other damages, alleging state-law
claims for breach of contract, negligence, and fraud and
misrepresentation through Greyhound’s denial of his
reinstatement in 1971. Terwilliger claimed that Grey-
hound employees intentionally changed the first report
by Dr. Kantor and concealed the second report in order to
secure the Union’s agreemert to an examination by a
third physician, all as part of a Greyhound plot to not
rehire Terwilliger as a driver. At trial, with only the fraud
and misrepresentation claim remaining, the jury returned
(Continued from previous page)
advised that everything pertaining to Mr. Terwilliger’s heart
was normal, and A&P meant the heart beat is normal, and he
did not know what they could put on the physical form under
“Heart” that would disqualify him. [ referred him to statement
made by Lincoln Clinic for reason of Terwilliger’s Disqualifica-
tion and asked if he received a copy of it if it would assist him
in determining the terminology to use; he advised it might. |
told him I would have to obtain approval from Mr. Jorgensen.
Mr. Jorgensen advised to send copy of physical to clinic.
| advised Mr. Morche to have Doctor Kantor submit a
corrected physical upon his return from vacation 8-23-71. Mr.
Morche stated since he spoke with me earlier, he had located a
copy of the physical form dated 8-2-66, but did not have a copy
of the Supplementary Report dated 8-2-66, | advised him a
copy would be forwarded.
App. 24
a verdict for Terwilliger, awarding him $250,000 in actual
damages and $500,000 in consequential damages. Pur-
suant to pretrial agreement, this was set-off by the
$225,000 from Terwilliger’s previous attorney malpractice
award, resulting in a total award $525,000. Greyhound
appeals.
Il.
Section 301(a) of the Labor Management Relations
Act, 29 U.S.C. § 185(a), provides:
Suits for violation of contracts between an
employer and a labor organization representing
employees .. . may be brought in any district
court of the United States having jurisdiction of
the parties... .
The Supreme Court has determined that section 301 not
only confers federal jurisdiction over controversies
involving collective bargaining agreements, but also
authorizes the federal courts to fashion a body of federal
law for the enforcement of section 301. Textile Workers v.
Lincoln Mills, 353 U.S. 448, 451 (1957). In Teamsters v. Lucas
Flour, 369 U.S. 95 (1962), the Court determined that the
federal law preempts local law so that a uniform body of
labor law can be developed to avoid conflicts in the
interpretation of collective bargaining agreements. Then,
in Allts-Chalmers Corp. v. Lueck, 471 U.S. 202, 213 (1985),
the Court determined that the pre-emptive effect of the
federal labor law extended to state-law tort claims which
are “inextricably intertwined with consideration of the
terms of the labor contract” as well as pure contract
claims. In 1987, the Court summarized the preemption
doctrine as follows: “Section 301 governs claims founded
App. 25
directly on rights created by collective bargaining agree-
ments, and also claims substantially dependent on anal-
ysis of a collective bargaining agreement.” Caterpillar Inc.
v. Williams, 107 S.Ct. 2425, 2431 (1987).
In 1988, the Supreme Court clarified the scope of the
terms “substantially dependent on analysis of a collective
bargaining agreement” and “inextricably intertwined” in
a tort context in Lingle v. Norge Division of Magic Chef, Inc.,
108 S.Ct. 1877 (1988). Lingle invoived a claim of retalia-
tory discharge for filing a worker’s compensation claim.
The Court held that the claim was not preempted because
“resolution of the state-law claim [did] not require con-
struing the collective-bargaining agreement.” Id. at 1882
The Court noted that the two elements of retaliatory
discharge, that the employee was discharged or threat-
ened with discharge, and that the employer’s motive was
to deter him from exercising his rights under the
Worker’s Compensation Act, were purely factual and did
not involve interpretation of the terms of the agreement
Id.
On the basis of Lingle, this court has recently recon-
sidered a claim of tortious interference with a contract by
a third party and found no preemption of that state-law
claim because the claim could be resolved without inter-
preting the collective bargaining agreement. Dougherty v.
Parsec, 872 F.2d 766 (6th Cir. 1989). Dougherty involved a
claim against a non-signatory to a collective bargaining
agreement who was not bound by the terms of the con-
tract and thus not bound to the arbitration process for
resolution of disputes. The court recognized that a major
policy underlying the preemption principle was “that
permitting state law claims would allow plaintiffs to
App. 26
avoid the fundamental labor policy that contract disputes
should be decided by arbitrators in the first instance.” Id.
at 771. Because the defendant was a third party to the
contract and the relationship of the parties was not
defined by the contract, there was no basis for preemp-
tion because a dispute between them would not have
been subject to arbitration initially. Thus the court deter-
mined that preemption principles did not apply.
This court, en banc, also recently considered the issue
of preemption under section 301 in Smolarek v. Chrysler
Corp., Nos. 86-2074, 87-1387 (6th Cir. July 12, 1989),
Smolarek involved two types of claims: a claim of retalia-
tory discharge for filing a workmen’s compensation claim
and a claim under the Michigan Handicapper’s Civil
Rights Act. The court, en banc, determined that neither of
the two claims was subject to section 301 preemption:
first, because resolution of the claims did not require
interpreting the terms of the collective bargaining agree-
ment in force, and second, because the rights that the
employee sought to vindicate were created by state law
and did not arise solely under the terms of the collective
bargaining agreement. Slip op. at 9.
Thus, in evaluating Terwilliger’s claim, we must
determine first, whether resolution of Terwilliger’s state-
law claim of fraud and misrepresentation requires inter-
pretation of the terms of the collective bargaining agree-
ment such that this claim should have been decided by
arbitration pursuant to the terms of the agreement in the
first instance and second, whether his claim is based on
rights created by the collective bargaining agreement or
under state law. Here, Terwilliger has pleaded his cause
of action as one based upon fraud by the employer in
App. 27
carrying out the process of examining a reinstatement
request by a medically disqualified employee and misrep-
resentation regarding Terwilliger’s physical condition
when it negotiated with the Union for an examination by
a third physician. Terwilliger attempted to frame his
claim purely in state-law fraud terms. However, such
“artful pleading” will not suffice to avoid preemption
under section 301. See Hyles v. Mensing, 849 F.2d 1213 (9th
Cir. 1988) (“Plaintiffs may not avoid removal by ‘artfully
pleading’ their claims to omit references to preemptive
federal law.”). Terwilliger essentially has a'leged that
Greyhound, acting in bad faith, violated the provisions of
the collective bargaining agreement.
Terwilliger in essence claims that Greyhound failed
to abide by the terms of the agreement when it negotiated
with the Union for an examination by a third physician.
Resolution of this claim requires interpretation of the
terms of the agreement in order to determine whether, in
fact, Greyhound complied with them when it negotiated
for the third physician.> To hold otherwise would allow
plaintiffs to avoid the obligation of arbitration by “art-
fully pleading” their claims and would, in our view,
eviscerate the strong policy favoring arbitration which
has been a cornerstone of federal labor law since the
5 The third physician selected by representatives of man-
agement and the union found Terwilliger’s heart condition to
be disabling:
It is my opinion that this gentleman does have
significant coronary artery disease. For this reason
he should not be employed in the operation of a
commercial or passenger transport vehicle.
App. 28
Steelworkers Trilogy. Therefore because resolution of this
claim does require a construction of the terms of the
collective bargaining agreement, Terwilliger’s claim is
preempted by section 301.7
The rights which Terwilliger seeks to vindicate arise
solely under the terms of the collective bargaining agree-
ment. The agreement creates the right to re-employment
claimed by Terwilliger that provides the only basis for the
relationship between Terwilliger and Greyhound. “Sec-
tion 301 governs claims founded directly on rights cre-
ated by collective-bargaining agreements. . . .” Caterpillar
6 United Steelworkers v. American Manufacturing Co., 363
U.S. 564 (1960); United Steelworkers v. Warrior & Gulf Navigation
Co., 363 U.S. 574 (1960); United Steelworkers v. Enterprise Wheel
& Car Corp., 363 U.S. 593 (1960).
? Even assuming that the second physical report was
intentionally withheld, that report and Dr. Kantor’s letter do
not conclusively foreclose the application of Article 12 of the
collective bargaining agreement pertaining to disagreeing phy-
sicians. The Tetter did not indicate that Terwilliger’s heart
condition enabled him to drive for Greyhound, but that his
condition might not meet Greyhound’s internal standards.
Therefore, there still existed a situation involving disagreeing
physicians’ resolution of the disagreement would involve the
terms of the agreement. Further, any analysis involving Grey-
hound’s internal standards is itself uniquely a contractual
question which should have been resolved in the first instance
by the arbitration process specified in the agreement.
The question whether the company’s physician finally con-
cluded that Terwilliger was, or was not disabled - purely
factual, though impaired obviously by company attempts to
influence him — would in our view be the kind of decision
entrusted to the arbitrator based upon the equivocal nature of
his reports.
—————————————
App. 29
Inc. v. Williams, 107 S.Ct. 2425, 2431 (1987). Since both the
relationship between the parties and the process for rein-
statement were governed by the collective bargaining
agreement, the claim must be preempted by section 301°
if the important policies underlying the Steelworkers Tril-
ogy are to be accorded more than mere lip service.
Preemption in this case, then, is more essential here
as a matter of public policy since both triggers of section
301 preemption are present: resolution of the state-law
claim directly requires construction of the terms of the
agreement itself, and the rights sought to be vindicated
and the relationship between the parties are created not
by state law, but by the collective bargaining agreement
itself.
Since this claim is preempted by section 301, it
should have been first resolved through the grievance
procedures established by the collective bargaining
agreement.
As a general rule in cases to which federal
law applies, federal labor policy requires that
individual employees wishing to assert contract
grievances must attempt us: of the contract
grievance procedure agreed upon by the
employer and union as the mode of redress.
Republic Steel Corp. v. Maddox, 379 U.S. 650, 652 (1965)
(footnote omitted) (emphasis in original). “[A]n employee
5 Interestingly, although relying primarily upon whether
the terms of the contract would be interpreted during resolu-
tion of the state claim, in both Lingle and Smolarek the wage
earner was suing to vindicate rights expressly conferred by
state statute for the benefit of persons in his class and entirely
separate from rights conferred by the contract.
App. 30
[can]not sidestep the grievance machinery provided in
the contract and . . . unless he attempt[s] to utilize the
contractual procedures for settling his dispute with his
employer, his independent suit against the employer in
the District Court [will] be dismissed.” Hines v. Anchor
Motor Freight, 424 U.S. 554, 563 (1976). It is undisputed
that Terwilliger did not exhaust the remedies available to
him either with the Union or pursuant to the collective
bargaining agreement. “A rule that permitted an individ-
ual to sidestep available grievance procedures would
cause arbitration to lose most of its effectiveness, . . . as
well as eviscerate a central tenet of federal-labor contract
law that it is the arbitrator, not the court, who has the
responsibility to interpret the labor contract in the first
instance.” Allts-Chalmers, 471 U.S. at 220. Therefore this
case should have been dismissed by the district court for
failure to exhaust available remedies.
Terwilliger claims that he is excused from exhausting
the available remedies either because pursuing such
remedies in this instance would have been futile or
because Greyhound repudiated the contract and its dis-
pute resolution procedures. The record does not support
either of these contentions.
A. Futility
Terwilliger first claims that pursuing the remedies set
forth in the collective bargaining agreement would have
been futile. Certainly, viewed in a light most favorable to
plaintiff, his employer, whether genuinely fearing his
heart was not up to the stress of his job, or implied baser
§
i
|
;
App. 31
motives, pursued a course of action to achieve its objec-
tions which is at least unethical, if not downright dishon-
est. This circumstance does not, however, lead inexorably
to the conclusion that arbitration, if pursued, would have
been futile.
“(T]he exhaustion requirement is subject to a number
of exceptions [where] doctrinaire application of the
exhaustion rule would defeat the overall purposes of
federal labor relations policy.” Glover v. St. Louis-San
Francisco Railway, 393 U.S. 324, 329-30 (1969). One such
exception occurs “where the effort to proceed formally
with contractual or administrative remedies would be
wholly futile.” Id. at 330. The Sixth Circuit requires “a
clear and positive showing of futility before excusing a
failure to exhaust... .” Miller v. Chrysler Corporation, 748
F.2d 323, 326 (6th Cir. 1984) (quoting Winter v. Interna-
tional Brotherhood of Teamsters, Local 639, 569 F.2d 146, 149
(D.C. Cir. 1977)). Terwilliger has made no such showing.
That he subjectively may have thought such procedures
were futile is insufficient. Even assuming the validity of
his allegations that Greyhound engaged in fraud or deceit
regarding the reinstatement process, this does not indi-
cate that the company would not have cooperated with
the dispute resolution process and does not constitute a
clear and positive showing of futility. Such an assertion is
similar to that made in Miller, supra, wherein the
employees failed to initiate grievance procedures with
the union because they believed that the union was in
agreement with the company and would not have pur-
sued their claim. Such a subjective belief was insufficient
to excuse them from at least attempting to utilize the
procedures. Here, Terwilliger admits that he did not
attempt to pursue his available remedies under the collec-
tive bargaining agreement.’ Therefore, he has no basis to
claim that such procedures would have been futile
B. Repudiation
Exhaustion may also be excused “when the conduct
of the employer amounts to a repudiation of [the] con-
tractual procedures.” Vaca v. Sipes, 386 U.S. 171, 185
(1967). Although repudiation of the contractual pro-
cedures is an excuse for exhaustion, such repudiation
must be of the grievance procedures themselves. See
Anderson v. Ideal Basic Industries, 804 F.2d 950 (6th Cir
1986) (where employees filed grievance only two weeks
prior to filing suit, company’s failure to process it in the
short time available did not constitute repudiation);
United Slate, Tile and Composition Roofers v. G & M Roofing
and Sheet Metal Co., 732 F.2d 495 (6th Cir. 1984) (an out-
right refusal to comply with grievance procedures would
constitute repudiation); Geddes v. Chrysler Corp., 608 F.2d
261, 263 (6th Cir. 1979) (“Employers are normally
estopped from seeking dismissal of a claim based on
failure to exhaust remedies when they have taken the
position that those remedies are not available to the
7 Indeed, had Terwilliger initiated the grievance pro-
cedures contemplated in the collective bargaining agreement,
the second report and the letter as well as the internal memo
may have come to light during the arbitration process and
could have been resolved by the arbitrator if they affected his
claim to reinstatement.
———————————————————————
App. 33
employees.”). Terwilliger asserts that Greyhound repudi-
ated the contract when it fraudulently withheld the sec-
ond physical examination report and misrepresented
Terwilliger’s physical condition in order to secure Union
agreement to a third physician’s examination. However,
Terwilliger has not asserted that Greyhound ever refused
to abide by the terms of the contract regarding the avail-
able grievance procedures. In fact, Terwilliger never even
filed a formal grievance on this matter, thus depriving
Greyhound any opportunity to resolve the claim through
the procedures found in the collective bargaining agree-
ment. We therefore find no evidence of repudiation by
Greyhound which excuses Terwilliger’s failure to exhaust
the remedies available to him under the collective bar-
gaining agreement.!°
Ill.
The national policy encouraging a uniform body of
labor law, Textile Workers v. Lincoln Mills, 353 U.S. at 451,
and encouraging arbitration as the strongly preferred
means by which disputes involving collective bargaining
agreements ought to be resolved, United Steelworkers v.
Warrior & Gulf Navigation Co., 363 U.S. 574 (1960),
requires that the federal labor principles and the methods
for dispute resolution provided by collective bargaining
10 Having determined that Terwilliger’s claim is pre-
empted by section 301 and should have been dismissed for
failure to exhaust available remedies, we do not examine
defendant’s other contentions regarding statute of limitations,
insufficiency of the evidence or the alleged errors by the trial
court.
App. 34
agreements should and must take precedence. We do not
read the recent case law, such as Lingle, to imply anything
less. Because Terwilliger’s claim involves interpretation
of the collective bargaining agreement and rights created
solely by the agreement, Terwilliger’s claim is preempted
by section 301 of the Labor Management Relations Act
and the relief to which he might be entitled is governed
thereby. Before a section 301 action can be initiated, an
employee must attempt to use the procedures available
under the collective bargaining agreement. Republic Stee!
Corp. v. Maddox, 379 U.S. 650 (1965). Terwilliger never
attempted to invoke the procedures available to him. It
follows, therefore, that his claim should have been dis-
missed by the district court for failure to exhaust the
remedies available under the collective bargaining agree-
ment, there being no evidence of futility of initiating the
procedures nor evidence that Greyhound repudiated the
contract regarding the grievance procedures.
We think that after viewing this court’s decisions in
Smolarek and Dougherty, as contrasted to the circum-
stances here, that this decision provides a reasonable and
workable interpretation of the Supreme Court’s intent as
expressed in Allis-Chalmers and Lingle, and substantially
relieves any tensions which might otherwise exist in this
area.
For the foregoing reasons, the judgment of the dis-
trict court is REVERSED, and the case is REMANDED
with directions that it be DISMISSED for failure to
exhaust available remedies.
me ee
ee ee So
App. 35
MERRITT, Circuit Judge, concurring in part and dis-
senting in part. I agree with the Court that this dispute
cannot be resolved without interpreting the collective
bargaining agreement. | further agree with the Court that
the grievance process is not now futile as the plaintiff has
actually discovered the alleged fraud. We should not,
however, simply dismiss this case without having pro-
vided plaintiff an opportunity to pursue his claims. The
plaintiff is still entitled to pursue in the grievance process
the wrongs which he has alleged his employer
committed.
This is a difficult and puzzling case because of the
jury’s finding that the employer, Greyhound, defrauded
the plaintiff employee in the reinstatement and grievance
process by manufacturing false medical reports and mis-
representing the diagnosis of the company’s doctor. That
conduct so misled the plaintiff, his counsel and his union
representative that a fair grievance process became
improbable during the period of fraudulent non-
disclosure.
Once, however, the evidence of the employer’s fraud-
ulent misconduct became apparent at a later date, a full
and fair grievance process became possible. That griev-
ance process, not a lawsuit in state or federal court, was
what the parties had bargained for. At this point in the
history of this case, however, we encounter the problem
of the limitations period for initiating the grievance proc-
ess, for Greyhound prevented plaintiff from discovering
its fraud until the limitations period had expired. It
would be inequitable to allow Greyhound, on these facts,
to escape the grievance procedure it has contracted fox.
App. 36
Rather, the employer’s concealment of the real facts and
the pendency of this lawsuit toll the running of the lim-
itations period for the filing of a grievance proceeding.
Hence the grievance process remains open even at this
late date. The case should be remanded to the District
Court with instructions to order the parties to proceed
with the grievance process provided by the collective
bargaining agreement. The arbitrator will be ina position
to construe the terms of the collective bargaining agree-
ment in light of the alleged fraudulent concealment of
medical information and determine the appropriate
award, if any.
App. 37
APPENDIX G
No. 87-1236
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
MARION TERWILLIGER AND
DORIS TERWILLIGER,
Plaintiffs-Appellees,
v. ORDER
GREYHOUND LINES, INC., ETC., (Filed Sep. 26,
ET AL., 1989)
Defendants-Appellants,
M. J. JORGENSEN,
Defendant
BEFORE: ENGEL, Chief Judge; MERRITT and KRU-
PANSKY, Circuit Judges
ee ee de ee
The Court having received a petition for rehearing en
banc, and the petition having been circulated not only to
the original panel members but also to all other active
judges of this Court, and no judge of this Court having
requested a vote on the suggestion for rehearing en banc,
the petition for rehearing has been referred to the original
hearing panel.
The panel has further reviewed the petition for
rehearing and concludes that the issues raised in the
petition were fully considered upon the original submis-
sion and decision of the case. Accordingly, the petition is
denied.
App. 38
ENTERED BY ORDER OF THE
COURT
/s/ Leonard Green
Leonard Green, Clerk
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.