Jenkins v. Wm. Schluderberg-T. J. Kurdle Co.

⁵⁵⁸ Bruñe, C. J., delivered the opinion of the Court. This is an appeal by Josephine Jenkins, a former employee of Wm. Schluderberg-T. J. Kurdle Co., appellee, from an order and judgment of the Superior Court of Baltimore City, sustaining without leave to amend, appellee’s demurrer to her declaration. Her suit is for damages for her allegedly wrongful discharge from employment by the appellee in violation of a collective bargaining agreement between the union of which she was a member, the Amalgamated Meat Cutters and Butcher Workmen of North America, Local No. 149, A.F.L.-C.I.O.

(the “Union”), and the appellee (sometimes referred to below as the “Employer”). Her declaration states that she had been an able and satisfactory employee of the appellee for fourteen years prior to her discharge; that the Union failed and refused to arbitrate her grievance although she requested it to do so; that the Union acted in a “discriminatory, wilful, and arbitrary manner toward the plaintiff, which accounted for its failure and refusal to arbitrate plaintiff’s discharge”; and that the Employer refused to comply with her request for reinstatement and back pay. The appellee’s demurrer was based chiefly on two theories: (1) that the collective bargaining agreement barred the plaintiff from maintaining this suit for wrongful discharge (though this was not explicitly stated as a ground of demurrer) ; and (2) that state courts are precluded by the National Labor Relations Act from asserting jurisdiction in such an action. At the hearing on the demurrer, the appellee did not urge the second point, and on appeal it has not relied on this point, which we assume has been abandoned. 1 The trial court sustained the appellee’s demurrer on the first theory, and we shall consider solely the correctness of this ruling.

The collective bargaining agreement between the Union and Employer is an elaborate document covering all the usual ⁵⁵⁹ aspects of labor-management relations. Section 1(B) of the agreement provides that “No employee shall be unjustly discharged or laid off.” The appellant claims that she was unjustly discharged and that the employer has committed a breach of the agreement. There no longer seems to be any doubt that in certain situations an individual employee may sue his employer for the breach of a collective bargaining agreement. Several theories have been advanced to explain this result. 2 One view is that although the agreement gives no rights to individual workers, whenever a man goes to work, his individual contract incorporates the union agreement as a local custom or usage so that every breach of the collective agreement is also a breach of the individual contract of employment.

A second theory holds that a collective bargaining agreement is a contract with the employer as promisor, the union as promisee, and the employees as third party beneficiaries. A third view is that the collective bargaining agreement is like a trust, with the union holding the employer’s promises in trust for the benefit of the individuals. Under any of these theories, the individual may sue the employer for infringement of his individual rights. What are these “individual rights” for which he can sue?

Certainly, promises relating to such things as union security, recognition, deduction of dues, the use of bulletin boards, and access to the plant run to the union and are not individual rights. On the other hand, it is felt that claims regarding wages, seniority, and wrongful discharge peculiarly affect the individual and for them he should be able (at least in the absence of some bar under the agreement) to bring an individual action. With a discharge, for example, it is his job that is at stake and his income. Writing specifically with re ⁵⁶⁰ gard to discharge cases, Professor Cox has stated, “The great weight of authority sustains the individual’s right of action.” “Rights under a Eabor Agreement”, 69 Harv.

L. Rev. 601 , 647 (1956). And see cases cited in Annot., 18 A. E. R. 2d 352, 367 (1951). See also Ass’n of Westinghouse Salaried Employees v. Westinghouse Elec. Corp., 348 U. S. 437 (1955).

Naturally, the employer does not wish to be harassed with a lawsuit each time an employee has a grievance regarding wages, seniority, or wrongful discharge. Nor does he want to incur the risk of a strike because the union may sympathize with a disgruntled employee. Hence the collective bargaining agreement usually provides for a detailed procedure through which all grievances are channeled. In the instant case, the grievance procedure, we understand, is of a rather usual type.

It is as follows: “Should any difference arise between the Union or employee members, and the Company, as to the application and interpretation of this Agreement, there shall be no strike, stoppage or suspension of the work on the part of the Union or its members, or lockout on the part of the Company on account of such conditions. The following procedure shall be followed in settling such difference: (A) Complaints or Grievances presented by the Union and/or employees: (1) Employee or Shop Steward or both shall take up question with the foreman. (2) In the event a satisfactory conclusion is not reached, question may be taken up with the Sectional Superintendent. (3) In the event a satisfactory conclusion is not reached, question may be taken up with Plant Superintendent.

(4) If the Complaint or Grievance is not satisfactorily determined by steps 1, 2, and 3 above, representatives of the Company Management shall meet with a Grievance Committee, consisting of ⁵⁶¹ not more than six (6) employees selected by the Union and/or its Business Representative, at the Union’s option, to discuss such complaint or grievance in an attempt to resolve the same. (5) Any such complaint or grievance not satisfactorily settled by step 4 above, shall upon the application of either the Company or the Union, be referred to an Impartial Arbitrator to be selected by the mutual agreement of both parties. If the parties shall fail, within 10 days after notice for arbitration, to agree upon an Impartial Arbitrator, such arbitrator shall be appointed by the then Chief Judge of the Supreme Bench of Baltimore City. The decision of the Impartial Arbitrator so selected or appointed shall be final and conclusive upon the Company, the Union and the employees.” The general rule is that before an individual employee can maintain a suit, he must show that he has exhausted his contractual remedies: “This rule, which is analogous to the rule requiring the exhaustion of administrative remedies as a condition precedent to resorting to courts * * * is based on a practical approach to the myriad problems, complaints and grievances that arise under a collective bargaining agreement.

It makes possible the settlement of such matters by a simple, expeditious and inexpensive procedure, and by persons who, generally, are intimately familiar therewith. * i? The use of these internal remedies for the adjustment of grievances is designed not only to promote settlement thereof but also to foster more harmonious employee-employer relations.” Cone v. Union Oil Co., 129 Cal. App. 2d 558, 564 , 277 P. 2d 464, 468 (1954). Thus, if the employee refuses to take even the initial step of requesting the processing of the grievance, he will not be ⁵⁶² granted relief in the courts.

The difficulty arises when he presents his grievance to the union and he is dissatisfied with the way in which the union handles his case. There are not many cases on this issue, but the trend seems to be that he cannot sue the employer if he does not like the result of the union efforts at negotiation. See Cox, “Individual Enforcement of Collective Bargaining Agreements”, 8 Rab. L. J. 850 (1957). 3 However, that is not the case which confronts us.

For purposes of a ruling on demurrer, we must accept as true the facts in appellant’s declaration. The Employer has not elected to press any challenge to the allegations of wrongful discharge on its part and of wilful, arbitrary and discriminatory conduct on the part of the Union is failing and refusing to carry the plaintiff’s grievance to arbitration, on the ground that these allegations are not sufficient as statements of fact, but constitute mere conclusions of the pleader. Cf. Conrad v. City of Takoma Park, 208 Md. 363 , 118 A. 2d 497 (1955) ; Lord Calvert Theatre, Inc. v. City of Baltimore, 208 Md. 606 , 119 A. 2d 415 (1956) ; Marranzano v. Riggs Nat.

Bank (C.A.D.C., (1950)), 184 F. 2d 349 . It should also be noted that the plaintiff’s declaration makes no allegations of compliance with steps 1, 2, 3 or 4 of the grievance procedure, but the defendant makes no point of that either. The case thus comes to us on the bald allegations of wrongful discharge by the employer, arbitrary, etc., refusal of the Union to take up the cudgels of arbitration on behalf of the discharged employee, and the terms of the collective bargaining agreement. The heart of the Employer’s contention is that the discharged employee “is limited in contesting the validity of her discharge to the remedies specified in the contract,” that “only ⁵⁶³ the Union or the Company [Employer] can invoke arbitration and “where the Appellant’s bargaining representative has refused to arbitrate her discharge, the Appellant is bound by that determination [and] has no right to * * * maintain an individual action at law against the [Employer].” The collective bargaining agreement in the instant case does not contain any express, affirmative statement that the only remedies which employees covered by it may have against their employer for alleged breaches of the agreement shall be through the grievance procedures provided for by the agreement.

We think, however, that such a limitation may be implied from the agreement as to such matters as those in which the Union may be the aggrieved party or in which the interests of different groups of employees may be involved, and also generally (but subject to an exception which we shall state later) as to matters which may be considered as primarily individual rights. The late Dean Shulman, of the Yale Law School, in an article entitled, “Reason, Contract and Law in Labor Relations”, 68 Harv. L. Rev. 999 , at pp. 1006-1007, contrasted the different interests involved in labor agreements in matters of seniority and in matters of discipline. As to the latter, he pointed out the interest of the union to challenge the soundness of the exercise of the employer’s discretionary power to discipline or discharge and the interest of the employer to reduce this vulnerability of the disciplinary action taken by the employer, and then stated: “So most collective bargaining agreements do not go much beyond recognizing the employer’s power to discipline or discharge and providing that the action shall be for cause, or good cause, and shall be subject to challenge by the employee and the union, subject to a few limitations or exceptions.” At the conclusion of this article (p. 1024), Dean Shulman stressed the importance of self-government and of arbitration as a part thereof in labor relations, saying: “The arbitration is an integral part of the system of self-government.

And the system is designed to aid management in its quest for efficiency, to assist union leadership in its participation in the enterprise, and to secure justice for the employees. It is a means of making collective ⁵⁶⁴ bargaining work * * *. When it works fairly well, it does not need the sanction of the law of contracts or the law of arbitration. It is only when the system breaks down completely that the courts’ aid in these respects is invoked.

But the courts cannot, by occasional sporadic decision, restore the parties’ continuing relationship; and their intervention in some cases may seriously affect the going systems of self-government.” We think that under the provisions of the agreement now before us the Employer is generally entitled to immunity from suits by individual employees, that the Union is to consider carefully and fairly the alleged grievances of its members, that it is likewise to exercise its judgment and discretion fairly on behalf of its individual members in determining upon what terms it believes any grievances of theirs should be adjusted and whether such grievances should be carried to arbitration, if negotiations for settlement or adjustment fail. It is conceded in the present case that, but for the prohibition against unjust discharge contained in the collective bargaining agreement, the plaintiff would have no claim at all against the Employer. We think that she must take the bitter with the sweet and cannot select and rely upon one provision of the agreement which is to her advantage and at the same time reject or ignore another provision which limits or is a condition to the exercise of the provision which she invokes. But, accepting that promise, the question is whether or not she is barred from redress through litigation for allegedly wrongful discharge by the Union’s refusal to carry her claim to arbitration, notwithstanding that the Union’s refusal is due to conduct which, on the pleadings before us, must be taken as wilful, arbitrary and discriminatory.

In discussing such a problem in his article on “Rights under a Labor Agreement”, 69 Harv. L. Rev. 601 , Professor Cox says in part (at p. 652) : “While the rule which bars an individual employee from bringing an action on the contract when the union is unwilling to take the case to arbitration is sound if the union has made an adjustment or is satisfied that the grievance lacks merit, nevertheless it would work injustice in situations where the union is unwilling to ⁵⁶⁵ press the claim because of indifference or reluctance to suffer the expense. Both factors come into play under open-shop contracts when a grievance having no precedent value is filed by a non-member, whose failure to pay dues means that he contributes nothing to the cost of acting as his representative. One solution would be to open arbitration proceedings to individual grievants.

Another alternative is to allow the employees to bring suit against the employer and union as co-defendants upon analogy to the bill in equity which the beneficiary of a trust may maintain against the trustee who fails to press a claim against a third person. The suit would fail on the merits if it appeared that the collective bargaining representative had dropped the grievance for lack of merit or had negotiated a reasonable adjustment.” 4 Professor Cox expresses much the same idea in his article entitled, “Individual Enforcement of Collective Bargaining Agreements”, 8 Rab. R. J. 850 (1957) where, at p. 858, he states: “In my opinion the presumption should be against individual enforcement of a collective bargaining agreement unless the union has unfairly refused to act * * *. The bargaining representative would be guilty of a breach of duty if it refused to press a justifiable grievance either because of laziness, prejudice or unwillingness to expend money on behalf of employees who were not members of the union.

Individual enforcement would then become appropriate. The proper remedy would be an action against the union and employer analogous to the action maintained by the beneficiary against the debtor of a trust when the trustee refuses to bring the action. It would be a defense to show that the union and employer had made a settlement or that the union’s decision not to press the claim was honest and reasonable.” (Emphasis added.) Although we have not been referred to, nor have we found, any case exactly on all fours with the instant case, an analysis Gf related cases will, we think, demonstrate the soundness of this approach. ⁵⁶⁶ A number of these cases deal with failure of the employee to exhaust contractual procedure. In Pattenge v. Wagner Iron Works, 275 Wis. 495 , 82 N. W. 2d 172 (1957), discharged employees brought an action against the employer for vacation pay allegedly due under the collective bargaining agreement.

The contract even provided that the grievance procedure “shall be the sole means of disposing of grievances.” However, it was held that these employees, who had been discharged for supporting a rival union, were not required to use the grievance procedure before bringing suit against the employer since it was “reasonably apparent that the [incumbent] union is hostile to him and will not give him adequate representation.” The court felt that to require exhaustion of the contractual remedy “would place the employee’s accrued rights against his employer more or less at the mercy of an unfriendly union.” The court also emphasized the fact that the individual could not demand arbitration as a matter of right. In United Protective Workers v. Ford Motor Co., 223 F. 2d 49 (7th Cir. 1955), a suit for reinstatement and back pay by an employee against his employer wa's upheld despite the employee’s failure first to follow the grievance procedure of the collective bargaining agreement. This did not bar his recovery in court, “because the Company’s attitude * * * made it obvious that pursuit of the grievance procedure would have availed [him] nothing.” On a previous appeal, United Protective Workers v. Ford Motor Co., 194 F. 2d 997 (7th Cir. 1952), the court had similarly found that although the collective bargaining agreement established a grievance procedure, if the employer refused to participate in this procedure in a wrongful discharge case, the employee need not exhaust the contractual remedies. In Nichols v. National Tube Co., 122 F. Supp. 726 (N. D. Ohio 1954), an individual employee recovered damages for a discharge resulting from his employer’s violating the collective agreement by compelling him to retire, even though the union had waived all claims for past violations in negotiating a retirement policy.

The court said: “[I]t would seem * * * completely futile to have instituted grievance proceed ⁵⁶⁷ ings in such circumstances. The retired employee had not the slightest chance of remedial consideration; there was no basis for relief. According to the defendant, the policy of retirement was inflexible and no one in the Company had the right to make exceptions; it was not an arbitral grievance; consequently, it would not be expected that the plaintiff should be required to do a vain thing as a prerequisite to a suit.” (p. 728) In Youmans v. Charleston & W. C. Ry., 175 S. C. 99, 178 S. E. 671 (1935), where the employer refused to grant a hearing and made it impossible for the employee to pursue the course prescribed under the collective agreement, the employee’s failure to exhaust his contractual remedy was no defense to his suit. In many cases where it has been held that an employer cannot be sued until the contractual remedies have been exhausted, the facts show that the employee had initiated the grievance procedure but the union rejected the claim on its merits as unworthy, and these cases are the converse of the exception suggested by Professor Cox, which we have quoted.

Thus, in DiSanti v. United Glass and Ceramic Workers, 33 CCH Lab. Cas. 94, 785 (Pa. C. P. 1957), the plaintiff claimed seniority over another worker who was taken off the job. The other worker initiated a grievance claim under the contract machinery and eventually the plaintiff was removed from his job.

Plaintiff then sued the employer for wrongful removal. The union and the other worker were joined as parties defendant. Against plaintiff’s contention that it would have been futile to exhaust his remedy under the contract, because of the prior adjudication, the court held that plaintiff was bound by the union’s actions in settling the dispute when the other worker had brought his grievance. The Court distinguished the situation there found to exist from such a situation as is alleged in the present case and said (p. 94, 789) : “In stating that plaintiff is bound by decisions arrived at according to the provisions of the contract, the Court does not mean to imply that a member of a collective bargaining agency can never seek the protection of the courts for wrongs done him.

Certainly where it is made clear that ⁵⁶⁸ the