HINES v. ANCHOR MOTOR FREIGHT

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Argument of Niki Z. Schwartz

Chief Justice Warren E. Burger: We will hear arguments next in Hines against Anchor Motor Freight Company.

Mr. Schwartz, you may proceed whenever you are ready.

Mr. Niki Z. Schwartz: Thank you, Your Honor.

Mr. Chief Justice, may it please the court.

The issue in this case is whether or not eight men, eight truck drivers, discharged for dishonesty of which they were innocent shall be permanently deprived of their jobs, their livelihoods and their good names, because they were afforded the form without the substance of agreements proceeding.

That issue arises on these facts, on June 5th 1967, eleven Anchor Motor Freight truck drivers were discharged for the alleged dishonesty in allegedly turning in inflated motel receipts for reimbursement, and that the receipts were for more than they actually paid.

On that day, the company showed its evidence to the business agents for Teamster local union number 377.

That evidence which is in the record and in the appendix, consisted of the motel registration cards and the correlative motel receipts, the registration card showing less paid than the amount showed on the receipts.

In addition the, company presented the affidavits of the owner of the motel and the clerk of the motel, attesting to these records and to the fact that the man had been given receipts for more than they actually paid.

In addition, there were some corroborative things in the form of logs and sign-in sheets, the men did not dispute that they had been in Batavia where their logs showed they were.

They did not dispute that they had stayed at that motel, but they vigorously denied to their Union leadership that they had paid any less than the receipt that they turned in.

After meeting between Union and company officials, it was agreed between them that the matter would be referred to the joint conference grievance committee in Detroit, that the men would continue working pending a decision on that.

The men went to their, really a gasp at what have happened to them, went to the Union leadership the two business agents Angelo and Schwartz and said, what shall we do?

Should we go up there, should you or we or somebody go up there to the motel and talk to the clerk or the owner?

Should we get a lawyer?

Should we do this, should we do that?

They were advised no, do not do anything, do not worry about it, they cannot fire you, you are a sure winner, you have nothing to worry about; do not do anything we will take care of it.

That is clear in the record.

So the men headed that advice as “advice of knowing what was going on”, track driver Lingo I think, and they did not do anything, relying on the Union to do something.

Well the Union did not do anything at all.

Except go to the Grievance Committee and assert, by raw assertion, the men did not do it, they must have been the motel clerk.

No evidence to support that argument, just raw argument.

The men, a majority of whom went to the Grievance Committee were given the opportunity to state their contention that they did not do it.

The company presented all of its evidence, not in substantial and the grievance was upheld.

The men were astounded having been assured that everything would be alright, and they went to their Union leadership and said, what do we know, should we get a lawyer?

And he said you might as well.

So they went and they got a lawyer, finally.

The lawyer went to Batavia, and he got a statement a notarized interrogation statement from the motel owner, which said that the motel owner had no personal knowledge whatsoever of the amount actually paid and written down that his affidavit had been based entirely on the records themselves in the word of his clerk who was his brother-in-law, but he had no firsthand knowledge.

Armed with this statement, the men and their lawyer sought a rehearing.

They were given the opportunity to appear, to ask for a rehearing and the Union agents presented this statement that the lawyer had obtained, the lawyer was not allowed to participate except to be present, read the statement of the motel owner Rapichi(ph) and the rehearing was denied.

You do not get a rehearing because that is not new evidence that is the same thing you have argued the first time, totally overlooking the distinction between argument and evidence.

Justice William H. Rehnquist: Why should the employer be penalized for the shortcomings of the Union here, which is your men’s agent I take it?

Mr. Niki Z. Schwartz: Well the employer is; first of all the employer is not to be penalized if he has ordered to reinstate these men—

Justice William H. Rehnquist: Well, he is claiming the benefit of the arbitration procedure?

Mr. Niki Z. Schwartz: Well, but—

Justice William H. Rehnquist: You say that the union did not do a good job at the arbitration procedure?

Why should that redound the employer’s disadvantage, it was not his problem?

Mr. Niki Z. Schwartz: The employer should not be permitted to take, to claim the benefit of an arbitration procedure result, which is based on shoddy representation, where all of the evidence of innocence was not presented—

Justice William H. Rehnquist: Well, why are your not people bound by the acts of their own agents?

Mr. Niki Z. Schwartz: The agent was not selected by them.

It was foisted upon them, the contract negotiated by the company and the Union, vests exclusive control of the Union.

The men had no choice in that fact, and the company have invested that exclusive control over the grievance in the Union is in a poor position to say, okay we want to reap the benefits of their abuse.

Justice William H. Rehnquist: Why does the company vested that in the Union, the Union represents the majority of the employees, the Union demanded that that be done—

Mr. Niki Z. Schwartz: For bargaining purposes the Union is the representative of the employees.

Nothing in the law requires that the Union had exclusive control of the grievance proceeding, I direct your attention to footnote 10 of the opinion in Vaca versus Sipes, where it points out that alternatively some contracts permit the employees to have some control over the processing of their own grievance, so that the company by its agreement vested that control in the Union representative.

Justice William H. Rehnquist: But it was the demand of the Union as the agent for the employees that that provision was put in the contract, I take it?

Mr. Niki Z. Schwartz: Well, we do not know how it was demanded.

The company and the Union agreed to do it?

Justice William H. Rehnquist: Well and the company is not your men’s agent, the Union is?

Mr. Niki Z. Schwartz: It is not a willing agent under these circumstances.

The record is replete with a long history of conflict between the men on the one hand and the Union representatives and the company on the other, with a lot of evidence of a very friendly relationship between the company and these Union officials.

The --—

Unknown Speaker: If you prevail here, do you think the company has a claim over against the Union?

Mr. Niki Z. Schwartz: No, I think according to Vaca versus Sipes, and Czosek versus O'Mara, the company’s liability is for a back pay.

The Union’s liability is for the extent to which its wrongdoing increased the burden and expense of getting their jobs back and collects it.

Now when we talk about the company’s good faith, which is an argument that the company has made, I think it is necessary to set that in context.

If indeed the company is entitled to any claim of good faith, and based on the background we would deny that, nevertheless that claim could only be good up till September of 1968, as far as the litigation of the back pay claim.

In September of 1968, the men having filed applications for unemployment compensation, Anchor defending them vigorously on the ground that they were fired for just cause, Anchor sent an airplane ticket to the motel for Mr. pegano(ph) to come and testify in favor of the company against the men’s BUC claim.

Unknown Speaker: Incidentally, has he ever been prosecuted?

Mr. Niki Z. Schwartz: He has not to my knowledge, Your Honor.

Unknown Speaker: Have your people ever filed any charges against him?

Mr. Niki Z. Schwartz: Not to my knowledge.

Unknown Speaker: Why not?

Mr. Niki Z. Schwartz: Well, I have already been involved in a tremendous burden in this case, it would not be productive for my people to file charges against the poor motel clerk?

Unknown Speaker: No, but it is a crime, is it not?

Mr. Niki Z. Schwartz: He submitted the three crimes in his affidavit.

But it will not advance the cause of of my drivers to refer charges against him, the company is free to do that if they wish.

In any rate—

Unknown Speaker: Have you, what does that answer state?

Mr. Niki Z. Schwartz: Well the answer—

Unknown Speaker: The company is free to do it—

Mr. Niki Z. Schwartz: Anyone—

Unknown Speaker: You are the one who were defrauded, really?

Mr. Niki Z. Schwartz: In that sense my people were victims of his misconduct, but again it produces no recompense, no—the defendants aren’t, I mean the plaintiffs aren’t made whole by prosecuting Mr. pegano?

Chief Justice Warren E. Burger: —victims of crime, you are the most injured person, isn’t that usually the person who files the criminal complaint?

Mr. Niki Z. Schwartz: Usually it is, usually it is.

But I—

Chief Justice Warren E. Burger: The fact that there is no profit in it or really has nothing to do with, does it?

Mr. Niki Z. Schwartz: Well it is not a question of profit, it is a question of the primary concern here being getting their jobs back and clearing their good names.

Prosecuting Mr. pegano would not clear their good names?

When Mr. pegano came to Cleveland or in Ohio in September of 1968 to testify the BUC hearing, he advised the company on his own that what he had told them before was a lie, that he had pocketed the money and their company, this was denounced to the plaintiffs by the way, the company stating it is as because he changed his testimony, he was not, because he changed his story he was not required to testify, silently shipped him back to Batavia.

Never informing the plaintiffs of this fact, never offering to reinstate them, never offering even just to clear their records so that they could get another job somewhere else and not have to report that they were out of work because of dishonesty, so if there was any company good faith, it comes to a starkling, screeching halt in September of 1968.

Moreover the recent decisions of this Court in Albmarle and Ratorex (ph) to make it clear that the good faith is not a defense to per se to a back pay claim.

Chief Justice Warren E. Burger: We are proceeding to Title VII?

Mr. Niki Z. Schwartz: No, I am not proceeding under Title VII, nor am I proceeding as in Ratorex (ph) in an unfair labor practice action.

However, both the Albamarle and the Ratorex (ph) opinions drew for its reasoning on a very old case cited -- it is in my reply brief, it is Wicker versus Hopeck (ph) Six Wallace 94 at 99, relying on law from a breach of contract case, and so I think that Ratorex and Albamarle are quite relevant to this situation, given the derivation of the decisions in those cases.

As I indicated there was an extensive, an extensive background which if time permits I will go into, but it is in the briefs and it is not in terms of the relationship of the company and the Union, and the men being now contest as far as both were concerned.

Unknown Speaker: They were transferred up to Lordstown from Norwell Ohio, were they not?

Mr. Niki Z. Schwartz: That is correct.

Unknown Speaker: And worked it on the seniority and there was continuing --

Mr. Niki Z. Schwartz: The Norwood drivers were particularly difficult or from the company’s standpoint or unhappy from their standpoint, because they were aware of the better working conditions from their standpoint at Norwood, and so they were unhappy at Lordstown, whereas the new (Inaudible) at Lordstown, not having had the better experience at Norwood were more complacent and for that reason, there was some conflict there.

And that was the genesis of the problem and there was a wildcat strike, in which a number of the plaintiffs were very active, and complained about lack of representation from the Union and so forth.

In any event, a suit was filed in the District Court in Cleveland, in 1972, the company after discovery was completed, filed a motion for summary judgment, motion was overruled.

The case was set for trial four or five times in the following year but somehow never came up.

A year later the company files a virtually identical motion for summary judgment, no new evidence, no new law, same arguments, same contentions.

This time the Union makes the same arguments too, the international makes different arguments, the Court revered itself, granted the motion for summary judgment against all defendants.

We appealed to the Sixth Circuit.

The Sixth Circuit reversed with respect to Local 377 on the ground that the evidence of a breach of the duty of fair representation was sufficient for us to go to trial.

But held that not withstanding that fact and that they may well have prejudiced the reliability of the grievance result, the company was entitled for the benefit of it, the men were bound by it and the dismissal against the company was affirmed.

This was decided without a great deal of discussion, without acknowledgment of all of the contrary authority around the country and virtually every circuit, either by holding or dicta that a breach of the duty of fair representation entitles the plaintiff to litigate his breach of contract action against the company.

This flows from, and the Courts that have so held do so in large part looking at Vaca.

Now the rule that the Sixth Circuits sets up permits the easy -- facilitates the easy end run around Vaca, you do not have to not process the grievance you just do it perfunctorily, you go through the motions.

And then it is all final and binding and every thing is fine, makes no difference how good the procedure or the substance is, as long as you go through the motions, it is final and binding.

Secondly, this case is really more within Vaca than it would appear for the reason that we are talking about a joint grievance proceeding, rather than an arbitration.

A joint grievance proceeding is a proceeding in which there are an equal number of Union and company representatives.

And if the Union people vote for the Union people vote for the Union guy, and the company people vote for the company guy, it deadlocks and they go to the next layer and so on and so forth.

Now what that means is that there is no way that the men can lose their grievance at this stage without the Union, some Union representatives voting against them.

So that is really tantamount to a decision by the Union not to process the grievance any further, similar, not identical but similar to what the Court was discussing in Vaca versus Sipes.

Unknown Speaker: I suppose it is probably be possible to draw a distinction between those cases where the grievances has presented it all, and the employer’s defenses exhaustion rather than preclusion by operation of the grievance procedure.

Mr. Niki Z. Schwartz: It is possible to distinguish between those two, yes it is.

I am not sure --

Unknown Speaker: Well, Vaca was the former type, isn’t it?

Mr. Niki Z. Schwartz: Well Vaca was a case which went to the third or fourth layer, when they decided not to process it any further.

Unknown Speaker: They did not go any farther?

Mr. Niki Z. Schwartz: That is right.

Unknown Speaker: And the employer would claim the failure to exhaust?

Mr. Niki Z. Schwartz: Right.

Unknown Speaker: Here, all the steps were gone through?

Mr. Niki Z. Schwartz: Well, the joint—

Unknown Speaker: —they were purportedly they were going to—

Mr. Niki Z. Schwartz: Yes.

Unknown Speaker: And how about Czosek?

Mr. Niki Z. Schwartz: In Czosek, the situation was one with the Railway Adjustment Board, in a situation where the plaintiff had a right to press his own grievance, he was not limited to going for the company.

Unknown Speaker: (Inaudible) Is that still a different --

Mr. Niki Z. Schwartz: That is a very different case, yes.

Justice William H. Rehnquist: But here the employer’s defense was not failure to exhaust, but that you are bound by the result of the arbitration procedure?

Mr. Niki Z. Schwartz: That is right that was his defense.

Justice William H. Rehnquist: And those are two quite different things, aren’t they?

Mr. Niki Z. Schwartz: They are two quite different things but they tend to merge when you look at a joint grievance proceeding which is in reality a decision by the Union not to push the matter any further.

There is no neutral arbitrator who makes a decision—

Unknown Speaker: But you are not suggesting the rules between the employer and the Union here, are you?

Mr. Niki Z. Schwartz: Well, there is some suggestion of that from the beginning, I do not think, I have to prove that in order to prevail but—

Unknown Speaker: Are you claiming that this whole business was worked out between the employer and the Union?

Mr. Niki Z. Schwartz: I am claiming that there is a substantial likelihood of that.

Unknown Speaker: There is no allegation, that is -- It is not alleged that in your complaint?

Mr. Niki Z. Schwartz: It is alleged in the compliant but it is proved only inferentially and circumstantially, there is no direct evidence of that.

Unknown Speaker: I though your case was that, there was a, you did not get the proper representation on that part of the Union, and in that circumstance you cannot let the employer out because this occasion against the Union, unless there has been a wrongful discharge.

And in this circumstance, for the kind of allegations that you have made which was focused on the Union representation as I understand it, not as anything involving the employer, the employer is not free on for a lot of issues tried out to rely on the arbitration provision whatever it may be.

Isn’t that what you are claiming?

Mr. Niki Z. Schwartz: That is my basic fundamental argument, but we have also advanced the contention that this did not happen in a vacuum, that these -- one of the reasons that the 377 representatives sabotaged the grievance was because they had a very friendly relationship in which they were provided --

Unknown Speaker: Well let me understand?

Do we or do we not have a case here where what you are charging is collusion between employer and Union?

Mr. Niki Z. Schwartz: That is a secondary claim, Your Honor, but that is not the basic—

Unknown Speaker: Well, that maybe a very different case for me if, that would be an easy one if you were charging collusion between employer and Union?

Mr. Niki Z. Schwartz: We have charged that.

I think that the case is stronger in terms of the evidence, in terms of the fact that the Union in bad faith misrepresented these men because they along with the company wanted to get rid of them because they were trouble makers.

Chief Justice Warren E. Burger: Where in your brief you treat the concept of collusion between the employer and the Union—

Mr. Niki Z. Schwartz: It is treated in the—

Chief Justice Warren E. Burger: In these terms that you are now arguing.

Mr. Niki Z. Schwartz: Well, it is treated first of all in the statement of facts setting forth on page eight, in very succinct form, the background showing a friendly relationship between the Union officials and the company, a hostile attitude on the part of the company and the Union towards these men.

Chief Justice Warren E. Burger: Is there something wrong with the idea of having a friendly relationship between the employer and the Union?

Mr. Niki Z. Schwartz: Yes, Your Honor.

When that friendly relationship includes the company furnishing the Union officials with cars, arranging for automobile purchase bargains for them, hiring their relatives, there is something wrong with that.

Then --

Chief Justice Warren E. Burger: You have to show what that produces then, where do you say that this produced collusion and conspiracy or whatever your terms you ought to reply to it.

Mr. Niki Z. Schwartz: Well, in the --

Chief Justice Warren E. Burger: I thought your claim was that it was unfair to bind the employees for the results of the grievance procedure when their representative did not fairly present their case for—

Mr. Niki Z. Schwartz: That is one, can I make two claims, Your Honor?

Chief Justice Warren E. Burger: Of course you can.

Where do you make this other, the collusion claim?

Mr. Niki Z. Schwartz: The collusion claim is secondary because it is concededly; it is evidentiarily not as strong as I think the other proposition is.

It is advanced generally in Article III, part III of the brief and part IV, dealing with the risks of collusion and unfair representation in the joint grievance proceeding.

And all of this is said in the context of the relationship between the company and Union.

Justice William H. Rehnquist: Mr. Schwartz, our grant of certiorari here was limited, was it not?

It was limited to the—

Mr. Niki Z. Schwartz: To the question stated.

Justice William H. Rehnquist: And certainly in the question stated, as shown on page four of your brief, I do not see where there is anything raised about collusion?

Mr. Niki Z. Schwartz: Well, You Honor, in stating that—

Justice William H. Rehnquist: Do you see anything in the question presented that suggests any issue of collusion?

Mr. Niki Z. Schwartz: The statement --

Justice William H. Rehnquist: Do you or do you not?

Mr. Niki Z. Schwartz: No.

The statement on its face does not include collusion.

It alludes to a breach of fair representation with which one looks at the facts that underlie the breach of fair representation there is a collusion argument there.

But I do not rest on that, I do not have to show collusion in order to prevail, that is not the basis of my argument.

The claim of the company here is that, well if you have agreed a bribe, it will get you relief from the Union, they cause the harm here.

Well relief against the Union is insufficient, the Union cannot give them back their jobs, the Union cannot even clear their records or give them a good name so they can get another job somewhere else.

At best the Union could—

Chief Justice Warren E. Burger: Well, the suit against the Union could go a long ways to producing the results you have just described?

Mr. Niki Z. Schwartz: It can --

Chief Justice Warren E. Burger: Indicating them in terms of getting a new job?

Mr. Niki Z. Schwartz: It can never undo the fact that they are permanently discharged from the Anchor Motor Freight Company for dishonesty, Your Honor.

Now Anchor says it is unfair because of its good faith.

Anchor discharged the plaintiffs; the Union did not discharge the plaintiffs.

Anchor gave total control over the grievance handling to the Union, the plaintiffs didn’t do that?

Chief Justice Warren E. Burger: Do you say that there was not prima facie evidence supporting a discharge?

Mr. Niki Z. Schwartz: No I do not, at the time that, the initial time the company had prima facie evidence but there was overwhelming evidence of innocence, in fact in light of the evidence subsequently gathered.

There is no evidence of guilt that is left.

The company having discharged the men is not and cannot be penalized by reinstating them, if as the evidence indicates the men are innocent of the wrongdoing with which they were charged, then indeed the company should be delighted to have back eight highly experienced, six now two are deceased, six highly experienced truck drivers who have been cleared.

But that is not the company’s opinion, attitude, and that calls them to question their handling of the pegano thing, calls into question their good faith from the very inception.

Their conduct with pegano, on the Bureau of Unemployment Compensation hearing was as has been argued more eminent advocate recently, kind of the thirteenth stroke of a clock that calls into question the first twelve strokes, and cause this question ab initio about the company’s good faith.

For all of these reasons we would urge that the Court reverse the decision of the Sixth Circuit in favor of Anchor Motor Freight and remand the case finally for a trial in Cleveland, this is a summary judgment proceeding so far, and I would reserve the remainder of my time.

Thank you.

Unknown Speaker: Mr. Schwartz?

Mr. Niki Z. Schwartz: Yes Sir.

Unknown Speaker: If you prevail and the case is retried, I take it the company’s first line of defense would be that there was perhaps you would sue the Union and the company both.

Mr. Niki Z. Schwartz: They have been sued together, yes.

Unknown Speaker: Right.

Mr. Niki Z. Schwartz: Not retried however, Your Honor, there has never been a trial.

Unknown Speaker: Well I understand that, you are here on summary Judgment motion.

But at trial you would have the Union as defendant you would have to prove that there had been a breach of its duty, failure to represent the petitioner.

Mr. Niki Z. Schwartz: Right.

Unknown Speaker: And if you prevailed on that issue, then you would reach the second issue—

Mr. Niki Z. Schwartz: Which is the wrongful discharged.

Unknown Speaker: Whether or not the discharge was wrong or—

Mr. Niki Z. Schwartz: Right, that is correct.

I have to make the threshold issue first before we reach the the wrongful discharge.

Thank you.

Chief Justice Warren E. Burger: Mr. Goldfarb.

Argument of Bernard S. Goldfarb

Mr. Bernard S. Goldfarb: Mr. Chief Justice, may it please the Court.

I think this case has to be looked at in the greater context of labor management relations.

We have to look at it from the standpoint of the congressional mandate to amicably settle disputes between employers and Unions.

We have to look at it from the derivative rights of employees under labor agreements, we have to look at it from the Unions’ statutory duty to represent and we also have to look at it from the employer’s standpoint and what are his rights.

Now in order to correct any misapprehensions that the petitioners have, no employer vests anything in a Union, particularly control of a grievance machinery.

These are bargained for, negotiated and resolved at the bargaining table, approved by Union membership in the same agreement that establishes their wages, holiday, vacation and pension.

And it is almost inconceivable on how they can accept the benefits of that agreement and reject the grievance machinery.

In this particular case the men were accused of falsifying their expense sheets by turning in inflated motel receipts over and above what they actually paid for their lodgings while there were on the road.

Affidavits of the motel clerk and the owner specifically stated that the men requested these receipts.

Even in the deposition and it is in the record where one witness recants and says that he lied, he says that this is a normal practice of the motels in the area to give inflated receipts to drivers in order to get business.

But in any event, the case that went before the grievance committee, the same type of committee that was approved by this court in Humphrey versus Moore.

The same type of committee that is negotiated and approved by the membership, that committee had before it the men who were involved, the affidavit of the motel clerk and the motel owner, the records, the receipts and the hearing took several hours and all the men had an opportunity to talk.

And all the issues of credibility of the witnesses, the motel clerk and the owner were in issue before that arbitral body.

Justice Thurgood Marshall: What is the credibility of the people that filed an affidavit?

Mr. Bernard S. Goldfarb: Because the drivers denied—

Justice Thurgood Marshall: Or is it the credibility of all of then people including hotel clerk?

Mr. Bernard S. Goldfarb: That is right.

Justice Thurgood Marshall: You did not really mean that, did you?

Or he didn’t testify to it?

Mr. Bernard S. Goldfarb: They had an affidavit of his.

Justice Thurgood Marshall: Well how does that go to credibility?

Mr. Bernard S. Goldfarb: Because the drivers denied the efficacy of that affidavit, the driver said that that motel clerk was not telling the truth in that affidavit.

Justice Thurgood Marshall: You decided—

Mr. Bernard S. Goldfarb: And the arbitral—

Justice Thurgood Marshall: Who decided that the credibility lied with the man who made an affidavit against the man who testified?

Mr. Bernard S. Goldfarb: Obviously the arbitral body accepted the affidavit over and above what the driver said; the notarized affidavit.

So the credibility at least from our standpoint was an issue.

In any event, after the arbitral body decided the case in favor of the company, a lawyer was hired who went to Batavia, New York and interviewed the motel owner, Mr. Rapichi.

And all his affidavit said that he knew no more about this case than his brother-in-law the motel clerk, witness pegano said.

And armed with that affidavit they returned to the grievance committee and requested rehearing.

And the grievance committee reconvenes, examines the affidavit of Rapichi for purposes of rehearing, and comes to the conclusion that there really is not any new evidence in this case, and accordingly finds again for the company.

Following this the men go to the labor board and file a charge with the labor board which is rejected, they appeal that rejection and it is rejected again, and they re-appeal that and it is rejected again.

And in the chronology of events, witness pegano then says to a representative of Anchor, I was not telling the truth.

A year-and-half later after all the arbitration process is exhausted, he says I was not telling the truth in my previous affidavit.

Now according to the petitioners, at that point they state in their briefs that right then and there ipso facto, the arbitral award is vitiated, there is no longer any evidence of any dishonesty and the men should automatically be reinstated.

We submit to this court that these arbitration awards have some legal efficacy—

Unknown Speaker: May I ask, Mr. Goldfarb, you referred this as an arbitration award, perhaps inaccurately, it was an award of a joint grievance committee, had the committee, under the collective bargaining agreement, had the committee not been able to decide the merits of this grievance, where would the grievance have gone?

Mr. Bernard S. Goldfarb: It would have gone to a higher level.

Unknown Speaker: Where,what?

Mr. Bernard S. Goldfarb: Other joint national grievance committee made up of an equal number of employers and Union representatives.

Unknown Speaker: If there had been no decision there?

Mr. Bernard S. Goldfarb: If there had been no decision there, it would have gone to a third arbitral process made up of three people with a neutral on the final board.

Unknown Speaker: That would have been the first truly, true arbitration in the technical sense.

Mr. Bernard S. Goldfarb: In the technical sense, yes.

Now—

Unknown Speaker: Mr. Goldfarb, I take it then that it is your position that we should not assume here for the purposes of the present posture of the case, that the discharges were wrongful and in violation of the bargaining agreement?

Mr. Bernard S. Goldfarb: Our position is that the discharges were not wrongful, that there has been a determination that they cannot conceivably be wrongful at this stage of the game.

There is no evidence of any misconduct on part of the employer, nobody has accused the employer.

Whatever they have say about collusion was rejected in the District Court and rejected in the Court of Appeals, as not even being a, there is being a suspicion of it.

There was no evidence of any collusion—

Unknown Speaker: Maybe that is not the exact question I asked is -- is it conceded today or not that these people were the victims of a dishonesty of Mr. pegano?

Mr. Bernard S. Goldfarb: No it is not conceded.

Unknown Speaker: Not conceded.

Mr. Bernard S. Goldfarb: It is not conceded, Your Honor.

Unknown Speaker: Certainly the Court of Appeals decided the case on the assumption that the employer should be dismissed even if there had been a wrongful discharge?

Mr. Bernard S. Goldfarb: Correct, Your Honor.

Unknown Speaker: And because of refusing summary judgment against the Union left to those issues in the case?

Mr. Bernard S. Goldfarb: For the simple reason that there are tow different types of wrongs.

Unknown Speaker: Alright, alright. But nevertheless the court, if a case comes to us, the issues is whether the employer should be dismissed even if he wrongfully discharged.

Mr. Bernard S. Goldfarb: Correct.

Now there are two distinct individual wrongs, one arises out of a breach of a statutory duty, the unfair representation and a wrongful discharge arises out of a breach of contract.

Now, this is where precisely where we are at.

According to the petitioners, they feel that if there was an unfair representation charged, they automatically have the right to re-litigate the wrongful discharge, we disagree with that, we disagree with that.

Because if that is true under the present state of the Court of Appeals’ opinion, where an allegation of bad faith is non amenable to summary judgment, and must be litigated.

And what petitioners say if they make that allegation they have a right to review the wrongful, the claim of wrongful discharge that completely destroys the position of this court and the finality of arbitration, or in the finality of any kind of any kind of grievance machinery.

It just would not exist, it would be non-existent anymore.

Unknown Speaker: What do you do with the Vaca case?

Mr. Bernard S. Goldfarb: The Vaca case is distinguishable.

Unknown Speaker: --wrong, but does it not read on this issue?

Mr. Bernard S. Goldfarb: I do not think it does.

Vaca does not read on this issue because Vaca did not have the employer involved.

Vaca did not go to any final arbitration, Vaca did not -- the heart of Vaca does not concern itself with finality of arbitral or grievance machinery.

And that is what we are really concerned with here?

Unknown Speaker: You are saying that Vaca is limited to just the exhaustion?

Mr. Bernard S. Goldfarb: Vaca is limited to exhaustion, and plus the fact that the Union is under no compulsion or duty to pursue a grievance to the final stage of arbitration.

Unknown Speaker: Oh that is Vaca too?

Mr. Bernard S. Goldfarb: That is Vaca.

Unknown Speaker: That is Vaca also—

Mr. Bernard S. Goldfarb: But that is not this case.

This case was pursued through the grievance machinery and a conclusion was arrived at, an untainted conclusion.

I want to submit to this court very briefly.

They went back to the grievance committee when they took the statement of witness Rapichi, but when witness Pegano says that he did not make rightful affidavit they do not go back to the grievance committee.

It would seem to me at that point they should have returned to the committee and said, here we have more new evidence, we would like to get another hearing.

They do not do that anymore?

Unknown Speaker: But you are suggesting that the employer can say to the employee, well, I fired you legally perhaps but even if I did you have no remedy because a have contractual right to rely on the grievance procedure.

And even though the Union did not really represent you well there, or even though the Union will be found to have unfairly represented you in bad faith, I still have the defense to the contract.

Mr. Bernard S. Goldfarb: Not quite.

Unknown Speaker: How do you differ?

Mr. Bernard S. Goldfarb: Merely by saying this to you, that we are under no obligation to accept the second statement of the witness to be true, because --

Unknown Speaker: Well, I understand that.

Mr. Bernard S. Goldfarb: If that so then we never come to final conclusion.

Unknown Speaker: I know, but the question is whether you should stay in the case until it is decided whether or not there was a wrongful discharge?

Mr. Bernard S. Goldfarb: I do not believe so, because the very issue, the very same issue that they want to litigate in the federal District Court is the very same issue that went before the grievance committee.

Unknown Speaker: So you do say, so you do say yes even if it is determined one way or another you have a right to rely on your contractual—

Mr. Bernard S. Goldfarb: Precisely, we have been concluded.

We are all done because if we are not, and they have a right to take us back on the present state of the opinion of the Court of Appeals, which says you have a right to litigate that, then Federal District Courts become nothing but reviewing bodies for arbitrators—

Unknown Speaker: (Inaudible) there was a wrong discharge because it is already been determined finally that there was none?

Mr. Bernard S. Goldfarb: Correct, Your Honor, absolutely.

Otherwise it has no, this machinery that we have negotiated have no efficacy, they are meaningless things, if allegations can cause them to be reviewed in the federal courts.

Unknown Speaker: Even though the employer later said, well based on this evidence it is perfectly clear that it was the motel employee that pocketed the money, rather than the employees.

The evidence shows it, here is his bank account, here is everything and here is his confession.

Mr. Bernard S. Goldfarb: But that is extra legal, but if that were so, isn’t there—

Unknown Speaker: --extra legal.

Mr. Bernard S. Goldfarb: I know, but isn’t there an affirmative duty on the part of the grievant to go back to the committee that made the award --

Unknown Speaker: Even though there was a wrongful discharge on the actual facts, you have the right to rely on the grievance procedure.

Mr. Bernard S. Goldfarb: Correct, Your Honor.

And if the grievant feels that he was unjustly treated then he ought to go back to the committee that made the award and ask to be reheard or file a petition to vacate their award, rather than to have trial de novo on the same set of facts.

Justice William H. Rehnquist: What year was this grievance heard?

Mr. Bernard S. Goldfarb: In 1967.

Unknown Speaker: Is there a procedure for what you have suggested?

Mr. Bernard S. Goldfarb: Yes there is, they followed it once; that is for a rehearing on new evidence, there is a procedure.

Unknown Speaker: With no limitation, no time limitation?

Mr. Bernard S. Goldfarb: There is no time limitation.

There was no time limitation imposed on them the first time, there would be no time limitation imposed on them, the second time.

We wanted to submit that in order to give some stability to arbitral awards or grievance machinery awards.

That traditional grounds ought to be utilized for setting up aside in the courts.

Fraud, collusion, something that taints the machinery.

And we do not want to be heartless either to say that the derivative right of the employee, if he is not fairly represented that he should not have some right in that machinery to say something affirmatively that, I do not feel, I am being represented properly.

So at least the employers and the committees are put on notice, but I do not think he has the rights.

With all the rights he has to sit back and accept the benefit of a grievance machinery, and then when he gets an unfavorable decision to holler foul.

Unknown Speaker: Do you think it makes any difference if the employee has any access to the machinery himself?

Mr. Bernard S. Goldfarb: No, I do not think it makes any difference.

Unknown Speaker: So that in this case the employee may not himself invoke these procedures?

Mr. Bernard S. Goldfarb: I do not know of anything in this labor agreement—

Unknown Speaker: Is this difficult that they may not do that?

Mr. Bernard S. Goldfarb: Well, I do not know of any situation where they would be prevented from doing it.

I know noting in this contract that would prevent an individual from; as a matter of fact they do invoke it by filling a grievance.

Unknown Speaker: Well they filed a grievance, but let us assume that the employer rejects it the first level.

Now isn’t that the, only the Union that may—

Mr. Bernard S. Goldfarb: The Union files it with the committe.

Unknown Speaker: Well isn’t only the Union that may do that?

Mr. Bernard S. Goldfarb: I do not know of anything in the contract that would prevent the man to file any—

Unknown Speaker: Do you know of any instance?

Mr. Bernard S. Goldfarb: No, I know of none.

Unknown Speaker: Yes.

Mr. Bernard S. Goldfarb: I know of none.

But let us assume it was frustrated, let us assume the Union did not file a grievance and there had been no adjudication before a committee.

Now I say we have got a different situation, a man is entitled that be heard and tried on the merits—

Unknown Speaker: At least the employer then knows there has not been exhaustion.

Mr. Bernard S. Goldfarb: Precisely.

We know where we stand, we know what risk we are exposed to and we know that we are taking a chance until that man has his grievance resolved.

But until that happens, we should be put on some kind of notice that we are going to be exposed to some kind of Jeopardy.

And if that man himself does not affirmatively take some action, we will never know what our liability is under this contract; there is no stability, we do not have any ground rules, we do not have any way of relying on the good faith collective bargaining.

Now, I want to talk just briefly about remedies.

The petitioners seem to feel that if the employer is not kept in this case, for no other reason whatsoever, the men cannot get a favorable remedy.

Now that would be a unique proposition to keep a party in a case because of not liability but simply because of collectability.

And unless there is some nixes to some wrongdoings, some collusion, some taint in the machinery where there is a legal basis for keeping the employer in litigation, collectability in and of itself certainly cannot be the basis for keeping an employer in as a party defendant to a law suit.

Unknown Speaker: Mr. Goldfarb, I do not understand that to be your brothers’ submission.

It is rather that the damage to these employees that resulted from the failure of statutory representation on the part of their agent was their wrongful discharge.

And that only the employer can repair that damage, because only the employer can reinstate them.

That is a simple submission as I understand it.

It is not a matter of collectability?

Mr. Bernard S. Goldfarb: Well, to address myself to that particular—

Unknown Speaker: If I misunderstand it but it was my understanding of it.

Mr. Bernard S. Goldfarb: Perhaps I did not understand the question?

Unknown Speaker: The question was, are you -- do you think you are fairly paraphrasing your brother’s position because I thought you weren’t as I understood.

Mr. Bernard S. Goldfarb: I think I am.

He said, if I understood him correctly and I think he takes the position in his brief, that unless the employer is kept in this case without regard to what happened before, the men would be without a remedy.

Unknown Speaker: Because they could not be reinstated, because the employer can reinstate them.

Mr. Bernard S. Goldfarb: Correct.

Unknown Speaker: That is self evident, is it not?

Mr. Bernard S. Goldfarb: And the Bench addressed the question that he could get a remedy from the Union.

Unknown Speaker: Not reinstatement?

Mr. Bernard S. Goldfarb: But not reinstatement, that is correct.

Unknown Speaker: And it was wrongful discharge which was, of which they complained.

And the remedy for wrongful discharge is reinstatement.

Mr. Bernard S. Goldfarb: Yes, but the posture of this case before this court is that the wrongful discharge has been adjudicated and there is some finality.

And the way—

Chief Justice Warren E. Burger: They are not asking for back pay?

Are they asking for back pay here?

Mr. Bernard S. Goldfarb: Originally in their compliant they ask for a back pay.

Chief Justice Warren E. Burger: If the employer is in the District Court, he is certainly exposed to a very-very large back pay award.

Mr. Bernard S. Goldfarb: Correct.

Chief Justice Warren E. Burger: Apart from reinstatement.

Mr. Bernard S. Goldfarb: That is correct Mr. Chief Justice, but the Union can also satisfy a back pay award and money damages.

Chief Justice Warren E. Burger: And they could satisfy a claim measured by the loss, a value of the failure to get reinstatement, even though that is very difficult to evaluate.

Mr. Bernard S. Goldfarb: It would not be unique because it is done on wrongful death cases, it is done in all kinds of phases where you have to project earnings into the future.

The union in and of itself could satisfy any kind of a money claim.

Unknown Speaker: But as I understood Mr. Goldfarb, however the position is that he has no, these employees have no cause of action against the Union for failure to give adequate representation in a discharge case, unless in fact there has been wrongful discharge.

And that therefore you have to keep the employer in on the issue of whether or not there has been a wrongful discharge before he has any cause of action at all for failure to give proper representation against the Union.

Then he goes on as I understand it the so he answered me earlier as I understood him to argue, that in this instance you cannot rely on the arbitration law because that award was not the product of a proper representation on the part of the Union.

Mr. Bernard S. Goldfarb: And we say—

Unknown Speaker: I know what you say but that is his position?

Mr. Bernard S. Goldfarb: That is his position.

Unknown Speaker: So as Mr. Justice Stewart, was suggesting to you earlier your characterization of this position does not seem quite accurate.

Mr. Bernard S. Goldfarb: That is the reading I got of it, but in any event this case boils down to a very simple proposition that once there has been an adjudication in the machinery, and the employer is free from any wrong, he should not be exposed to the jeopardy of going through any kind of litigation, if the Union was guilty of unfair representation.

There are two distinct --

Unknown Speaker: But the duty of fair representation is a statutory duty, isn’t it?

Mr. Bernard S. Goldfarb: That is right.

Unknown Speaker: And your opponent’s argument is that the finality the attached to the grievance procedure should not obtain in full force unless the statutory duty has been satisfied.

That the assumption on which finality is based is that the statutory obligation has been satisfied.

Mr. Bernard S. Goldfarb: What inherent evils there would be in that type of situation? How easy it would be for Union to be guilty of unfair representation, and take a chance on a arbitration decision.

If they won, they would be fine, if they lost the Union’s could holler foul that we did not fairly represent this man and we want another trial.

Why should be the employer be infected with what the Union fails to do in its statutory duties.

Unknown Speaker: Are there some cases that have gone with you on this matter?

Mr. Bernard S. Goldfarb: No, this is a case of a, from our standpoint of first significance.

Unknown Speaker: There are cases against you though?

Mr. Bernard S. Goldfarb: Not in, Your Honor, I respectfully submit to you Sir.

There are not any cases against me where there has been an arbitration.

Unknown Speaker: When there has been exhaustion.

Mr. Bernard S. Goldfarb: When there has been exhaustion.

There are plenty of cases that philosophically discuss the question, like Vaca does, assuming there was a wrongful discharge and a failure to represent and then they go out and talk about apportionment but assuming a wrongful discharge, our posture here today is without the assumption, we are dealing with the reality of an adjudication.

And so as a result we say we have got a case of some significance here where the Court has an opportunity to delineate some employer rights.

Justice William J. Brennan: You are quite right Mr. Goldfarb, in this Court’s cases.

Way back to the steelworkers Trilogy but very especial emphasis on the values and labor relations of the arbitration procedure.

And I expect that your concern with this employer’s representative is, that those procedures may not mean as much as you used to believe they did, if we are going to say that you can interpose unless defense in circumstances of alleged here.

Mr. Bernard S. Goldfarb: That is precisely it, Mr. Justice Brennan, precisely.

And so we would like to submit this case that we would frankly like to see the District Court’s decision reinstated.

Unknown Speaker: What if the arbitrators decision itself was subject to review on one of the very few grounds it is subject to, let us say for fraud or something.

Mr. Bernard S. Goldfarb: I think it would be an entirely different situation.

I think they would be entitled to review the entire matter.

Unknown Speaker: Even though you had a contractual right to rely on the grievance procedure?

Mr. Bernard S. Goldfarb: Right, because fraud, collusion goes to the very higher deals with both parties.

There is nothing unilateral about it.

I think, if we had a fraud situation here we would have a entirely different case --

Unknown Speaker: No, I guess our cases have always said with that exception to the finality of arbitration?

Mr. Bernard S. Goldfarb: Correct, there is not any question about it.

I think if we stayed with the traditional grounds of fraud, collusion to upset the arbitration process, we would greatly strengthen the collective bargaining positions of Unions and employers throughout this Country.

We would have some certainty, we would have some finality in our dealing.

Unknown Speaker: Would you say that it is also a different case if in the complaint it were alleged that the Union and the employer were in cahoots?

Mr. Bernard S. Goldfarb: I do not think there is any question about that either because that takes two, it is bilateral then.

But where one party is innocent, I do not think we should be prejudiced.

I would go—

Justice Thurgood Marshall: (Inaudible) if this case alleged him?

Mr. Bernard S. Goldfarb: No.

Justice Thurgood Marshall: It did not?

Mr. Bernard S. Goldfarb: No.

Unknown Speaker: Well there is the question presented certainly does not put that to this hour, -- if you have collusion between the Union and the employer, almost by definition you have the sort of fraud that would be included in the grounds for reviewing arbitration?

Mr. Bernard S. Goldfarb: Be no question about it.

I think if both were parties to any kind of wrong that would taint the machinery there is not a doubt in my mind that there would be no validity of the arbitral process.

But where there is no taint to the machinery and where, for example in this case, the Court of Appeals merely suggested that bad faith ought to be litigated and not be handled by summary judgment, and vindicated the employer's position and gave finality to the arbitral process.

I think if this court would return to the status of the District Court, we would avoid a multiplicity of actions in trying these cases before arbitration boards, and then trying them again before labor boards, and then trying them again before District Courts.

Unknown Speaker: Well the District Court granted summary judgment against all the parties, did not it?

Mr. Bernard S. Goldfarb: Yes.

Unknown Speaker: Well, and the Court of Appeals reversed this to one and no review is sought to that, wasn’t it?

Mr. Bernard S. Goldfarb: No, Your Honor.

Unknown Speaker: See, we were without power to do what you have asked us to do.

Chief Justice Warren E. Burger: In the effect of the District Court’s action now affirmed or of the Court of Appeal’s action remanding the case for trial on the merits as against the Union.

Any more or less than a declaration that they may have an action against the Union for failure to represent it properly?

Mr. Bernard S. Goldfarb: I think the present posture of the case is precisely that.

If they have an action against the Union for any damages they may have suffered, regardless of what it may be.

Chief Justice Warren E. Burger: Just as they would have against a lawyer for malpractice --

Mr. Bernard S. Goldfarb: Malpractice, and just as against they would have against anybody for any tort that cause them many damage.

We would like to stand submitted in our briefs and argument.

Thank you.

Chief Justice Warren E. Burger: Thank you, do you have anything further Mr. Schwartz?

Rebuttal of Niki Z. Schwartz

Mr. Niki Z. Schwartz: Yes Mr. Chief Justice, thank you.

So I think it is important to point out that the action against the employer here is a breach of contract action, not a tort action, not a criminal action, there is no requirement of proof of mens rea or evil intent in a breach of contract action.

And on that basis the employer either breached the contract or he did not irrespective of whether he was in good faith or not in good faith, to say that the discharge was not wrongful because it has been adjudicated in the grievance proceeding, is simply to pull himself up by his own bootstraps.

That is the very issue here is how much are we going to attribute to this grievance proceeding in which grossly deficient representation in bad faith resulted in a total lack of exculpatory evidence.

Chief Justice Warren E. Burger: When?

Was this 1967 when the grievance procedure was held?

Mr. Niki Z. Schwartz: Yes it was.

Chief Justice Warren E. Burger: Do you suggest that it will not undermine grievance and arbitration processes in the area of labor, employer and labor relations, eight years later and you would still be reexamining what appeared to be a final award at that time?

Mr. Niki Z. Schwartz: It is only eight years later, Your Honor, because of all the proceedings in the courts below --

Chief Justice Warren E. Burger: Yes, whatever the reasons it is eight years later?

Mr. Niki Z. Schwartz: It is eight years later.

Chief Justice Warren E. Burger: Which has greatly enhanced any possible claims, does it here involve?

Mr. Niki Z. Schwartz: Except since 1968 the company has been on notice that Mr. Pegano has admitted to his own wrongdoing that the men were innocent.

I contend that to permit us to proceed against the Union and the company here will not undermine the grievance procedures, contractual grievance procedures as this court sets forth in the trilogy.

A distinction has to be made between cases such as the trilogy where you have a Union against a company whether or not independent individuals, where the issues are such that the Union is together, the company is together and they are litigating against each other.

This is a situation of a third party.

And there is a lot of discussion in Vaca dealing with the inherent—

Unknown Speaker: But I am sure it is not beyond the realms of practicalities of employees who lose arbitration awards, thereafter may find a reason of saying that they were not properly represented by the Union in the grievance procedure.

Mr. Niki Z. Schwartz: It is not also beyond the realm of --

Unknown Speaker: No, no, but isn’t that so?

Mr. Niki Z. Schwartz: That is within—

Unknown Speaker: If that so I suppose this adds something so far at least, that the case that is in uncertainties is to the finality of arbitration awards?

Mr. Niki Z. Schwartz: Except, the Sixth Circuit did not say that the mere allegations of bad faith and misrepresentation entitles us to litigate, there is a substantial amount of evidence of both of those things.

So it is not a free ticket into court, it is a very difficult struggle, and if you pursue the cases and law review literature since Vaca you will see it is a very uphill struggle and not one that to be lightly undertaken.

Unknown Speaker: Nobody says you are staying in Court just by alleging there was a mistake?

Mr. Niki Z. Schwartz: That is right.

Unknown Speaker: It would be bad faith.

Mr. Niki Z. Schwartz: That is right.

Thank you.

Chief Justice Warren E. Burger: Thank you gentleman.

The case is submitted.