Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 80 C 4482 -- J. Sam Perry, Senior Judge.
Before PELL and POSNER, Circuit Judges, and BROWN, Senior Circuit Judge.*fn*
PELL, Circuit Judge. Consolidated Rail Corporation (Conrail) appeals from judgments entered below, pursuant to jury verdicts, awarding Junior S. Jackson (Jackson) compensatory damages in the amount of $13,500 for his claim under the Federal Employers' Liability Act, 45 U.S.C. §§ 51-60 (FELA), and $182,000 pursuant to his pendent claim of retaliatory discharge. Jackson urges on cross-appeal that a punitive damage award of $1,260,000, relating to the retaliatory discharge claim, should be reinstated.
The principal issue on appeal is whether the provisions of the Railway Labor Act (RLA) providing for a scheme of administrative grievance procedures and remedies, 45 U.S.C. § 153 First, preempt the state tort action for retaliatory discharge upon which Jackson relied. If the RLA does preempt the state action, a related issue is whether the preemptive effect is to divest the district court of subject matter jurisdiction over Jackson's pendent claim, thereby making immaterial Conrail's delay until after trial in raising the preemption defense.
Jackson worked as a track maintenance foreman for Conrail.He was a member of the Brotherhood of Maintenance of Railway Employees (Union) and covered by the Union's collective bargaining agreement.
On August 22, 1980, Jackson filed a two-count complaint against his employer pursuant to the FELA.Jackson alleged that he suffered work-related injuries on or about February 3, 1978 and, as a result, was hospitalized for approximately ten days that month.*fn1
On February 3, 1981, Jackson received a letter from Conrail. The letter advised him that a formal hearing would be held to determine whether he had violated the Railroad Safety Rules by, inter alia, failing to report his alleged injury of February 3, 1978. The hearing was held on February 25, 1981. A transcript of the hearing was sent to the Division Engineer so that he could determine what discipline was to be administered. Hammons, the Division Engineer, had learned previously of Jackson's 1978 injury because he had received a copy of Jackson's FELA complaint in November, 1980.*fn2 On April 20, 1981, Hammons issued a notice of discipline, discharging Jackson for failing to report immediately his February 3, 1978 injury to a supervisor as required by Railroad Safety Rule 3000(a) and for lifting beyond his physical capabilities.*fn3
On April 10, 1981, Jackson had amended his claim to add a third count. He charged Conrail with job harassment and the intentional infliction of emotional distress.*fn4 Following his discharge, Jackson indicated that he would again amend his complaint to state a claim of retaliatory discharge and filed an emergency motion seeking to enjoin Conrail from discharging him in retaliation for filing the FELA claim. A hearing was held before Judge Marvin E. Aspen on May 4, 1981. Judge Aspen denied injunctive relief, noting that both Indiana and Illinois recognize a cause of action for retaliatory discharge and that Jackson could be adequately compensated if he succeeded in such an action.
On May 7, 1981, Jackson amended his complaint to add a fourth count alleging retaliatory discharge. He sought $250,000 compensatory damages and $500,000 punitive damages. He asserted that the court had pendent jurisdiction over the claim. Conrail did not challenge this jurisdictional basis.
On April 19, 1982, a jury trial commenced before Senior Judge J. Sam Perry. On April 27, 1982, the jury returned its verdicts awarding the plaintiff $13,500 in compensatory damages on the FELA claim, $182,000 compensatory damages on the retaliatory discharge claim, and $1,260,000 punitive damages on that action. Conrail subsequently filed its post-trial motions urging, inter alia, that the district court lacked subject matter jurisdiction over Jackson's retaliatory discharge claim and that a new trial should be granted because of inflammatory remarks by Jackson's counsel during opening and closing argument. Prior to filing this motion, Conrail had not objected to the district court's exercise of pendent jurisdiction over the retaliatory discharge claim.
On July 28, 1982, the district court issued a memorandum order denying all Conrail's post-trial motions. The court upheld the jury verdicts except for the $1,260,000 punitive damage award which was set aside on the ground that willful, malicious, or oppressive conduct could only be asserted against Jackson's superior, who was not a party to the action, rather than against Conrail.
Conrail has appealed on the grounds that the district court lacked subject matter jurisdiction over the retaliatory discharge claim and that a new trial is required to determine the amount of compensatory damages because both compensatory awards were tainted by evidence and argument relevant, if at all, only to the question of punitive damages. Jackson urges on cross-appeal that the punitive damage award should be reinstated.
II.SUBJECT MATTER JURISDICTION
Conrail contends that the scheme of administrative remedies and procedures mandated by 45 U.S.C. § 153 First preempts the power of the district court to entertain, pursuant to pendent jurisdiction, Jackson's claim of retaliatory discharge. Conrail's argument turns on three analytically distinct points: (1) Jackson's claim is a variety of wrongful discharge action and, under Andrews v. Louisville & Nashville Railroad Co., 406 U.S. 320, 32 L. Ed. 2d 95, 92 S. Ct. 1562 (1972)(Andrews), his exclusive remedy lay with the grievance procedures established pursuant to the collective bargaining agreement and with the National Railroad Adjustment Board (NRAB) created by 45 U.S.C. § 153 First;*fn5 (2) the preemption effected by the RLA divests the district court of subject matter jurisdiction over Jackson's pendent claim; and (3) because the court below lacked subject matter jurisdiction, Conrail cannot be estopped from raising the issue for the first time in its post-trial motions. Although there is some congruence in the discussion necessitated by the three prongs of Conrail's argument, we shall discuss each in turn insofar as possible.
A. Preemptive Effect of the RLA
Andrews, upon which Conrail relies, involved a railroad employee who was unable to work for a period after he was involved in an automobile accident. When Andrews believed that he was physically able to return to work, the railroad refused to allow him to return. Andrews severed his connection with the railroad, characterized its refusal to grant him work as a wrongful discharge, and sought relief, in the form of damages for loss of past and future earnings, in the Georgia state court. After the railroad removed the case to federal court, both the district court and court of appeals held that Andrews' tort claim was barred because he had failed to exhaust his administrative remedies under the RLA.
The Supreme Court affirmed the dismissal of Andrews' suit. Two aspects of the Andrews opinion are particularly relevant to the present case. First, the Court reasoned that Andrews' claim was a minor dispute, subject to the arbitration remedy provided under the RLA, 45 U.S.C. § 153 First (i), because the collective bargaining agreement was necessarily the source of Andrews' claim that the discharge was wrongful. The Court noted that, absent the bargaining agreement, Andrews would have been subject to termination at the will of the railroad. 406 U.S. at 324. Second, the Court emphasized that exhaustion under the RLA does not mean merely that one must utilize administrative remedies before relitigating the merits of one's claim in an independent judicial proceeding. Rather, under the RLA, the federal administrative remedy is exclusive. Id. at 325.
Jackson urges on appeal that the district judge correctly found his claim to be outside the scope of Andrews and therefore cognizable as a pendent claim in his FELA suit. There is no question that Jackson's right not to be discharged at the will of Conrail grows out of the collective bargaining agreement. Similarly, there is no doubt that a "retaliatory discharge" is one variety of a "wrongful discharge" claim. Jackson's argument is that retaliatory discharge implicates certain rights that distinguish it sufficiently from the discharge in Andrews to place Jackson's claim outside the scope of the Andrews holding. Whether this is true is a question of first impression. The arguments and case law upon which Jackson relies are best grouped into two lines of analysis: (1) that his retaliatory discharge claim vindicates a federal FELA right, and (2) that an exception to preemption is justified in this case by Farmer v. United Brotherhood of Carpenters, Local 24, 430 U.S. 290, 51 L. Ed. 2d 338, 97 S. Ct. 1056 (1977). We discuss each in turn.*fn6
1. Vindication of Federal Right.
Jackson analogizes this case to those in which a claim based on a federal statute has been upheld, despite petitioner's failure to exhaust administrative remedies under the RLA or to obtain relief pursuant to those remedies. E.g., Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 67 L. Ed. 2d 641, 101 S. Ct. 1437 (1981); Johnson v. American Airlines, Inc., 487 F. Supp. 1343 (N.D.Tex. 1980).Jackson reasons that he had a federal statutory right to bring an FELA suit, 45 U.S.C. § 51, and that suffering discharge in retaliation for bringing such a suit has an impermissible impact on his federal right.
In Johnson v. American Airlines, Inc., 487 F. Supp. 1343 (N.D.Tex. 1980), former commercial airline pilots challenged American's rule that made retirement of pilots mandatory at age sixty. The former pilots wanted to continue working for American as flight engineers. Flight engineers were not subject to the age sixty retirement rule. The district court held that the pilots' suit, based on the Age Discrimination in Employment Act, 29 U.S.C. § 623 (ADEA), was cognizable even though the plaintiffs had not exhausted the applicable remedies under the collective bargaining agreement or the RLA. The court relied on the holding in Alexander v. Gardner-Denver Co., 415 U.S. 36, 45, 39 L. Ed. 2d 147, 94 S. Ct. 1011 (1974), in which the Court stated that an arbitrator's resolution of a contractual claim is not necessarily dispositive of a statutory claim premised on Title VII. Johnson, 487 F. Supp. at 1345. The Johnson court noted that exhaustion of administrative remedies was not a condition precedent to maintaining an ADEA suit because the right not to suffer from age discrimination is a federal statutory right rather than a contractual right. Id. at 1346. See also Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 67 L. Ed. 2d 641, 101 S. Ct. 1437 (1981) (wage claims based on Fair Labor Standards Act, 29 U.S.C. §§ 201-219, not barred by prior submission of grievances to contractual dispute resolution procedures); Conrad v. Delta Air Lines, Inc., 494 F.2d 914 (7th Cir. 1974) (distinguishing Andrews from Conrad's allegations that Delta discharged him, in violation of the express provisions of 45 U.S.C. § 152 Fourth, because of his union activities).
The present case is distinguishable from Barrentine, Conrad, and Johnson, because neither the FELA, the RLA, nor any other federal statute specifically provides a right of action to one discharged under the circumstances alleged by Jackson. The question is whether the state tort action for retaliatory discharge, buttressed by the policies underlying the FELA, is sufficiently analogous to a federal statutory right to rebut the preemption of the RLA.
The case most relevant to resolving this issue is Hendley v. Central of Georgia Railroad, 609 F.2d 1146 (5th Cir. 1980), cert. denied, 449 U.S. 1093, 66 L. Ed. 2d 822, 101 S. Ct. 890 (1981). Hendley brought suit to enjoin the railroad for which he worked from conducting a disciplinary hearing relating to his alleged disloyalty in assisting a fellow employee's FELA action against the railroad. Hendley relied on 45 U.S.C. § 60 which provides that it is a crime to discipline an employee for voluntarily furnishing information in connection with an FELA case. The district court in Hendley had ruled that his claim was a minor dispute, within the exclusive jurisdiction of the NRAB, because the FELA case was already concluded and there was no possibility that relevant evidence would be suppressed through coercion by the railroad.
Several factors were relevant to the Fifth Circuit's holding that Hendley's claim was cognizable in federal court. The court noted that the case involved interpretation of a federal statute because it was necessary to determine whether 45 U.S.C. § 60 was applicable after the FELA action was concluded. The Fifth Circuit also analogized Hendley to Brotherhood of Railroad Trainmen v. Central of Georgia Railway, 305 F.2d 605 (5th Cir. 1962) (Brotherhood), in which the plaintiff had alleged that a disloyalty investigation by the railroad was instituted in order to discredit the union of which he was a representative. Because these allegations constituted, if proven, a violation of 45 U.S.C. § 152 Third, which prohibits coercion in the employees' choice of a representative, the Fifth Circuit had held that it had jurisdiction over the case. The Hendley court explicitly distinguished Brotherhood from a later Fifth Circuit disposition, Brotherhood of Railroad Trainmen v. Southern Railway, 393 F.2d 303 (5th Cir. 1968) (Southern), in which the plaintiff had relied on the general policy provisions of the RLA. The Southern court had held that jurisdiction could not be premised on such a general policy statement. Hendley, 609 F.2d at 1152 n.4.
The Hendley decision therefore recognizes an exception to preemption only if the suit is premised on a specific federal statutory section. It distinguishes such a claim from one in which the allegations constitute, if proven, only a violation of the policy underlying a federal statute. This distinction, recognized in Hendley, strongly suggests ...