United States District Court, Northern District of Illinois, E.D
March 16, 1984
MICHAEL SKROBACZ, ET AL., PLAINTIFFS,
INTERNATIONAL HARVESTER, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER*fn1
Michael Skrobacz and twenty-one others have sued:
1. International Harvester Company ("IH") under
Labor Management Relations Act § 301,
29 U.S.C. § 185 ("Section 301") for violations of
a collective bargaining agreement (Count I) and under
Employee Retirement Income Security Act ("ERISA")
§ 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B)
("Section 1132(a)(1)(B)") for failure to pay required
benefits under the employees' retirement plan (the
"Plan") (Count III); and
2. Automobile Mechanics Local No. 701 of the
International Association of Machinists and Aerospace
Workers ("Union") for breach of its duty of fair
representation by failing to take plaintiffs'
resulting grievances to arbitration (Count II).
IH and Union now move alternatively (1) for dismissal of the Complaint
under Fed. R.Civ.P. ("Rule") 12(b)(6) for failure to state a claim or (2)
for summary judgment under Rule 56.*fn2
For the reasons stated in this
memorandum opinion and order, summary judgment is granted in favor of IH
on Counts I and III and in favor of Union on Count II.
In September 1982 IH told Union the Melrose ReNew Center ("Center") had
been sold and IH planned to close it October 29. Union and IH
representatives then met to discuss the impact of the Center's closing on
On November 26 plaintiffs,*fn3 former Center employees, filed a
grievance with Union relating to IH's treatment of sick leave, holiday
leave and retirement and insurance benefits. In a separate November 26
letter plaintiffs also filed a charge against Union representatives who
had engaged in negotiations
with IH about the Center's closing, claiming those unidentified
representatives had failed to represent plaintiffs' interests properly.
That second charge was lodged pursuant to Union's Constitution (the
"Constitution"), not under the collective bargaining agreement.
On December 6 Union President Donald Gustafson ("Gustafson") responded
with a letter stating (1) the conclusion plaintiffs' grievance and their
charge against unnamed Union representatives lacked merit, (2) his
reasons for that decision and (3) Union's decision not to pursue the
matter to arbitration. At a December 20 Union meeting to which all former
Center employees were invited, Gustafson and Union Vice President Gordon
Frank explained Union's position on the grievance and actions it took in
the negotiations with IH. Gustafson gave each member at the meeting a
copy of his December 6 letter and a December 8 letter from IH as to sick
leave benefits. On the following day Gustafson mailed those same
materials to each Union member who had not been at the meeting. Union
took no further action on the grievances identified in plaintiffs'
November 26 letters, and plaintiffs did not appeal those decisions.
On January 26, 1983 plaintiffs reasserted their charges under the
Constitution, this time naming four individuals who had assertedly failed
to represent plaintiffs' interests properly in negotiations with IH. On
February 3 Gustafson appointed a Trial Committee to investigate the
matter. On February 16 the Committee recommended the charges be dismissed
as nonmeritorious. On March 2 the Union membership voted to accept the
Committee's recommendation and Gustafson wrote plaintiffs of the decision
to dismiss the charges. Plaintiffs did not appeal that decision as
provided for in Constitution Art. I, § 14.
IH's Manager of Employee Pensions David Clemens ("Clemens") stated (by
affidavit) IH had received letters from plaintiffs dated November 26,
1982 and January 26, 1983 asking information about their pension and
supplemental benefits. On February 23*fn4 Clemens mailed a letter to
plaintiffs' designated counsel, explaining why plaintiffs were not
eligible for some benefits but might be eligible for others. Even though
Clemens included in the letter a copy of the Plan's Claims and Review
Procedure, plaintiffs took no further action in that respect.
Instead plaintiffs filed this action August 16, 1983. Though their
counsel was fully aware of the location of both IH and Union, service was
not effected on either defendant until December 16, 1983. In both
instances that was over 120 days after suit was filed.
Counts I and II
IH and Union make the same two arguments against Counts I and II:
1. Under Del Costello v. International Brotherhood
of Teamsters, ___ U.S. ___, 103 S.Ct. 2281, 76 L.Ed.2d
476 (1983), the six-month statute of limitations
(drawn from National Labor Relations Act § 10(b),
29 U.S.C. § 160(b) ("Section 10(b)")) bars
plaintiffs' assertion of those two counts.
2. Plaintiffs also failed to exhaust the mandatory
remedies prescribed by the Constitution and the
collective bargaining agreement.
Because the limitations argument is unquestionably sound, the exhaustion
issue need not be addressed.
Del Costello embraced Section 10(b)'s six-month limitation period as
applicable both to actions against an employer for breach of the
collective bargaining agreement and to actions against a union for breach
of its duty of fair representation. Our Court of Appeals promptly made
plain in Metz v. Tootsie Roll Industries, 715 F.2d 299, 303-04 (7th Cir.
1983) (quoting with approval this court's decision in
Bigbie v. Local 142, International Brotherhood of Teamsters,
530 F. Supp. 402, 404 (N.D.Ill. 1981)) the limitations clock began to
tick when the employee "knew or should have known" his union was not
going to process his grievance. Here that was true not later than Union's
December 20, 1982 meeting, when it reconfirmed Gustafson's December 6
statement it would not pursue plaintiffs' grievance Union considered as
plainly without merit.*fn5
Consequently plaintiffs' August 16, 1983 filing of this action was
clearly untimely. That compels dismissal of counts I and 11.*fn6
IH claims plaintiffs have not in fact exhausted their remedies under
the Plan,*fn7 such exhaustion being a necessary prerequisite to this
action. As IU correctly points out, plaintiffs must pursue those Plan
remedies before they can maintain an action for benefits or for a
declaration of their rights as participants under Section 1132(aXl)(B).
Challenger v. Local Union No. 1 of the International Bridge, Structural
and Ornamental Ironworkers, 619 F.2d 645, 649 (7th Cir. 1980); Kross v.
Western Electric Co., 534 F. Supp. 251, 253 (N.D.Ill. 1982).
According to the Claims and Review Procedure under the Plan, a claim
for Plan benefits must be filed with IH's Employees Pension Department.
Written notice of any decision denying such a claim is provided,
detailing the reasons for the denial and an explanation of the claim
review procedure. Claimants then have the opportunity to appeal the
denial to designated parties.
IH first argues plaintiffs' letters were not "claims" but merely
requests for information. This Court will however indulge the inference
(a reasonable one from the letters' language) plaintiffs thought they
were making a claim. Even on that favorable assumption, plaintiffs'
failure to take an appeal from the disposition of that "claim" prevents
this action now.*fn8
One matter remains.*fn10 Union has moved for an award of attorneys'
expenses because the claim against it has been pursued frivolously and in
On January 3, 1984 Union's lawyer called plaintiffs' lawyer and then
wrote him January 5 (see Ex. A), specifically calling his attention to
Del Costello and Metz (among other reasons for dismissal) and asking that
the suit against Union be dismissed to obviate the need for further legal
costs to Union. Plaintiffs' lawyer rejected that request and said that
Union should file a motion — despite Union counsel's warning of the
risk of attorneys' fees liability for bad faith prosecution.
With a squarely applicable Supreme Court decision of such recent
vintage having been cited to plaintiffs' counsel, no conceivable excuse
exists for such intransigence. Filing of this action may well have been
in good faith (Del Costello was just two months old on August 16, and
Metz had not yet been decided),*fn11 but certainly its continuation
after counsel's conversation described in Ex. A was a clear violation of
28 U.S.C. § 1927:
Any attorney or other person admitted to conduct cases
in any court of the United States or any Territory
thereof who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the
court to satisfy personally the excess costs,
expenses, and attorneys' fees reasonably incurred
because of such conduct.
In light of all the circumstances (coupled with counsel's current failure
to respond, though that is not at all a controlling factor), this Court
finds the continued assertion of the claim against Union, in the face of
Union counsel's courtesy in identifying squarely applicable and
unimpeachable precedent, was both unreasonable and vexatious (and indeed
reflected bad faith). See McCandless v. Great Atlantic & Pacific Tea
Co., 697 F.2d 198 (7th Cir. 1983).
Accordingly Union is entitled to an award of its attorneys' fees
incurred after the lawyers' January 8 conversation. Because of the
prospect of assessing fees on fees, it would be in no one's interest to
compound the expenses involved by requiring an evidentiary hearing if one
can be avoided — or if one is necessary, by failing to narrow the
issues if possible. For that reason this Court will await notice from
either party (with a copy to the other, of course) as to whether they
have been able to reach agreement on all or part of the fees and expenses
There is no genuine issue as to any material fact, and defendants are
entitled to a judgment as a matter of law. Both their motions for summary
judgment are granted, and this action is dismissed. This Court will await
further submissions on the issues of attorneys' fees and expenses.
*fn2 Though Union did not (as did IH) designate its motion as one for
summary judgment, it tendered supporting factual material by affidavit
for consideration by this Court. Under the last sentence of Rule 12(b)
that converted Union's motion as well into one for summary judgment under
Rule 56. In fact such factual material was essential, given the
Complaint's total omission of any dates at all (a matter mentioned later
in this opinion). In any event plaintiffs' total default in adhering to
the schedule set for their response leaves the facts uncontroverted (see
the last two sentences of Rule 56(e)).
*fn3 Because of the partial illegibility of the photocopies provided
this Court, this opinion assumes all plaintiffs were signatories to the
letters described in this section (the assumption most favorable to
plaintiffs). That appears probable, given the fact the letters referred to
(and were most likely drafted by) the same lawyers who filed this action
*fn4 Clemens remailed the same letter to plaintiffs' lawyers March 21,
after the first letter was returned as "Unclaimed."
*fn5 There was certainly nothing ambiguous about Gustafson's detailed
December 6 letter itself. But because this action was not filed between
June 6 and 26, 1983 this Court does not have to decide whether plaintiffs
"knew or should have known" as soon as they received the December 6
letter or not until December 26.
*fn6 Union's convening of the Trial Committee to consider the charges of
improper representation under the Constitution — a totally internal
matter, which it was obligated to pursue — is wholly different from
its asserting plaintiffs' claim against IH. There is no room for an
inference that Union's internal resolution of those charges between
January 26 and March 2, 1983 served to toll the running of limitations
(by somehow changing what plaintiffs already "knew or should have known"
about Union's intention not to process plaintiffs' grievance against
IH). According this Court is also not called upon to decide whether the
six-month limitation period is met by merely filing suit (see Rule 3) or
whether, as Union Mem. 4 suggests, plaintiffs not only had to file suit
but also (as they unquestionably did not do) serve defendants within six
months — as Section 10(b) mandates for the filing of unfair labor
practice charges. NLRB v. Complas Industries, Inc., 714 F.2d 729, 732-33
(7th Cir. 1983); NLRB v. Local 264, Laborers' international Union of
North America, 529 F.2d 778, 782 (8th CIr. 1976).
*fn7 IH initially argues the Complaint does not adequately allege
exhaustion. But Count III ¶ 15 says "Plaintiffs have performed all
those necessary acts on their part to be performed both prior to and
including the maintenance of this litigation." Under conventionally
liberal pleading standards, that is enough to withstand a Rule 12(b)(6)
*fn8 Nothing in the record suggests such an appeal would be futile so as
to excuse the exhaustion requirement. On the contrary, Clemens' Aff.
¶ 8 says plaintiffs are still entitled to pursue their administrative
remedies under the Plan (a matter as to which this Court expresses no
*fn9 Both the facts and the conduct of plaintiffs' counsel (even
including the non-compliance with this District Court's General Rule
13(b)) are startlingly similar to those described in this Court's
December 12, 1983 opinion in Smith v. Jones Warehouse, Inc., No. 83 C.
4657. Accordingly this section has plagiarized freely from that
*fn10 Much of this opinion or its footnotes seems to have been spent in
describing issues it did not decide. And there is another. Even before
the total delinquency of plaintiffs' counsel in responding to the current
motion, they and their clients were involved in the questionable decision
to bring and proceed with this suit (discussed next in the text) and also
the failure to pursue service on defendants as they were bound to do
(discussed next in this note). Despite the fact both Union and III were
stationary targets whose location was well known to plaintiffs and their
lawyers, process was not served on either defendant for more than the 120
days referred to in Rule 4(j). That factor alone, absent a showing of
good cause, could have led to dismissal under that Rule. But in light of
defendants' showings on the merits. such a dismissal without prejudice
would have been false judicial economy.
*fn11 On the other hand, it is certainly unusual to encounter a
complaint like that drafted by plaintiffs' counsel here, in which not a
single date is alleged for any of the events spelled out in such detail.
That might reasonably raise the question whether counsel was at least
aware of potential time problems with the filing of the lawsuit.