Chauffeurs, Teamsters & Helpers Local No. 391 v. Terry

494 U.S. 558, 110 S. Ct. 1339, 108 L. Ed. 2d 519, 1990 U.S. LEXIS 1530

• Court: Supreme Court of the United States
• Decided: May 14, 1990
• Docket: 88-1719
• Status: Published

Opinions

Justice Marshall

delivered the opinion of the Court, except as to Part III-A.

This case presents the question whether an employee who seeks relief in the form of backpay for a union’s alleged breach of its duty of fair representation has a right to trial by jury. We hold that the Seventh Amendment entitles such a plaintiff to a jury trial.

I

McLean Trucking Company and the Chauffeurs, Teamsters and Helpers Local No. 391 (Union) were parties to a collective-bargaining agreement that governed the terms and conditions of employment at McLean’s terminals. The 27 respondents were employed by McLean as truckdrivers in bargaining units covered by the agreement, and all were members of the Union. In 1982 McLean implemented a change in operations that resulted in the elimination of some of its terminals and the reorganization of others. As part of that change, McLean transferred respondents to the terminal located in Winston-Salem and agreed to give them special seniority rights in relation to “inactive” employees in Winston-Salem who had been laid off temporarily.

After working in Winston-Salem for approximately six weeks, respondents were alternately laid off and recalled several times. Respondents filed a grievance with the Union, contesting the order of the layoffs and recalls. Respondents also challenged McLean’s policy of stripping any driver who was laid off of his special seniority rights. Respondents claimed that McLean breached the collective-bargaining agreement by giving inactive drivers preference over respondents. After these proceedings, the grievance committee ordered McLean to recall any respondent who was then laid off and to lay off any inactive driver who had been recalled; in addition, the committee ordered McLean to recognize respondents’ special seniority rights until the inactive employees were properly recalled.

On the basis of this decision, McLean recalled respondents and laid off the drivers who had been on the inactive list when respondents transferred to Winston-Salem. Soon after this, though, McLean recalled the inactive employees, thereby allowing them to regain seniority rights over respondents. In the next round of layoffs, then, respondents had lower priority than inactive drivers and were laid off first. Accordingly, respondents filed another grievance, alleging that McLean’s actions were designed to circumvent the initial decision of the grievance committee.' The Union representative appeared before the grievance committee and presented the contentions of respondents and those of the inactive truckdrivers. At the conclusion of the hearing, the committee held that McLean had not violated the committee’s first decision.

McLean continued to engage in periodic layoffs and recalls of the workers at the Winston-Salem terminal. Respondents filed a third grievance with the Union, but the Union declined to refer the charges to a grievance committee on the ground that the relevant issues had been determined in the prior proceedings.

In July 1983, respondents filed an action in District Court, alleging that McLean had breached the collective-bargaining agreement in violation of § 301 of the Labor Management Relations Act, 1947, 61 Stat. 156, 29 U. S. C. §185 (1982 ed.),¹ and that the Union had violated its duty of fair representation. Respondents requested a permanent injunction requiring the defendants to cease their illegal acts and to reinstate them to their proper seniority status; in addition, they sought, inter alia, compensatory damages for lost wages and health benefits. In 1986 McLean filed for bankruptcy; subsequently, the action against it was voluntarily dismissed, along with all claims for injunctive relief.

Respondents had requested a jury trial in their pleadings. The Union moved to strike the jury demand on the ground that no right to a jury trial exists in a duty of fair representation suit. The District Court denied the motion to strike. After an interlocutory appeal, the Fourth Circuit affirmed the trial court, holding that the Seventh Amendment entitled respondents to a jury trial of their claim for monetary relief. 863 F. 2d 334 (1988). We granted the petition for certiorari to resolve a Circuit conflict on this issue,² 491 U. S. 903 (1989), and now affirm the judgment of the Fourth Circuit.

II

The duty of fair representation is inferred from unions’ exclusive authority under the National Labor Relations Act (NLRA), 49 Stat. 449, 29 U. S. C. § 159(a) (1982 ed.), to represent all employees in a bargaining unit. Vaca v. Sipes, 386 U. S. 171, 177 (1967). The duty requires a union “to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct.” Ibid. A union must discharge its duty both in bargaining with the employer and in its enforcement of the resulting collective-bargaining agreement. Ibid. Thus, the Union here was required to pursue respondents’ grievances in a manner consistent with the principles of fair representation.

Because most collective-bargaining agreements accord finality to grievance or arbitration procedures established by the collective-bargaining agreement, an employee normally cannot bring a § 301 action against an employer unless he can show that the union breached its duty of fair representation in its handling of his grievance. DelCostello v. Teamsters, 462 U. S. 151, 163-164 (1983). Whether the employee sues both the labor union and the employer or only one of those entities, he must prove the same two facts to recover money damages: that the employer’s action violated the terms of the collective-bargaining agreement and that the union breached its duty of fair representation. Id., at 164-165.

Ill

We turn now to the constitutional issue presented in this case — whether respondents are entitled to a jury trial.³ The Seventh Amendment provides that “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” The right to a jury trial includes more than the common-law forms of action recognized in 1791; the phrase “Suits at common law” refers to “suits in which legal rights [are] to be ascertained and determined, in contradistinction to those where equitable rights alone [are] recognized, and equitable remedies [are] administered.” Parsons v. Bedford, 3 Pet. 433, 447 (1830); see also ibid. (“[T]he amendment then may well be construed to embrace all suits which are not of equity and admiralty jurisdiction, whatever may be the peculiar form which they may assume to settle legal rights”). The right extends to causes of action created by Congress. Tull v. United States, 481 U. S. 412, 417 (1987). Since the merger of the systems of law and equity, see Fed. Rule Civ. Proc. 2, this Court has carefully preserved the right to trial by jury where legal rights are at stake. As the Court noted in Beacon Theatres, Inc. v. Westover, 359 U. S. 500, 501 (1959), ‘“Maintenance of the jury as a fact-finding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care’” (quoting Dimick v. Schiedt, 293 U. S. 474, 486 (1935)).

To determine whether a particular action will resolve legal rights, we examine both the nature of the issues involved and the remedy sought. “First, we compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, we examine the remedy sought and determine whether it is legal or equitable in nature.” Tull, supra, at 417-418 (citations omitted). The second inquiry is the more important in our analysis. Granfinanciera, S. A. v. Nordberg, 492 U. S. 33, 42 (1989).⁴

A

An action for breach of a union’s duty of fair representation was unknown in 18th-century England; in fact, collective bargaining was unlawful. See N. Citrine, Trade Union Law 4-7 (2d ed. 1960). We must therefore look for an analogous cause of action that existed in the 18th century to determine whether the nature of this duty of fair representation suit is legal or equitable.

The Union contends that this duty of fair representation action resembles a suit brought to vacate an arbitration award because respondents seek to set aside the result of the grievance process. In the 18th century, an action to set aside an arbitration award was considered equitable. 2 J. Story, Commentaries on Equity Jurisprudence § 1452, pp. 789-790 (13th ed. 1886) (equity courts had jurisdiction over claims that an award should be set aside on the ground of “mistake of the arbitrators”); see, e. g., Burchell v. Marsh, 17 How. 344 (1855) (reviewing bill in equity to vacate an arbitration award). In support of its characterization of the duty of fair representation claim, the Union cites United Parcel Service, Inc. v. Mitchell, 451 U. S. 56 (1981), in which we held that, for purposes of selecting from various state statutes an appropriate limitations period for a §301 suit against an employer, such a suit was more analogous to a suit to vacate an arbitration award than to a breach of contract action. Id., at 62.⁵

The arbitration analogy is inapposite, however, to the Seventh Amendment question posed in this case. No grievance committee has considered respondents’ claim that the Union violated its duty of fair representation; the grievance process was concerned only with the employer’s alleged breach of the collective-bargaining agreement. Thus, respondents’ claim against the Union cannot be characterized as an action to vacate an arbitration award because “‘[t]he arbitration proceeding did not, and indeed, could not, resolve the employee’s claim against the union. . . . Because no arbitrator has decided the primary issue presented by this claim, no arbitration award need be undone, even if the employee ultimately prevails.’” DelCostello, 462 U. S., at 167 (quoting Mitchell, supra, at 73 (Stevens, J., concurring in part and dissenting in part) (footnotes omitted)).

The Union next argues that respondents’ duty of fair representation action is comparable to an action by a trust beneficiary against a trustee for breach of fiduciary duty. Such actions were within the exclusive jurisdiction of courts of equity. 2 Story, supra, § 960, p. 266; Restatement (Second) of Trusts § 199(c) (1959). This analogy is far more persuasive than the arbitration analogy. Just as a trustee must act in the best interests of the beneficiaries, 2A W. Fratcher, Scott on Trusts § 170 (4th ed. 1987), a union, as the exclusive representative of the workers, must exercise its power to act on behalf of the employees in good faith, Vaca v. Sipes, 386 U. S., at 177. Moreover, just as a beneficiary does not directly control the actions of a trustee, 3 Fratcher, supra, § 187, an individual employee lacks direct control over a union’s actions taken on his behalf, see Cox, The Legal Nature of Collective Bargaining Agreements, 57 Mich. L. Rev. 1, 21 (1958).

The trust analogy extends to a union’s handling of grievances. In most cases, a trustee has the exclusive authority to sue third parties who injure the beneficiaries’ interest in the trust, 4 Fratcher, supra, § 282, pp. 25-29, including any legal claim the trustee holds in trust for the beneficiaries, Restatement (Second) of Trusts, supra, § 82, comment a. The trustee then has the sole responsibility for determining whether to settle, arbitrate, or otherwise dispose of the claim. Restatement (Second) of Trusts, supra, § 192. Similarly, the union typically has broad discretion in its decision whether and how to pursue an employee’s grievance against an employer. See, e. g., Vaca v. Sipes, supra, at 185. Just as a trust beneficiary can sue to enforce a contract entered into on his behalf by the trustee only if the trustee “improperly refuses or neglects to bring an action against the third person,” Restatement (Second) of Trusts, supra, §282(2), so an employee can sue his employer for a breach of the collective-bargaining agreement only if he shows that the union breached its duty of fair representation in its handling of the grievance, DelCostello, supra, at 163-164. See Bowen v. United States Postal Service, 459 U. S. 212, 243 (1983) (White, J., concurring in judgment in part and dissenting in part).

Respondents contend that their duty of fair representation suit is less like a trust action than an attorney malpractice action, which was historically an action at law, see, e. g., Russell v. Palmer, 2 Wils. K. B. 325, 95 Eng. Rep. 837 (1767). In determining the appropriate statute of limitations for a hybrid § 301/duty of fair representation action, this Court in DelCostello noted in dictum that an attorney malpractice action is “the closest state-law analogy for the claim against the union.” 462 U. S., at 167. The Court in DelCostello did not consider the trust analogy, however. Presented with a more complete range of alternatives, we find that, in the context of the Seventh Amendment inquiry, the attorney malpractice analogy does not capture the relationship between the union and the represented employees as fully as the trust analogy does.

The attorney malpractice analogy is inadequate in several respects. Although an attorney malpractice suit is in some ways similar to a suit alleging a union’s breach of its fiduciary duty, the two actions are fundamentally different. The natute of an action is in large part controlled by the nature of the underlying relationship between the parties. Unlike employees represented by a union, a client controls the significant decisions concerning his representation. Moreover, a client can fire his attorney if he is dissatisfied with his attorney’s performance. This option is not available to an individual employee who is unhappy with a union’s representation, unless a majority of the members of the bargaining unit share his dissatisfaction. See J. I. Case Co. v. NLRB, 321 U. S. 332, 338-339 (1944). Thus, we find the malpractice analogy less convincing than the trust analogy.

Nevertheless, the trust analogy does not persuade us to characterize respondents’ claim as wholly equitable. The Union’s argument mischaracterizes the nature of our comparison of the action before us to 18th-century forms of action. As we observed in Ross v. Bernhard, 396 U. S. 531 (1970), “The Seventh Amendment question depends on the nature of the issue to be tried rather than the character of the overall action.” Id., at 538 (emphasis added) (finding a right to jury trial in a shareholder’s derivative suit, a type of suit traditionally brought in courts of equity, because plaintiffs’ case presented legal issues of breach of contract and negligence). As discussed above, see supra, at 564, to recover from the Union here, respondents must prove both that McLean violated §301 by breaching the collective-bargaining agreement and that the Union breached its duty of fair representation.⁶ When viewed in isolation, the duty of fair representation issue is analogous to a claim against a trustee for breach of fiduciary duty. The § 301 issue, however, is comparable to a breach of contract claim — a legal issue.⁷

Respondents’ action against the Union thus encompasses both equitable and legal issues. The first part of our Seventh Amendment inquiry, then, leaves us in equipoise as to whether respondents are entitled to a jury trial.

B

Our determination under the first part of the Seventh Amendment analysis is only preliminary. Granfinanciera, S. A. v. Nordberg, 492 U. S., at 47. In this case, the only remedy sought is a request for compensatory damages representing backpay and benefits. Generally, an action for money damages was “the traditional form of relief offered in the courts of law.” Curtis v. Loether, 415 U. S. 189, 196 (1974). This Court has not, however, held that “any award of monetary relief must necessarily be ‘legal’ relief.” Ibid. (emphasis added). See also Granfinanciera, supra, at 86, n. 9 (White, J., dissenting). Nonetheless, because we conclude that the remedy respondents seek has none of the attributes that must be present before we will find an exception to the general rule and characterize damages as equitable, we find that the remedy sought by respondents is legal.

First, we have characterized damages as equitable where they are restitutionary, such as in “action[s] for disgorgement of improper profits,” Tull, 481 U. S., at 424. See also Curtis v. Loether, supra, at 197; Porter v. Warner Holding Co., 328 U. S. 395, 402 (1946). The backpay sought by respondents is not money wrongfully held by the Union, but wages and benefits they would have received from McLean had the Union processed the employees’ grievances properly. Such relief is not restitutionary.

Second, a monetary award “incidental to or intertwined with injunctive relief” may be equitable. Tull, supra, at 424. See, e. g., Mitchell v. Robert DeMario Jewelry, Inc., 361 U. S. 288, 291-292 (1960) (District Court had power, incident to its injunctive powers, to award backpay under the Fair Labor Standards Act; also backpay in that case was restitutionary). Because respondents seek only money damages, this characteristic is clearly absent from the case.⁸

The Union argues that the backpay relief sought here must nonetheless be considered equitable because this Court has labeled backpay awarded under Title VII of the Civil Rights Act of 1964, 42 U. S. C. §2000e et seq. (1982 ed.), as equitable. See Albemarle Paper Co. v. Moody, 422 U. S. 405, 415-418 (1975) (characterizing backpay awarded against employer under Title VII as equitable in context of assessing whether judge erred in refusing to award such relief). It contends that the Title VII analogy is compelling in the context of the duty of fair representation because the Title VII backpay provision was based on the NLRA provision governing backpay awards for unfair labor practices, 29 U. S. C. § 160(c) (1982 ed.) (“[W]here an order directs reinstatement of an employee, back pay may be required of the employer or labor organization”). See Albemarle Paper Co. v. Moody, supra, at 419. We are not convinced.

The Court has never held that a plaintiff seeking backpay under Title VII has a right to a jury trial. See Lorillard v. Pons, 434 U. S. 575, 581-582 (1978). Assuming, without deciding, that such a Title VII plaintiff has no right to a jury trial, the Union’s argument does not persuade us that respondents are not entitled to a jury trial here. Congress specifically characterized backpay under Title VII as a form of “equitable relief.” 42 U. S. C. §2000e-5(g) (1982 ed.) (“[T]he court may . . . order such affirmative action as may be appropriate, which may include, but is not limited to, reinstatement or hiring of employees, with or without back pay ... , or any other equitable relief as the court deems appropriate”). See also Curtis v. Loether, supra, at 196-197 (distinguishing backpay under Title VII from damages under Title VIII, the fair housing provision of the Civil Right Act, 42 U. S. C. §§3601-3619 (1982 ed.), which the Court characterized as “legal” for Seventh Amendment purposes). Congress made no similar pronouncement regarding the duty of fair representation. Furthermore, the Court has noted that backpay sought from an employer under Title VII would generally be restitutionary in nature, see Curtis v. Loether, supra, at 197, in contrast to the damages sought here from the Union. Thus, the remedy sought in this duty of fair representation case is clearly different from backpay sought for violations of Title VII.

Moreover, the fact that Title VII’s backpay provision may have been modeled on a provision in the NLRA concerning remedies for unfair labor practices does not require that the backpay remedy available here be considered equitable. The Union apparently reasons that if Title VII is comparable to one labor law remedy it is comparable to all remedies available in the NLRA context. Although both the duty of fair representation and the unfair labor practice provisions of the NLRA are components of national labor policy, their purposes are not identical. Unlike the unfair labor practice provisions of the NLRA, which are concerned primarily with the public interest in effecting federal labor policy, the duty of fair representation targets “‘the wrong done the individual employee.’” Electrical Workers v. Foust, 442 U. S. 42, 49, n. 12 (1979) (quoting Vaca v. Sipes, 386 U. S., at 182, n. 8) (emphasis deleted). Thus, the remedies appropriate for unfair labor practices may differ from the remedies for a breach of the duty of fair representation, given the need to vindicate different goals. Certainly, the connection between backpay under Title VII and damages under the unfair labor practice provision of the NLRA does not require us to find a parallel connection between Title VII backpay and money damages for breach of the duty of fair representation.

We hold, then, that the remedy of backpay sought in this duty of fair representation action is legal in nature. Considering both parts of the Seventh Amendment inquiry, we find that respondents are entitled to a jury trial on all issues presented in their suit.

IV

On balance, our analysis of the nature of respondents’ duty of fair representation action and the remedy they seek convinces us that this action is a legal one. Although the search for an adequate 18th-century analog revealed that the claim includes both legal and equitable issues, the money damages respondents seek are the type of relief traditionally awarded by courts of law. Thus, the Seventh Amendment entitles respondents to a jury trial, and we therefore affirm the judgment of the Court of Appeals.

It is so ordered.

1 Section 301(a) of the Labor Management Relations Act, 1947, provides for suits by and against labor unions:

“Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.” 61 Stat. 156, 29 U. S. C. § 185(a) (1982 ed.).

2 Compare Leach v. Pan American World Airways, 842 F. 2d 285 (CA11 1988) (no right to a jury trial), with United Transportation Union, Local 74 v. Consolidated Rail Corp., 881 F. 2d 282 (CA6 1989) (allowing plaintiff the right to a jury trial); Terry v. Chauffeurs, Teamsters and Helpers, Local 391, 863 F. 2d 334 (CA4 1988) (same); Quinn v. DiGiulian, 238 U. S. App. D. C. 247, 739 F. 2d 637 (1984) (same); Roscello v. Southwest Airlines Co., 726 F. 2d 217 (CA5 1984) (same).

3 Because the NLRA, 49 Stat. 449, 29 U. S. C. § 159(a) (1982 ed.), does not expressly create the duty of fair representation, resort to the statute to determine whether Congress provided for a jury trial in an action for breach of that duty is unavailing. Cf. Curtis v. Loether, 415 U. S. 189, 192, n. 6 (1974) (recognizing the “ ‘cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the [constitutional] question may be avoided’” (quoting United States v. Thirty-seven Photographs, 402 U. S. 363, 369 (1971))).

4 Justice Stevens’ analysis emphasizes a third consideration, namely whether “the issues [presented by the claim] are typical grist for the jury’s judgment.” Post, at 583. This Court, however, has never relied on this consideration “as an independent basis for extending the right to a jury trial under the Seventh Amendment.” Tull v. United States, 481 U. S. 412, 418, n. 4 (1987). We recently noted that this consideration is relevant only to the determination “whether Congress has permissibly entrusted the resolution of certain disputes to an administrative agency or specialized court of equity, and whether jury trials would impair the functioning of the legislative scheme.” Granfinanciera, S. A. v. Nordberg, 492 U. S., at 42, n. 4. No one disputes that an action for breach of the duty of fair representation may properly be brought in an Article III court; thus, the factor does not affect our analysis.

5 We later abandoned the reliance on state statutes of limitations for § 301 actions, and instead applied the federal limitations period for unfair labor practice charges, § 10(b) of the NLRA, 49 Stat. 453, as amended, 29 U. S. C. S 160(b) (1982 ed.), to both a S 301 claim against an employer and a duty of fair representation claim against a union. DelCostello v. Teamsters. 462 U. S. 151 (1983).

6 The dissent characterizes this opinion as “parsfing] legal elements out of equitable claims.” Post, at 590. The question whether the Seventh Amendment analysis requires an examination of the nature of each element of a typical claim is not presented by this case. The claim we confront here is not typical; instead, it is a claim consisting of discrete issues that would normally be brought as two claims, one against the employer and one against the union. Had the employer remained a defendant in this action, the dissent would surely agree that the § 301 claim against the employer was a separate claim. The Seventh Amendment analysis should not turn on the ability of the plaintiff to maintain his suit against both defendants, when the issues in the suit remain the same even when he can sue only the union. Consideration of the nature of the two issues in this hybrid action is therefore warranted.

7 In United Parcel Service, Inc. v. Mitchell, 451 U. S. 56 (1981), we found a S 301 action against the employer more analogous to a suit to set aside an arbitration award than to a breach of contract suit because the employee, to overturn the grievance committee’s decision, had to prove that the union violated its duty of fair representation. Id., at 62. In that case, we analyzed the action as a whole; in this case, however, the Seventh Amendment requires that we treat each issue separately. When considered by itself, the § 301 issue is closely analogous to a breach of contract claim.

8 Both the Union and the dissent argue that the backpay award sought here is equitable because it is closely analogous to damages awarded to beneficiaries for a trustee’s breach of trust. See post, at 587. Such damages were available only in courts of equity because those courts had exclusive jurisdiction over actions involving a trustee’s breach of his fiduciary duties. See 3 W. Fratcher, Scott on Trusts §205, p. 240 (4th ed. 1987); Restatement (Second) of Trusts § 205(a), and comment c, illustration 2 (1959).

The Union’s argument, however, conflates the two parts of our Seventh Amendment inquiry. Under the dissent’s approach, if the action at issue were analogous to an 18th-century action within the exclusive jurisdiction of the courts of equity, we would necessarily conclude that the remedy sought was also equitable because it would have been unavailable in a court of law. This view would, in effect, make the first part of our inquiry dispositive. We have clearly held, however, that the second part of the inquiry — the nature of the relief — is more important to the Seventh Amendment determination. See supra, at 565. The second part of the analysis, therefore, should not replicate the “abstruse historical” inquiry of the first part, Ross v. Bernhard, 396 U. S. 531, 538, n. 10 (1970), but requires consideration of the general types of relief provided by courts of law and equity.