International Union, United Automobile, Aerospace & Agricultural Implement Workers, Local 737 v. Auto Glass Employees Federal Credit Union

72 F.3d 1243
CourtCourt of Appeals for the Sixth Circuit
DecidedJanuary 9, 1996
DocketNos. 94-6349, 94-6351
StatusPublished
Cited by3 cases

This text of 72 F.3d 1243 (International Union, United Automobile, Aerospace & Agricultural Implement Workers, Local 737 v. Auto Glass Employees Federal Credit Union) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Union, United Automobile, Aerospace & Agricultural Implement Workers, Local 737 v. Auto Glass Employees Federal Credit Union, 72 F.3d 1243 (6th Cir. 1996).

Opinion

LIVELY, Circuit Judge.

This is an appeal by union members and their local union from summary judgment for the defendants in an action arising out of a conservator’s repudiation of a collective bargaining agreement. The employer is a federal credit union, subject to the terms of the Federal Credit Union Act (the Act), 12 U.S.C. § 1751 et seq. (1988). Section 207 of the Act, 12 U.S.C. § 1787(c)(1) (1988 ed. Supp. I), gives conservators specific authority to repudiate contracts:

(c) Provisions relating to contracts entered into before appointment of conservator or liquidating agent
(1) Authority to repudiate contracts In addition to any other rights a conservator or liquidating agent may have, the conservator or liquidating agent for any insured credit union may disaffirm or repudiate any contract or lease—
(A) to which such credit union is a party;
(B) the performance of which the conservator or liquidating agent, in the conservator’s or liquidating agent’s discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which the conservator or liquidating agent determines, in the conservator’s or liquidating agent’s discretion, will promote the orderly administration of the credit union’s affairs.

This provision was added to the Act by section 1217(c) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub.L. No. 101-73 (1989).

There are three questions for decision by this court. First, whether the quoted: provisions of the amended Act gave the conservator authority to repudiate a collective bargaining agreement. Second, if the conservator had such authority, whether the conservator exercised it in this instance within the permissible bounds of labor-management relations law. Third, whether the individual who made the decision to repudiate the collective bargaining agreement in issue was entitled to qualified immunity from a claim for money damages.

I.

A.

The defendant Auto Glass Employees Federal Credit Union (the Credit Union) operates in Nashville, Tennessee. Prior to December 1991 it entered into a collective bargaining agreement with Local 737 of the United Automobile, Aerospace and Agricul[1246]*1246tural Implement Workers of America (Local 737 or the Union), which represented a majority of the Credit Union’s nonmanagement employees. The Credit Union experienced financial problems and on December 16, 1991, while the collective bargaining agreement remained in effect, the defendant National Credit Union Administration Board (the Board) appointed itself conservator of the Credit Union pursuant to a provision of the Act. See 12 U.S.C. § 1786(h). As conservator, the Board assumed control of all the Credit Union’s operations, and named the defendant H. Allen Carver, its regional director, to oversee management of the Credit Union.

Following establishment of the conserva-torship, the Board instituted various changes in work rules and policies that the Union claimed were violations of the existing collective bargaining agreement. On March 13, 1992, the Board submitted to union representatives proposed modifications to the collective bargaining agreement. The Union promptly rejected the proposal, and on March 20, the Board repudiated the collective bargaining agreement. Thereafter, the Board implemented new wage rates and employee benefits, terminated the existing employee pension plan and distributed vested pension benefits to at least some of the plan beneficiaries.

B.

Local 737 and eleven present or former employees of the Credit Union who were members of Local 737 filed this action in district court seeking, insofar as this appeal is concerned, two remedies. First, they sought a declaration that the Board’s action violated their federal constitutional and statutory rights. Second, the plaintiffs asked for compensatory and punitive damages, costs and attorney fees.

After the plaintiffs filed several amended complaints, their principal claim was that the Board’s repudiation of the collective bargaining agreement violated provisions of the National Labor Relations Act (NLRA). They also alleged that the Board’s actions caused termination, constructive discharge or permanent lay-off of employee-plaintiffs in violation of their constitutional right to not be deprived of a property interest without due process of law. Two of the original defendants filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6). This motion was referred to a magistrate judge who recommended granting dismissal to an improperly named defendant and to the defendant Carver. The plaintiffs only objected to the recommendation to dismiss Carver. Overruling the objection, the district court dismissed Carver as a defendant upon finding that the magistrate judge correctly determined that Carver had been sued in his individual capacity and was entitled to qualified immunity. The remaining defendants filed a motion for partial summary judgment, and the plaintiffs responded with a motion for partial summary judgment of their own.

In ruling on the cross-motions, the district court decided the principal issue that is the subject of this appeal. By later stipulation, the plaintiffs dismissed their remaining claims and the district court entered a final judgment.

II.

The district court held that the language of the Act granting authority to conservators of federal credit unions to repudiate contracts is broad enough to include collective bargaining agreements. International Union v. Auto Glass Employees Federal Credit Union, 858 F.Supp. 711, 718 (M.D.Tenn.1994). The court pointed out that collective bargaining agreements are not excepted from the language authorizing repudiation and found no reason to exclude such contracts by implication. Id.

The district' court discussed N.L.R.B. v. Bildisco & Bildisco, 465 U.S. 513, 104 S.Ct. 1188, 79 L.Ed.2d 482 (1984), in which the Supreme Court held that a provision of the Bankruptcy Code (11 U.S.C. § 365(a)) authorizing trustees to repudiate “executory contracts,” permitted a debtor-in-possession to repudiate a collective bargaining agreement “upon an appropriate showing.” Id. at 516, 104 S.Ct. at 1191. Congress overruled Bil-disco in a 1984 amendment that prohibits the unilateral repudiation of collective bargaining [1247]*1247agreements by a trustee or a bankrupt debt- or-in-possession absent compliance with explicit conditions. See Pub.L. No. 98-353, § 541(a) (codified as amended at 11 U.S.C. § 1113 (1988)).

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Bluebook (online)
72 F.3d 1243, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-union-united-automobile-aerospace-agricultural-implement-ca6-1996.