Labor Law - Stephen W. Mooney and Leigh Lawson Reeves

• Publication year: 1997

Labor Lawby Stephen W. Mooney^* and

Leigh Lawson Reeves^**

I. Introduction

This Article surveys the 1996 decisions of the United States Court of Appeals for the Eleventh Circuit in which the court addressed issues in the areas of traditional labor law. This Article specifically discusses decisions by the Eleventh Circuit under the Labor Management Relations Act of 1947 ("LMRA"),¹ the Fair Labor Standards Act of 1938 ("FLSA"),² the Occupational Safety and Hazard Act of 1970 ("OSHA"),³ and the Employee Retirement Income Security Act of 1974 ("ERISA").⁴

In this survey year, the Eleventh Circuit decided several cases involving these traditional areas of labor law. Due to the volume of cases, this Article does not attempt to address all the cases decided by the Eleventh Circuit on these issues; rather, this Article attempts to point out the more noteworthy decisions issued by the court in 1996 to assist the general practitioner in the handling of these types of claims.

II. The Labor Management Relations Act

A. Jurisdiction

In International Union of Electronics v. Statham,⁵ the Union filed suit against three former Union officers who sold a piece of land that was titled in their individual names. The Union alleged, among other things, that the land had originally been improperly titled in the officers' individual names and should have instead been titled in the Union's name. Specifically, the Union sued the former officers, their lawyer, real estate broker, and the buyer of the land, alleging that all parties had breached their fiduciary duties to the Union members and the Union itself. The Union filed suit in federal court on its own behalf asserting claims for breach of fiduciary duties under section 501 of the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA"),⁶ as well as breach of contract claims, pursuant to section 301 of the LMRA.⁷ The district court held that there was no jurisdiction under the LMRDA section 501 or the LMRA section 301 and thus dismissed the suit by the Union. The Union then appealed this decision to the Eleventh Circuit.⁸

1. LMRDA. The court began by interpreting sections 501(a) and (b) of the LMRDA, recognizing that "the procedural limits on an individual's right to enforce the subsection (a) [fiduciary] duties, [were] analogous to the demand prerequisites for bringing shareholder derivative suits."⁹ Thus, for an individual to sue for breach of a union official's section 501(a) duty, he "must first request the union to proceed against the official. Only if the union fails to act within a reasonable time after the request may the individual proceed to federal court."¹⁰ The court inferred that because the union was given the "right of first refusal" to a cause of action under section 501(b), Congress "preferred that the union, rather than individual members, sue on its own behalf."¹¹ Because this section contemplated a suit brought by the union, it must also contemplate federal jurisdiction.¹²

The court next examined the legislative history behind the LMRDA and found that it indicated a belief by Congress that state remedies for union officials' breach of fiduciary duties were inadequate.¹³ Thus, the court concluded that "Congress intended to supplement the remedies available to unions by creating new federal protection."¹⁴ Specifically, the court stated "[i]t would make no sense to impose federal duties and simultaneously deny the unions the right to enforce those duties."¹⁵

Based on this analysis, the Eleventh Circuit held that section 501(a) "was intended to create a federal cause of action that can be asserted by the union on its own behalf."¹⁶ Because the court determined that a federal cause of action existed in this case, it recognized federal jurisdiction over the claim under 28 U.S.C. Sec. 1331.¹⁷

2. LMRA. The second issue addressed was the Union's contention that section 301 of the LMRA also provided jurisdiction for its suit against former Union officials.¹⁸ Specifically, section 301(a) states that the LMRA provides jurisdiction over contract suits '"between any labor organization [representing employees in an industry affecting commerce].'"¹⁹ Consequently, defendants argued that section 301(a) did not provide for contract suits between individuals within the labor organization.²⁰ The Eleventh Circuit did not agree with defendant's interpretation of section 301(a) and made special mention of several cases they had affirmed in which the district courts asserted section 301(a) jurisdiction over individual defendants.²¹

The Eleventh Circuit held, however, that section 301(a) would only allow for jurisdiction over individual defendants as long as they were seeking simply equitable relief.²² In addition, the court stated there was no jurisdiction under section 301(a) for an action for damages.²³ In the present case, however, the Union had expressly limited its claim to seek only equitable relief. Therefore, the court found there was federal jurisdiction over the Union's contract claim against its former officers under the LMRA.²⁴ Accordingly, the Eleventh Circuit reversed the district court's dismissal of this case and remanded the claim for further proceedings.²⁵

B. Statute of Limitations I Choice of Law

In International Union, United Plant Guard Worker's v. Johnson Controls World Services, Inc.,²⁶ the Eleventh Circuit faced a statute of limitations issue. Because section 301 of the LMRA contained no statute of limitations, the court had to determine if it should borrow one from the law of the forum state or that of the state in which the claim

97 arose.

The Eleventh Circuit started by reiterating the long-standing rule that when Congress had not provided a limitations period for a federal claim, a '"court must borrow the applicable limitations period in tolling rules from the state in which it sits, unless those rules are inconsistent with federal policy.'"²⁸ The court went on to note that in the former Fifth Circuit, the case law sometimes borrowed the statute of limitations law of the forum state and sometimes borrowed the statute of limitations law of the state in which the cause of action arose.²⁹ Based on this conflict, the court attempted to clarify the rule.³⁰

The Eleventh Circuit then turned to the United States Supreme Court case of Northstar Steel Co. v. Thomas.³¹ In Northstar, the Supreme Court did not literally discuss which choice of law should be used but rather simply applied the law of the forum state.³² However, the Supreme Court acknowledged that applying the law of the forum state could "lead to forum shopping."³³ Even so, relying on the reasoning in Northstar, the Eleventh Circuit concluded that the statute of limitations law in the forum state, Florida in the present case, must be applied to this claim.³⁴

The court then turned to the decision of exactly which statute of limitations under current Florida law was most analogous to the present claim.³⁵ The court reasoned that the suit in the present case was most analogous to Florida's statute of limitations law for governing specific performance of contracts.³⁶ Consequently, under this one-year limitation period, the Union suit was timely and the Union could proceed.³⁷

C. Jury Trial Under LMRA

In Stewart v. KHD Deutz of America Corp.,³⁸ the Eleventh Circuit addressed two issues:

(1) whether [plaintiffs were] entitled to a jury trial on their breach of collective bargaining claim under section 301 of the LMRA; and (2) if so, whether [they] retain[ed] their Seventh Amendment right to a jury trial in a hybrid LMRA/ERISA action where the amount of monetary relief sought under LMRA and ERISA [was] identical.³⁹

In this case, a class of retirees brought an action against their former employer for its unilateral modification of their retirement benefits.⁴⁰ The district court struck plaintiffs' demand for a jury trial, finding that section 301 of the LMRA did not provide for one.⁴¹

In reversing the lower court, the Eleventh Circuit held that because the LMRA did not provide a statutory right to a jury trial, its analysis needed to focus on the Seventh Amendment.⁴² The Seventh Amendment right to a jury trial involves a two-part analysis. The first part requires a comparison of "the nature of the issues to be resolved to '[eighteenth century] actions brought in the courts of England prior to the merger of the courts of law and equity.'"⁴³ The second part determines "whether the remedy sought is legal or equitable in nature."⁴⁴

Initially, the court noted that although plaintiffs' action for breach of the collective bargaining agreement did not exist at common law, it was similar to the common law action for breach of contract.⁴⁵ In fact, section 301 of the LMRA provided a cause of action for violation of contract.⁴⁶ Thus, the claims to be "resolved under the section 301 claim, when viewed in isolation of the ERISA claims, [were found to be] legal in nature."⁴⁷ The court also found "no reason to depart from the general rule that monetary relief sought pursuant to section 301 of the LMRA [was] legal in nature."⁴⁸ Because both the issues involved and the remedy sought under the LMRA were legal in nature, the court held that plaintiffs had a Seventh Amendment right to a jury trial under section 301 of the LMRA.⁴⁹

The court then had to determine whether the joinder of plaintiffs' ERISA claim destroyed their right to a jury trial. The Eleventh Circuit stated that for purposes of Seventh Amendment analysis, ERISA had been interpreted as an equitable statute.⁵⁰ Accordingly, no Seventh Amendment right to a jury trial would exist in actions brought pursuant to ERISA. The court went on to note, however, that "section 514(d) of ERISA explicitly save[d] federal causes of action, including section 301 of the LMRA."⁵¹ Moreover, because there was a policy, both in the Federal Rules of Civil Procedure and in the spirit of the Seventh Amendment itself, in favor of preserving the right to a jury trial, the...