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LEWIS v. TUSCAN DAIRY FARMS

August 30, 1993

ERNEST LEWIS, et al., Plaintiffs,
v.
TUSCAN DAIRY FARMS, INC. and WILLIE WHELAN, as President of Local 584, International Brotherhood of Teamsters, Defendants.



The opinion of the court was delivered by: MICHAEL B. MUKASEY

 MICHAEL B. MUKASEY, U.S.D.J.

 In a prior Opinion and Order, reported at 752 F. Supp. 116 (S.D.N.Y. 1990) (the "1990 opinion"), familiarity with which is assumed for current purposes, I found that defendant William Whelan, sued as president of Local 584, International Brotherhood of Teamsters, had violated the duty of fairly representing plaintiffs, that defendant Tuscan Dairy Farms, Inc. had breached a contractual obligation to dovetail plaintiffs' seniority with the seniority of employees at Tuscan's Lindenhurst and Woodside plants, and that both defendants were liable to plaintiffs as a result. On appeal sub nom. Alier v. Tuscan Dairy Farms, Inc., 979 F.2d 946 (2d Cir. 1992), the Court of Appeals remanded the case for further consideration in light of Air Line Pilots Association, International v. O'Neill, 499 U.S. 65, 111 S. Ct. 1127, 113 L. Ed. 2d 51 (1991), decided after the opinion on liability in this case. The immediately relevant portion of the Court of Appeals opinion is as follows:

 
In March 1991, a few months after the district court's liability decision, the Supreme Court decided Air Line Pilots Association, International v. O'Neill, 499 U.S. 65, 111 S. Ct. 1127, 113 L. Ed. 2d 51 (1991), clarifying the standard to be applied to fair representation claims against a union:
 
We hold that the rule announced in Vaca v. Sipes, 386 U.S. 171, 190, 87 S. Ct. 903, 916, 17 L. Ed. 2d 842 (1967) -- that a union breaches its duty of fair representation if its actions are either 'arbitrary, discriminatory, or in bad faith' -- applies to all union activity, including contract negotiation. We further hold that a union's actions are arbitrary only if, in light of the factual and legal landscape at the time of the union's actions, the union's behavior is so far outside a 'wide range of reasonableness,' Ford Motor Co. v. Huffman, 345 U.S. 330, 338, 73 S. Ct. 681, 686, 97 L. Ed. 1048 . . . (1953), as to be irrational.
 
U.S. at , 111 S. Ct. at 1130.
 
Since the district court may have applied a standard different from that established by O'Neill, we vacate the judgment and remand in order to permit the court to consider the issues in light of the O'Neill standard. We of course express no view as to the merits.

 979 F.2d 948. For the reasons set forth below, when the O'Neill standard is applied to the facts of this case, as set forth in the 1990 opinion, the union's actions were arbitrary. Further, the facts found in the 1990 opinion show also that the union's actions were taken in bad faith. Accordingly, the liability determination in the 1990 opinion will stand.

 I.

 The 1990 opinion found that Whelan had received advice from his lawyer in late May or early June of 1987 that he was free to modify or ignore General Rule IV C of the agreement, which required that the seniority of workers at a closed plant be dovetailed with the seniority of workers at a plant to which production from the closed plant was transferred, if Whelan found that modifying or ignoring such a rule would promote the interest of the general membership. 752 F. Supp. at 118-19. Whelan was up for reelection in 1987 and was reluctant to risk the anger of the 200 men at Tuscan's Lindenhurst and Woodside plants in order to help the 100 or so at the Ozone Park plant who would benefit from the dovetailing of their seniority at the Tuscan plants. Id. at 118. Moreover, as the 1990 opinion also found, Whelan was anxious that Tuscan pay the unfunded liability under the Employee Retirement Income Security Act of 1974 for employees who had retired from the Ozone Park plant, and believed that payment would not be forthcoming as quickly if Tuscan were required to hire the Ozone Park employees as it would if no such requirement were imposed. Id. at 120. Accordingly, as the 1990 opinion found, Whelan decided even before he knew the terms of the Tuscan-Liberty Farms deal that he would not press the rights of the Ozone Park employees under Rule IV C, regardless of what the contract required. Id. at 119. Whelan's decision did not come in response to any crisis of the moment. It was made after Whelan's conversation with his lawyer in late May or early June of 1987, weeks before the Tuscan-Liberty Farms deal was closed and about two months before the Ozone Park plant closed at the end of July. Id. at 119, 120. Further, Whelan then misled the Ozone Park employees by concealing his knowledge that the plant would be closed and, contrary to his testimony at trial, did not encourage senior workers at Ozone Park to leave before the plant was closed but rather encouraged them to stay. Id. at 119-20.

 II.

 Although the Supreme Court in O'Neill articulated a broadly deferential standard for lower courts to use when assessing the arbitrariness of challenged union conduct -- "union's behavior is so far outside a 'wide range of reasonableness' [citation omitted] as to be irrational" O'Neill, 111 S. Ct. at 1130 -- the Court also made clear that that standard is not abstract but contextual; the challenged conduct must be considered "in light of the factual and legal landscape at the time of the union's actions." Id. The dominant topographic feature of that landscape at the time of Whelan's actions in this case was Rule IV C of the contract, which dealt specifically with the seniority rights of employees when the plant at which they work is closed and its production is transferred to other plants. It is in that context that Whelan's actions must be evaluated.

 Certainly, in a purely abstract setting, Whelan's course of conduct, whatever its conflict with the contract, was not "irrational." Whelan could have decided rationally that the interests of the Ozone Park employees had to be sacrificed in the interest of harmony and that renegotiating the contract to achieve that result, even though such renegotiation had taken place successfully in the past in response to a perceived crisis, 752 F. Supp. at 117, would involve more trouble and risk of failure than it was worth. Moreover, if such a decision were otherwise permissible, that Whelan may also have had a selfish interest in his own reelection would not necessarily invalidate the decision, so long as the decision also furthered a legitimate union objective. In Rakestraw v. United Airlines, Inc., 981 F.2d 1524 (7th Cir. 1992) (Easterbrook, J.), the Seventh Circuit, decided challenges to two separate contracts negotiated by the Airline Pilots Association, one following the acquisition of one airline by another and the second following a strike in which the airline had hired replacements. In the former case the pilots of the acquired carrier claimed the union had committed an unfair labor practice by not negotiating in their behalf for bonus seniority so that when the seniority lists of the two airlines were dovetailed they would not be disproportionately disadvantaged. In the second case pilots hired as permanent replacements during the strike claimed the union had taken out its animosity against them by permitting the seniority of other pilots to include training time with the result that those other pilots forced out pilots hired as permanent replacements during the strike. 981 F.2d at 1525-26. The Court in Rakestraw applied an analogy drawn in O'Neill between a union's choice of which workers to favor and a legislature's choice of which constituents to favor, as follows:

 
Slapping the label 'bad faith' or 'discrimination' on a classification that is rationally related to a legitimate objective does not alter the analysis. A discriminatory motive without a discriminatory rule does not condemn a statute. Palmer v. Thompson, 403 U.S. 217, 91 S. Ct. 1940, 29 L. Ed. 2d 438 (1971); cf. McGowan v. Maryland, 366 U.S. 420, 81 S. Ct. 1101, 6 L. Ed. 2d 393 (1961) (rule rationally related to legitimate objective not spoiled by religious motivation of some sponsors). Knowledge that some groups gain or lose as a result of a rule does not even ...

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