directly. The Court noted hat the outcome of its decision would not change because even in the absence of a claim against the union, an employee plaintiff must establish breach of the union's duty of fair representation as an essential element of the case to be proved when suing his employer directly. An essential element cannot be proved if it is not pleaded. At that point in the proceedings, the plaintiffs refused to allege a breach of duty by Local 138 and further refused to address a request for arbitration to Local 138. The Court then adhered to its prior granting of summary judgment to White Rose because the plaintiffs failed "to show the court any precedent permitting a plaintiff employee to proceed directly against an employer in the absence of any attempt to even initial the contractual, bargained-for private dispute resolution mechanism."
The plaintiffs then brought a second reargument motion, and on May 12, 1995, the Court again revisited its prior decisions. At that time, the plaintiffs submitted a letter dated March 6, 1995 from Daniel Clifton, Esq., Counsel for Local No. 138 stating that "Local 138 does not believe that a breach of contract has occurred, and it has declined to take this case to arbitration. In an Order dated May 12, 1995, the Court vacated its decisions of September 23, 1994 and February 27, 1995 and granted leave to the plaintiffs to serve and file a third amended complaint based on Local 138's express denial of the plaintiffs' request to arbitrate the matter of the disputed employer payroll taxes.
The plaintiffs' third amended complaint alleges that White Rose violated the Internal Revenue Code and FICA statutes, as well as the Settlement Agreement, by deducting the employer contribution for payroll taxes from the settlement fund. As to Local 138, the amended complaint alleges that the union breached its duty of fair representation by (1) refusing in March, 1995 to take the plaintiffs' claims to arbitration; and (2) entering into the amendment to the Settlement Agreement in January, 1993 without presenting it to the rank and file for approval.
Both defendants move the Court for an order granting summary judgment in their favor dismissing the complaint.
A. The summary judgment standard
A court may grant summary judgment "only if the evidence, viewed in the light most favorable to the party opposing the motion, presents no genuine issue of material fact," Cable Science Corp. v. Rochdale Village, Inc., 920 F.2d 147, 151 (2d Cir. 1990), and the movant is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); see also Fed. R. Civ. P. 56(c) (summary judgment standard). The Court must, however, resolve all ambiguities and draw all reasonable inferences in the light most favorable to the party opposing the motion. See Twin Laboratories, Inc. v. Weider Health & Fitness, 900 F.2d 566, 568 (2d Cir. 1990); Liscio v. Warren, 901 F.2d 274, 276 (2d Cir. 1990); Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987).
According to the Second Circuit "summary judgment is a tool to winnow out from the trial calendar those cases whose facts predestine them to result in a directed verdict." United National Ins. Co. v. The Tunnel, Inc., 988 F.2d 351, 355 (2d Cir. 1993). Once a party moves for summary judgment, in order to avoid the granting of the motion, the non-movant must come forward with specific facts showing that a genuine issue for trial exists. See Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990) (quoting Fed. R. Civ. P. 56(e)); see also National Union Fire Ins. Co. v. Turtur, 892 F.2d 199, 203 (2d Cir. 1989). A genuine issue of material fact exists if "a reasonable jury could return a verdict for the nonmoving party." Liberty Lobby, 477 U.S. at 248; see Converse v. General Motors Corp., 893 F.2d 513, 514 (2d Cir. 1990).
However, mere conclusory allegations, speculation or conjecture will not avail a party resisting summary judgment. See Western World, 922 F.2d at 121. If there is evidence in the record as to any material fact from which an inference could be drawn in favor of the non-movant, summary judgment is unavailable. See United National, 988 F.2d at 354-55; Rattner v. Netburn, 930 F.2d 204, 209 (2d Cir. 1991). Finally, the Court is charged with the function of "issue finding", not "issue resolution". Gallo v. Prudential Residential Services, Ltd, Partnership, 22 F.3d 1219, 1224 (2d Cir. 1994).
It is within this framework that the Court addresses the grounds for the present motions for summary judgment.
B. As to the claims for breach of duty of fair representation against Local 138
A claim for breach of the duty of fair representation ("DFR") is an allegation that the union treated its members arbitrarily, discriminatorily, or in bad faith or acted to seriously undermine the integrity of the arbitration process. Vaca v. Sipes, 386 U.S. 171, 17 L. Ed. 2d 842, 87 S. Ct. 903 (1967); Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 47 L. Ed. 2d 231, 96 S. Ct. 1048 (1976). The plaintiffs' cause of action for breach of duty of fair representation is comprised of two claims. The first is based on the union's execution of the Amendment to the Settlement Agreement, which is dated January 19, 1993 and appears to have come to the attention of the plaintiffs by March 29, 1993. The second is based on the union's March, 1995 refusal to take action on the plaintiffs' challenge to the distribution of the settlement funds.
1. The DFR claim based on execution of the amendment without membership ratification
Unfair representation claims are governed by a six month statute of limitations borrowed from Section 10(b) of the National Labor Relations Act. DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 169, 76 L. Ed. 2d 476, 103 S. Ct. 2281 (1983). The Supreme Court has stated that the short limitations period for a hybrid Section 301/unfair representation claim effectuates the strong federal policy favoring rapid and final resolution of labor disputes. Id. at 168; see also United Parcel Service v. Mitchell, 451 U.S. 56, 67 L. Ed. 2d 732, 101 S. Ct. 1559 (1981). As a general rule, the limitation period commences when a plaintiff knows or reasonably should know that the union has breached its duty of fair representation," or when the plaintiff first could have successfully maintained a suit based on that cause of action. Buttry v. General Signal Corp., 68 F.3d 1488, 1492 (2d Cir. 1995); Flanigan v. IBT, Truck Drivers Local 671, 942 F.2d 824, 827 (2d Cir. 1991); see also King v. New York Tel. Co., 785 F.2d 31 (2d Cir. 1985).
In the present case, the first settlement checks with the allegedly improper deductions were disbursed to the plaintiffs in February, 1993. Documentary evidence reveals that the plaintiffs had some knowledge regarding Local 138's agreement to the disputed payroll tax deductions at least as early as March 29, 1993. On that date the plaintiffs' counsel wrote to White Rose advising the employer of his belief that withholding tax had been improperly deducted and stating the following:
Any purported agreement by a union official justifying the deductions was not authorized by the individual recipients and/or rank and file.