Digby v. Denner , 156 Colo. 260 ( 1965 )

Mr. Justice Sutton

delivered the opinion of the Court.

We are confronted here with a dispute involving interpretation of both case and statutory labor law as applied to a dismissed counterclaim filed in the trial court.

The parties and individuals involved will be referred to either individually or as follows: Plaintiffs in error collectively will be referred to as “defendants” the position they occupied in the trial court; W. J. Digby, Inc., will be referred to as the “corporate defendant” and the Digbys individually by name; defendants in error, Denner and Baldwin, will be referred to as “plaintiffs”; and Local No. 961 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, one of the parties sought to be joined by the counterclaim in the trial court, will be referred to as “the union.”

The determinative question on this writ of error is whether an employer (here defendants) may assert a counterclaim against individual members and officers of a union for the alleged breach of, or for a conspiracy to breach, a collective bargaining agreement in existence between the employer and that union.

The facts essential to an understanding of the above question are as follows: The plaintiffs commenced an action in the Denver District Court in September of 1961. Their complaint was founded in tort and alleged several claims for relief; namely, assault and battery and conspiracy. A change of venue was stipulated to between the parties, and the case was thereafter removed to the District Court of Jefferson County.

Defendants, on January 2, 1962, filed their answer and four counterclaims. The first two counterclaims on behalf of W. J. Digby and Mrs. W. J. Digby were based in tort, and alleged that one of the plaintiffs had committed an assault against the Digbys. The third counterclaim was on behalf of the defendant corporation only and alleged, in essence, that the plaintiffs and the union, as well as certain other members (the latter two parties whom it sought to join by separate motion), had conspired to induce defendant corporation to abandon its rights under an existing collective bargaining agreement by illegal and unlawful work stoppages, threats, coercion, intimidation and violence. This third counterclaim also alleged a breach of the collective bargaining agreement, and a conspiracy to induce the employees of the defendant corporation to breach said agreement. It prayed for judgment against the plaintiffs, the union and its other named members. In addition, the claim prayed for an injunction enjoining plaintiffs from continuing to conduct themselves in the manner outlined in the pleadings. The fourth counterclaim alleged a conspiracy and is not material to this review.

Defendants also filed their motion for an Order Adding Parties Plaintiff. They hoped, thereby, to add the Union and certain members and officers of the Union, so that they could be sued and included in the litigation.

Plaintiffs’ reply to the first and second counterclaims consisted of general denials. At the same time, they filed a Motion to Dismiss the third counterclaim on the following grounds, viz:

(1) “That the allegations contained within said Third Counterclaim fail to allege facts sufficient to entitle defendant W. J. Digby, Inc., to any relief;

(2) “That this Court lacks jurisdiction of the subject matter of said Third Counterclaim.”

The trial court, after considering written briefs on the Motion to Dismiss, entered an order dismissing defendants’ third counterclaim. It is this dismissal that resulted in this writ of error.

Before considering the question that we find to be determinative in this review, we shall comment on why the trial court’s decision to deny the motion to add additional plaintiffs was correct. Our decision in this regard is based on the conduct and urging of counsel for defendants at the trial that “As I see it, it becomes unnecessary, therefore, to argue the motion to join as it would depend upon which way the Court decides the motion to dismiss.” In brief, the trial court relied on this statement of counsel, granted the Motion to Dismiss, and on Motion for New Trial denied both a new trial and the Motion for an Order Adding Parties Plaintiff. The result of this procedure would appear to be exactly what counsel for defendants requested. It is, therefore, not now subject to review on this Writ of Error.

The present appellate proceedings stem from the trial court’s determination that the third counterclaim failed to state a claim against the plaintiffs which would allow the granting of any remedy to defendants. The following review of case and statutory law demonstrates that the ruling was correct.

In 1947, when Congress enacted the Labor-Management Relations Act (61 Stat. 136, et seq.), often referred to as “Taft-Hartley,” as an amendment to the National Labor Relations Act (49 Stat. 449, et seq.), it provided, for the first time by Section 301 thereof (29 U.S.C.A. 185), that an action between a labor organization and an employer could be brought in a district court of the United States without regard to diversity of citizenship or to the amount in controversy. This section provides, in part, as follows:

“(b) Any labor organization which represents employees in an industry affecting commerce as defined in this chapter and any employer whose a’ctivities affect commerce as defined in this chapter shall be bound by the acts of its agents. Any such labor organization may sue or be sued as an entity and in behalf of the employees whom it represents in the courts of the United States. Any money judgment against a labor organization in a district court of the United States shall be enforceable only against the organization as an entity and against its assets, and shall not be enforceable against any individual member or his assets ” (Emphasis supplied.)

It is important to note that the above Section, in general, and the quoted portion in particular, provides for suits only between an employer and a labor organization; that is, it allows suits against the labor organization “as an entity” and, it also calls for the enforcement of a “money judgment * '* * only against the organization as an entity and against its assets * * *” and not against individual members.

We thus find Congress requiring that labor organizations be treated as legal entities; and further, we note certain specific statutory insulation for officers and members of unions against liability.

A review of the case law makes it clear that Section 301 is more than procedural. The United States Supreme Court has, in a series of cases, clearly and expressly ruled that this section of Taft-Hartley is the source of substantive rights, and is to be applied uniformly by federal courts as well as by state courts to the exclusion of any “local law” inconsistent with its provisions. See: Textile Workers Union v. Lincoln Mills of Ala., 353 U.S. 448 (1957); Dowd Box Co. v. Courtney, 368 U.S. 502 (1962); Local 174 v. Lucas Flour Co., 369 U.S. 95 (1962); Atkinson v. Sinclair Refining Co., 370 U.S. 238 (1962).

These cases make it clear that an action based upon the alleged violation of a collective bargaining agreement, whether that action is commenced in a federal court, or in a state court, is to be controlled exclusively by the federal labor policy, as that policy is enunciated in Section 301 and in the decisions of the United States Supreme Court interpreting that Section.

The third counterclaim in the instant case alleges a collective bargaining agreement between the corporate defendant and a labor organization, a conspiracy by the plaintiffs to induce a breach, and, the subsequent breach thereof by the union to the corporate defendant’s damage in the amount of “at least $500,000.00.” Such a claim falls within the purview of Section 301; it is not maintainable against individuals; but is only maintainable against the labor organization as an entity. See Atkinson, supra. Thus, the counterclaim did not state a claim under Section 301 as to these plaintiffs and was, therefore, properly dismissed.

In all respects the third counterclaim failed to state a claim upon which relief could be granted. Accordingly, the judgment of dismissal is affirmed.

Mr. Chief Justice McWilliams not participating; Mr. Justice Frantz dissents.