Ramirez-Lebron v. INTERNATIONAL SHIPPING AGENCY

          United States Court of Appeals
                     For the First Circuit


No. 08-2321

        ROBERTO RAMÍREZ-LEBRÓN; FÉLIX FERNÁNDEZ-TORRES;
            VÍCTOR APONTE-TORRES; JESÚS CASTRO-GELY;
           RAMÓN MATTA-FLORES; DAVID DE JESÚS-ORTÍZ;
                    JOSÉ J. GONZÁLEZ-CENTENO,

                     Plaintiffs, Appellants,

                                v.

              INTERNATIONAL SHIPPING AGENCY, INC.,

                      Defendant, Appellee.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

        [Hon. Jay A. García-Gregory, U.S. District Judge]


                             Before

         Torruella, Baldock, * and Lipez, Circuit Judges.



    Juan H. Saavedra Castro for appellants.
    Antonio Cuevas Delgado for appellee.




                        January 29, 2010




    *
          Of the Tenth Circuit, sitting by designation.
      BALDOCK, Circuit Judge.                        This appeal arises out of a

labor dispute over seniority rights between two groups of

employees of Defendant International Shipping Agency (ISA).

The   two       groups      consist         of       three       and        seven        employees

respectively         (G3   and      G7).         The       ten   total       employees,          all

employed        as    “checkers,”           are       members          of        the     Unión    de

Empleados de Muelles de Puerto Rico (AFL-CIO), Local 1901

I.L.A. (Union).            G7 filed a verified complaint pursuant to

§   301    of   the     Labor       Management         Relations            Act        (LMRA),    29

U.S.C.      §    185,      alleging         that       ISA       and        G3     fraudulently

procured, in breach of the collective bargaining agreement

(CBA), an arbitration award granting seniority rights to G3.

Neither     the      Union      nor    G7    was       a    party      to        the    agreement

between ISA and G3 that presaged the award.                                  As alleged, the

Union,     prior      to      the     award,         notified       both          ISA     and    the

arbitrator that the Union objected to any resolution of the

matter     absent       its     participation               as   exclusive              bargaining

representative for all ten member employees.                                      G7 asked the

district court to (1) vacate the arbitration award in favor

of G3, (2) order an arbitration hearing at which the Union

and   G7   would      be   provided         a    meaningful            opportunity          to    be

heard, and (3) render damages against ISA.                                        The district

court dismissed G7's complaint.                        According to the court, G7

lacked     standing        to   request          a   vacatur       of       the        arbitration

award and failed to exhaust its contractual remedies under


                                            - 2 -
the CBA’s grievance procedure.

      We exercise jurisdiction under 28 U.S.C. § 1291.                             Our

review of a Rule 12(b) dismissal is de novo.                         See McCloskey

v. Mueller, 446 F.3d 262, 265-66 (1st Cir. 2006).                         Accepting

all well pleaded factual allegations of the complaint as

true, we conclude the district court erroneously dismissed

G7's complaint.            Those factual allegations are sufficient

under    §   301    to    establish    G7's      standing      and     sustain    G7's

claim that ISA, by entering into a side agreement with G3

designed to procure an arbitration award, breached the CBA

and     effectively        repudiated       its       arbitration       provisions,

thereby estopping ISA from posing the defense of exhaustion.

See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) (“[O]nly

a    complaint      that     states    a     plausible         claim    for    relief

survives a motion to dismiss.”).

                                           I.

      G7's complaint alleges as follows:                      In April 2002, ISA

and the Union agreed that G7, whose members were part of

the   Union,       would    have    seniority         rights    over     G3.      G3's

members joined the Union in May 2002.                    In February 2003, the

Union, at the request of G3, filed a grievance pursuant to

the   CBA    with    the    Puerto    Rico      Bureau    of    Conciliation       and

Arbitration (Bureau) challenging the seniority rights of G7.

G7    thereafter         demanded    that       the   Union     allow    its     seven

members to intervene in the arbitration of G3's grievance.


                                       - 3 -
The Union agreed and “informed the Bureau and ISA in writing

that the [G7 members] would be joined as parties to the

grievance       because        they     could     be     ‘affected        by        any

determination of the grievance and that they had a right to

participate’ in the process.”

    In March 2007, the Union, through its President, sent

a letter to ISA (with a copy to the arbitrator previously

selected through the Bureau) stating the Union was “not in

agreement”      with     any    “arrangements”           regarding       seniority

rights that ISA might make with G3 (or G7 for that matter).

Rather,   the    Union    expressed       its     view    that    “there       is    no

arrangement      whatsoever       until     the    arbitrator        hears      both

parties   and    issues    his        Award.”     On     August    27,    2007,       a

hearing before the arbitrator, at which ISA, the Union, G3,

and G7 were set to appear, was suspended.                        That same day,

the Union, again through its President, sent a letter to the

arbitrator stating the Union did not recognize any agreement

ISA and G3 may have reached concerning the seniority rights

of G3 in relation to those of G7.               The letter further stated

that the Union:

    [H]ad a hearing today which was suspended since
    Atty. Gonzalez Vargas [G3's attorney] and the
    attorney   from  the   company  [ISA’s   attorney]
    requested that it [G3's grievance] be heard by
    record, which was never requested from this Union
    for its approval and we found out through you and
    I reiterate that this Union is totally opposed.

    Three days prior to the scheduled hearing, ISA and G3


                                       - 4 -
allegedly had “reached a secret agreement on the seniority

issue       and    submitted       their    agreement       to    the    arbitrator.”

Under the agreement, “ISA and [G3] agreed to amend the 2002

Seniority List Agreement to allow [G3] to move up the list

and   bump        and    acquire    seniority       rights       over    [G7].”    The

arbitrator issued an award on April 3, 2008, incorporating

what G7's complaint refers to as a “sham, secret agreement.”

According to the complaint:

      ISA and [G3] submitted their secret agreement to
      the Bureau under false and fraudulent pretenses.
      ISA intentionally mischaracterized this agreement
      to suggest the Union and ISA had reached the
      agreement.    ISA knew that the Union had not
      approved the agreement and that the Union required
      a hearing on the seniority grievance, with the
      presence of [G3] and [G7]. ISA also knew that the
      Union rejected any attempt to settle the seniority
      issue with [G3].

      G7     also       averred    that    ISA    induced    the    arbitrator     “to

issue an arbitration award based on a ruse and fraudulent

scheme, and the sham, secret agreement.”                            Based upon the

foregoing allegations, G7's complaint claimed that ISA had

breached the CBA and repudiated the arbitration process.                            As

its prayer for relief, G7 asked the court to vacate the

arbitrator’s award and render a declaratory judgment under

28 U.S.C. § 2201 “that any challenge or dispute relating to

the 2002 Seniority List must be resolved with the presence

and participation of [G7] and [G3], in accordance with the

terms and conditions established by the Board of Directors

of    the    Union.”         G7    further       sought   an     award    of   damages

                                           - 5 -
“including emotional and mental distress injuries suffered,

and    any   wages      and    compensation     losses      caused,”        based    on

ISA’s breach of the CBA “and/or the implied covenant of good

faith and fair dealing incorporated into the CBA.”

       ISA initially moved to dismiss G7's complaint on the

basis      that   the    latter’s     claim     to    seniority         rights      was

subject to arbitration under the CBA. 1                    The district court,

however,      read      G7's    complaint      as    one    to    set     aside      an

arbitration       award.        Relying   on   Section      5    of   the    Federal

Arbitration       Act    (FAA),    specifically       9    U.S.C.     §   10(a)(1),

which empowers a court “upon the application of any party to

the arbitration” to vacate an award “procured by corruption,

fraud, or undue means,” the court held G7's allegations of

fraud on the part of ISA sufficient to withstand the motion.

       ISA subsequently filed a motion to reconsider which the

district court construed pursuant to Fed. R. Civ. P. 60(b)

as one for relief from judgment based on a manifest error of

law.       This time, the district court reasoned G7 was not a

party to the CBA or the arbitration proceeding.                       Rather, ISA



       1
        We are left to ponder why neither G7 nor ISA,
whose respective theories of the case depend on the
terms of the CBA, have never entered the CBA into the
record.   On the   limited record before us, we accept
G7's uncontroverted allegations that the Union is the
exclusive   bargaining   representative  of  its  member
employees, and ISA and the Union agreed that disputes
over  seniority   rights   were  subject  to  the  CBA’s
grievance procedures.

                                      - 6 -
and the Union were the only proper parties thereto.                                          Thus,

the district court concluded G7 lacked standing to challenge

the arbitration award.                  According to the court, G7 would

have standing to challenge the award only if the complaint

had alleged ISA breached the CBA and the Union breached its

duty       of   fair     representation.              The       court    held         that    G7's

failure         to     allege    wrongdoing          on    the       part       of    the    Union

sounded the death knell of its challenge to the arbitration

award.           The     district       court        further         concluded         the     CBA

required G7 to submit its members’ breach of contract claim

to     arbitration            because     the        CBA       contained         a    provision

requiring the arbitration of grievances involving seniority

rights.

                                               II.

       We       need    not     address    whether             the   district          court    in

holding that G7 lacked “standing” to maintain this action

properly          characterized           G7     as        a     “non-party”            to     the

arbitration            within    the    meaning       of       Section      5    of    the    FAA.

Certainly, the named parties to the arbitration as reflected

in the challenged award’s caption were ISA and the Union. 2


       2
       That the arbitrator’s written award in favor of
G3's seniority rights is not a part of the record in
this case defies explanation.   We may, however, under
Fed. R. Evid. 201 take judicial notice of the official
English translation of that award as it appears of
record in Unión de Empleados de Muelles de Puerto Rico
v. Int’l Shipping Agency Inc., No. 08-cv-01615-ADC,
ISA’s Motion Submitting Certified Translations (D.P.R.,

                                           - 7 -
This    necessarily   follows     from    the   fact   that   ISA    and    the

Union are the named parties to the CBA.                  As the exclusive

bargaining representative of its member employees under the

terms of the CBA, the Union submitted G3's grievance over

seniority rights to ISA.           But G7's action is not one to

vacate    an   arbitration    award   under     Section   5   of    the    FAA.

Rather, G7 asserts a cause of action under Section 301 of

the LMRA for breach of the CBA.            Though somewhat inartfully

pled,    the    remedies     G7   seeks    for    that     breach     are     a

declaration of contractual rights, vacatur, and damages.

       Section 301 provides:      “Suits for violation of contracts

between an employer and a labor organization representing

employees in an industry affecting commerce . . . may be

brought in any district court of the United States having

jurisdiction of the parties.”            29 U.S.C. § 185(a).         Despite

Section 301's plain reference to contracts between employers



filed July 2, 2008) (Docket Entry #11).  In that case,
the Union filed a petition in Puerto Rico commonwealth
court seeking to set aside the arbitration award for
the reasons that the arbitrator (1) acted without
jurisdiction in the absence of the Union’s consent;
(2) condoned the improper conduct of ISA and G3; and
(3) denied both the Union and G7 due process of law.
See Unión de Empleados de Muelles de Puerto Rico v.
Int’l Shipping Agency, No. KAC08-0643 (507), Petition
for  Review   of Arbitration  Award  (Court  of  First
Instance, Superior Part of San Juan, filed May 2,
2008).    The Union’s petition apparently again is
pending in commonwealth court after ISA’s attempt
to remove the action to federal district court proved
unsuccessful.

                                  - 8 -
and    unions,      the    Supreme       Court       in    Hines     v.    Anchor     Motor

Freight, Inc., 424 U.S. 554, 562 (1976), recognized that

“Section 301 contemplates suits by and against individual

employees      as    well       as    between     unions       and     employers;         and

contrary to earlier indications § 301 suits encompass those

seeking to vindicate ‘uniquely personal’ rights of employees

such as wages, hours, [and] overtime pay.”                                Hines suggests

Section 301 is broad enough to encompass G7's action against

ISA for breach of the CBA, viewed as the first step in its

effort to vindicate its purported right to seniority status

vis-a-vis G3.         See Tejidos de Coamo, Inc. v. Int’l Ladies

Garment    Workers’         Union,       22    F.3d       8,   15    (1st     Cir.    1994)

(recognizing        that        a    Section     301       action      may     request      a

declaration of contractual rights pursuant to Section 2201);

Black-Clawson Co. v. Int’l Ass’n of Machinists, 313 F.2d

179,    181-82      (2d    Cir.       1962)    (holding        Section        301    is   not

restricted to suits for damages or specific enforcement and

will sustain a request for a declaratory judgment).

       Despite loose reference to the “standing” label in some

court opinions addressing employee claims under Section 301,

the overriding issue here is not whether G7 has standing.

Rather, as we shall see, the issue is whether G7 has alleged

circumstances sufficient to sustain a cause of action for

breach    of   the        CBA       against    ISA    under         Section    301.        G7

undoubtedly has standing because its members have alleged a


                                          - 9 -
“uniquely personal” stake in the outcome of the controversy

necessary to sustain federal jurisdiction under Section 301.

“To establish standing, a plaintiff must present an injury

that is concrete, particularized, and actual or imminent;

fairly traceable to the defendant’s challenged action; and

redressable by a favorable ruling.”                 Horne v. Flores, 129 S.

Ct. 2579, 2592 (2009).            More particularly, in the context of

Section 301:

       [T]he determination whether an individual employee
       has standing to seek enforcement of a right . . .
       granted under the [CBA] turns upon the nature of
       the right . . . at issue, the test being whether
       the right . . . sought to be enforced is ‘uniquely
       personal’ to the individual plaintiff or whether it
       is instead possessed by the bargaining unit as a
       whole.

20 Samuel Williston & Richard A. Lord, A Treatise on the Law

of Contracts § 55.60, at 279 (4th ed. 2001) (citing Hines).

We need not belabor the point:                The factual allegations of

G7's       complaint    readily    establish    the    “uniquely    personal”

injury to its members necessary to sustain G7's Article III

standing.

                                      III.

       Whether    the    district    court    may    exercise   jurisdiction

under       Section    301   and    adjudicate       G7's   claim   that   ISA

breached the CBA is another matter. 3                  As preconditions to

       3
       The Union is not an indispensable party to G7's
suit.   Because ISA allegedly acted unilaterally in
frustrating  the   CBA’s  grievance  procedure,  ISA’s
possible liability to G7 does not depend upon any

                                     - 10 -
suing their employers under Section 301 for breach of a CBA,

employees generally must be willing to (1) exhaust the CBA’s

grievance procedures and (2) abide by the CBA’s finality

provisions.    See Garcia v. Eidal Int’l. Corp., 808 F.2d 717,

720 (10th Cir. 1986).     Subjecting an employee’s Section 301

suit   to   such   preconditions   is   essential   because    “[t]he

collective bargaining system . . . of necessity subordinates

the interests of an individual employee to the collective

interests of all employees in a bargaining unit.”             Vaca v.

Sipes, 386 U.S. 171, 182 (1967).         When employees recognize

a union as their exclusive bargaining representative, the

rights of the individual employees so represented diminish.

See id.     A CBA generally provides for the final, binding

resolution of labor disputes through grievance procedures in

which the union fairly represents the aggrieved employee(s).

Section 301's purpose is to promote the integrity of such an

agreement according to its terms.         See United Paperworkers


wrongdoing on the part of the Union – a point on which
we subsequently expand in Part IV. See Garcia v. Eidal
Int’l Corp.,808 F.2d 717, 721 (10th Cir. 1986).     In
fact, controlling precedent dictates that even if G7
had alleged such wrongdoing by the Union, G7 still
would have been entitled to sue ISA and the Union
separately.    See Vaca v. Sipes, 386 U.S. 171, 187
(1967); Hayes v. New England Millwork Distribs., Inc.,
602 F.2d 15, 19 n.2 (1st Cir. 1979). Where an employee
accuses both the employer and the union of wrongdoing,
however, the norm is the “hybrid” action in which the
employee joins both defendants in one suit. See, e.g.,
Ayala v. Unión de Tronquistas de Puerto Rico, 74 F.3d
344, 345-46 (1st Cir. 1996).

                              - 11 -
Int’l Union v. Misco, Inc., 484 U.S. 29, 36-38 (1987).

       In nearly every instance, “[t]he refusal of courts to

review      the    merits    of    an    arbitration      award       is   the    proper

approach to arbitration under [the finality provisions] of

collective bargaining agreements.”                      United Steelworkers v.

Enter. Wheel & Car Corp., 363 U.S. 593, 596 (1960); see

UMass    Mem’l      Med.    Ctr,    Inc.    v.    United       Food    &    Commercial

Workers Union, 527 F.3d 1, 5-6 (1st Cir. 2008) (recognizing

that    a    procedurally         sound    arbitration         award       is    “nearly

impervious to judicial oversight”) (internal quotation marks

omitted).          Restricted       judicial       oversight      of       arbitration

awards      is    consistent      with    congressional         recognition         that

“[f]inal adjustment by a method agreed upon by the parties

is declared to be the desirable method for settlement of

grievance          disputes       arising        over    the     application            or

interpretation of an existing [CBA].”                         29 U.S.C. § 173(d).

Accordingly, courts have not allowed employees to challenge

the    underlying       merits      of    arbitration          awards      by    way    of

Section      301    absent    circumstances            that    have    impugned        the

integrity of the arbitration process, for instance, “fraud,

deceit,      or    breach    of    the    duty    of    fair   representation           or

unless the grievance procedure was a ‘sham, substantially

inadequate or substantially unavailable.’”                        Harris v. Chem.

Leaman Tank Lines, Inc., 437 F.2d 167, 171 (5th Cir. 1971)

(per curiam).


                                         - 12 -
       Additionally, if employees seek judicial relief against

an employer under Section 301 before the union has at least

attempted to exhaust the CBA’s dispute resolution procedures

on    their       behalf,     the   employer      may   raise    the    defense     of

failure to exhaust contractual remedies.                       See Vaca, 386 U.S.

at 184.           This too is an “important qualification” on an

employee’s right to prosecute a Section 301 claim against an

employer.          Hayes v. New England Millwork Distribs., Inc.,

602    F.2d       15,   18   (1st    Cir.   1979).       But    neither     is    this

precondition upon an employee’s Section 301 suit unlimited.

“[F]ull exhaustion is not inevitably required by a court

before       it   will   exercise       jurisdiction     under     §    301.”      Id.

Consistent with Supreme Court precedent, we have recognized

three    occasions           when   a   court     may   exercise       jurisdiction

over    an    employee’s        Section     301   suit   against       an   employer

absent complete exhaustion of contractual remedies because

circumstances have impugned the integrity of the arbitration

process: where (1) “the union has the sole power to invoke

the grievance procedures and the union wrongfully refuses to

process or perfunctorily handles the grievance;” (2) “the

employer          repudiates         the     grievance         procedures;”         or

(3) “resort to the grievance procedures would be futile.”

Cabarga Cruz v. Fundacion Educativa Ana G. Mendez, Inc., 822

F.2d 188, 192 (1st Cir. 1987).                    Absent an allegation of at

least    one       of    these      three   exceptions      to    Section        301's


                                         - 13 -
exhaustion requirement, an employee’s Section 301 complaint

may not survive an employer’s motion to dismiss based on the

failure to exhaust contractual remedies.

                                           IV.

       Of course, in this case we are concerned principally

with    the    second     exception         to     Section      301's     exhaustion

requirement.          G7 claims entitlement to Section 301 review

because,      according       to   the     complaint,      ISA       repudiated       the

arbitration provisions of the CBA when it entered into a

“sham,    secret      agreement”          with     G3,   thereby      inducing        the

arbitrator       to    issue       an     award     favorable        to   G3    absent

the participation of the Union or G7, all in breach of the

CBA.    According to G7, ISA cannot now invoke as a defense to

suit the very grievance procedures of the CBA by which it

failed to abide in the first place.                        We agree that ISA’s

alleged    conduct      is    suspect       because      the    claim     “of   a    sham

transaction, in the sense of being both covert and in bad

faith, implies a determination to repudiate the [relevant

provisions of the] contract and thereby avoid arbitration.”

Garcia,    808    F.2d       at    721.      In    Vaca,       the   Supreme        Court

recognized an individual employee’s right to secure judicial

review of a Section 301 breach of contract claim despite the

failure to exhaust contractual remedies where the employer

by its conduct repudiated the very procedures necessary to

ensure the realization of those remedies:


                                          - 14 -
      An obvious situation in which the employee should
    not be limited to the exclusive remedial procedures
    established by the contract occurs when the conduct
    of the employer amounts to a repudiation of those
    contractual procedures . . . . In such a situation
    (and there may of course be others), the employer
    is estopped by his own conduct to rely on the
    unexhausted grievance and arbitration procedures as
    a defense to the employee’s cause of action.

Vaca 386 U.S. at 185. 4

    ISA submits it is willing to arbitrate G7's grievance

over seniority rights consistent with the terms of the CBA,

and that means with the Union as G7's exclusive bargaining

representative.     But   an    employer   who   by   its   conduct

repudiates a promise to arbitrate a dispute consistent with

the terms of the CBA has no subsequent right to insist on

arbitration.   See 6A Arthur L. Corbin, Corbin on Contracts

§ 1443, at 434-35 (1962).       Rather, if the employer denies

the existence or the scope of its alleged repudiation in a

Section 301 suit and moves for dismissal of the action based


    4
         Mutual promises to arbitrate a dispute
         are the agreed equivalents of each
         other.  A repudiation by one party of
         his promise to arbitrate discharges
         the duty of the other party to perform
         his reciprocal promise . . . .    This
         is true, even though the provision for
         arbitration is only a part of a larger
         contract such as a collective bargain
         between an employer and his employees.

10 John E. Murray Jr. & Timothy Murray, Corbin on
Contracts § 972, at 102 (Cum. Supp. 2009) (interim
edition).


                               - 15 -
on the failure to exhaust contractual remedies, the issue

raised is for the court after appropriate inquiry into the

circumstances.   See id. § 1443, at 435.   In Drake Bakeries,

Inc. v. Am. Bakery & Confectionery Workers Int’l, 370 U.S.

254, 262-63 (1962), the Court told us: “[I]n determining

whether one party has so repudiated his promise to arbitrate

that the other party is excused, the circumstances of the

claimed repudiation are critically important.” 5


    5
        Given the final and binding nature of the
arbitration award granting G3 seniority rights, we are
also justifiably concerned at this point about the
futility of arbitrating G7's claim to seniority rights.
See Glover v. St. Louis-San Francisco Ry. Co., 393 U.S.
324, 330 (1969)(recognizing the futility exception to
Section 301's exhaustion requirement). Just as courts
may inquire into their prior judgments for fraud, we do
not dismiss out of hand the idea that arbitrators too
may inquire into their prior awards.    See generally 9
Tim Bornstein, Ann Gosline, & Marc Greenbaum, Labor and
Employment   Law   §   226.06[1],   at   226-33  (2009)
(addressing claim preclusion in the context of a prior
arbitration award). Nonetheless, the arbitration award
G7 seeks to set aside ostensibly rests on a settlement
agreement between the “parties” to the CBA.       Those
parties, as the district court recognized, are ISA and
the Union.   The final award determined the seniority
rights of G3, and thus necessarily those of G7. On its
face, that award binds ISA and the Union. Assuming the
allegations of the complaint to be true, that award, if
allowed to stand, may effectively gag the Union. As to
the merits of G7's claim to seniority, nothing at this
point appears left to arbitrate.        The arbitrator,
allegedly duped, has made his decision in favor of G3,
to the detriment of G7.    See Corbin, supra § 1443, at
436 (recognizing “that a breach may be of a kind that
destroys the end and aim of the arbitration provision
itself”).


                           - 16 -
       We have no quarrel with the Supreme Court’s statement

in Chauffeurs, Teamsters & Helpers Local No. 391 v. Terry,

494 U.S. 558, 564 (1990), referred to by the district court,

that due to the finality provisions usually contained in a

CBA,    “an    employee     normally     cannot          bring    a     §    301     action

against       an   employer     unless       he    can     show    that       the     union

breached its duty of fair representation in its handling

of    the    grievance.”        (emphasis         added).         As    the       array    of

precedents         illustrate,     Chauffeurs            speaks        to     the     usual

Section 301 scenario.             In such scenario, the employer is

alleged      to    have   breached     the    CBA     by    taking       some       adverse

action against the employee unrelated to the CBA’s grievance

provisions.          In that case, the employer’s misconduct has not

impugned       the    arbitration      process.            Rather,          the     union’s

alleged mishandling of the employee’s grievance has impugned

the    process.        These    were   the        circumstances         that       led    the

Supreme Court in Vaca to comment prior to Chauffeurs that in

order to succeed in a breach of contract action against the

employer, the employee must prove the union breached its

duty    of    fair    representation         in    processing          the    grievance.

See Vaca, 386 U.S. at 185-87.                 Without proof of the union’s

misconduct, the arbitration process has not been jeopardized

and courts, as we have explained, are loathe to interfere in

labor       relations     and   review   the       substantive          merits       of    an

employee’s grievance.


                                       - 17 -
       But the Court in Vaca also recognized a second, much

rarer, instance where an employee could maintain a Section

301 suit against an employer for breach of a CBA, namely

where    the     employer       through       its     conduct     repudiates           the

applicable provisions of the CBA.                    The district court never

cited    Vaca    or    addressed       G7's    allegations      of   repudiation.

Vaca    recognized       that   circumstances          may   arise,      like     those

alleged here, where the union has not wrongfully refused to

process the employee’s grievance, and thus the employee has

no cause of action against the union for breach of the duty

of fair representation.                But such circumstances do not in

themselves       foreclose       the    employee’s        breach      of    contract

action against the employer under Section 301.                             See Vaca,

386 U.S. at 185.             And whether the employer repudiates the

CBA     to    avoid     arbitration        or       fraudulently      procure           an

arbitration award ostensibly agreed to by the employer and

the    union,    while    bearing       upon    the    remedy     sought,        has    no

bearing upon the availability of the employee’s cause of

action       against   the    employer        for   breach   of    the     CBA    under

Section 301.

                                         V.

       This appeal in the end is about the fundamental fairness

of the arbitration process.                As alleged in G7's complaint,

ISA is solely responsible for the failure of the arbitration

process because it repudiated those very provisions of the


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CBA designed to ensure a fair process.                  Vaca teaches that we

should not allow ISA to hide behind the very provisions of

the CBA it has allegedly repudiated.                  Rather, Vaca      suggests

that ISA is estopped from utilizing the CBA (as well as the

consequent       award)    to    shield      itself    from    answering       G7's

factual    allegations.          We    therefore      hold,    based    upon    the

applicable       law,     that    the     factual     allegations       of     G7's

complaint    are     sufficient         to    withstand    ISA’s       motion    to

dismiss.     Given      the     factual      allegations      buttressing      G7's

claim that ISA and G3 entered into a “sham secret agreement”

whereby    ISA    breached       the    CBA     and   repudiated       the   CBA’s

grievance procedures, the issue of whether the integrity of

the process has been so impugned as to call into question

the validity of the arbitration award remains for judicial

resolution. 6

     Importantly, we do not read G7's complaint as a direct

challenge to the arbitrator’s substantive determination that

     6
        A different conclusion might leave G7 without
legal recourse absent the Union’s decision in this case
to seek judicial relief. Without deciding the scope of
the Union’s duty to fairly represent G7, we wonder
whether a decision on the part of the Union not to seek
judicial relief would suggest the Union had breached
its duty of fair representation when the Union, as
exclusive   bargaining  agent  for  both   G3  and  G7,
apparently bent over backwards in its effort to inform
both ISA and the arbitrator of its objection to any
agreement absent the participation of all interested
parties.   Certainly nothing in the record before us
suggests the Union has wrongfully refused to process
G7's grievance.

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G3 is entitled to seniority rights over G7.                                   The complaint

does    not     request         a    substantive            merits          review    of     the

arbitrator’s final decision, and wisely so, because, as we

have seen, that review would be “very limited,” perhaps even

more so in G3's absence.                  Because the agreement between ISA

and    the    Union      is    to    submit       irresolvable             grievances       over

seniority rights to arbitration, a court generally has “no

business weighing the merits of the grievance, considering

whether       there       is    equity        in       a    particular             claim,     or

determining         whether         there    is     particular             language   in     the

written instrument which will support the claim.”                                      United

Steelworkers v. Am. Mfg. Co., 363 U.S. 564, 567 (1960).

       Rather, G7's complaint challenges the process through

which the arbitrator reached such decision as contrary to

the    remedial          procedures         outlined        in       the    CBA.      In     the

complaint, G7 recognizes that the dispute between G7 and G3

over    seniority         “must      be     resolved        with      the     presence       and

participation of [G7] and [G3], in accordance with the terms

and conditions established by the Board of Directors of the

Union.”        To     that     we     add     “so      long      as    those       terms     and

conditions are consistent with the applicable provisions of

the    CBA.”        In    other      words,       G7   appears         quite    willing       to

permit ISA and the Union to arbitrate its member employees’

grievances      over       seniority        rights         in    a   fundamentally          fair




                                            - 20 -
process, that is, with the participation of both G3 and G7. 7

G7's position accords with the sound view that even where

procedural aberrations have tainted an arbitration award,

    as a rule the court must not foreclose further
    proceedings by settling the merits according to its
    own judgment of the appropriate result, since this
    step  would   improperly   substitute  a   judicial
    determination for the arbitrator’s decision that


    7
       According to the complaint, G3 and G7 assigned
to ISA and the Union through the CBA the task of
resolving the two groups’ differences.    The Union may
not be pushed aside simply because the problem posed is
between two groups of member employees.        “‘By its
selection as bargaining representative, [the union] has
become the agent of all the employees, charged with the
responsibility of representing their interests fairly
and impartially.’”   Humphrey v. Moore, 375 U.S. 335,
342 (1964). “Conflict between employees represented by
the same union is a recurring fact.    To remove or gag
the union in these cases would surely weaken the
collective bargaining and grievance process.”     Id. at
349-50. Notably, Humphrey also involved a dispute over
seniority rights between two groups of union employees.
The Court was not troubled by the fact that the same
union was bound to represent both groups under the
terms of the CBA:

    [W]e are not ready to find a breach of the
    collective bargaining agent’s duty of fair
    representation in taking a good faith position
    contrary to that of some individuals whom it
    represents nor in supporting the position of
    one group of employees against that of another
    . . . .   The complete satisfaction of all who
    are represented is hardly to be expected.    A
    wide range of reasonableness must be allowed a
    statutory bargaining representative in serving
    the unit it represents, subject always to
    complete good faith and honesty of purpose in
    the exercise of its discretion.

Id. at 349.

                           - 21 -
    the parties bargained for in the collective-
    bargaining agreement.   Instead, the court should
    simply vacate the award, thus leaving open the
    possibility of further proceedings if they are
    permitted under the terms of the agreement.

Misco, 484 U.S. at 40-41 n.10.

    If on remand G7's allegations ultimately prove accurate,

the district court should fashion a remedy not inconsistent

with the foregoing.   In that event, any damage determination

based upon ISA’s breach of the CBA must await resolution of

the underlying seniority rights’ dispute between G3 and G7.

    REVERSED and REMANDED.




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