Nicholas Malfitano Feb. 3, 2016, 9:07am


PHILADELPHIA – The U.S. Court of Appeals for the Third Circuit has affirmed a trial court in dismissing an employee pension plan's lawsuit against United Parcel Service, Inc. (UPS) and the International Brotherhood of Teamsters (Teamsters).

On Monday, judges Kent A. Jordan, Thomas M. Hardiman and Joseph A. Greenaway Jr. affirmed a decision from the U.S. District Court of Eastern Pennsylvania to dismiss a complaint brought by James Hughes and John K. Hughes (along with their respective spouses, Melissa Hughes and Beverly Hughes) versus UPS and Teamsters Local 623.

The appellants are both employees of UPS and members of Teamsters Local 623, who had worked for UPS as part-time “air drivers” for 12 years and attained an hourly pay rate of $23.70 when, in January 2012, they learned full-time positions were opening at UPS.

The appellants averred they asked certain Teamster members of the Teamsters if their rate of pay would change if they became full-time employees and were told that it would not. Both James and John were hired by UPS as full-time drivers.

However, when the appellants received their first full-time paychecks, they saw their hourly pay had been reduced by nearly half to $13.50 per hour, and their seniority eliminated. Inquiring with UPS to the discrepancy, they were allegedly told their previous wages would not be restored – which led the appellants to contact the National Labor Relations Board and file grievances with the Teamsters.

On June 4, 2014, the appellants and their spouses filed a state court complaint against UPS and the Teamsters, where they alleged breach of contract, violation of Pennsylvania Wage and Payment Collection Law, unjust enrichment, loss of consortium and violation of the Fair Labor Standards Act (FLSA – a claim they ultimately withdrew).

The Teamsters opted to remove the case to federal court on the basis all of the appellants’ claims fell under the auspices of their organization’s collective bargaining agreement (CBA) and pre-empted by Section 301 of the Labor Management Relations Act (LMRA).

The District Court agreed with the appellees and dismissed the suit with prejudice, also ruling the appellants failed to “exhaust their available administrative remedies” before filing suit. With the other counts dismissed, the loss of consortium claim did not survive.

On appeal, the appellants believe the District Court erred 1) in considering the CBA, since they argue their claim is an “extra-CBA promise” to pay the higher wage, 2) in not remanding the case to state court and 3) in not providing them leave to further amend their complaint.

However, the Third Circuit decided the appellants’ complaint is predicated upon the CBA and thus, the District Court did not consider it mistakenly.

“Appellants’ complaint demonstrates awareness of the CBA, mooting concerns of notice. We therefore find that the District Court did not err in considering the parties’ CBA,” Greenaway said.

The Third Circuit also found Section 301 of the LMRA did in fact pre-empt the appellants’ state law claims, as it stipulates federal courts have jurisdiction over “suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations.”

Further, they concurred with the District Court the appellants failed to exhaust the administrative remedies available to them before taking legal action.

Finally, the Third Circuit decided the District Court did not err in not considering the appellants’ argument of an “extra-CBA promise to pay” (barred by the CBA’s merger clause), or in preventing further amendment of the complaint.

“If the subject promise fell within the CBA, then amendment would be futile in light of appellants’ failure to exhaust the CBA-specified grievance procedure,” Greenaway said.

“If the subject promise lies outside the CBA, then the claim is not actionable against the party alleged to have made the promise, the Teamsters. Viewed in either light, dismissal with prejudice was entirely appropriate,” Greenaway added.

The plaintiffs are represented by Matthew B. Weisberg of Weisberg Law, in Morton.

The defendants are represented by Gary M. Tocci, Molly Quinn Campbell and Valerie Eifert Brown of Reed Smith in both Philadelphia and Washington, D.C. and Neal Goldstein of Freedman Lorry, also in Philadelphia.

U.S. Court of Appeals for the Third Circuit case 15-1690

U.S. District Court for the Eastern District of Pennsylvania case 2:14-cv-03822

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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