CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT.
Powell, J., delivered the opinion of the Court, in which Burger, C. J., and Brennan, Stevens, and O'connor, JJ., joined. White, J., filed an opinion concurring in the judgment in part and dissenting in part, in which Marshall and Blackmun, JJ., joined, and in all but Part IV of which Rehnquist, J., joined, post, p. 230. Rehnquist, J., filed a dissenting opinion, post, p. 246.
JUSTICE POWELL delivered the opinion of the Court.
The issue is whether a union may be held primarily liable for that part of a wrongfully discharged employee's damages caused by his union's breach of its duty of fair representation.
On February 21, 1976, following an altercation with another employee, petitioner Charles V. Bowen was suspended without pay from his position with the United States Postal Service. Bowen was a member of the American Postal Workers Union, AFL-CIO, the recognized collective-bargaining agent for Service employees. After Bowen was formally terminated on March 30, 1976, he filed a grievance with the Union as provided by the collective-bargaining agreement. When the Union declined to take his grievance to arbitration, he sued the Service and the Union in the United States District Court for the Western District of Virginia, seeking damages and injunctive relief.
Bowen's complaint charged that the Service had violated the collective-bargaining agreement by dismissing him without "just cause" and that the Union had breached its duty of fair representation. His evidence at trial indicated that the responsible Union officer, at each step of the grievance process, had recommended pursuing the grievance but that the national office, for no apparent reason, had refused to take the matter to arbitration.
Following the parties' presentation of evidence, the court gave the jury a series of questions to be answered as a special verdict.*fn1 If the jury found that the Service had discharged
Bowen wrongfully and that the Union had breached its duty of fair representation, it was instructed to determine the amount of compensatory damages to be awarded and to apportion the liability for the damages between the Service and the Union.*fn2 In explaining how liability might be apportioned, the court instructed the jury that the issue was left primarily to its discretion. The court indicated, however, that the jury equitably could base apportionment on the date of a hypothetical arbitration decision -- the date at which the Service would have reinstated Bowen if the Union had fulfilled its duty. The court suggested that the Service could be liable for damages before that date and the Union for damages thereafter. Although the Union objected to the instruction allowing the jury to find it liable for any compensatory damages, it did not object to the manner in which the court instructed the jury to apportion the damages in the event apportionment was proper.*fn3
Upon return of a special verdict in favor of Bowen and against both defendants, the District Court entered judgment,
holding that the Service had discharged Bowen without just cause and that the Union had handled his "apparently meritorious grievance . . . in an arbitrary and perfunctory manner . . . ." 470 F.Supp. 1127, 1129 (1979). In so doing, both the Union and the Service acted "in reckless and callous disregard of [Bowen's] rights."*fn4 Ibid. The court found that Bowen could not have proceeded independently of the Union*fn5 and that if the Union had arbitrated Bowen's grievance, he would have been reinstated. Ibid.
The court ordered that Bowen be reimbursed $52,954 for lost benefits and wages. Although noting that "there is authority suggesting that only the employer is liable for damages
in the form of backpay," it observed that "this is a case in which both defendants, by their illegal acts, are liable to plaintiff. . . . The problem in this case is not one of liability but rather one of apportionment . . . ." Id., at 1130-1131. The jury had found that the Union was responsible for $30,000 of Bowen's damages. The court approved that apportionment, ordering the Service to pay the remaining $22,954.*fn6
On appeal by the Service and the Union, the Court of Appeals for the Fourth Circuit overturned the damages award against the Union. 642 F.2d 79 (1981). It accepted the District Court's findings of fact, but held as a matter of law that, "[as] Bowen's compensation was at all times payable only by the Service, reimbursement of his lost earnings continued to be the obligation of the Service exclusively. Hence, no portion of the deprivations . . . was chargeable to the Union. Cf. Vaca v. Sipes, 386 U.S. 171, 195 . . . (1967)." Id., at 82 (footnote omitted). The court did not alter the District Court's judgment in any other respect, but "affirmed [it] throughout" except for the award of damages against the Union. Id., at 83.
Thus, the Court of Appeals affirmed the District Court's apportionment of fault and its finding that both the Union and the Service had acted "in reckless and callous disregard of [Bowen's] rights."*fn7 Indeed, the court accepted the District
Court's apportionment of fault so completely that it refused to increase the $22,954 award against the Service to cover the whole of Bowen's injury. Bowen was left with only a $22,954 award, whereas the jury and the District Court had awarded him lost earnings and benefits of $52,954 -- the undisputed amount of his damages.
In Vaca v. Sipes, 386 U.S. 171 (1967), the Court held that an employee such as Bowen, who proves that his employer violated the labor agreement and his union breached its duty of fair representation, may be entitled to recover damages from both the union and the employer. The Court explained that the award must be apportioned according to fault:
"The governing principle, then, is to apportion liability between the employer and the union according to the damage caused by the fault of each. Thus, damages attributable solely to the employer's breach of contract should not be charged to the union, but increases if any in those damages caused by the union's refusal to process the grievance should not be charged to the employer." Id., at 197-198.
Although Vaca 's governing principle is well established, its application has caused some uncertainty.*fn8 The Union argues
that the Court of Appeals correctly determined that it cannot be charged with any damages resulting from a wrongful discharge. Vaca 's "governing principle," according to
the Union, requires that the employer be solely liable for such damages. The Union views itself as liable only for Bowen's litigation expenses resulting from its breach of duty. It finds support for this view in Vaca 's recognition that a union's breach of its duty of fair representation does not absolve an employer of all the consequences of a breach of the collective-bargaining contract. See id., at 196. The Union contends that its unrelated breach of the duty of fair representation does not make it liable for any part of the discharged employee's damages; its default merely lifts the bar to the employee's suit on the contract against his employer.
The difficulty with this argument is that it treats the relationship between the employer and employee, created by the collective-bargaining agreement, as if it were a simple contract of hire governed by traditional common-law principles. This reading of Vaca fails to recognize that a collective-bargaining agreement is much more than traditional common-law employment terminable at will. Rather, it is an agreement creating relationships and interests under the federal common law of labor policy.
In Vaca, as here, the employee contended that his employer had discharged him in violation of the collective-bargaining agreement and that the union had breached its duty of fair representation by refusing to take his claim to arbitration. He sued the union in a Missouri state court for breach of its duty. On finding that both the union and the employer
were at fault, the jury decided -- and the Missouri Supreme Court agreed -- that the union was entirely liable for the employee's lost backpay. See id., at 195.
On appeal, this Court was required to resolve a number of issues. One was whether an employee who had failed to exhaust the grievance procedure prescribed in the bargaining agreement could bring suit for a breach of that agreement.*fn9 In Republic Steel Corp. v. Maddox, 379 U.S. 650 (1965), the Court had held that "federal labor policy requires that individual employees wishing to assert contract grievances must attempt use of the contract grievance procedure agreed upon by employer and union as the mode of redress."*fn10 Id., at 652 (emphasis in original; footnote omitted). Because the employee in Republic Steel had made no attempt to exhaust the grievance procedure, it was necessary for the Court to consider only the union's interest in participating in the administration of the contract and the employer's interest in limiting administrative remedies. The Court noted, however, that if "the union refuses to press or only perfunctorily presses the individual's claim," federal labor policy might require a different result. Ibid.
Vaca presented such a situation. The union, which had the "sole power under the contract to invoke the higher stages of the grievance procedure," had chosen not to take the employee's claim to arbitration. See 386 U.S., at 185. Thus the Court faced a strong countervailing interest: the
employee's right to vindicate his claim. Vaca resolved these conflicting interests by holding that an employee's failure to exhaust the contractual grievance procedures would bar his suit except when he could show that the union's breach of its duty of fair representation had prevented him from exhausting those remedies. See ibid. The Vaca Court then observed:
"It is true that the employer in such a situation may have done nothing to prevent exhaustion of the exclusive contractual remedies to which he agreed in the collective bargaining agreement. But the employer has committed a wrongful discharge in breach of that agreement, a breach which could be remedied through the grievance process to the employee-plaintiff's benefit were it not for the union's breach of its statutory duty of fair representation to the employee. To leave the employee remediless in such circumstances would, in our opinion, be a great injustice." Id., at 185-186.
The interests thus identified in Vaca provide a measure of its principle for apportioning damages. Of paramount importance is the right of the employee, who has been injured by both the employer's and the union's breach, to be made whole. In determining the degree to which the employer or the union should bear the employee's damages, the Court held that the employer should not be shielded from the "natural consequences" of its breach by wrongful union conduct. Id., at 186. The Court noted, however, that the employer may have done nothing to prevent exhaustion. Were it not for the union's failure to represent the employee fairly, the employer's breach "could [have been] remedied through the grievance process to the employee-plaintiff's benefit." The fault that justifies dropping the bar to the employee's suit for damages also requires the union to bear some responsibility for increases in the employee's damages resulting from its breach. To hold otherwise would make the employer alone liable for the consequences of the union's breach of duty.
caused by the union's refusal to process the grievance should not be charged to the employer." Id., at 197-198 (emphasis added). The Union's position here would require us to read out of the Vaca articulation of the relevant principle the words emphasized above.*fn13 It would also ignore the interests of all the ...