Can a non-union member could pursue a claim against a union for the union’s alleged breach of the duty of fair representation?

Gustafson v. AFSCME, 310 A.3d 1267 (Pa. Cmwlth. 2024) (en banc), allocatur granted Aug. 6, 2024, appeal docket 24 WAP 2024

In this case, the Pennsylvania Supreme Court will consider whether a non-union member can pursue a claim against a union for breaching its duty of fair representation or if the non-member is constrained to seek arbitration pursuant to the Public Employe Relations Act (PERA).

Penny Gustafson (Appellant), a resident care employee with the Pennsylvania Department of Human Services, was part of a bargaining unit represented by the American Federation of State, County, and Municipal Employees (AFSCME) but resigned her union membership in June 2019. Thereafter, Gustafson was removed from direct resident care for three weeks during a workplace misconduct investigation. Gustafson requested AFSCME file a grievance to recover lost overtime opportunities. Without Gustafson’s knowledge or consent, AFSCME settled the grievance without proceeding to arbitration. Gustafson filed a lawsuit against AFSCME, alleging the union breached its duty of fair representation by mishandling her grievance and discriminating against her as a non-member. AFSCME filed preliminary objections, arguing that Gustafson’s claims were legally insufficient. The trial court sustained AFSCME’s objections and dismissed Gustafson’s complaint with prejudice. Gustafson appealed to Commonwealth Court, which summarized the parties’ arguments as follows:

Appellant argues that, because the Public Employe Relations Act (PERA) does not govern or limit the relief Appellant may seek for AFSCME’s breach of its duty of fair representation, she is not constrained to seek arbitration of a claim that only the union is responsible for mishandling. Appellant contends that the duty of fair representation in this Commonwealth is based in common law and does not implicate PERA when only a union’s misconduct is at issue. Specifically, Appellant asserts that, where, as alleged herein, a union intentionally, discriminatorily, and in bad faith “botches” an employee’s grievance, established precedent and justice dictate that the union alone must answer for its misconduct in damages. Appellant Br. at 10. Appellant maintains that to hold otherwise would allow unions to “run roughshod” over public employees’ rights and prevent those affected by union wrongdoing from ever obtaining meaningful relief. Id. Further, Appellant declares that limiting an aggrieved employee’s relief to arbitrating a claim that her union already mishandled would abrogate the essence of the fiduciary duty of fair representation the Pennsylvania Supreme Court pronounced in Falsetti v. Local Union No. 2026, United Mine Workers of America, 400 Pa. 145, 161 A.2d 882 (1960).

AFSCME rejoins that the Pennsylvania Supreme Court’s decision in Martino v. Transport Workers’ Union of Philadelphia, Local 234, 505 Pa. 391, 480 A.2d 242 (1984), is binding precedent that limits Appellant’s remedy to an equitable one because she has not, by specific facts, pled collusion and/or conspiracy between the Commonwealth and AFSCME to deprive her of rights under the applicable collective bargaining agreement (CBA). Specifically, AFSCME retorts that, in Martino, our Supreme Court expressly considered whether the remedy available in duty of fair representation cases arising under federal labor law should govern for Commonwealth public-sector workers, and the Martino Court expressly declined to adopt the private-sector remedial scheme that Appellant has asked this Court to apply.

Slip op. at 3-4.

Commonwealth Court reversed the trial court’s decision, allowing Gustafson’s lawsuit to proceed. The court found that Martino did not support AFSCME’s position that the only permitted remedy is arbitration, reasoning that:

While at first blush Martino may appear to support AFSCME’s position, a thorough reading of that Opinion instructs otherwise. Specifically, in Martino,

[t]he sole question for our [Supreme Court’s] consideration [wa]s whether a public employee is totally precluded from obtaining any relief directly or indirectly, involving his public employer, for discharge in arguable breach of a [CBA] when the union has violated its duty of fair representation by failing in bad faith to pursue his grievance to impartial arbitration.

Id. at 243 (emphasis added). The Martino Court held:

[B]efore a court in equity may entertain a complaint seeking to order arbitration, the complainant must prove that the union acted in bad faith towards its member. Once it has been determined that the union breached its duty of fair representation, the [c]ourt of [c]ommon [p]leas sitting in equity ma[ ]y order the completion of the arbitration procedure and, in cases governed by state labor law[,] its power is limited to that remedy.

Id. at 252 (emphasis added).

However, the Martino Court explained:

Our legislature mandates [ ]:

In all cases where a remedy is provided or a duty is enjoined or anything is directed to be done by any statute, the directions of the statute shall be strictly pursued, and no penalty shall be inflicted, or anything done agreeably to the common law, in such cases, further than shall be necessary for carrying such statute into effect.

[Section 1504 of the Statutory Construction Act of 1972,] 1 Pa.C.S. § 1504. Our holding that the chancellor lacks authority to resolve the underlying grievance is consistent with that statutory provision and the strong policy favoring arbitration of public sector grievances embodied in Section 903 of PERA[, 43 P.S. § 1101.903]. Moreover, our holding that the chancellor may, if the employee establishes the union’s breach of its duty of fair representation, order arbitration of the underlying grievance nunc pro tunc provides the employee with a complete and adequate legal remedy.]14 See D. Feller, A General Theory of the Collective Bargaining Agreement, 61 Cal.L.Rev. 663, 813 (1976).]15

]14 Unlike Ziccardi, Martino’s complaint against the union and [Southeastern Pennsylvania Transportation Authority] seeks an order directing the union to undertake its duty to represent him and to initiate arbitration proceedings nunc pro tunc.

]15 The [U.S. Supreme C]ourt in Vaca assigned two reasons for the proposition that the court could reach the underlying grievance in actions based on the union’s breach of its duty of fair representation. First, the [Vaca] Court stated that “[i]n some cases at least part of the employee’s damages may be attributable to the union’s breach of duty, and an arbitrator may have no power under the bargaining agreement to award such damages against the union.” 386 U.S. at 196[, 87 S.Ct. 903] …. However, “it is perfectly possible, and indeed desirable, to couple an order directing the union to process the grievance with an order imposing liability on the union for any additional damages suffered by the employee if it should be found in arbitration that the grievance was justified, without jumping to the conclusion that, in order to do so, the court must itself decide the merits of the grievance.” Feller, supra, 61 Cal.L.Rev. at 814.

The Vaca [C]ourt’s second reason for not limiting the remedy to an order to process the grievance was that “the arbitrable issues may be substantially resolved in the course of trying the fair representation controversy ….” 386 U.S. at 196[, 87 S.Ct. 903][.] … It does not follow, however, that the court should proceed to decide the merits.

[T]here are differences in the quality of judgment and the standards to be applied in arbitration as compared with the judicial forum … and considerable differences … in the remedies available ….

Feller, supra, at 815.

Martino, 480 A.2d at 251-52 (emphasis added).

Here, Appellant avers that AFSCME discriminated against her for not being a union member. Appellant is not seeking an order directing the union to undertake its duty to represent her and/or to initiate arbitration proceedings nunc pro tunc on her behalf. Further, Appellant is not asking the court to decide the merits of her grievance. Moreover, Appellant is not alleging wrongdoing on her employer’s part. Rather, Appellant’s sole claim is that AFSCME failed to fairly represent her during a workplace investigation and subsequent grievance proceeding.

Slip op. at 7-9. Finding that Gustafson’s complaint sufficiently alleged that AFSCME’s actions were arbitrary, discriminatory, or in bad faith, which, if proven, could constitute a breach of the duty of fair representation, the court concluded:

Clearly, Appellant is seeking damages for AFSCME’s breach of its fair representation duty because she was not a union member. Such a claim is not an unfair labor practice under PERA. See Ziccardi. Accordingly, because it is not “free and clear from doubt[,]” that Appellant cannot proceed on a claim for damages on her duty of fair representation claim, the trial court erred by sustaining AFSCME’s first Preliminary Objection and dismissing the Complaint. Podolak, 37 A.3d at 1287.

Slip op. at 10.

The Pennsylvania Supreme Court will consider the following issues:

1) Whether the Commonwealth Court’s decision below is contrary to this Court’s ruling in Martino v. Transport Workers Union, 505 Pa. 391, 480 A.2d 242 (1984)?

(2) Whether, in a duty of fair representation claim, Section 1101.903 of PERA requires arbitration when plaintiff-employee received relief through the grievance process and the action for damages against the union requires the trial court to evaluate what the employee is entitled to under the collective bargaining agreement?

(3) Whether, in a duty of fair representation claim, a public sector employer is an indispensable party when the employee’s requested remedy requires the trial court to evaluate what the employee is entitled to under the collective bargaining agreement?