Litigating the Taylor Law in federal court

Litigating the Taylor Law in federal court
Schermerhorn v Metropolitan Trans. Auth. CA2, 156 F.3d 351

The Schermerhorn case demonstrates that complaints that a union has breached its duty of fair representation to the members of the negotiating unit it represents must be filed within the controlling statute of limitations because the court will never reach the merits of the complaint if it is untimely filed.

Another important issue in this case: which was the controlling law -- federal or state -- for the purposes of determining the applicable limitations period.*

Schermerhorn, a member of Local 100 of the Transport Workers Union of America (Union) sued the Union and the Metropolitan Transportation Authority and the New York City Transit Authority (Employers). He complained that the Union breached its duty of fair representation in violation of the Taylor Law.

According to the Schermerhorn, the Union, without the knowledge of its members, had made a somewhat complex “open offer” to the Employers which, if accepted, would require members of the negotiating unit to pay “additional medical costs” upon their receiving an anticipated salary increase that was tied to a proposed change in pension legislation then pending before the New York State legislature.

This would constitute a significant change in the benefit package provided to the employees in the unit. At the time the Union made its “open offer,” the Employers were paying all costs of medical benefits for unit members through contributions to a welfare benefit trust. Further, the “open offer” also included a provision requiring its terms to be incorporated into the next collective bargaining agreement negotiated by the parties.

The pension legislation was adopted and on July 26, 1994, the Employers accepted the “open offer.”

The Union and the Employers subsequently entered into new collective bargaining agreements, which were later ratified by the Union’s membership. This new Taylor Law contract included the provisions contained in the “open offer.” Contending that the members had not been informed of the terms of the “open offer,” which was described as an “undisclosed agreement,” Schermerhorn argued that the contract was a nullity because it “was never properly ratified by the membership.”

A federal district court dismissed Schermerhorn’s petition, holding that the National Labor Relations Act applied to Schermerhorn’s action. The district court then held that Schemerhorn’s petition was “time-barred” under the six-month statute of limitations applicable under Section 301 of the federal Labor-Management Relations Act.

Although Schermerhorn settled his complaint against the Union officials after his petition was dismissed, he elected to appeal the district court’s ruling insofar as it related his allegations of collusion by the Employers.

In this appeal to the U.S. Circuit Court of Appeals, however, the parties stipulated, and the Circuit Court agreed, that the claim against the Employers was governed by the Taylor Law provision relating to claims by public employees against their employer premised on their union’s breach of its duty of fair representation [Civil Service Law Section 209-a] rather than by federal law.

Applying New York State Law, the Circuit Court held that the four-month statute of limitations set out in Section 217(2)(b) of New York’s Civil Practice Law and Rules [CPLR] controlled.

According to the Circuit Court’s ruling, this four-month limitations period begins to run when (i) the plaintiff knew or should have known of the union’s breach of its duty of fair representation; or (ii) the plaintiff suffered harm from that breach, whichever is later.

The Circuit Court said that “there can be no question that plaintiffs became aware of the existence of the agreement at the very latest in early September 1995” when they learned that the Employers would begin to deduct 0.75% of their wages to offset increased medical costs resulting from the modification of the pension plan.”

Accordingly, said the Court, “more than four months prior to the commencement of their suit, [Schemer horn] knew or should have known of the Union’s alleged breach, and had suffered harm from that breach.”

Schemer horn also contended that the four-month limitations period should be tolled because an internal Union grievance was filed by one of the plaintiffs on December 29, 1995. In that grievance the member attempted to have the Union officials responsible for the “undisclosed agreement” disciplined.

The Circuit Court said that it would look to New York’s “tolling rules” to determine whether the statute of limitations was tolled by the filing of a grievance. It concluded that “[t]here is no New York statutory provision tolling the statute of limitations while an employee pursues an internal union grievance for claims against a public employer arising from a union’s breach of its duty of fair representation....”

According to the Circuit Court, New York law does not allow administrative or union grievances to toll the statute of limitations on claims against public entities in article 78 proceedings. It noted the decision in Vasbinder v. Hartnett, 129 A.D.2d 894, 895, 514 N.Y.S.2d 530, commenting that in that ruling the State’s Appellate Division noted that “invocation of a grievance procedure will not serve to toll the statutory time limit prescribed by CPLR [Section] 217” for the purposes of Article 78 proceedings.

The points of the ruling to be remembered:

1. If a party brings an action involving New York’s Taylor Law on the theory that the National Labor Relations Act is, in some way, implicated, the federal court will decide those aspects of the litigation involving the Taylor Law on the basis of New York’s law, not the federal law; and

2. The fact that a grievance concerning the underlying complaint has been filed by one of the parties will not stop the statute of limitations from continuing to run with respect to that party for the purposes of initiating litigation.

* Although the decisions here concluded that Schermerhorn’s suit was “untimely” regardless of whether federal and State law controlled, the critical aspect of the ruling was that the parties, and the U.S. Circuit Court of Appeals, ultimately agreed that New York State Law rather than the National Labor Relations Act, controlled.