No. 84-1186, 759 F.2d 1161 (4th Cir. 1985)

Appellant Howard B. Peterson, III, a former pilot for Piedmont Aviation, Inc. ("Piedmont"), has alleged that the Airline Pilots Association, International ("ALPA") and known and unknown union members coerced Piedmont into firing him for failing to respect a nationwide ALPA sponsored job action. Peterson contends that the union thereby failed to live up to its duty of fair representation and, together with individual pilots, violated North Carolina law prohibiting blacklisting, conspiracy, and interference with a contractual relationship. In two orders granting summary judgment in favor of ALPA, the district court ruled that Peterson's state law claims were preempted by the Railway Labor Act, that punitive damages could not be assessed against union defendants, and that Peterson's duty of fair representation claim was time barred.

From May 1977 to January 1979 Peterson was a replacement pilot for Wien Air Alaska, Inc. during a nationwide ALPA sponsored strike. As part of the agreement ending Wien's labor dispute, striking pilots replaced non-union pilots, non-union pilots were furloughed, and ALPA promised there would be no reprisals or recriminations against pilots who had flown during the strike.

In May 1979 Peterson was hired by Piedmont Airlines. All Piedmont employees were represented by ALPA and were protected by the ALPA-Piedmont collective bargaining agreement.¹  Peterson flew without incident until a fellow Piedmont pilot learned, some time in July 1979, that Peterson previously was a strike-breaker. Over the next several weeks, the complaint alleges, Peterson was harassed by individual pilots and ALPA sponsored a slowdown of flight operations designed to pressure Piedmont into firing Peterson. Peterson further alleges that on or about August 2, 1979 he was taken off active flight duty by Piedmont and was told to find employment elsewhere. Peterson, however, apparently was paid by Piedmont until he secured another job with a different airline.

In July 1980, eleven months after the date of his alleged termination, Peterson filed a complaint in federal court claiming that he had been blacklisted by ALPA. His first complaint contained seven causes of action, including claims that Piedmont violated the Railway Labor Act, 45 U.S.C. §§ 151 et seq. (1982) ("the RLA"),²  breached the contract of employment and did not live up to its duty of good faith and fair dealing. The complaint also asserted causes of action against ALPA alleging a breach of the duty of fair representation, blacklisting intentional interference with a contractual relationship, and civil conspiracy. The complaint sought punitive damages against all parties. The defendants answered the complaint, and, for the next several years, extensive discovery ensued.

On January 27, 1983 the district court, on motions for summary judgment by ALPA, entered an order dismissing six of Peterson's seven causes of action. The court held that appellant's state tort claims were preempted by the RLA (thus dismissing claims against individual union members), that punitive damages against ALPA were unavailable under the RLA, and that appellant failed to state a cause of action against Piedmont for interfering with union activities. The district court denied summary judgment, and left outstanding Peterson's claim against ALPA for breach of the duty of fair representation.

In that same order Peterson was granted leave to amend his complaint within thirty days to add Piedmont to his claim against ALPA for a breach of its duty of fair representation. On February 23, 1983 Peterson filed a second amended complaint,³  however, because the amended pleading went beyond the scope of the district court's order, the complaint was stricken on August 11, 1983. On August 19, 1983 Peterson filed his third amended complaint.⁴ 

While appellees' motion to strike the second amended complaint was pending, the Supreme Court on June 8, 1983 ruled in DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S. Ct. 2281, 76 L. Ed. 2d 476 (1983) that a uniform six month limitation period applies to hybrid duty of fair representation claims under the National Labor Relations Act. On August 29, 1983 ALPA filed its amended answer wherein, some three years after Peterson originally accused the union of breaching its duty of fair representation and three years after ALPA first joined issue by answering the initial complaint without asserting a time-bar, for the first time raised a limitations defense. Piedmont's answer similarly asserted that appellant's fair representation claim was time-barred. Motions to dismiss the complaint were filed and, on January 14, 1984, the district court granted defendants' motions. Since that time Peterson has settled his dispute with Piedmont, but he appeals the January 27, 1983 and January 14, 1984 orders insofar as they relate to ALPA and individual union members.

Normally, the first issue we should have to consider would be the length of the applicable limitations period, whether the six months announced in DelCostello, the two year period found in 45 U.S.C. § 153 First (r), or a time span lasting one year or possibly three years as provided by the most analogous North Carolina statute.⁵  That issue, however, currently engages the attention of another panel of the Court.⁶  It is not profitable for us to complicate the matter since, on our view of things, even assuming that the shorter six months limitations period applies, nevertheless, time-bar has not occurred. That is so because the case established a principle of law new enough that neither Peterson in filing his complaint, nor ALPA in answering it, sought to take advantage of the new principle. ALPA, by failing to raise a limitations defense for three years after the case was initiated, has waived its right to rely on DelCostello.

The initial complaint against ALPA was answered on September 8, 1980 without any reference to limitations as a defense against the duty of fair representation cause of action. That cause of action was initiated eleven months after its accrual, and it was not until August 29, 1983 that ALPA decided to press for summary disposition on grounds of limitations. It is well settled that the defense of limitations is waived unless asserted promptly by way of answer or motion. See Weinberger v. Salfi, 422 U.S. 749, 764, 95 S. Ct. 2457, 2466, 45 L. Ed. 2d 522 (1975); Hayden v. Ford Motor Co., 497 F.2d 1292, 1293-95 (6th Cir. 1974); Strauss v. Douglas Aircraft Co., 404 F.2d 1152, 1154-56 (2d Cir. 1968); Fed. R. Civ. P. 8(c). See also Metropolitan Housing Development Corp. v. Village of Arlington Heights, 558 F.2d 1283, 1287 (7th Cir. 1977). Although waiver is not automatic, requiring a showing of prejudice or unfair surprise, see generally 5 Wright & Miller, Federal Practice and Procedure Sec. 1278 (1969 & Supp.1984), we are persuaded by considerations of fairness, entirely separate from the extensive investment of time and energy expended on discovery before the action was dismissed on limitations grounds.

Under traditional jurisprudential principles Peterson, as plaintiff, is charged with anticipating that the Supreme Court would establish the six months limitations period for his duty of fair representation claim. At the same time what is sauce for the goose is sauce for the gander--fairness calls for uniform application of the same principle to the defendant, in that ALPA had as much cause to anticipate DelCostello as did Peterson. Had ALPA shown the necessary perspicacity so to plead to the original complaint, Peterson would have no viable basis to attack a limitations defense. In such instance ALPA would have been entitled to a complete victory at the early pleading stage, regardless of the strength of plaintiff's claim on the merits.⁷  ALPA's brief implies that it could not have raised a statute of limitations defense until after DelCostello was decided, but certainty of success is not a prerequisite to deciding whether to assert an affirmative defense in a pleading.⁸  See Perez v. Dana Corp., 718 F.2d 581, 584 (3d Cir. 1983) where the union defendants several years before DelCostello was decided anticipated the result in that case and raised a six-months limitation defense.⁹  Consequently, since neither side anticipated DelCostello Peterson is entitled to a safe harbor. In short we leave the parties where we find them.

The same result should obtain despite the fact that Peterson filed a series of amended complaints.¹⁰  It is true that, in cases where, from the very outset, no cloud obscured the right of the defendant to plead limitations, courts have permitted defendants to raise limitations even though not asserted as a defense in the original answer. See, e.g., Pierce v. County of Oakland, 652 F.2d 671 (6th Cir. 1981). Here, however, the eclipse was great enough to convince counsel for both parties that neither the threat nor the advantage of limitations was present. In the present case ALPA was on notice since July 7, 1980 that Peterson was asserting a breach of the duty of fair representation. Subsequent amendments to the complaint did not affect the substance of the claim; consequently, for all practical purposes ALPA waited for over three years before raising a limitations defense.

Equally important, the statute of limitations set out in DelCostello, although serving national labor policies,¹¹  is still a personal defense. As such it is "designed to promote justice by preventing surprises through the revival of claims that have been allowed to slumber.... The theory is that even if one has a just claim it is unjust not to put an adversary on notice to defend within the period of limitation and that the right to be free of stale claims in time comes to prevail over the right to prosecute them." Order of Railroad Telegraphers v. Railway Express Agency, Inc., 321 U.S. 342, 348-49, 64 S. Ct. 582, 586, 88 L. Ed. 788 (1944). At the time Peterson filed his claim ALPA cannot claim it was surprised or prejudiced by a stale claim. Indeed for three years ALPA presumed the action was filed timely and engaged in extensive discovery. Thus, the purpose served by limitation periods--to allow an adversary repose--would not be furthered by allowing ALPA to raise the defense at the eleventh hour. See Burnett v. New York Central Railroad Co., 380 U.S. 424, 428, 85 S. Ct. 1050, 1054, 13 L. Ed. 2d 941 (1965) (The "policy of repose designed to protect defendants is frequently outweighed ... when the interests of justice require vindication of the plaintiff's rights").¹² 

This, in short, is not the case of a delinquent plaintiff whose counsel alone deserved smearing with pitch for delay in filing suit. Rather the attorneys for both plaintiff and defendant were, to the extent that pitch should be applied at all, tarred with the same brush. The uniformity and promptness decreed by DelCostello in instituting unfair representation cases will not seriously be frustrated by allowing an odd case to proceed where, if counsel for the plaintiff nodded, the defendant's lawyer slumbered to no less a degree. In the case of the initial complaint the plaintiff had already successfully negotiated the limitations hurdle, only to fall afoul of a rule permitting a limitations defense, which had not earlier been raised, to be introduced only because a subsequent amended complaint, no different as to the operative language of the count here involved, was filed. The portions of the original complaint with which we are concerned, the allegations of breach of a duty of fair representation, were not deemed by the district judge to be inadequate or defective. The rule allowing a limitations plea not made to an original complaint to be made to an amendment properly has no application to a claim whose nature has not been substantially affected by the amendment.¹³ 

Because both the plaintiff and the defendant assumed that a limitations period of at least one year governed the action we are unwilling to ratify a result of unwarranted harshness and will not cut off Peterson's right to have a full hearing on the allegations contained in his complaint, which, on its face, at least, has substantial merit.¹⁴  Accordingly we reverse the holding that the action was time-barred.

III

Having reinstated Peterson's federal claim, we must decide whether, if he ultimately prevails on the merits, punitive damages may be assessed against ALPA. Previously, in Harrison v. United Transportation Union, 530 F.2d 558, 563 (4th Cir. 1975), cert. denied, 425 U.S. 958, 96 S. Ct. 1739, 48 L. Ed. 2d 203 (1976), we held that punitive damages were available if the union acted wantonly, maliciously, or in reckless disregard of an employee's rights. Harrison, however, was effectively overruled by International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 99 S. Ct. 2121, 60 L. Ed. 2d 698 (1979). In that case the Supreme Court held that punitive "damages may not be assessed against a union that breaches its duty of fair representation by failing properly to pursue a grievance." Id. at 52, 99 S. Ct. at 2128. Peterson argues that the holding in Foust should be limited to the grievance and arbitration context and, that, in any event, punitive damages should be available where the union acting intentionally and maliciously procures the discharge of an employee because of his prior refusal to honor a strike. We are satisfied, however, that in Foust the Supreme Court has established a per se rule prohibiting punitive damages in all duty of fair representation actions.

Foust involved punitive damages levied against a union which had mishandled an employee's grievance by filing it two days after the dead-line specified in the collective bargaining agreement. Distinguishable is the present appeal, in which Peterson alleged that he was the victim of a nation-wide conspiracy to retaliate against pilots who flew during an ALPA sponsored strike. Despite the difference, a close reading of Foust demonstrates that the ban on punitive damages is not limited to the arbitration and grievance context but applies to all fair representation actions.

The issue presented in Foust was "what if any circumstances justify assessing punitive damages against a union that breaches its duty of fair representation." 442 U.S. at 46, 99 S. Ct. at 2124. One circumstance squarely presented but not relied upon by the majority was the absence of any proof of union animus against the employee. Justice Blackmun noted in his concurrence that, " [t]he union's conduct here betrayed nothing more than negligence, and thus presented an inappropriate occasion for awarding punitive damages under any formula." Id. at 53, 99 S. Ct. at 2128 (Blackmun, J., concurring). Justice Marshall, writing for the majority, eschewed that narrower ground, however, and assumed that the jury had before it an instance where the union acted maliciously.¹⁵  More importantly the majority took no exception to Justice Blackmun's statement, joined by three other members, that " [t]he Court now adopts a per se rule that a union's breach of the duty of fair representation can never render it liable for punitive damages, no matter how egregious its breach may be." Id. at 52-53, 99 S. Ct. at 2128. The absence of any rebuttal to the per se charge, coupled with the majority's rather obvious reaching out to avoid a more narrow basis for its decision, demonstrates that Foust created a barrier protecting the union against punitive damage awards in all fair representation actions. The circuit courts which have considered the issue are in accord. See Quinn v. DiGuilian, 739 F.2d 637, 647 (D.C. Cir. 1984); Wells v. Southern Airways, Inc., 616 F.2d 107, 109 n. 1 (5th Cir. 1980), cert. denied, 449 U.S. 862, 101 S. Ct. 166, 66 L. Ed. 2d 78 (1980) (dicta); Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208, 1216 (8th Cir. 1981), cert. denied, 454 U.S. 968, 102 S. Ct. 512, 70 L. Ed. 2d 384 (1981) (dicta).¹⁶ 

IV

In another "variant of a familiar theme" Local 926, International Union of Operating Engineers v. Jones, 460 U.S. 669, 675, 103 S. Ct. 1453, 1458, 75 L. Ed. 2d 368 (1983), quoting San Diego Building Trades Council v. Garmon, 359 U.S. 236, 239, 79 S. Ct. 773, 776, 3 L. Ed. 2d 775 (1959), we must determine whether Peterson's pendent state law causes of action against ALPA and union members for civil conspiracy, unlawful blacklisting, and interference with a contractual relationship are preempted by his federal duty of fair representation claim.

The preemption doctrine, more familiar terrain under the National Labor Relations Act, 29 U.S.C. §§ 151-169 (1982), has been affected by two competing concerns. See Farmer v. United Brotherhood of Carpenters & Joiners, 430 U.S. 290, 295, 97 S. Ct. 1056, 1060, 51 L. Ed. 2d 338 (1977). In the first place, preemption of state law is required in order to protect the primary jurisdiction of the administrative agency created by Congress to oversee the development of uniform rules of law governing labor-management relations. See Vaca v. Sipes, 386 U.S. 171, 178-79, 87 S. Ct. 903, 910-11, 17 L. Ed. 2d 842 (1967). Thus, state (and federal) courts generally may not adjudicate claims based on conduct that is protected or prohibited by federal labor law, or arguably so. San Diego Building Trades Council v. Garmon, 359 U.S. at 244-45, 79 S. Ct. at 779-80. Cf. Brotherhood of Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 375-77, 89 S. Ct. 1109, 1113-14, 22 L. Ed. 2d 344 (1969). On the other hand, the Supreme Court has been unwilling to "declare pre-empted all local regulation that touches or concerns in any way the complex interrelationships between employees, employers, and unions...." Amalgamated Association of Street, Electric Railway & Motor Coach Employees v. Lockridge, 403 U.S. 274, 289, 91 S. Ct. 1909, 1919, 29 L. Ed. 2d 473 (1971). Consequently, where the conduct sought to be regulated by state law is only a "peripheral concern" of federal labor law or touches interests "deeply rooted in local feeling and responsibility" we are instructed that the preemption inquiry requires a sensitive balancing of the potential harm to the federal scheme against the importance of the state's interest in protecting its citizens. Farmer, 430 U.S. at 296-97, 97 S. Ct. at 1061-62.¹⁷ 

Preemption under the RLA has followed a similar tack, but a more stringent pattern of judicial deference has emerged. The scheme of remedies and procedures carefully crafted in the RLA has long been interpreted as evidence of congressional intent significantly to limit an aggrieved employee's right to resort to state law as an alternative remedy for a wrongful discharge. See Andrews v. Louisville & Nashville Railroad Co., 406 U.S. 320, 92 S. Ct. 1562, 32 L. Ed. 2d 95 (1972). Garden variety wrongful discharge actions, so-called "minor disputes" involving rights under the collective bargaining agreement, ordinarily are subject to the mandatory arbitration procedure provided in 45 U.S.C. § 153 First (i) and are routinely held to be within the exclusive jurisdiction of the arbitral authority created by the statute. See Andrews v. Louisville & Nashville Railroad Co., 406 U.S. at 324-25, 92 S. Ct. at 1565-66. As the Supreme Court explained in Union Pacific Railroad v. Sheehan, 439 U.S. 89, 94, 99 S. Ct. 399, 402, 58 L. Ed. 2d 354 (1978) "Congress considered it essential to keep these so-called 'minor' disputes within the Adjustment Board and out of the courts." See also Air Line Pilots Association v. Texas International Airlines, 656 F.2d 16, 19 (2d Cir. 1981). Unlike preemption under the NLRA, the preemption of state law claims under the RLA has been more complete. See, e.g., Minehart v. Louisville & Nashville Railroad Co., 731 F.2d 342 (6th Cir. 1984); Jackson v. Consolidated Rail Corp., 717 F.2d 1045 (7th Cir. 1983), cert. denied, --- U.S. ----, 104 S. Ct. 1000, 79 L. Ed. 2d 233 (1984); Beers v. Southern Pacific Transportation Co., 703 F.2d 425 (9th Cir. 1983); Magnuson v. Burlington Northern, Inc., 576 F.2d 1367 (9th Cir. 1978), cert. denied, 439 U.S. 930, 99 S. Ct. 318, 58 L. Ed. 2d 323 (1978); Majors v. U.S. Air, Inc., 525 F. Supp. 853 (D. Md. 1981).¹⁸  Consequently, in approaching the preemption question we are mindful that Peterson's right to resort to state law to vindicate his wrongful discharge claim has been circumscribed in the first instance by the RLA.

Peterson's duty of fair representation claim now proceeding only against ALPA is, of course, not itself preempted by the arbitration machinery mandated by the RLA. See Czosek v. O'Mara, 397 U.S. 25, 27-28, 90 S. Ct. 770, 772-73, 25 L. Ed. 2d 21 (1970) (the claim against the union for breach of the duty of fair representation is a discrete claim from the right of an individual to pursue his grievance under the RLA). Cf. Vaca v. Sipes, 386 U.S. at 180-81, 87 S. Ct. at 911-12. Since Peterson has alleged that his discharge by Piedmont was the product of unlawful union discrimination, his only remedy is to sue ALPA in state or federal court. Id. Consequently, there is no question that federal jurisdiction over Peterson's entire complaint was proper. Instead, the preemption inquiry in the present case is whether the duty of fair representation claim itself "preempts" the power of the district court to exercise its pendent jurisdiction over related state law claims. To resolve the question, we refer to NLRA cases since we believe the risk of state interference with the effective administration of national labor policy is present here even though the exclusive jurisdiction of the arbitrator is not at issue.

At the outset we note that the allegations contained in Peterson's complaint can hardly be called a peripheral concern to federal labor law. Compare Linn v. United Plant Guard Workers, 383 U.S. 53, 86 S. Ct. 657, 15 L. Ed. 2d 582 (1966). The duty of fair representation is a corollary of the union's status as the exclusive representative of all employees in a bargaining unit. See International Brotherhood of Electrical Workers v. Foust, 442 U.S. at 46-47, 99 S. Ct. at 2124-25; Vaca v. Sipes, 386 U.S. at 182, 87 S. Ct. at 912. When the union has abused its power, the duty of fair representation stands as "a bulwark to prevent arbitrary union conduct...." Vaca v. Sipes, 386 U.S. at 182, 87 S. Ct. at 912. The importance of the federal interest is such that the duty of fair representation cause of action is governed exclusively by federal law even when the claim is filed in state court. Id. at 178, 87 S. Ct. at 910.

A careful examination of Peterson's complaint also demonstrates that the underlying dispute draws its basic character from ALPA's alleged violation of federal law, and that the state law claims, in both substance and relief, are identical to the federal claim. The only losses Peterson has sustained were caused by his wrongful discharge. Under federal law Peterson may recover all of his damages if he can prove they were attributable to the union's misconduct. See Czosek v. O'Mara, 397 U.S. at 28-29, 90 S. Ct. at 773; Vaca v. Sipes, 386 U.S. at 197-98, 87 S. Ct. at 920-21. The causes of action for conspiracy, interference with a contractual relation, and unlawful blacklisting add nothing by way of relief. Peterson does not seek compensation for any injury beyond that which would be awarded if successful on the duty of fair representation claim.¹⁹ 

More importantly, Peterson's state law claims not only focus on conduct prohibited by federal law, the state claims are essentially identical to the duty of fair representation claim. The district court found that Peterson had no written employment contract and, as an "at will" employee under North Carolina law, Nantz v. Employment Security Commission, 290 N.C. 473, 226 S.E.2d 340 (1976); Brooks v. Carolina Telephone & Telegraph Co., 56 N.C.App. 801, 290 S.E.2d 370 (1982), was protected only by the terms of the collective bargaining agreement and by any rights he might have under the RLA. To recover under either the state or federal claims Peterson must prove that Piedmont's discharge violated the collective bargaining agreement and that the union caused his discharge, which would be a violation of its duty of fair representation, a violation of the Wien Air settlement agreement and, by sponsoring a slowdown of flight operations, a violation of obligations under the collective bargaining agreement with Piedmont. In short, if Peterson can recover on his state law claims, it will be because he has established a violation of federal law. In addition, although the state's interest in protecting Peterson is not insignificant, the interpretation of collective bargaining agreements and the range of economic self-help under the RLA available to the union are matters which must be determined by federal law. See Brotherhood of Railroad Trainmen v. Jacksonville Railroad Terminal, 394 U.S. at 377-82, 89 S. Ct. at 1114-17.²⁰ 

In light of the significant overlap of the state and federal claims, it becomes apparent that Peterson seeks to pursue the state claims merely to take advantage of more liberal remedies. Since Peterson's state claims seek to vindicate rights largely secured by federal law, the potential conflict between remedies and administration are too great to permit the state claims to stand. See In re Sewell, 690 F.2d 403, 409 (4th Cir. 1982).

Accordingly, we reverse the dismissal on limitations grounds of the federal duty of fair representation claim and affirm the dismissal of the punitive damage claim and the common law claims.

AFFIRMED IN PART and REVERSED IN PART.