John Richard Gregg v. Chauffeurs, Teamsters and Helpers Union Local 150

Appellees, four members of a local union, claimed that it breached its duty of fair representation when it withdrew from arbitration grievances against the employer seeking severance pay on behalf of the appellees. The district court agreed, finding that the union acted arbitrarily, and awarded damages against it in the amount that each appellee would have received as severance pay. In this appeal the union contends that it acted rationally and breached no duty to the appellees.

FACTS

In December 1973 American Bakeries Company (American) and Union Local 150 were parties to a collective bargaining agreement which covered American’s employees, including the appellees. Under section 25 of the agreement, employees terminated “due to the closing of a plant or depot and the discontinuance of its operations” were entitled to severance pay. However, if a layoff resulted from the operation of seniority rules, no severance pay was due.

In December 1973 American cut back its distribution operations in the Sacramento area, within the jurisdiction of the union. It closed three of its four depots and reduced the number of drivers at the fourth, the Iris depot.

Laid off members of the union…