Employment Law Daily $100K jury award upheld for union's bad faith in accepting settlement without employee’s knowledge
Monday, June 13, 2016

$100K jury award upheld for union's bad faith in accepting settlement without employee’s knowledge

By Ronald Miller, J.D. Finding that a union’s conduct in accepting a settlement on behalf of an employee without her knowledge and without an opportunity to review constituted arbitrary, discriminatory, and bad-faith conduct, the Montana Supreme Court affirmed a jury award of $100,000 in damages to the employee. Substantial evidence supported the jury’s finding that the union violated its duty of fair representation, the state high court held. Also, the trial court correctly found it had no legal authority to award attorney fees to the employee (Petaja v. The Montana Public Employees Association (MPEA), June 8, 2016, Rice, J.). The employee was terminated from her position as clinic coordinator of a county nutrition program, ostensibly due to a reorganization, but she asserted that she was terminated because of her age—she was 59. She was a member of a collective bargaining unit represented by a union, and a CBA governed the terms of her employment, including a grievance process. The employee requested that the union file a grievance. In response, the employer offered her a temporary administrative receptionist position at a substantial pay decrease. The employee accepted the position but refused to waive any rights she had under the CBA. Lawsuit. The employee then requested a Step 2 grievance. However, the union representative refused to meet with the employee’s husband to discuss the grievance. The employee requested that the union provide her with written confirmation that it had decided not to pursue her grievance and that she had exhausted her remedies under the CBA. The union refused. Instead, it signed a settlement agreement on behalf of the employee that purported to resolve all disputes concerning wages owed to her under the CBA. The union did not advise the employee it was entering into the settlement agreement, nor did it present the agreement to her for her signature or review. She filed suit against the employer for age discrimination (a jury found the claim was time-barred) and against the union for breach of its duty of fair representation. The jury returned a verdict against the union, finding it liable for $100,000 in damages. Facts deemed admitted. As an initial matter, after the union’s counsel failed to timely answer multiple discovery requests propounded by the employee, and failed to respond to the trial court’s order granting the employee’s motion to compel the union to answer the discovery requests, the trial court ordered those requests for admission to be deemed admitted. Under the substantial evidence standard, the union’s admissions of fact as deemed by the trial court presented an insurmountable obstacle on appeal. The jury was instructed to accept as true that the union refused to meet with the employee and her husband to discuss the Step 2 grievance, that it failed to file the Step 2 grievance, failed to notify the employee that it would not file her Step 2 grievance, failed to verify that the employee had exhausted her administrative remedies, and signed the settlement agreement on her behalf. These admissions of fact presented the jury with significantly more than a "mere scintilla" of evidence that the union’s conduct was "arbitrary, discriminatory or in bad faith." Any evidence the union presented at trial that showed its conduct was reasonable was therefore conflicting at best, which precluded the jury’s verdict from being overturned. Employer fault? The high court next rejected the union’s contention that the jury’s verdict was inconsistent and contrary to the law because "the employer [was] found not at fault," which means "the union is liable for nothing— it did not increase the damages caused by the employer’s wrongful conduct because the employer committed no wrong." This assertion was wrong for two reasons. First, the question whether the employee’s discrimination claim was time-barred was submitted to the jury. Therefore, it was possible for the jury to believe the employer discriminated against the employee, only to also find that the meritorious claim was time-barred. Second, although the union cited ample authority for the proposition that a union is liable only for increases in the employee’s damages caused by its refusal to process a meritorious grievance, the jury received no such damages instruction. Because the union failed to object to the jury instruction, it became the law of the case. Thus, the jury verdict was not contrary to the law.

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