Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 80-03321).

Robert B. Fitzpatrick, Washington, D.C., for appellant.

Mozart G. Ratner, Washington, D.C., for appellee.

Before ROBINSON, Chief Judge, TAMM, Circuit Judge, and GORDON,* Senior District Judge for the Western District of Kentucky.

Opinion for the Court filed by Senior District Judge JAMES F. GORDON.

This case presents the question whether an action alleging a breach of a collective bargaining agreement between an employer and a supervisory union can be based on local law or must be brought under Sec. 301(a) of the federal Labor Management Relations Act (LMRA), 29 U.S.C. Sec. 185(a) (1976). The appellant's decedent tried to maintain this suit as a diversity action that could be resolved under local contract law. The district court, however, held that the suit was preempted by Sec. 301(a) and dismissed the action. We affirm.

Albert Elkes left B'nai B'rith International (BBI) at the end of 1977 following a staff reassignment earlier that year which he declined to accept.1 In December, 1979, Elkes first asserted that the reassignment represented a constructive discharge and that he was entitled to severance pay under the provisions of a bargaining agreement between BBI and its staff association. The staff association was the exclusive bargaining agent for a unit that appellant alleges contained only supervisory and managerial workers.2

After BBI responded that his request was frivolous, Elkes sought to have the staff association arbitrate his grievance with BBI. The association's executive committee voted on June 3, 1980, against taking his grievance to arbitration. However, Elkes was told by letter that day that he could appeal the executive committee's refusal to the full membership of the association, pursuant to its constitution. Instead, Elkes again wrote BBI's president on June 6, 1980, asserting a right to present his grievance personally or proceed to arbitration. He repeated those contentions in a letter dated July 24, 1980, but was told over the phone on August 1, 1980, that BBI would not process his grievance further. On December 31, 1980,3 Elkes brought a breach of contract suit for $36,500, alleging that the action could be heard under the district court's diversity jurisdiction, and should be governed by local law.4

Initially, the district court granted a discovery request aimed at determining the precise composition of the association. Later, however, the court ruled that even if the association was composed entirely of supervisory and managerial workers, Sec. 301(a) preempted the action.5 The district court also indicated that had the suit been brought under Sec. 301(a), it would have had to be dismissed because of Elkes's failure to exhaust his grievance remedies.6

The appellant continues to plead, however, that Sec. 301(a) is inapplicable because it only pertains to agreements involving "a labor organization representing employees." This excludes the association's agreements, the appellant contends, because the association itself is allegedly composed only of supervisory and managerial workers, not statutory "employees." The appellant relies for his definition of "employees" on Sec. 2(3) of the LMRA, 29 U.S.C. Sec. 152(3), which provides that "[t]he term 'employee' ... shall not include ... any individual employed as a supervisor." That definition is apparently made applicable throughout the LMRA, including Sec. 301(a), by Sec. 501(3), 29 U.S.C. Sec. 142(3).7 Additionally, the LMRA has been held not to cover the labor activities of managerial workers, NLRB v. Bell Aerospace Co., 416 U.S. 267, 94 S. Ct. 1757, 40 L. Ed. 2d 134 (1974).

Our resolution of this case hinges on an understanding of what Congress meant when it enacted the supervisory exclusion in Sec. 2(3). The exclusion stems from the special problem that supervisory workers present in the collective bargaining setting, as discussed in Florida Power & Light Co. v. International Brotherhood of Electrical Workers, Local 641, 417 U.S. 790, 94 S. Ct. 2737, 41 L. Ed. 2d 477 (1974). On one hand, supervisors are customarily given authority by their employers to hire, fire, discipline and manage other employees, and are assumed to be acting in their employer's best interests. On the other hand, however, when supervisors organize--and particularly when they affiliate with unions composed of rank and file workers--they become subject to influence or control by labor representatives who will have different goals than the employers.

The resulting conflict in loyalties caused initial uncertainty over whether to include supervisors within the organizational and bargaining protections of the original National Labor Relations Act. Following the Supreme Court's decision to interpret the Act as covering supervisors in Packard Motor Car Co. v. NLRB, 330 U.S. 485, 67 S. Ct. 789, 91 L. Ed. 1040 (1947), Congress adopted Sec. 2(3) in 1947 to exclude supervisors from the rewritten LMRA.

Congress' solution was essentially one of providing the employer with an option. On the one hand, he is at liberty to demand absolute loyalty from his supervisory personnel by insisting, on pain of discharge, that they neither participate in, nor retain membership in, a labor union, see Beasley v. Food Fair of North Carolina, Inc., [416 U.S. 653, 94 S. Ct. 2023, 40 L. Ed. 2d 443 (1974) ]. Alternatively, an employer who wishes to do so can permit his supervisors to join or retain their membership in labor unions, resolving such conflicts as arise through the traditional procedures of collective bargaining.

Florida Power & Light, 417 U.S. at 812-13, 94 S.Ct. at 2748-49 (emphasis added).

The appellant argues that Sec. 2(3) extends to prevent supervisors' agreements from being enforceable under Sec. 301(a) as other union agreements are. That argument was first made over two decades ago, and initially was successful before a panel of this court.8 But for more than a dozen years now, district and appellate courts have uniformly concluded that Sec. 301 does apply to agreements involving labor organizations that contain supervisors, despite the apparent conflict with the statutory language, because "[t]he particular definition of 'employee' in Sec. 2(3) ... has nothing to do with Sec. 301(a) federal jurisdiction." District 2, Marine Engineers Beneficial Ass'n v. Grand Bassa Tankers, 663 F.2d 392, 398 n. 6 (2d Cir.1981).9

Some courts have reached this conclusion after reading the legislative history of the LMRA as expressly limiting Sec. 2(3)'s definition to a section of the statute that does not include Sec. 301.10 At the least, our own review suggests that Congress probably never considered the issue before us. There are at least two explanations for this. First, it apparently was thought that once the 1947 amendments took effect and removed any obligation for employers to bargain with supervisors, that few agreements would ever be negotiated and there would never be any occasion for Sec. 301(a) enforcement.11 Second and more significant, relatively little thought went into Sec. 301's scope because few people imagined that it would ever evolve into the profoundly important source of law it has come to be. Originally, the chief purpose of the national labor laws was simply to set forth the ground rules regulating the adversarial relationship between management and labor. Only in recent years has Sec. 301 been broadly interpreted to embody a "national labor policy" that seeks to promote grievance and arbitration procedures and encourage "private rather than judicial resolution of disputes arising over collective bargaining agreements." Clayton v. Automobile Workers, 451 U.S. 679, 689, 101 S. Ct. 2088, 2095, 68 L. Ed. 2d 538 (1981).

It is this larger role Sec. 301 has come to play that dooms appellant's statutory interpretation. Nothing about supervisors' conflicts of loyalty can justify treating their bargaining agreements differently from agreements negotiated by other employees.12 Instead, with federal labor policy and the LMRA itself13 now recognized as favoring private resolution of labor disputes, BBI's agreement must be treated like every other "collective-bargaining agreement [that] is much more than traditional common law employment at will. Rather, it is an agreement creating relationships and interests under the federal common law of labor policy." Bowen v. United States Postal Service, --- U.S. ----, ----, 103 S. Ct. 588, 594, 74 L. Ed. 2d 402 (1983).

Among the federal interests implicated by appellant's suit are concerns that bargaining agreements be enforceable and that grievance procedures be undergirded by judicial deference to the grievance process. The appellant's statutory interpretation would threaten both of these concerns, however. If this claim were adjudicated under local law, BBI's agreement might well be unenforceable or subject to widely varying local statutes and court interpretations.14 Even if the agreement were given effect, there would be no assurance that employees would be required to exhaust their grievance remedies in a timely fashion before turning to the courts.

In fact, appellant's suit vividly illustrates the problems with his argument. Elkes did not raise his grievance until two years after the events giving rise to his complaint. Even then, he did not pursue the grievance through all the channels adopted by his bargaining agent. Yet it has never been alleged that his agent should be liable for unfair representation. We conclude that the appellant cannot escape federal labor policy by trying to have this claim adjudicated under local law through our diversity jurisdiction. We hold that the staff association was a "labor organization representing employees" within the scope of Sec. 301(a), and we AFFIRM the district court's dismissal.