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Smart Summary

Factual and Procedural Background

Appellant Rachel Dominguez brought suit against Kansas City Inns, Inc. (KC Inns), alleged successor to her former employer KP Management Corporation, and the Hotel, Motel, Restaurant and Miscellaneous Bartenders Union, Local 64. Dominguez claimed that KC Inns was liable under successor liability for KP Management's alleged sexually discriminatory employment practices during her employment as an extra banquet waitress at a Holiday Inn from October 1974 to January 1975. She also alleged retaliatory refusal of employment upon union referral due to grievances she filed, and contended that Local 64 participated in and condoned discriminatory and retaliatory actions, violating its duty of fair representation. The parties consented to trial before a United States Magistrate, who resolved all claims against the appellant. The district court adopted the Magistrate’s recommendations, and this appeal followed.

Legal Issues Presented

  1. Whether Kansas City Inns, Inc., as the successor owner of the Holiday Inn premises, assumed liability for past discriminatory employment practices by KP Management under the doctrine of successor liability, particularly when it acquired the property without knowledge of pending EEOC charges.
  2. Whether the Hotel, Motel, Restaurant and Miscellaneous Bartenders Union, Local 64, violated its duty of fair representation by participating in or condoning discriminatory and retaliatory employment practices against appellant.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
EEOC v. MacMilian Bloedel Containers, Inc., 503 F.2d 1086 (6th Cir. 1974) Successor liability requires knowledge of pending charges for liability to attach. Used to support the conclusion that KC Inns was not liable because it lacked knowledge of EEOC charges at acquisition.
Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973) Principles governing successor liability and labor law. Referenced to affirm the district court’s determination that KC Inns was not liable under successor liability.
NLRB v. Fabsteel Co., 587 F.2d 689 (5th Cir. 1979), cert. denied 442 U.S. 943 Successor liability and employer obligations in labor contexts. Supported the court’s conclusion regarding non-liability of KC Inns absent knowledge of discrimination claims.
United States Pipe and Foundry Co. v. NLRB, 398 F.2d 544 (5th Cir. 1968) Enforcement of successor liability principles. Used to reinforce the analysis on successor liability.
Donnell v. General Motors Corp., 576 F.2d 1292 (8th Cir. 1978) Union duty of fair representation standards. Applied to determine that the union was not liable for failing to recognize or act on alleged discrimination.
Street, Electric Railway and Motor Coach Employees v. Lockridge, 403 U.S. 274 (1971) Union’s duty of fair representation and investigatory obligations. Supported the conclusion that the union did not breach its duty by discontinuing referrals without further investigation.

Court's Reasoning and Analysis

The court first analyzed whether KC Inns could be held liable for KP Management’s past discriminatory practices under successor liability. Although KC Inns acquired the Holiday Inn premises and continued operations with substantially the same workforce and conditions, the court emphasized that KC Inns had no direct or indirect knowledge of appellant’s pending EEOC discrimination charges at the time of acquisition. This lack of knowledge, combined with the acquisition occurring through a foreclosure sale, led the court to affirm the district court’s finding that KC Inns was not liable.

Regarding the union’s liability, the court examined appellant’s numerous grievances filed with Local 64, noting that none referenced sexual discrimination either expressly or implicitly. The union’s attempts to process grievances were thwarted by appellant’s lack of cooperation. When the Holiday Inn requested that the union cease sending appellant for work referrals, the union complied. The court found no evidence that the union was aware of any retaliatory or discriminatory motive behind this refusal, nor that appellant brought such concerns to the union’s attention. Consequently, the court concluded that the union did not breach its duty of fair representation. The court also rejected appellant’s argument that the union was obligated to continue referrals pending investigation, citing the contractual right of hotels to select employees and the union’s discretion in referral decisions.

Holding and Implications

The judgment of the district court is affirmed.

The court held that KC Inns, having acquired the Holiday Inn without knowledge of discrimination charges and through a foreclosure sale, did not assume successor liability for past discriminatory practices. Additionally, the union did not violate its duty of fair representation as appellant failed to notify it of discrimination claims and did not cooperate with grievance processing. The direct effect is that appellant’s claims against both KC Inns and Local 64 were dismissed. The opinion sets no new precedent beyond reaffirming existing principles regarding successor liability and union duties in the context presented.

RACHEL DOMINGUEZ, APPELLANT, v. HOTEL, MOTEL, RESTAURANT MISCELLANEOUS BARTENDERS UNION, LOCAL # 64; HOLIDAY INN, APPELLEES.

PER CURIAM.

Appellant Rachel Dominguez brought an action against appellee Kansas City Inns, Inc. (KC Inns), the alleged successor of her former employer KP Management Corporation, and appellee Hotel, Motel, Restaurant and Miscellaneous Bartenders Local 64. She alleged that KC Inns was responsible, under the doctrine of successor liability, for sexually discriminatory employment practices by KP Management, the operator of a Holiday Inn at which appellant worked as an extra banquet waitress from October 16, 1974 to approximately January 10, 1975, and for her former employer's retaliatory refusal to accept her for employment upon referral by Local 64 because of numerous grievances she filed. Appellant also asserted that Local 64 had participated in and condoned the alleged discriminatory and retaliatory actions and that the union had violated its duty of fair representation.

The parties agreed to a trial before a United States Magistrate, who resolved all claims against appellant. The district court adopted the Magistrate's recommendations. We affirm.

I. Successor Liability

KC Inns acquired title to the Holiday Inn premises on July 28, 1976 at a foreclosure sale conducted by the trustee under a November 15, 1974 deed of trust issued by the Holiday Inn's owners, a limited partnership and an individual, to secure payment of a debt described in the deed. At this time, appellee was unaware of the sex discrimination charges filed by appellant with the Equal Employment Opportunity Commission (EEOC) on October 14, 1975.

Before KC Inns acquired the Holiday Inn, the holders of the note secured by the deed of trust sued and requested the appointment of a receiver. A Missouri court appointed a receiver on March 17, 1976, who operated the Holiday Inn until KC Inns acquired it at the public sale.

Appellant named only "Holiday Inn" and Local 64 in the charges. She did not name KC Inns or the owners of the Holiday Inn at any time.

After KC Inns acquired title, it continued to operate the Holiday Inn under the name "Holiday Inn" and to provide substantially the same services. Additionally, it used the same physical plant and equipment and substantially the same work force and low and mid-level supervisory personnel. We also note that the same jobs continued to exist under substantially the same working conditions.

Appellee, however, did not use KP Management to operate the Holiday Inn.

As to KC Inns, the question presented by this appeal is whether KC Inns assumed the liability of KP Management for any past discriminatory employment practices when it acquired title to the Holiday Inn premises at a public sale before it had notice of the EEOC charges filed by appellant. We conclude that it did not. Although there was substantial identity of business operations here, it is clear that at the time KC Inns acquired and began operation of the Holiday Inn, it had no direct or indirect knowledge of appellant's allegations of discrimination. See EEOC v. MacMilian Bloedel Containers, Inc., 503 F.2d 1086, 1090 (6th Cir. 1974). In the absence of any knowledge of the pending charges and in view of KC Inns' acquisition of the Holiday Inn at a foreclosure sale, we cannot say that in the circumstances of this case, the district court's determination that appellee was not liable was clearly erroneous. See Golden State Bottling Co. v. NLRB, 414 U.S. 168, 94 S.Ct. 414, 38 L.Ed.2d 388 (1973); NLRB v. Fabsteel Co., 587 F.2d 689 (5th Cir.), cert. denied, 442 U.S. 943, 99 S.Ct. 2887, 61 L.Ed.2d 313 (1979); EEOC v. MacMillan Bloedel Containers, Inc., supra; Perma Vinyl Corp., 164 N.L.R.B. 968 (1967), enforced sub nom. United States Pipe and Foundry Co. v. NLRB, 398 F.2d 544 (5th Cir. 1968).

II. Union Liability

Appellant was a member of appellee Local 64. To find employment as an extra waitress at banquets, she waited for a telephone call from Local 64 or went to the union referral hall to see if work was available. She was also free to personally seek work at various Kansas City hotels.

During the brief period appellant worked at the Holiday Inn she filed numerous grievances with Local 64 complaining about wages and working conditions. None of these grievances either expressly or impliedly referred to sexually discriminatory employment practices. Union officials repeatedly attempted to process appellant's grievances, but she stymied their efforts by refusing to cooperate.

Sometime in January, 1975 the Holiday Inn management informed appellant and Local 64 that it no longer wanted her to be referred for work at the Holiday Inn when extra banquet waitresses were needed. The union complied with this request. Appellant received a letter directly from the Holiday Inn stating: "The reasons we no longer wish you to be sent to us by the Union are: (1) You have filed many grievances against the Holiday Inn, none of which we have found to be valid. . . ." Union officials did not see a copy of this letter until the pretrial discovery proceedings. Appellant did not file a grievance with Local 64 concerning the Holiday Inn's refusal to accept her for work and did not complain in any way to the union about the Holiday Inn's action.

Addressing appellant's claim that Local 64 participated in and condoned the alleged discriminatory and retaliatory practices of the Holiday Inn, we find that the evidence established that appellant did nothing to call the union's attention to the Holiday Inn's retaliatory motive in refusing to accept her for work after January, 1975. Moreover, despite the long list of complaints contained in her grievances, the union still had no clue from either the language or context of the complaints that sex discrimination was the problem. In light of these facts, the district court's determination on this question was not clearly erroneous. See Donnell v. General Motors Corp., 576 F.2d 1292, 1300 (8th Cir. 1978).

We also conclude that the denial of relief on appellant's fair representation claim was not based on clearly erroneous findings or a misapprehension of the applicable law. On this point, appellant argues that despite the Holiday Inn's request that she not be referred for employment, Local 64 was obligated to continue to refer her until it had thoroughly investigated her grievances and determined that they were meritless. In countering the union's argument that it was required, under a contract between it and an association of Kansas City hotels, to discontinue referring appellant, counsel points to a letter from the Holiday Inn to Local 64 stating that the management preferred that appellant no longer be referred but would leave the matter to the union's discretion. After carefully examining the evidence and considering the parties' arguments, we conclude that the district court was not clearly erroneous in concluding that the union did not violate its duty of fair representation. See Street, Electric Railway and Motor Coach Employees v. Lockridge, 403 U.S. 274, 299, 91 S.Ct. 1909, 1924, 29 L.Ed.2d 473 (1971).

The relevant provision of the contract stated that the hotels had the exclusive right to "`select the employees [they] will hire.'"

Accordingly, the judgment of the district court is affirmed.

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DOMINGUEZ v. HOTEL, MOTEL, RESTAURANT MISC
(Apr 1, 1982)