On March 1, 2012, the US Court of Appeals for the Sixth Circuit Court issues an opinion in Chapman v. UAW Local 1005. The key litigated issue was whether a unionized worker must exhaust internal union processes to appeal his union's decision not to file a grievance on his behalf before he can bring a hybrid lawsuit under Section 301 of the Labor Management Relations Act (LMRA) alleging his union breached its duty of fair representation (DFR) and his employer breached the applicable collective bargaining agreement (CBA).

Brandon Chapman was a temporary employee at General Motors (GM) who took a leave of absence from his position in 2007 to tour with his band. Chapman did not discuss the leave with GM management or a designated representative of the UAW Local 1005 (UAW), his union. Instead, he asked his stepfather, a UAW Committeeman if he would be allowed to take the leave, and the Committeeman spoke to a GM labor relations representative. The GM representative told the Committeeman that temporary employees are not allowed to take leaves of absence, but Chapman would be allowed to re-apply for future temporary positions. The Committeeman then told Chapman he was "good to go on vacation."

When Chapman returned from his absence, he did not apply directly with GM for a temporary position. The GM labor relations representative told the Committeeman that there were no open positions. Chapman chose not to file a grievance at that time even though he knew he could. Meanwhile, the UAW Shop Chairman told the Committeeman not to write a grievance for Chapman.

Chapman was re-hired as a temporary employee in 2008, and the UAW Shop Chairman informed him that the union did not file a grievance on his behalf, and did not intend to do so, because Chapman had no case to pursue.

Instead of appealing the Shop Chairman's decision through the union's internal appeal procedures, as is required by the UAW Constitution, Chapman brought a hybrid lawsuit under Section 301 of the LMRA (29 U.S.C. § 185) against GM and the UAW, alleging that:

The federal district court granted summary judgment for GM and the UAW. The court held that Chapman's claim against the UAW failed because he did not exhaust the internal union remedies as required by the UAW Constitution. Furthermore, Chapman could not litigate his breach of CBA claim against GM without prevailing on his DFR claim against the UAW.

Chapman appealed to the Sixth Circuit.

The Sixth Circuit accepted the case for en banc review and held that Chapman's lawsuit was barred because he was required to first exhaust the internal union appeal procedures established by the UAW Constitution.

The Sixth Circuit's opinion differentiated two types of remedies under labor law:

Contractual remedies are available in disputes between a worker and his employer regarding a CBA. Internal union remedies are available in disputes between a worker and the union that represents him. Both remedies are implicated in a hybrid Section 301 lawsuit for breach of CBA and DFR.

Each type of remedy has its own exhaustion doctrine. In Clayton v. UAW, the Supreme Court provided three factors for courts to apply in determining whether a worker must first exhaust an internal union appeals procedure before filing a hybrid Section 301 case for breach of CBA and DFR:

If any of these factors exists, the court may excuse the worker from exhausting internal union procedures before litigating his contractual claim.

To obtain contractual remedies in a hybrid Section 301 litigation for breach of CBA and DFR, the worker must exhaust the procedures under the applicable CBA before bringing suit (typically by having his union file a timely grievance about an adverse employment action covered under the CBA). However, an employee may be excused from exhausting his contractual remedies if he proves that the union failed in its duty of fair representation (see Vaca v. Sipes).

The Sixth Circuit held that Chapman did not establish any of the three Clayton factors, and he therefore was not excused from exhausting the internal union remedies. Chapman's hybrid litigation was accordingly barred for failure to exhaust internal remedies.

The Sixth Circuit also overruled Williams v. Molpus and Burkholder v. UAW, where it had held that a worker is excused from exhausting internal union remedies in a hybrid Section 301 lawsuit for breach of CBA and DFR if the union allegedly breached its DFR. The court found that it had erred in those cases by misapplying standards for excusing failures to exhaust contractual remedies and effectively excused employees' failures to exhaust internal union remedies.

Before Chapman, the Sixth Circuit conflated exhaustion of remedies doctrines and effectively permitted unionized employees who did not challenge their union's failure to file a grievance on their behalf under their union's rules, constitution or bylaws to sue both their union and employer whenever they had cognizable DFR and breach of CBA claims. Chapman restores the Clayton requirements for employees seeking to sue their unions and employers in the federal district courts in the Sixth Circuit, which includes courts in Kentucky, Michigan, Ohio and Tennessee. Employers defending hybrid Section 301 lawsuits for breach of CBA and DFR in the Sixth Circuit should, like employers in all other circuits, use discovery requests to investigate whether the employee bringing the cases has exhausted internal union remedies and satisfied the Clayton requirements.