author: Mr. Justice Stewart Mr. Justice Black, Mr. Justice Brennan,

text:
    NATIONAL EQUIPMENT RENTAL, LTD., v. SZUKHENT et al.
    No. 81.
    Argued November 20, 1963.
    —Decided January 6, 1964.

      Wilbur O. Silverman argued the cause and filed a brief for petitioner.

      Harry R. Schwartz argued the cause and filed a brief for respondents.

      David Hartfield, Jr., Allen F. Maulsby, Benjamin C. Milner III, Merrell E. Clark, Jr. and Henry L. King filed a brief for the Bankers Trust Co. et al., as amici curiae, urging reversal.
   Mr. Justice Stewart

delivered the opinion of the Court.

The Federal Rules of Civil Procedure provide that service of process upon an individual may be made “by delivering a copy of the summons and of the complaint to an agent authorized by appointment ... to receive service of process.” The petitioner is a corporation with its principal place of business in New York. It sued the respondents, residents of Michigan, in a New York federal court, claiming that the respondents had defaulted under a farm equipment lease. The only question now before us is whether the person upon whom the summons and complaint were served was “an agent authorized by appointment” to receive the same, so as to subject the respondents to the jurisdiction of the federal court in New York.

The respondents obtained certain farm equipment from the petitioner under a lease executed in 1961. The lease was on a printed form less than a page and a half in length, and consisted of 18 numbered paragraphs. The last numbered paragraph, appearing just above the respondents’ signatures and printed in the same type used in the remainder of the instrument, provided that “the Lessee hereby designates Florence Weinberg, 47-21 Forty-first Street, Long Island City, N. Y., as agent for the purpose of accepting service of any process within the State of New York.” The respondents were not acquainted with Florence Weinberg.

In 1962 the petitioner commenced the present action by filing in the federal court in New York a complaint which alleged that the respondents had failed to make any of the periodic payments specified by the lease. The Marshal delivered two copies of the summons and complaint to Florence Weinberg. That same day she mailed the summons and complaint to the respondents, together with a letter stating that the documents had been served upon her as the respondents’ agent for the purpose of accepting service of process in New York, in accordance with the agreement contained in the lease. The petitioner itself also notified the respondents by certified mail of the service of process upon Florence Weinberg.

Upon motion of the respondents, the District Court quashed service of the summons and complaint, holding that, although Florence Weinberg had promptly notified the respondents of the service of process and mailed copies of the summons and complaint to them, the lease agreement itself had not explicitly required her to do so, and there was therefore a “failure of the agency arrangement to achieve intrinsic and continuing reality.” 30 F. R. D. 3, 5. The Court of Appeals affirmed, 311 F. 2d 79, and we granted certiorari, 372 U. S. 974. For the reasons stated in this opinion, we have concluded that Florence Weinberg was “an agent authorized by appointment . . . to receive service of process,” and accordingly we reverse the judgment before us.

We need not and do not in this case reach the situation where no personal notice has been given to the defendant. Since the respondents did in fact receive complete and timely notice of the lawsuit pending against them, no due process claim has been made. The case before us is therefore quite different from cases where there was no actual notice, such as Schroeder v. City of New York, 371 U. S. 208; Walker v. Hutchinson City, 352 U. S. 112; and Mullane v. Central Hanover Tr. Co., 339 U. S. 306. Similarly, as the Court of Appeals recognized, this Court’s decision in Wuchter v. Pizzutti, 276 U. S. 13, is inapposite here. In that case a state nonresident motorist statute which failed to provide explicitly for communication of notice was held unconstitutional, despite the fact that notice had been given to the defendant in that particular case. Wuchter dealt with the limitations imposed by the Fourteenth Amendment upon a statutory scheme by which a State attempts to subject nonresident individuals to the jurisdiction of its courts. The question presented here, on the other hand, is whether a party to a private contract may appoint an agent to receive service of process within the meaning of Federal Rule of Civil Procedure 4 (d)(1), where the agent is not personally known to the party, and where the agent has not expressly undertaken to transmit notice to the party.

The purpose underlying the contractual provision here at issue seems clear. The clause was inserted by the petitioner and agreed to by the respondents in order to assure that any litigation under the lease should be conducted in the State of New York. The contract specifically provided that “This agreement shall be deemed to have been made in Nassau County, New York, regardless, of the order in which the signatures of the parties shall be affixed hereto, and shall' be interpreted, and the rights and liabilities of the parties here determined, in accordance with the laws of the State of New York.” And it is settled, as the courts below recognized, that parties to a contract may agree in advance to submit to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether. See, e. g., Kenny Construction Co. v. Allen, 248 F. 2d 656 (C. A. D. C. Cir. 1957); Bowles v. Schmitt & Co., Inc., 170 F. 2d 617 (C. A. 2d Cir. 1948); Gilbert v. Burnstine, 255 N. Y. 348, 174 N. E. 706 (1931).

Under well-settled general principles of the law of agency, Florence Weinberg’s prompt acceptance and transmittal to the respondents of the summons and complaint pursuant to the authorization was itself sufficient to validate the agency, even though there was no explicit previous promise on her part to do so. “The principal’s authorization may neither expressly nor impliedly request any expression of assent by the agent as a condition of the authority, and in such a case any exercise of power by the agent within the scope of the authorization, during the term for which it was given, or within a reasonable time if no fixed term was mentioned, will bind the principal.” 2 Williston on Contracts (3d ed. 1959), § 274.

We deal here with a Federal Rule, applicable to federal courts in all 50 States. But even if we were to assume that this uniform federal standard should give way to contrary local policies, there is no relevant concept of state law which would invalidate the agency here at issue. In Michigan, where the respondents reside, the statute which validates service of process under the circumstances present in this case contains no provision requiring that the appointed agent expressly undertake to notify the principal of the service of process. Similarly, New York law, which it was agreed should be applicable to the lease provisions, does not require any such express promise by the agent in order to create a valid agency for receipt of process. The New York statutory short form of general power of attorney, which specifically includes the power to accept service of process, is entirely silent as to any such requirement. Indeed, the identical contractual provision at issue here has been held by a New York court to create a valid agency for service of process under the law of that State. National Equipment Rental v. Graphic Art Designers, 36 Misc. 2d 442, 234 N. Y. S. 2d 61.

It is argued, finally, that the agency sought to be created in this case was invalid because Florence Weinberg may have had a conflict of interest. This argument is based upon the fact that she was not personally known to the respondents at the time of her appointment and upon a suggestion in the record that she may be related to an officer of the petitioner corporation. But such a contention ignores the narrowly limited nature of the agency here involved. Florence Weinberg was appointed the respondents’ agent for the single purpose of receiving service of process. An agent with authority so limited can in no meaningful sense be deemed to have had an interest antagonistic to the respondents, since both the petitioner and the respondents had an equal interest in assuring that, in the event of litigation, the latter be given that adequate and timely, notice which is a prerequisite to a valid judgment.

A different case would be presented if Florence Weinberg had not given prompt notice to the.respondents, for then the claim might well be made that her failure to do so had operated to invalidate the agency. We hold only that, prompt notice to the respondents having been given, Florence Weinberg was their “agent authorized by appointment” to receive process within the meaning of Federal Rule of Civil Procedure 4 (d)(1).

The judgment of the Court of Appeals is reversed and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Mr. Justice Black,

dissenting.

The petitioner, National Equipment Rental, Ltd., is a Delaware corporation with its principal place of business in greater New York City. From that location it does a nationwide equipment rental business. The respondents, Steve and Robert Szukhent, father and son farming in Michigan, leased from National two incubators for their farm, signing in Michigan a lease contract which- was a standard printed form obviously prepared by the New York company’s lawyers. Included in the 18 paragraphs of fine print was the following provision:

“. . . the Lessee hereby designates Florence Weinberg, 47-21 Forty-first Street, Long Island City, N. Y., as agent for the purpose of accepting service of any process within the State of New York.”

The New York company later brought this suit for breach of the lease in the United States District Court for the Eastern District of New York. Rule 4 (d) (1) of the Federal Rules of Civil Procedure authorizes service of process for suits in federal courts to be made on “an agent authorized by appointment or by law to receive service of process.” Process was served on Mrs. Weinberg as “agent” of the Michigan farmers. She mailed notice of this service to the Szukhents. A New York lawyer appeared especially for them and moved to quash the service on the ground that Mrs. Weinberg was not their agent but was in reality the agent of the New York company.

The record on the motion to quash shows that the Szukhents had never had any dealings with Mrs. Weinberg, their supposed agent. They had never met, seen, or heard of her. She did not sign the lease, was not a party to it, received no compensation from the Szukhents, and undertook no obligation to them. In fact, she was handpicked by the New York company to accept service of process in any suits that might thereafter be filed by the company. Only after this suit was brought was it reluctantly revealed that Mrs. Weinberg was in truth the wife of one of the company’s officers. The district judge, applying New York law to these facts, held that there had been no effective appointment of Mrs. Weinberg as agent of the Szukhents, that the service on her as their “agent” was therefore invalid, and that the service should be quashed. 30 F. R. D. 3 (D. C. E. D. N. Y.). The Court of Appeals, one judge dissenting, affirmed, agreeing that no valid agency had been created. 311 F. 2d 79 (C. A. 2d Cir.). This Court now reverses both courts below and holds that the contractual provision purporting to appoint Mrs. Weinberg as agent is valid and that service of process on her as agent was therefore valid and effective under Rule 4 (d) (1) as on an “agent authorized by appointment... to receive service of process.” I disagree with that holding, believing that (1) whether Mrs. Weinberg was a valid agent upon whom service could validly be effected under Rule 4 (d)(1) should be determined under New York law and that we should accept the holdings of the federal district judge and the Court of Appeals sitting in New York that under that State’s law the purported appointment of Mrs. Weinberg was invalid and ineffective; (2) if, however, Rule 4 (d)(1) is to be read as calling upon us to formulate a new federal definition of agency for purposes of service of process, I think our formulation should exclude Mrs. Weinberg from the category of an “agent authorized by appointment ... to receive service of process”; and (3) upholding service of process in this case raises serious questions as to whether these Michigan farmers have been denied due process of law in violation of the Fifth and Fourteenth Amendments.

I.

No federal statute has undertaken to regulate the sort of agency transaction here involved. There is only Rule 4 (d)(1), which says nothing more than that in federal courts personal jurisdiction may be obtained by service on an “agent.” The Rule does not attempt to define who is an “agent.” To me it is evident that the draftsmen of the Rules did not, by using the word “agent,” show any intention of throwing out the traditional body of state law and creating a new and different federal doctrine in this branch of the law of agency. Therefore, it is to the law of New York — the State where this action was brought in federal court, the place where the contract was deemed by the parties to have been made, and the State the law of which was specified as determining rights and liabilities under the contract — that we should turn to test the validity of the appointment.

I agree with the district judge that this agency is invalid under the laws of New York. The highest state court that has passed on the question has held that, because of New York statutes, the designation by a nonresident of New York of an agent to receive service of process is ineffective; the court, in denying an order for interpleader, held that only residents of New York can make such an appointment, and even then only in compliance with the terms of the controlling statute. Rosenthal v. United Transp. Co., 196 App. Div. 540, 188 N. Y. S. 154. Even the dissenting judge in the Court of Appeals in the present case acknowledged that the purported appointment of Mrs. Weinberg “would not subject the defendants to the jurisdiction of the courts of the State of New York.” The company cites three decisions of trial judges in two of New York’s 62 counties which have upheld service upon purported agents in circumstances like these. In fact, two of those cases, both decided in Nassau County, where the company does business, upheld service on this same Mrs. Weinberg as “agent” in suits brought for breach of contract by this same company, one against a defendant living in the distant State of California. But these trial courts did not even mention the Rosenthal case, decided by a higher court, and in fact cited no higher court opinions at all which dealt with the question here raised. In seeking to apply New York’s definition of “agent” we should follow the considered opinions of the highest appellate courts which have passed upon the question, not unexamined decisions of trial courts. In so doing, we see that under New York law this service of process is invalid. Also, we should accept the view of the question taken by the federal courts sitting in the State whose law is being applied unless we are shown “clearly and convincingly” that these courts erred. Here there is no showing that the Court of Appeals — where neither the majority nor the dissenter disputed the District Court’s view of New York law — has erred.

II.

If Rule 4 (d) (1) is to be read as requiring this Court to formulate new federal standards of agency to be resolved in each case as a federal question, rather than as leaving the question to state law, I think the standards we formulate should clearly and unequivocally denounce as invalid any alleged service of process on nonresidents based on purported agency contracts having no more substance than that naming Mrs. Weinberg.

A. In the first place, we should interpret the federal rule as contemplating a genuine agent, not a sham. Here the “agent,” Mrs. Weinberg, was unknown to respondents. She was chosen by the New York company, was under its supervision, and, indeed, was the wife of one of its officers — facts no one ever told these farmers. State courts in general quite properly refuse to uphold service of process on an agent who, though otherwise competent, has interests antagonistic to those of the person he is meant to represent. In Michigan, the place where the contract here involved was signed and where the machinery was delivered, the State Supreme Court has said that to hold otherwise would open “wide the door for the perpetration of fraud and maladministration of justice.” There is no reason for a federal rule to tolerate a less punctilious regard for fair dealing in a matter so very important to a person being sued. I cannot believe that Rule 4 (d)(1), which may under some circumstances be used to subject people to jurisdiction thousands of miles from home, was ever meant to bring a defendant into court by allowing service on an “agent” whose true loyalty is not to the person being sued but to the one bringing suit. The Canons of Ethics forbid a lawyer to serve conflicting parties, at least without express consent given after full disclosure. If we are to create a federal standard, I would hold a4 (d)(1) agent to a like duty. Furthermore, as the courts below pointed out, there was no provision in the contract assuring the defendants of notice of any action brought against them in New York, and no undertaking by their purported agent or anyone else to notify them. It is true that actual notice was given. But there is a prophylactic value, especially where contracts of this kind can in future cases be used to impose on a nonresident defendant, in requiring that the contract provide for notice in the first place. We have, on due process grounds, required as much of state statutes which declare a statutory agent for substituted service on nonresidents. Wuchter v. Pizzutti, 276 U. S. 13.

B. But even if this contract had named a disinterested agent and required that notice of service be given to the Szukhents, I think that any federal standards we formulate under Rule 4(d)(1) should invalidate purported service of process in the circumstances of cases like this one. To give effect to the clause about service of process in this standardized form contract amounts to a holding that when the Szukhents leased these incubators they then and there, long in advance of any existing justiciable dispute or controversy, effectively waived all objection to the jurisdiction of a court in a distant State the process of which could not otherwise reach them. Both the nature of the right given up and the nature of the contractual relation Here make such an application of the contract impossible to square with the context of American law in which Rule 4 (d)(1) was written. The right to have a case tried locally and be spared the likely injustice of having to litigate in a distant or burdensome forum is as ancient as the Magna Charta. States generally have refused to enforce agreements in notes purporting to consent to foreign jurisdiction along with consent to confession of judgment, sometimes because such provisions are outlawed by statutes and sometimes because they are outlawed by courts in .the absence of specific statutory prohibitions. In countless cases courts have refused to allow insurance companies to arrange that suits against them on their policies may be brought only at the home office of the company. And prior decisions of our own Court have gone to great lengths to avoid giving enforcement to such provisions. Compare National Exchange Bank v. Wiley, 195 U. S. 257; Grover & Baker Sewing Machine Co. v. Radcliffe, 137 U. S. 287.

C. Where one party, at its leisure and drawing upon expert legal advice, drafts a form contract, complete with waivers of rights and privileges by the other, it seems to me to defy common sense for this Court to formulate a federal rule designed to treat this as an agreement coolly negotiated and hammered out by equals. With respect to insurance contracts drawn this way this Court long ago said:

“The phraseology of contracts of insurance is that chosen by the insurer and the contract in fixed form is tendered to the prospective policy holder who is often without technical training, and who rarely accepts it with a lawyer at his elbow.” Aschenbrenner v. United States Fidelity & Guaranty Co., 292 U. S. 80, 84-85.

It is hardly likely that these Michigan farmers, hiring farm equipment, were in any position to dicker over what terms went into the contract they signed. Yet holding this service effective inevitably will mean that the Szukhents must go nearly a thousand miles to a strange city, hire New York counsel, pay witnesses to travel there, pay their own and their witnesses’ hotel bills, try to explain a dispute over a farm equipment lease to a New York judge or jury, and in other ways bear the burdens of litigation in a distant, and likely a strange, city. The company, of course, must have had this in mind when it put the clause in the contract. It doubtless hoped, by easing into its contract this innocent-looking provision for service of process in New York, to succeed in making it as burdensome, disadvantageous, and expensive as possible for lessees to contest actions brought against them. This Court, in applying the doctrine of jorum non con-veniens, has suggested that “a plaintiff sometimes is under temptation to resort to a strategy of forcing the trial at a most inconvenient place for an adversary.” Gulf Oil Corp. v. Gilbert, 330 U. S. 501, 507. What was there deemed to be a very unjust result is greatly aggravated, I think, by today’s holding that a man can, by a cleverly drafted form, be successfully inveigled into giving up in advance of any controversy his traditional right to be served with process and sued at home. Rule 4 (d)(1), designed in part to preserve the right to have a case tried in a convenient tribunal, should not be used to formulate federal standards of agency that defeat this purpose.

It should be understood that the effect of the Court’s holding is not simply to give courts sitting in New York jurisdiction over these Michigan farmers. It is also, as a practical matter, to guarantee that whenever the company wishes to sue someone who has contracted with it, it can, by force of this clause, confine all such suits to courts sitting in New York. This Court and others have frequently refused to hold valid a contract which, before any controversy has arisen, attempts to restrict jurisdiction to a single court or courts. See Doyle v. Continental Ins. Co., 94 U. S. 535; Insurance Co. v. Morse, 20 Wall. 445, 451; Nute v. Hamilton Mut. Ins. Co., 6 Gray (72 Mass.) 174; 6A Corbin, Contracts § 1445. Here this contract as effectively ousts the Michigan courts of jurisdiction as if it had said ¡30. Today’s holding disregards Michigan’s interest in supervising the protection of rights of its citizens who never leave the State but are sued by foreign companies with which they have done business. Cf. Travelers Health Assn. v. Virginia ex rel. State Corp. Comm’n, 339 U. S. 643; McGee v. International Life Ins. Co., 355 U. S. 220.

D. To formulate standards of agency under Rule 4 (d)(1) which allow a plaintiff with a form contract to extend a District Court’s service of process for suits on that contract anywhere in the country (or, presumably, the world) is to do something which Congress has never done. Years ago Mr. Justice Brandéis, speaking for the Court, emphasized that Congress had always been reluctant to grant power to Federal District Courts to serve process outside the territorial borders of the State in which a District Court sits, saying:

“[N]o act has come to our attention in which such power has been conferred in a proceeding in a circuit or district court where a private citizen is the sole defendant and where the plaintiff is at liberty to commence the suit in the district of which the defendant is an inhabitant or in which he can be found.” Robertson v. Railroad Labor Board, 268 U. S. 619, 624-625. (Footnotes omitted.)

This Court should reject any construction of Rule 4(d)(1) or formulation of federal standards under it to help powerful litigants to achieve by unbargained take-it-or-leave-it contracts what Congress has consistently refused to permit by legislation.

The end result of today’s holding is not difficult to foresee. Clauses like the one used against the Szuk-hents — clauses which companies have not inserted, I suspect, because they never dreamed a court would uphold them — will soon find their way into the “boilerplate” of everything from an equipment lease to a conditional sales contract. Today’s holding gives a green light to every large company in this country to contrive contracts which declare with force of law that when such a company wants to sue someone with whom it does business, that individual must go and try to defend himself in some place, no matter how distant, where big business enterprises are concentrated, like, for example, New York, Connecticut, or Illinois, or else suffer a default judgment. In this very case the Court holds that by this company’s carefully prepared contractual clause the Szukhents must, to avoid a judgment rendered without a fair and full hearing, travel hundreds of miles across the continent, probably crippling their defense and certainly depleting what savings they may have, to try to defend themselves in a court sitting in New York City. I simply cannot believe that Congress, when by its silence it let Rule 4(d)(1) go into effect, meant for that rule to be used as a means to achieve such a far-reaching, burdensome, and unjust result. Heretofore judicial good common sense has, on one ground or another, disregarded contractual provisions like this one, not encouraged them. It is a long trip from San Francisco — or from Honolulu or Anchorage — to New York, Boston, or Wilmington. And the trip can be very expensive, often costing more than it would simply to pay what is demanded. The very threat of such a suit can be used to force payment of alleged claims, even though they be wholly without merit. This fact will not be news to companies exerting their economic power to wangle such contracts. No statute and no rule requires this Court to place its imprimatur upon them. I would not.

III.

The Court’s holding that these Michigan residents are compelled to go to New York to defend themselves in a New York court brings sharply into focus constitutional questions as to whether they will thereby be denied due process of law in violation of the Fifth and Fourteenth Amendments. While implicit in much of the oral arguments and in the briefs, these questions have not been adequately discussed. The questions are serious and involve matters of both historical and practical importance. These things lead me to believe that this case should be set down for reargument on these constitutional questions. Moreover, this Court might, after such arguments, conclude that these constitutional questions are so substantial and weighty that the nonconstitutional issues should be decided in favor of the Michigan defendants, thereby making a constitutional decision unnecessary. While I would prefer to await more informative constitutional discussions before deciding these due process questions, the Court rules against a reargument. In this situation I am compelled now to reach, consider, and decide the constitutional questions. My view is that the Court’s holding denies the Szukhents due process of law for the following, among other, reasons.

It has been established constitutional doctrine since Pennoyer v. Neff, 96 U. S. 714, was decided in 1878, that a state court is without power to serve its process outside the State’s boundaries so as to compel a resident of another State against his will to appear as a defendant in a case where a personal judgment is sought against him. This rule means that an individual has a constitutional right not to be sued on such claims in the courts of any State except his own without his consent. The prime value of this constitutional right has not diminished since Pennoyer v. Neff was decided. Our States have increased from 38 to 50. Although improved methods of travel have increased its speed and ameliorated its discomforts, it can hardly be said that these almost miraculous improvements would make more palatable or constitutional now than in 1878 a system of law that would compel a man or woman from Hawaii, Alaska, or even Michigan to travel to New York to defend against civil lawsuits claiming a few hundred or thousand dollars growing out of an ordinary commercial contract.

It can of course be argued with plausibility that the Pennoyer constitutional rule has no applicability here because the process served on the Szukhents ran from a federal, not a state, court. But this case was m federal court solely because of the District Court’s diversity jurisdiction. And in the absence of any overriding constitutional or congressional requirements the rights of the parties were to be preserved there as they would have been preserved in state courts. Neither the Federal Constitution nor any federal statute requires that a person who could not constitutionally be compelled to submit himself to a state court’s jurisdiction forfeits that constitutional right because he is sued in a Federal District Court acting for a state court solely by reason of the happenstance of diversity jurisdiction. The constant aim of federal courts, at least since Erie R. Co. v. Tompkins, 304 U. S. 64, has been, so far as possible, to protect all the substantial rights of litigants in both courts alike. And surely the right of a person not to be dragged into the courts of a distant State to defend himself against a civil lawsuit cannot be dismissed as insubstantial. Happily, in considering this question we are not confronted with any congressional enactment designed to bring non-state residents into a Federal District Court passed pursuant to congressional power to establish a judicial system to hear federal questions under Article III of the Constitution, or its power to regulate commerce under Art. I, § 8, or any of the other constitutionally granted congressional powers; we are dealing only with its power to let federal courts try lawsuits when the litigants reside in different States. Whatever power Congress might have in these other areas' to extend a District Court’s power to serve process across state lines, such power does not, I think, provide sound argument to justify reliance upon diversity jurisdiction to destroy a man’s constitutional right to have his civil lawsuit tried in his own State. The protection of such a. right in cases growing out of local state lawsuits is the reason for and the heart of the Pen-noyer constitutional doctrine relevant here.

The Court relies on the printed provision of the contract as a consent of the Szukhents to be sued in New York, making the Pennoyer rule inapplicable. In effect the Court treats the provision as a waiver of the Szuk-hents’ constitutional right not to be compelled to go to a New York court to defend themselves against the company’s claims. This printed form provision buried in a multitude of words is too weak an imitation of a genuine agreement to be treated as a waiver of so important a constitutional safeguard as is the right to be sued at home. Waivers of constitutional rights to be effective, this Court has said, must be deliberately and understanding^ made and can be established only by clear, unequivocal, and unambiguous language. It strains credulity to suggest that these Michigan farmers ever read this contractual provision about Mrs. Weinberg and about “accepting service of any process within the State of New York.” And it exhausts credulity to think that thej or any other laymen reading these legalistic words would have known or even suspected that they amounted to an agreement of the Szukhents to let the company sue them in New York should any controversy arise. This Court should not permit valuable constitutional rights to be destroyed by any such sharp contractual practices. The idea that there was a knowing consent of the Szukhents to be sued in the courts of New York is no more than a fiction — not even an amiable one at that.

I would affirm the judgment.

Mr. Justice Brennan,

with whom The Chief Justice and Mr. Justice Goldberg join,

dissenting.

I would affirm. In my view, federal standards and not state law must define who is “an agent authorized by appointment” within the meaning of Rule 4 (d)(1). See Mississippi Pub. Corp. v. Murphree, 326 U. S. 438, 445-446; Bowles v. Schmitt & Co., 170 F. 2d 617, 620; 1 Barron and Holtzoff, Federal Practice (Wright rev. 1960), at 701. In formulating these standards I would, first, construe Rule 4 (d)(1) to deny validity to the appointment of a purported agent whose interests conflict with those of his supposed principal, see Hartsock v. Commodity Credit Corp., 10 F. R. D. 181, 183. Second, I would require that the appointment include an explicit condition that the agent after service transmit the process forthwith to the principal. Although our decision in Wuchter v. Pizzutti, 276 U. S. 13, dealt with the constitutionality of a state statute, the reasoning of that case is persuasive that, in fashioning a federal agency rule, we should engraft the same requirement upon Rule 4 (d)(1). Third, since the corporate plaintiff prepared the printed form contract, I would not hold the individual purchaser bound by the appointment without proof, in addition to his mere signature on the form, that the individual understandingly consented to be sued in a State not that of his residence. We must bear in mind what was said in United States v. Rumely, 345 U. S. 41, 44, that we must strive not to be “that ‘blind’ Court, against which Mr. Chief Justice Taft admonished in a famous passage, . . . that does not see what ‘[a] 11 others can see and understand.’ ” It offends common sense to treat a printed form which closes an installment sale as embodying terms to all of which the individual knowingly assented. The sales pitch aims solely at getting the signature on the form and wastes no time explaining or even mentioning the print. Before I would find that an individual purchaser has knowingly and intelligently consented to be sued in another State, I would require more proof of that fact than is provided by his mere signature on the form.

Since these standards were not satisfied in this case, the service of the summons and complaint was .properly quashed.

       Federal Rule of Civil Procedure 4 (d) provides, in pertinent part:
      “(d) Summons: Personal Service. The summons and complaint shall be served together. The plaintiff shall furnish the person making service with such copies as are necessary. Service shall be made as follows:
      “(1) Upon an individual other than an infant or an • incompetent person, by delivering a copy of the summons and of the complaint to him personally or by leaving copies thereof at his dwelling house or usual place of abode with some person of suitable age and discretion then residing therein or by delivering a copy of the summons and of the complaint to an agent authorized by appointment or by law to receive service of process.”

       No questions of subject matter jurisdiction or of venue are presented. Federal jurisdiction exists by reason of diversity of citizenship. 28 U. S. C. § 1332. Venue in the United States District Court for the Eastern District of New York has not been contested. 28 U. S. C. § 1391.

       The paragraph in its entirety read as follows:
      “This agreement shall be deemed to have been made in Nassau County, New York, regardless of the order in which the signatures of the parties shall be affixed hereto, and shall be interpreted, and the rights and liabilities of the parties here determined, in accordance with the laws of the State of New York; and the Lessee hereby designates Florence Weinberg, 47-21 Forty-first Street, Long Island City, N. Y., as agent for the purpose of accepting service of any process within the State of New York.”

       The complaint, summons, and covering letter were sent by certified mail, and the letter read as follows:
      “Gentlemen:
      “Please take notice that the enclosed Summons and Complaint was duly served upon me this day by the United States Marshal, as your agent for the purpose of accepting service of process within the State of New York, in accordance with your contract with National Equipment Rental, Ltd.
      “Very truly yours,
      “Florence Weinberg”

       Mich. Stat. Ann., 1962, § 27A.1930.

       McKinney’s N. Y. Laws, General Business Law, § 229 (6).

       McKinney’s N. Y. Laws, General Business Law, § 220.

       It is argued that the state court decisions upholding the agency designation here at issue would have been different if the case of Rosenthal v. United Transp. Co., 196 App. Div. 540, 188 N. Y. S. 154, had been brought to the attention of the courts. Rosenthal interpreted the forerunner of § 227 of the Civil Practice Act, Gilbert-Bliss’ N. Y. Civ. Prac., Vol. 3A, 1942, §227 (1963 Supp.), which creates a procedure whereby a resident of New York may appoint an agent for the receipt of process by designation of a person to receive service and the filing thereof with the County Clerk. The Rosenthal case is entirely inapposite, because § 227 clearly applies only to residents of New York who leave the State, and even as to them, the provision is permissive rather than exclusive. Phillips v. Garramone, 36 Misc. 2d 1041, 233 N. Y. S. 2d 842; Torre v. Grasso, 11 Misc. 2d 275, 173 N. Y. S. 2d 828.

       There is no allegation that Weinberg had any pecuniary interest in the subject matter of the litigation. Nor is the issue here the applicability of a statute which permits service on a foreign corporation by service on persons who are generally authorized to act as agents of the corporation, when the agent upon whom service is made has a personal interest in suppressing notice of service: see, e. g., John W. Masury & Son v. Lowther, 299 Mich. 516, 300 N. W. 866 (1941) (involving a garnishment proceeding in which service under such a statute was attempted upon that employee of the foreign corporation who had incurred the debt on which the suit was based, who therefore had a personal interest in concealing from his employer the fact of service, and who did not notify the employer that service had been made). See Hartsock v. Commodity Credit Corp., 10 F. R. D. 181, also involving a situation where the agent “sustains such a relation to plaintiff or the claim in suit as to make it to his interest to suppress the fact of service ...” 10 F. R. D., at 184.

       Both the District Court and the Court of Appeals also rested their decisions on the contract’s lack of provision for notice of the service of process.

       Of course, Congress would not lack power to regulate at least some aspects of contracts like this one. Cf. United States v. South-Eastern Underwriters Assn., 322 U. S. 533.

       This is not to suggest that a contractual stipulation as to what state law should govern would necessarily be binding on state courts which did not choose to recognize it, including the courts of Michigan, where the Szukhents lived, signed the lease contract, and received the leased property. See Watson v. Employers Liability Assurance Corp., 348 U. S. 66; see also Clay v. Sun Ins. Office Ltd., 363 U. S. 207, 213 (dissenting opinion); Order of United Commercial Travelers of America v. Wolfe, 331 U. S. 586, 625 (dissenting opinion).

       If New York would look in turn to the law of Michigan, the place where the contract was signed by the Szukhents and was to be performed, then we should do the same. Cf. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U. S. 487.

        National Equipment Rental, Ltd., v. Graphic Art Designers, Inc., 36 Misc. 2d 442, 234 N. Y. S. 2d 61 (Sup. Ct., Nassau County); National Equipment Rental, Ltd., v. Boright, N. Y. L. J., July 17, 1962, p. 8, col. 8 (Sup. Ct., Nassau County); Emerson Radio & Phonograph Corp. v. Eskind, 32 Misc. 2d 1038, 228 N. Y. S. 2d 841 (Sup. Ct., N. Y. County).

        Helvering v. Stuart, 317 U. S. 154, 164; see also United States v. Durham Lumber Co., 363 U. S. 522, 526-527; Propper v. Clark, 337 U. S. 472, 486-487.

       Since New York would not hold Mrs. Weinberg a valid agent to receive service of process, service cannot be upheld as authorized by that part of Rule 4 (d) (7) which validates service “in the manner prescribed by the law of the state.”

       See Szabo v. Keeshin Motor Express Co., 10 F. R. D. 275 (D. C. N. D. Ohio); Fleming v. Malouf, 7 F. R. D. 56 (D. C. W. D. N. Y.).

       Apparently the district judge asked the company to supply particulars of Mrs. Weinberg’s relationship to the company, but this information was never furnished. For all that appears, she may be a stockholder or director of the company.

       See cases collected in 72 C. J. S., Process § 50.

        John W. Masury & Son v. Lowther, 299 Mich. 516, 525, 300 N. W. 866, 870.

       Canon of Ethics 6.

       Magna Charta, cc. 17-19:
      "17. Common Pleas shall not follow our Court, but shall be held in any certain place.
      “18. Trials upon the Writs of Novel Disseisin, of Mort d’Ancestre (death of the ancestor), and Darrien Presentment (last presentation) shall not be taken but in their proper counties, and in this manner:— We, or our Chief Justiciary, if we are out of the kingdom, will send two Justiciaries into each county, four times in the year, who, with four Knights of each county, chosen by the county, shall hold the aforesaid assizes, within the county on the day, and at the place appointed.
      “19. And if the aforesaid assizes cannot be taken on the day of the county-court, let as many knights and freeholders, of those who were present at the county-court remain behind, as shall be sufficient to do justice, according to the great or less importance of the business.” Reprinted in S. Doc. No. 232, 66th Cong., 2d Sess.

        E. g., Ind. Stat., 1933, §2-2904; Mass. Gen. Laws, 1956, c. 231, § 13A.

        E. g., Farquhar & Co. v. Dehaven, 70 W. Va. 738, 75 S. E. 65; see also Hamilton v. Schoenberger, 47 Iowa 385.

        E. g., Nute v. Hamilton Mut. Ins. Co., 6 Gray (72 Mass.) 174; Slocum v. Western Assur. Co., 42 F. 235 (D. C. S. D. N. Y.); see cases collected in 56 A. L. R. 2d 300, 312-316,

       See also, e. g., Bisso v. Inland Waterways Corp., 349 U. S. 85, 90-91; Railroad Co. v. Lockwood, 17 Wall. 357, 379-382.

       Cf. Guaranty Trust Co. v. York, 326 U. S. 99.

       It may be that the Court intends its disclaimer of passing on venue of the New York Federal District Court to imply that the service on the Szukhents’ “agent” might not after all compel them to go to New York to defend themselves against a default judgment, should they prevail on the discretion of the judge in New York to grant them a transfer of venue under 28 U. S. C. § 1404 (a). If so, apart from disregarding the trouble and expense which defendants would undergo in appearing and answering the complaint in New York and presenting evidence in hope of obtaining a discretionary change of venue, the Court’s holding really would have no practical effect whatever. But the Court carefully refrains from holding that venue in New York could be successfully challenged, and consequently I must consider the statement in text to be correct.

        Johnson v. Zerbst, 304 U. S. 458, 464. See also, e. g., Fay v. Noia, 372 U. S. 391, 439; Emspak v. United States, 349 U. S. 190, 197-198; Aetna Ins. Co. v. Kennedy ex rel. Bogash, 301 U. S. 389, 393; Hodges v. Easton, 106 U. S. 408, 412.


source: Caselaw Access Project

author: Mr. Justice White Mr. Justice Douglas. Mr. Justice Goldberg, Mr. Justice Harlan,

license: Public Domain

text:
    HUMPHREY et al. v. MOORE et al.
    No. 17.
    Argued October 16, 1963.
    —Decided January 6, 1964.

      David Previant and Mozart O. Batner argued the cause for petitioners. With them on the briefs were H. Solomon Horen, William S. Zeman, Herbert S. Thatcher and Ralph H. Logan.

      John Y. Brown and Newell N. Fowler argued the cause and filed briefs for respondents.

      Together with No. 18, General Drivers, Warehousemen & Helpers, Local Union No. 89, v. Moore et al., also on certiorari to the same Court.

   Mr. Justice White

delivered the opinion of the Court.

The issue here is whether the Kentucky Court of Appeals properly enjoined implementation of the decision of a joint employer-employee committee purporting to settle certain grievances in accordance with the terms of a collective bargaining contract. The decision of the committee determined the relative seniority rights of the employees of two companies, Dealers Transport Company of Memphis, Tennessee, and E & L Transport Company of Detroit, Michigan. We are of the opinion that the Kentucky court erred and we reverse its judgment.

Part of the business of each of these companies was the transportation of new automobiles from the assembly plant of the Ford Motor Company in Louisville, Kentucky. In the face of declining business resulting from several factors, the two companies were informed by Ford that there was room for only one of them in the Louisville operation. After considering the matter for some time, the two companies made these arrangements: E & L would sell to Dealers its “secondary” authority out of Louisville, the purchase price to be a nominal sum roughly equal to the cost of effecting the transfer of authority; E & L would also sell to Dealers its authority to serve certain points in Mississippi and Louisiana; and Dealers would sell to E & L its initial authority out of Lorain, Ohio, along with certain equipment and terminal facilities. The purpose of these arrangements was to concentrate the transportation activities of E & L in the more northerly area and those of Dealers in the southern zone. The transfers were subject to the approval of regulatory agencies.

The employees of both Dealers and E & L were represented by the same union, General Drivers, Warehouse-men and Helpers, Local Union No. 89. Its president, Paul Priddy, as the result of inquiry from E & L by his assistant, understood that the transaction between the companies involved no trades, sales, or exchanges of properties but only a withdrawal by E & L at the direction of the Ford Motor Company. He consequently advised the E & L employees that their situation was precarious. When layoffs at E & L began three E & L employees filed grievances claiming that the seniority lists of Dealers and E & L should be “sandwiched” and the E & L employees be taken on at Dealers with the seniority they had enjoyed at E & L. The grievances were placed before the local joint committee, Priddy or his assistant meanwhile advising Dealers employees that they had “nothing to worry about” since E & L employees had no contract right to transfer under these circumstances.

The collective bargaining contract involved covered a multi-employer, multi-local union unit negotiated ,on behalf of the employers by Automobile Transporters Labor Division and on behalf of the unions by National Truck-away and Driveaway Conference. Almost identical contracts were executed by each company in the unit and by the appropriate local union. According to Art. 4, § 1 of the contract “seniority rights for employees shall prevail” and “any controversy over the employees’ standing on such lists shall be submitted to the joint grievance procedure. . . .” Section 5 of the same article, of central significance here, was as follows:

“In the event that the Employer absorbs the business of another private, contract or common carrier, or is a party to a merger of lines, the seniority of the employees absorbed or affected thereby shall be determined by mutual agreement between the Employer and the Unions involved. Any controversy with respect to such matter shall be submitted to the joint grievance procedure.”

Article 7 called for grievances to be first taken up between the employer and the local union and, if not settled, to be submitted to the local joint committee where the union and the employer were to have equal votes. Failing settlement by majority vote of the members of the local committee, the matter could be taken to the Automobile Transporters Joint Conference Committee upon which the employers and the unions in the overall bargaining unit had an equal number of representatives. Decisions of the Joint Conference Committee were to be “final and conclusive and binding upon the employer and the union, and the employees involved.” However, if the Joint Conference Committee was unable to reach a decision the matter was to be submitted to arbitration as provided in the contract.

Article 7 also provided that:

(d) “It is agreed that all matters pertaining to the interpretation of any provision of this Agreement, whether requested by the Employer or the Union, must be submitted to the full Committee of the Automobile Transporters Joint Conference Committee, which Committee, after listening to testimony on both sides, shall make a decision.”

Other provisions of the contract stated that it was “the intention of the parties to resolve all questions of interpretation by mutual agreement” and that the employer agreed “to be bound by all of the terms and provisions of this Agreement, and also agrees to be bound by the interpretations and enforcement of the Agreement.”

The grievances of the E & L employees were submitted directly to the local joint committee and endorsed “Deadlocked to Detroit for interpretation” over the signatures of the local union president and the Dealers representative on the committee. Later, however, the local union, having been more fully advised as to the nature of the transaction between the two companies, decided to recommend to the Joint Conference Committee that the seniority lists of the two companies be dovetailed and the E & L employees be employed at Dealers with seniority rights based upon those which they had enjoyed at E & L. The three shop stewards who represented the Dealers employees before the Joint Conference Committee meeting in Detroit were so advised by the union immediately prior to the opening of the hearing. After hearing from the company, the union and the stewards representing Dealers employees, the Joint Conference Committee thereupon determined that “in accordance with Article 4 and particularly sub-sections 4 and 5” of the agreement the employees of E & L and of Dealers should “be sandwiched in on master seniority boards using the presently constituted seniority lists and the dates contained therein . . . .”

Since E & L was an older company and most of its employees had more seniority than the Dealers employees, the decision entailed the layoff of a large number of Dealers employees to provide openings for the E & L drivers.

Respondent Moore, on behalf of himself and other Dealers employees, then brought this class action in a Kentucky state court praying for an injunction against the union and the company to prevent the decision of the Joint Conference Committee from being carried out. Damages were asked in an alternative count and certain E & L employees were added as defendants by amendment to the complaint. The complaint alleged that Dealers employees had relied upon the union to represent them, that the president of Local 89, Paul Priddy, assured Dealers employees that they had nothing to worry about and that precedent in the industry provided that when a new business is taken over, its employees do not displace the original employees of the acquiring company; it further alleged that Priddy had deliberately “deadlocked” the local joint committee and that the Dealers employees learned for the first time before the Joint Conference Committee in Detroit, that Priddy favored dovetailing the seniority lists. Priddy’s actions, the complaint went on, “in deceiving these plaintiffs as to his position left them without representation before the Joint Conference Committee.” The decision, according to the complaint, was “contrived, planned and brought about by Paul Priddy” who “has deceived and failed completely to represent said employees” and whose “false and deceitful action” and “connivance . . . with the employees of E & L” threatened the jobs of Dealers employees. The International union is said to have “conspired with and assisted the defendant, Local No. 89, and its president, Paul Priddy, in bringing about this result . . . .” The decision of the Joint Conference Committee was charged to be arbitrary and capricious, contrary to the existing practice in the industry and violative of the collective bargaining contract.

After hearing, the trial court denied a temporary and permanent injunction. The Court of Appeals of the Commonwealth of Kentucky reversed and granted a permanent injunction, two judges dissenting. 356 S. W. 2d 241. In the view of that court, Art. 4, § 5 could have no application to the circumstances of this case since it came into play only if the absorbing company agreed to hire the employees of the absorbed company. The clause was said to deal with seniority, not with initial employment. Therefore, it was said, the decision of the Joint Conference Committee was not binding because the question of employing E & L drivers was not “arbitrable” at all under this section. The Court of Appeals, however, went on to hold that even if it were otherwise, the decision could not stand since the situation involved antagonistic interests of two sets of employees represented by the same union advocate. The result was inadequate representation of the Dealers employees in a context where Dealers itself was essentially neutral. Against such a backdrop, the erroneous decision of the board became “arbitrary and violative of natural justice.” Kentucky cases were cited and relied upon. We granted both the petition filed by the E & L employees in No. 17 and the petition in No. 18, filed by the local union. 371 U. S. 966, 967.

I.

Since issues concerning the jurisdiction of the courts and the governing law are involved, it is well at the outset to elaborate upon the statement of the Kentucky court that this is an action to enforce a collective bargaining contract, an accurate observation as far as we are concerned.

First, Moore challenges the power of the parties and of the Joint Conference Committee to dovetail seniority lists of the two companies because there was no absorption here within the meaning of § 5 of Art. 4 and because, as the court below held, that section granted no authority to deal with jobs as well as seniority. His position is that neither the parties nor the committee has any power beyond that delegated to them by the precise terms of § 5. Since in his view the Joint Committee exceeded its power in making the decision it did, the settlement is said to be a nullity and his impending discharge a breach of contract.

Second, Moore claims the decision of the Committee was obtained by dishonest union conduct in breach of its duty of fair representation and that a decision so obtained cannot be relied upon as a valid excuse for his discharge under the contract. The undoubted broad authority of the union as exclusive bargaining agent in the negotiation and administration of a collective bargaining contract is accompanied by a responsibility of equal scope, the responsibility and duty of fair representation. Syres v. Oil Workers Union, 350 U. S. 892, reversing 223 F. 2d 739; Brotherhood of Railroad Trainmen v. Howard, 343 U. S. 768; Tunstall v. Brotherhood of Locomotive Firemen & Enginemen, 323 U. S. 210; Steele v. Louisville & N. R. Co., 323 U. S. 192. “By its selection as bargaining representative, it has become the agent of all the employees, charged with the responsibility of representing their interests fairly and impartially.” Wallace Corp. v. Labor Board, 323 U. S. 248, 255. The exclusive agent’s obligation “to represent all members of an appropriate unit requires [it] to make an honest effort to serve the interests of all of those members, without hostility to any . . .’’and its powers are “subject always to complete good faith and honesty of purpose in the exercise of its discretion.” Ford Motor Co. v. Huffman, 345 U. S. 330, 337-338.

In the complaint which Moore filed here, the union is said to have deceived the Dealers employees concerning their job and seniority rights, deceitfully connived with the E & L drivers and with the International union to deprive Moore and others of their employment rights and prevented the latter from having a fair hearing before the Joint Committee by espousing the cause of the rival group of drivers after having indicated that the interests of the men at Dealers would be protected by the union. These allegations are sufficient to charge a breach of duty by the union in the process of settling the grievances at issue under the collective bargaining agreement.

Both the local and international unions are charged with dishonesty, and one-half of the votes on the Joint Committee were cast by representatives of unions affiliated with the international. No fraud is charged against the employer; but except for the improper action of the union, which is said to have dominated and brought about the decision, it is alleged that Dealers would have agreed to retain its own employees. The fair inference from the complaint is that the employer considered the dispute a matter for the union to decide. Moreover, the award had not been implemented at the time of the filing of the complaint, which put Dealers on notice that the union was charged with dishonesty and a breach of duty in procuring the decision of the Joint Committee. In these circumstances, the allegations of the complaint, if proved, would effectively undermine the decision of the Joint Committee as a valid basis for Moore’s discharge.

For these reasons this action is one arising under § 301 of the Labor Management Relations Act and is a case controlled by federal law, Textile Workers Union v. Lincoln Mills, 353 U. S. 448, even though brought in the state court. Local 174, Teamsters v. Lucas Flour Co., 369 U. S. 95; Smith v. Evening News Assn., 371 U. S. 195. Although there are differing views on whether a violation of the duty of fair representation is an unfair labor practice under the Labor Management Relations Act, it is not necessary for us to resolve that difference here. Even if it is, or arguably may be, an unfair labor practice, the complaint here alleged that Moore’s discharge would violate the contract and was therefore within the cognizance of federal and state courts, Smith v. Evening News Assn., supra, subject, of course, to the applicable federal law.

We now come to the merits of this case.

II.

If we assume with Moore and the courts below that the Joint Conference Committee’s power was circumscribed by § 5 and that its interpretation of the section is open to court review, Moore’s cause is not measurably advanced. For in our opinion the section reasonably meant what the Joint Committee said or assumed it meant. There was an absorption here within the meaning' of the section and that section did deal with jobs as well as with seniority.

Prior to this transaction both E & L and Dealers were transporting new cars out of Louisville for the Ford Motor Company. Afterwards, only one company enjoyed this business, and clearly this was no unilateral withdrawal by E & L. There was an agreement between the companies, preceded by long negotiation. E & L’s authority to engage in the transportation of new cars out of Louisville was sold to Dealers. The business which E & L had done in that city was henceforth to be done by Dealers. While there was no sale of tangible assets at that location, the Joint Conference Committee reasonably concluded that there was an absorption by Dealers of the E & L business within the meaning of § 5 of the contract.

It was also permissible to conclude that § 5 dealt with employment as well as seniority. Mergers, sales of assets and absorptions are commonplace events. It is not unusual for collective bargaining agreements to deal with them, especially in the transportation industry where the same unions may represent the employees of both parties to the transaction. Following any of such events, the business of the one company will probably include the former business of the other; and the recurring question is whether it is the employees of the absorbed company or those of the acquiring company who are to have first call upon the available work at the latter concern. Jobs, as well as seniority, are at stake; and it was to solve just such problems that § 5 was designed. Its interpretation should be commensurate with its purposes.

Seniority has become of overriding importance, and one of its major functions is to determine who gets or who keeps an available job. Here § 5 provided for resolving the seniority of not only those employees who are “absorbed,” but all who were “affected” by the absorption. Certainly the transaction “affected” the E & L employees; and the seniority of these drivers, which the parties or the Joint Conference Committee could determine, was clearly seniority at Dealers, the company which had absorbed the E & L business. The parties very probably, therefore, intended the seniority granted an E & L employee at Dealers to carry the job with it, just as seniority usually would. If it did not and if Dealers unilaterally could determine whether to hire any E & L employee, it might decide to hire none, excluding E & L employees from any of the work which they had formerly done. Or if it did hire E & L employees to fill any additional jobs resulting from the absorption of the E & L business, it might select E & L employees for jobs without regard to length of service at E & L or it might insist on an agreement from the union to grant only such seniority as might suit the company. Section 5 would be effectively emasculated.

The power of the Joint Conference Committee over seniority gave it power over jobs. It was entitled under § 5 to integrate the seniority lists upon some rational basis, and its decision to integrate lists upon the basis of length of service at either company was neither unique nor arbitrary. On the contrary, it is a familiar and frequently equitable solution to the inevitably conflicting interests, which arise in the wake of a merger or an absorption such as occurred here. The Joint Conference Committee’s decision to dovetail seniority lists was a decision which § 5 empowered the committee to make.

Neither do we find adequate support in this record for the complaint’s attack upon the integrity of the union and of the procedures which led to the decision. Although the union at first advised the Dealers drivers that they had nothing to worry about but later supported the E & L employees before the Joint Conference Committee, there is no substantial evidence of fraud, deceitful action or dishonest conduct. Priddy’s early assurances to Dealers employees were not well founded, it is true; but Priddy was acting upon information then available to him, information received from the company which led him to think there was no trade or exchange involved, no “absorption” which might bring § 5 into play. Other sections of the contract, he thought, would protect the jobs of Moore and his fellow drivers. Consistent with this view, he also advised E & L employees that the situation appeared unfavorable for them. However, when he learned of the pending acquisition by Dealers of E & L operating authority in Louisville and of the involvement of other locations in the transaction, he considered the matter to be one for the Joint Committee. Ultimately he took the view that an absorption was involved, that § 5 did apply and that dovetailing seniority lists was the most equitable solution for all concerned. We find in this evidence insufficient proof of dishonesty or intentional misleading on the part of the union. And we do not understand the court below to have found otherwise.

The Kentucky court, however, made much of the antagonistic interests of the E & L and Dealers drivers, both groups being represented by the same union, whose president supported one group and opposed the other at the hearing before the Joint Conference Committee. But we are not ready to find a breach of the collective bargaining agent’s duty of fair representation in taking a good faith position contrary to that of some individuals whom it represents nor in supporting the position of one group of employees against that of another. In Ford Motor Co. v. Huffman, 345 U. S. 330, the Court found no breach of duty by the union in agreeing to an amendment of an existing collective bargaining contract, granting enhanced seniority to a particular group of employees and resulting in layoffs which otherwise would not have occurred. “Inevitably differences arise in the manner and degree to which the terms of any negotiated agreement affect individual employees and classes of employees. The mere existence of such differences does not make them invalid. The complete satisfaction of all who are represented is hardly to be expected. A wide range of reasonableness must be allowed' a statutory bargaining representative in serving the unit it represents, subject always to complete good faith and honesty of purpose in the exercise of its discretion.” Id., at 338. Just as a union must be free to sift out wholly frivolous grievances which would only clog the grievance process, so it must be free to take a position on the not so frivolous disputes. Nor should it be neutralized when the issue is chiefly between two sets of employees. Conflict between employees represented by the same union is a recurring fact. To remove or gag the union in these cases would surely weaken the collective bargaining and grievance processes.

As far as this record shows, the union took its position honestly, in good faith and without hostility or arbitrary discrimination. After Dealers absorbed the Louisville business of E & L, there were fewer jobs at Dealers than there were Dealers and E & L drivers. One group or the other was going to suffer. If any E & L drivers were to be hired at Dealers either they or the Dealers drivers would not have the seniority which they had previously enjoyed. Inevitably the absorption would hurt someone. By choosing to integrate seniority lists based upon length of service at either company, the union acted upon wholly relevant considerations, not upon capricious or arbitrary factors. The evidence shows no breach by the union of its duty of fair representation.

There is a remaining contention. Even though the union acted in good faith and was entitled to take the position it did, were the Dealers employees, if the union was going to oppose them, deprived of a fair hearing by having inadequate representation at the hearing? Dealers employees had notice of the hearing; they were obviously aware that they were locked in a struggle for jobs and seniority with the E & L drivers, and three stewards representing them went to the hearing at union expense and were given every opportunity to state their position. Thus the issue is in reality a narrow one. There was no substantial dispute about the facts concerning the nature of the transaction between the two companies. It was for the Joint Conference Committee initially to decide whether there was an “absorption” within the meaning of § 5 and, if so, whether seniority lists were to be integrated and the older employees of E & L given jobs at Dealers. The Dealers employees made no request to continue the hearing until they could secure further representation and have not yet suggested what they could have added to the hearing by way of facts or theory if they had been differently represented. The trial court found it “idle speculation to assume that the result would have been different had the matter been differently presented.” We agree.

Moore has not, therefore, proved his case. Neither the parties nor the Joint Committee exceeded their power under the contract and there was no fraud or breach of duty by the exclusive bargaining agent. The decision of the committee, reached after proceedings adequate under the agreement, is final and binding upon the parties, just as the contract says it is. Drivers Union v. Riss & Co., 372 U. S. 517.

The decision below is reversed and the cases are remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

Mr. Justice Douglas.

I agree for the reasons stated by my Brother Goldberg that this litigation was properly brought in the state court but on the merits I believe that no cause of action has been made out for the reasons stated by the Court.

Mr. Justice Goldberg,

with whom Mr. Justice Brennan joins,

concurring in the result.

I concur in the judgment and in the holding of the Court that since “Moore has not... proved his case ...,” the decision below must be reversed. Supra. I do not, however, agree that Moore stated a cause of action arising under § 301 (a) of the Labor Management Relations Act, 61 Stat. 156,29 U. S. C. § 185 (a). It is my view rather that Moore's claim must be treated as an individual employee’s action for a union’s breach of its duty of fair representation — a duty derived not from the collective bargaining contract but from the National Labor Relations Act, as amended, 61 Stat. 136, 29 U. S. C. § 141 et seg. See Syres v. Oil Workers Int’l Union, 350 U. S. 892, reversing 223 F. 2d 739; Brotherhood of Railroad Trainmen v. Howard, 343 U. S. 768; Tunstall v. Brotherhood of Locomotive Firemen & Enginemen, 323 U. S. 210; Steele v. Louisville & N. R. Co., 323 U. S. 192. Cf. International Association of Machinists v. Central Airlines, Inc., 372 U. S. 682.

The complaint does not expressly refer either to § 301 (a) of the Labor Management Relations Act or to the National Labor Relations Act as the source of the action. Since substance and not form must govern, however, we look to the allegations of the complaint and to the federal labor statutes to determine the nature of the claim.

The opinion of the Court correctly describes Moore’s complaint as alleging that the decision of the Joint Conference Committee dovetailing the seniority lists of the two companies violated Moore’s rights because: (1) the Joint Committee exceeded its powers under the existing collective bargaining contract in making its decision dovetailing seniority lists, and (2) the decision of the Committee was brought about by dishonest union conduct in breach of its duty of fair representation.

Neither ground, it seems to me, sustains an action under § 301 (a) of the L. M. R. A. A mutually acceptable grievance settlement between an employer and a union, which is what the decision of the Joint Committee was, cannot be challenged by an individual dissenting employee under § 301 (a) on the ground that the parties exceeded their contractual powers in making the settlement. It is true that this Court, in a series of decisions dealing with labor arbitrations, has recognized that the powers of an arbitrator arise from and are defined by the collective bargaining agreement. “For arbitration,” as the Court said in United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U. S. 574, 582, “is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Thus the existing labor contract is the touchstone of an arbitrator’s powers. But the power of the union and the employer jointly to settle a grievance dispute is not so limited. The parties are free by joint action to modify, amend, and supplement their original collective bargaining agreement. They are equally free, since “ [t] he grievance procedure is ... a part of the continuous collective bargaining process,” to settle grievances not falling within the scope of the contract. Id., at 581. In this case, for example, had the dispute gone to arbitration, the arbitrator would have been bound to apply the existing agreement and to determine whether the merger-absorption clause applied. However, even in the absence of such a clause, the contracting parties — the multiemployer unit and the union — were free to resolve the dispute by amending the contract to dovetail seniority lists or to achieve the same result by entering into a grievance settlement. The presence of the merger-absorption clause did not restrict the right of the parties to resolve their dispute by joint agreement applying, interpreting, or amending the contract. There are too many unforeseeable contingencies in a collective bargaining relationship to justify making the words of the contract the exclusive source of rights and duties.

These principles were applied in Ford Motor Co. v. Huffman, 345 U. S. 330. There the union and the employer during a collective bargaining agreement entered into a “supplementary agreement” providing seniority credit for the pre-employment military service of veterans, a type of seniority credit not granted in the original agreement. Id., at 334, n. 6. Huffman, on behalf of himself and other union members whose seniority was adversely affected, brought suit to have the supplementary provisions declared invalid and to obtain appropriate injunctive relief against the employer and the union. There was no doubt that Huffman and members of his class were injured as a result of the “supplementary agreement”; they were subjected to layoffs that would not have affected them if the seniority rankings had not been altered. Despite the change in rights under the prior agreement, this Court held that the existing labor agreement did not limit the power of the parties jointly, in the process of bargaining collectively, to make new and different contractual arrangements affecting seniority rights.

It necessarily follows from Huffman that a settlement óf a seniority dispute, deemed by the parties to be an interpretation of their agreement, not requiring an amendment, is plainly within their joint authority. Just as under the Huffman decision an amendment is not to be tested by whether it is within the existing contract, so a grievance settlement should not be tested by whether a court could agree with the parties’ interpretation. If collective bargaining is to remain a flexible process, the power to amend by agreement and the power to interpret by agreement must be coequal.

It is wholly inconsistent with this Court’s recognition that “[t]he grievance procedure is . . . a part of the continuous collective bargaining process,” United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U. S., at 581, to limit the parties’ power to settle grievances to the confines of the existing labor agreement, or to assert, as the Court now does, that an individual employee can claim that the collective bargaining contract is violated because the parties have made a grievance settlement going beyond the strict terms of the existing contract.

I turn now to the second basis of the complaint, viz., that the decision of the Joint Conference Committee was brought about by dishonest union conduct in breach of its duty of fair representation. In my view, such a claim of breach of the union’s duty of fair representation cannot properly be treated as a claim of breach of the collective bargaining contract supporting an action under § 301 (a). This is particularly apparent where, as here, “[n]o fraud is charged against the employer . . . .” Ante, at 343.

This does not mean that an individual employee is without a remedy for a union’s breach of its duty of fair representation. I read the decisions of this Court to hold that an individual employee has a right to a remedy against ,a union breaching its duty of fair representation — a duty derived not from the collective bargaining contract but implied from the union’s rights and responsibilities conferred by federal labor statutes. See Syres v. Oil Workers Int’l Union, supra (National Labor Relations Act) ; Brotherhood of Railroad Trainmen v. Howard, supra (Railway Labor Act); Tunstall v. Brotherhood of Locomotive Firemen & Enginemen, supra (Railway Labor Act); Steele v. Louisville & N. R. Co., supra (Railway Labor Act). Cf. International Association of Machinists v. Central Airlines, Inc., supra (Railway Labor Act). There is nothing to the contrary in Smith v. Evening News Assn., 371 U. S. 195. In that case the gravamen of the individual employee’s § 301 (a) action was the employer’s discharge of employees in violation of the express terms of the collective bargaining agreement. No breach of the union’s duty of fair representation was charged. To the contrary, the union supported the employee’s suit which was brought as an individual suit out of obeisance to what the union deemed to be the requirements of Association of Westinghouse Salaried Employees v. Westinghouse Electric Corp., 348 U. S. 437.

The remedy in a suit based upon a breach of the union’s duty of fair representation may be extended to the employer under appropriate circumstances. This was recognized in Steele v. Louisville & N. R. Co., supra, where the Court extended the remedy against the union to include injunctive relief against a contract between the employer and the union. There the employer willfully participated in the union’s breach of its duty of fair representation and that breach arose from discrimination based on race, a classification that was held “irrelevant” to a union’s statutory bargaining powers. The Court observed:

“[I]t is enough for present purposes to say that the statutory power to represent a craft and to make contracts as to wages, hours and working conditions does not include the authority to make among members of the craft discriminations not based on . . . relevant differences.” Id., at 203.

The Court distinguished classifications and differences which are “relevant to the authorized purposes of the contract . . . such as differences in seniority, the type of work performed, [and] the competence and skill with which it is performed, . . .” Ibid. Where the alleged breach of a union’s duty involves a differentiation based on a relevant classification — in this case seniority rankings following an amalgamation of employer units — and where the employer has not willfully participated in the alleged breach of the union’s duty, the collective bargaining agreement should not be open to the collateral attack of an individual employee merely because the union alone has failed in its duty of fair representation. We should not and, indeed, we need not strain, therefore, as the Court does, to convert a breach of the union’s duty to individual employees into a breach of the collective bargaining agreement between the employer and the union.

I do not agree with the Court that employer willfulness was claimed in this case by “[t]he fair inference from the complaint” that Dealers “considered the dispute a matter for the union to decide.” Ante, at 343. Nor can I agree that willfulness could be predicated on the rationale that since “the award had not been implemented at the time of the filing of the complaint,” Dealers was “put . . . on notice that the union was charged with dishonesty and a breach of duty in procuring the decision of the Joint Committee.” Ibid. Dealers may indeed have been neutral when the case was presented to the Joint Conference Committee but the Court overlooks that the employer-party to the collective bargaining contract was the multiemployer unit whose representatives — acting on behalf of both Dealers and E & L — fully participated in the Joint Committee’s decision resolving the dispute. Furthermore, an employer not willfully participating in union misconduct should not be restrained from putting a grievance settlement into effect merely by being “put ... on notice” that an individual employee has charged the union with dishonesty. Such a rule would penalize the honest employer and encourage groundless charges frustrating joint grievance settlements. Finally, it is difficult to conceive how mere notice to an employer of union dishonesty can transform the union’s breach of its duty of fair representation into a contractual violation by the employer.

In summary, then, for the reasons stated, I would treat Moore’s claim as a Syres-Steele type cause of action rather than as a § 301 (a) contract action. So considering it, I nevertheless conclude, as the Court does, that since “there was no fraud or breach of duty by the exclusive bargaining agent,” ante, at 351, Moore is not entitled to the relief sought.

I have written at some length on what may seem a narrow point. I have done so because of my conviction that in this Court’s fashioning of a federal law of collective bargaining, it is of the utmost importance that the law reflect the realities of industrial life and the nature of the collective bargaining process. We should not assume that doctrines evolved in other contexts will be equally well adapted to the collective bargaining process. Of course, we must protect the rights of the individual. It must not be forgotten, however, that many individual rights, such as the seniority rights involved in this case, in fact arise from the concerted exercise of the right to bargain collectively. Consequently, the understandable desire to protect the individual should not emasculate the right to bargain by placing undue restraints upon the contracting parties. Similarly, in safeguarding the individual against the misconduct of the bargaining agent, we must recognize that the employer's interests are inevitably involved whenever the labor contract is set aside in order to vindicate the individual’s right against the union. The employer’s interest should not be lightly denied where there are other remedies available to insure that a union will respect the rights of its constituents. Nor should trial-type hearing standards or conceptions of vested contractual rights be applied so as to hinder the employer and the union in their joint endeavor to adapt the collective bargaining relationship to the exigencies of economic life. I have deemed it necessary to state my views separately because I believe that the Court’s analysis in part runs contrary to these principles.

Mr. Justice Harlan,

concurring in part and dissenting in part.

I agree with the Court’s opinion and judgment insofar as it relates to the claim that the Joint Conference Committee exceeded its authority under the collective bargaining agreement. Although it is undoubtedly true as a general proposition that bargaining representatives have power to alter the terms of a contract with an employer, the challenge here is not to a purported exercise of such power but to the validity of a grievance settlement reached under proceedings allegedly not authorized by the terms of the collective agreement. Moreover, a committee with authority to settle grievances whose composition is different from that in the multiunion-multiemployer bargaining unit cannot be deemed to possess power to effect changes in the bargaining agreement. When it is alleged that the union itself has engaged or acquiesced in such a departure from the collective bargaining agreement, I can see no reason why an individually affected employee may not step into the shoes of the union and maintain a § 301 suit himself.

But insofar as petitioners’ claim rests upon alleged unfair union representation in the grievance proceeding, I agree with the views expressed in the concurring opinion of my Brother Goldberg {ante, 355-358) (except that I would expressly reserve the question of whether a suit of this nature would be maintainable under § 301 where it is alleged or proved that the employer was a party to the asserted unfair union representation). However, the conclusion that unilateral unfair union representation gives rise only to a cause of action for violation of a duty implicit in the National Labor delations Act brings one face-to-face with a further question: Does such a federal cause of action come within the play of the preemption doctrine, San Diego Trades Council v. Garmon, 359 U. S. 236, contrary to what would be the case were such a suit to lie under § 301, Smith v. Evening News Assn., 371 U. S. 195? Short of deciding that question, I do not think it would be appropriate to dispose of this case simply by saying that no unfair union representation was shown in this instance. For if there be preemption in this situation, Garmon would not only preclude state court jurisdiction but would also require this Court initially to defer to the primary jurisdiction of the Labor Board.

The preemption issue is a difficult and important one, carrying ramifications extending far beyond this particular case. It should not be decided without our having the benefit of the views of those charged with the administration of the labor laws. To that end I would reverse the judgment of the state court to the extent that it rests upon a holding that the Joint Conference Committee acted beyond the scope of its authority, set the case for reargument on the unfair representation issue, and invite the National Labor Relations Board to present its views by brief and oral argument on the preemption question. Cf. Retail Clerks International Assn. v. Schermerhorn, 373 U. S. 746, 757; 375 U. S. 96.

       The International union was also named as a party but service was quashed and the action dismissed as against it.

       The denial of a temporary injunction by the trial court was set aside and temporary injunction ordered by the Court of Appeals. Thereafter the trial court dismissed the complaint, but the Court of Appeals reversed and made the temporary injunction permanent.

       In its brief filed here Dealers does not support the decision of the Joint Committee. It suggests, rather, that the matter be finally settled by arbitration under the terms of the contract.

       Section 301 (a) of the L. M. R. A. is as follows:
      "Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.” 29 U. S. C. §185 (a).

       Compare, for example, Labor Board v. Local 294, International Bro. of Teamsters, 317 F. 2d 746 (C. A. 2d Cir.), with Miranda Fuel Co., 140 N. L. R. B. 181 (1962); enforcement denied, Labor Board v. Miranda Fuel Co., 326 F. 2d 172 (C. A. 2d Cir.). See also Cox, The Duty of Fair Representation, 2 Yillanova L. Rev. 151, 172-175.

       The union contended in the state courts that the jurisdiction of the state courts had been preempted by the federal statutes. The Kentucky Court of Appeals ruled otherwise and the union appears to have abandoned the view here, since it says, relying upon Ford Motor Co. v. Huffman, 345 U. S. 330, that individual employees “may undoubtedly maintain suits against their representative when the latter hostilely discriminates against them.”
      We note that in Syres v. Oil Workers International Union. 350 U. S. 892, individual employees sued the exclusive agent and the company to enjoin and declare void a collective bargaining agreement alleged to violate the duty of fair representation. Dismissal in the trial court was affirmed in the Court of Appeals. This Court reversed and ordered further proceedings in the trial court in the face of contentions made both in this Court and the lower courts that the employees should have brought their proceedings before the National Labor Relations Board. Cf. Cosmark v. Struthers Wells Corp., 54 L. R. R. M. 2333 (Pa. Oct. 17, 1963).
      The E & L employees, petitioners in No. 17, urge that even if the federal courts may entertain suits such as this, the state courts may not. Since in our view the complaint here charged a breach of contract, we find no merit in this position. It is clear that suits for violation of contracts between an employer and a labor organization may be brought in either state or federal courts. Dowd Box Co. v. Courtney, 368 U. S. 502.

       We need not consider the problem posed if § 5 had been omitted from the contract or if the parties had acted to amend the provision. The fact is that they purported to proceed under the section. They deadlocked at the local level and it was pursuant to § 5 that the matter was taken to the Joint Conference Committee which, under Art. 7, was to make a decision “after listening to testimony on both sides.” The committee expressly recited that its decision was in accordance with § 5 of the contract. Even in the absence of § 5, however, it would be necessary to deal with the alleged breach of the union’s duty of fair representation.

       We also put aside the union’s contention that Art. 7, § (d)— providing that all matters of interpretation of the agreement be submitted to the Joint Conference Committee — makes it inescapably clear that the committee had the power to decide that the transfer of operating authority was an absorption within the scope of § 5. But it is by no means clear that this provision in Art. 7 was intended to apply to interpretations of § 5, for the latter section by its own terms appears to limit the authority of the committee to disputes over seniority in the event of an absorption. Reconciliation of these two provisions, going to the power of the committee under the contract, itself presented an issue ultimately for the court, not the committee, to decide. Our view of the scope and applicability of § 5, infra, renders an accommodation of these two sections unnecessary.

       See cases cited in footnote 10, infra.

       See for example, Kent v. Civil Aeronautics Board, 204 F. 2d 263 (C. A. 2d Cir. 1953); Keller v. Teamsters Local 249, 43 CCH Labor Cases ¶ 17,119 (D. C. W. D. Pa. 1961); Pratt v. Wilson Trucking Co., 214 Ga. 385, 104 S. E. 2d 915 (1958); Walker v. Pennsylvania-Reading Seashore Lines, 142 N. J. Eq. 588, 61 A. 2d 453 (1948); In re Western Union Telegraph Co. and American Communications

        Association (Decisions of War Labor Board 1944) 14 L. R. R. M. 1623. Cf. Colbert v. Brotherhood of Railroad Trainmen, 206 F. 2d 9 (C. A. 9th Cir. 1953); Labor Board v. Wheland Co., 271 F. 2d 122 (C. A. 6th Cir. 1959); Hardcastle v. Western Greyhound Lines, 303 F. 2d 182 (C. A. 9th Cir. 1962); Fagan v. Pennsylvania R. Co., 173 F. Supp. 465 (D. C. M. D. Pa. 1959). "Integration of seniority lists should ordinarily be accomplished on the basis of each employee’s length of service with his original employer Kahn, Seniority Problems in Business Mergers, 8 Industrial and Labor Relations Review 361, 378.

       The Dealers employees rely upon a rider to the Dealers contract protecting the seniority of the employees at a terminal when another terminal of that company is closed down. The court below did not believe the rider dispositive, and we agree.

         E. g., United Steelworkers of America v. American Manufacturing Co., 363 U. S. 564; United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U. S. 574; United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U. S. 593.

       The Court states that “In its brief filed here Dealers does not support the decision of the Joint Committee.” See ante, at 343, n. 3. The Court overlooks, however, that Dealers throughout the litigation has acknowledged that it is a part of the multiemployer unit, which is the employer party to the collective bargaining agreement and that the employer representatives on the Joint Conference Committee acted honestly and properly on behalf of the employer members including Dealers. See infra, at 357.

       The contract in this case specifically envisioned such a result. Section 5 of Article 4 provided that:
      “In the event that the Employer absorbs the business of another private, contract or common carrier, or is a party to a merger of lines, the seniority of the employees absorbed or affected thereby shall be determined by mutual agreement between the Employer and the Unions involved. Any controversy with respect to such matter shall be submitted to the joint grievance procedure . . . .”
      Section 2 of Article 7 also provided that:
      “(d) It is agreed that all matters pertaining to the interpretation of any provision of this Agreement, whether requested by the Employer or the Union, must be submitted to the full Committee of the Automobile Transporters Joint Conference Committee, which Committee, after listening to testimony on both sides, shall make a decision.”
      Moreover, as the Court itself points out, other provisions stated that it was “the intention of the parties to resolve all questions of interpretation by mutual agreement” and that the employer agreed “to be bound by all of the terms and provisions of this Agreement, and also agrees to be bound by the interpretations and enforcement of the Agreement.” Ante, at 339.

       See note 2, supra.