Voilas v. General Motors Corp , 170 F.3d 367 ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
3-3-1999
Voilas v. General Motors Corp
Precedential or Non-Precedential:
Docket 98-5057
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"Voilas v. General Motors Corp" (1999). 1999 Decisions. Paper 55.
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Filed March 3, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-5057
GEORGE H. VOILAS; JOHN TRIPPA; WALT WENSKI;
MARIETTA BERENATO; JOHNNY M. DOLLSON; AUGUSTA
BUDD, INDIVIDUALLY AND ON BEHALF OF ALL OTHER
PERSONS SIMILARLY SITUATED; LOTTIE FERGUSON;
JOHN MELLODGE; SILVIA ALBARRAN; ROBERT L.
ALDRIDGE; CARMEN C. ALICEA; BEATRICE P. AMISON;
GERALD P. AMISON; SHIRLEY ANDERSON; JOSEPH R.
ANDREWS, JR.; MARY LOU ARCAMONE; MARY B.
AUSTIN; SAMUEL A. BADESSA; JAMES BAILEY;
RAYMOND BAYZATH; JOSE BEAUCHAMPS; MARY L.
BENJAMIN; GEORGE R. BERES; JOZEFA BIELSKI;
LEON R. BOYER; RICHARD M. BRACY; WILLIAM F.
BRADY, JR.; RICHARD BRIGGS; FREDDIE L. BRIMLEY;
HERBERT BROOKER; JAMES BROPHY; JAMES BROWNE;
VICTORIA BROWN; HECTOR G. BURGOS; JOHN E.
BURRES; ADELYN BURROUGHS; ROBERT C. CASE;
MARGARET CHAMBUC; PATRICIA F. CHARYAK; ELMONT
CHEESMAN; VINCENT J. CHESNEY; MATTEO CIPRIANO;
BENJAMIN COLE; THOMAS J. COLEMAN; GLORIA M.
COLLAZO; FRED M. COMO; DAVID M. COPE, SR.;
MARIA T. COWELL; WILLIAM R. CRAFT; PATRICIA
CRAMMER; JOANN CREA; LUZ M. CRUZ; EDWARD R.
CULVER; MARY L. CZAP; SOPHIE DARDZINSKI;
DOLORES M. DEGENNARO; MYRTLE DELBAUGH;
BARBARA DERRY; MARGAREE DILLARD; EDWARD
DOROBA; ANTHONY DOTO; ANATOL DOWBNIA; THOMAS
DOW; DAVID DOWNING, JR.; CHARLES P. DRAGOS;
MARY F. EALY; KURT EDER; BETTY EDDY; CUSTODIA
FEIJO; SYLVIA FERGUSON; HELEN FIGG; ETHEL M.
FINROCK; JUAN FLORES; RAFAEL GARCIA; MAJORIE O.
GARVIN; GEORGE E. GINDHART; DELORES R.
GLAZEWSKI; LESTER GLASCOE; LARRY G. GOODMAN;
RICHARD P. GRIMES; ELFRIEDA HALKO;
MURRAY HALPERN; GERALDINE B. HAMBLEY;
KATHERINE HAMILTON; BARBARA A. HARDEN;
CHARLOTTE HAYDEN; WILLIAM S. HILL; THOMAS J.
HORAN; RICHARD M. HUTCHINSON, JR.; SARAH C.
INNIS; JOSEPH J. JANECZEK; WILLIAM JEFFERSON;
ANDRENA JOHNSON; JOHN D. JOLLY; KATHLEEN E.
JONES; DOROTHEA E. KATO; DOLORES J. KELLEY;
DOROTHY M. KELLY; MARGARET M. KENNEDY;
BELA H. KISS; CARL H. KUHFELDT; SAM M. LAGARES;
RONALD LAWRENCE; CHONG SUE LEE; ARMAND
LORETUCCI, JR.; JACQUELINE MARINELLO;
DOLORES L. BEERS (nee MARLIN); MARGARET MASON;
THOMAS MATTEI; JUAN MEDINA; MARY R. MEROVICH;
FILLIPPI P. MICOCCI; EUGENE MINICH; HECTOR M.
MORALES; MINERVA MORALES; CORNELIUS MORROW;
MARY A. MURPHY; EDWARD J. NEMETH; CARMELA C.
NICKELS; STANLEY J. OLSCHEWSKI; RONALD J.
PALMIERI; GERALDINE PARRISH; JAMES PETRUCELLI;
NICHOLAS PFANN; GERTRUDE PINKNEY; FREYA E.
POLIZIANA; ALFREDA PRASAK; ROCHELLE PRITCHARD;
CARMEN QUILES; FREDERICK RAINER; EVELYN
RAMSEY; RAYMOND R. RAWA; STANISLAW REMBOWSKI;
ASTON RICHARDSON; ROBERT ROBINSON; RICHARD J.
ROGALINSKI; SATURNINO ROMAN; OLGA RUTH;
ANDREW J. SAMU; MINNIE SANDERS; ANTHONY SCOTT;
ERNEST SCOTT; JASPER T. SCOTT; JOSEPHINE
SECKINGER; JOSEPH B. SEROCK; MARGARET
SHELTON; THOMAS SEHUNUK; FREDERICK O. SHIPP,
SR.; JANET A. SIMPSON; GLADYS A. SMALLEY;
ELIZABETH J. SMITH; FRANK SMITH; FRANK E. SMITH;
DOLORES STEWART; ROBERT A. STOCKER;
BARBARA A. SYKES; IDA TAYLOR; ANTHONY TESTA;
GILBERT J. TILTON; ISAAC TONEY; EMANUEL J.
TRAMONTANA; EVELYN TREIBLY; EMMA M. TWYMAN;
KATHERINE VANDERBILT; ELIZABETH O. VANDEWATER;
JAMES L. VANDEWATER; PATRICIA A. VELEZ;
ROBERT F. WALKER; MARIE A. WALSH; JOHN WALTER;
LORETTA WASHINGTON; JOHN WELLS; JAMES B.
WHEELER; GLADYS WILLIAMS; MARGARET M.
WILLIAMS; ROSE MARIE WINROW; GEORGE M.
WOODWARD, JR.; BONNIE L. WRIGHT; FRANK PRASAK;
BENJAMIN ISOM; MICHAEL SEBASTO; WALTER LOMAX;
2
JOHN BLACK; HUGH DANIELS; KARL DEIBLER; JAMES
DUNCAN; MINERVA MONTERO; ALICEA QUINONES;
FRANK TUCCILLO; ROSCOE WRIGHT; AND
HANK WEINMAN
v.
GENERAL MOTORS CORPORATION; INLAND FISHER
GUIDE PLANT, A DIVISION OF GENERAL MOTORS
CORPORATION; LOCAL #731 INTERNATIONAL UNION,
UNITED AUTOMOBILE AEROSPACE AND AGRICULTURAL
IMPLEMENT WORKERS OF AMERICA; UNITED
AUTOMOBILE AEROSPACE AND AGRICULTURAL
IMPLEMENT WORKERS OF AMERICA
(D.C. Civil No. 95-487)
GEORGE VOILAS; JOHN TRIPPA; WALTER WENSKI;
MARIETTA BERENATO; JOHNNY M. DOLLSON; AUGUSTA
BUDD, individually and on behalf of all other persons
similarly situated
v.
LOCAL #731 INTERNATIONAL UNION, UNITED
AUTOMOBILE AEROSPACE AND AGRICULTURAL
IMPLEMENT WORKERS OF AMERICA
UNITED AUTOMOBILE AEROSPACE AND AGRICULTURAL
IMPLEMENT WORKERS OF AMERICA, a labor
organization
(D.C. Civil No. 95-2960)
GENERAL MOTORS CORPORATION,
Appellant
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Nos. 95-cv-00487 & 95-cv-02960)
(District Judge: Hon. Garrett E. Brown, Jr.)
Argued: October 29, 1998
3
Before: SLOVITER, GARTH and MAGILL,*
Circuit Judges
(Filed March 3, 1999)
James J. Crowley, Jr. (Argued)
Linda B. Celauro
Kathryn A. Korger
Carpenter, Bennett & Morrissey
Newark, N.J. 07102
Attorneys for Appellant
H. Thomas Hunt, III (Argued)
Anthony L. Marchetti, Jr.
Hunt & Scaramella, P.C.
Cherry Hill, N.J. 08002
Jerald R. Cureton
Michael J. Wietrzychowski
Cureton, Caplan & Clark, P.C.
Mt. Laurel, N.J. 08054
Attorneys for Appellees
OPINION OF THE COURT
SLOVITER, Circuit Judge.
INTRODUCTION
General Motors Corporation (GM) filed this interlocutory
appeal, contending that the action brought against it is
preempted under the federal labor laws. The action was
filed by former GM employees who allege that GM
fraudulently induced them to accept early retirement. After
the District Court denied GM's motion for summary
judgment, GM sought, and received, certification of two
issues for interlocutory appeal: (1) whether the plaintiffs'
_________________________________________________________________
*The Honorable Frank J. Magill, of the United States Court of Appeals for
the Eighth Circuit, sitting by designation.
4
fraud claims are preempted by section 301 of the Labor
Management Relations Act (LMRA), and (2) whether the
claims are preempted under sections 7 and 8 of the
National Labor Relations Act (NLRA).
I.
BACKGROUND
The operative facts are, for the most part, undisputed. On
December 3, 1992, GM issued a press release announcing
that several of its plants were slated for closure by the end
of the fourth quarter of 1993. Among those plants was the
Inland Fisher Guide Division factory in Trenton, New
Jersey. The employees at the Trenton plant were
represented by Local # 731 of the United Automobile
Aerospace and Agricultural Implement Workers of America
Union (UAW), and, at all relevant times, were covered by a
collective bargaining agreement between GM and the UAW.
On December 14, 1992, shortly after GM's announcement
of the anticipated plant closures, GM and the UAW reached
an agreement, denominated as the Special Acceleration
Attrition Agreement (SAAA), under which employees over
the age of 50 who had more than 10 years of service with
the company could take an early retirement package. The
SAAA program was available only until March 1, 1993, a
period of slightly more than two months. GM insists that,
despite the temporal proximity of the announced plant
closings and the agreement establishing the SAAA, the
negotiation of the SAAA was unrelated to the announced
plant closures, a proposition that plaintiffs do not appear to
dispute.
On December 23, 1992, Terry Marquis, the manager of
the Trenton plant, issued a newsletter to the plant's
employees confirming that the plant would be closed and
advising the employees to disregard any rumors to the
contrary. The newsletter stated, in relevant part:
Believe me when I say that all talk about potentially
keeping Trenton open is false optimism originating
right from this plant. No one at our divisional executive
level is actively working on a scenario that could
5
possibly keep Trenton open. . . . I know I'm being
blunt, but I know there are many people making
difficult decisions regarding retirement. I would not
want any rumors influencing those decisions. The
worst thing anyone could do would be to turn down
one of the best mutual retirement programs available
because of a rumor and then later lose what is
available when the plant closes.
App. at 1109. A February 9, 1993 newsletter, also authored
by Marquis, emphatically reiterated that the plant was
going to be closed. In the newsletter, Marquis stated, "Let
me leave no doubt -- the plant is closing. Many people take
the absence of visible movement of jobs, tools, and
equipment as a sign that something is up. Not so!" App. at
1203.
Nearly 200 of the employees at the Trenton plant
accepted the SAAA early retirement package before the
March 1, 1993 deadline. On March 3, 1993, GM announced
plans to pursue the sale of the plant as a going concern as
a possible alternative to closure. In the course of the
following year, GM negotiated with several companies, but
no agreement was reached. In May 1994, GM approved a
plan--drafted by a joint labor-management committee--to
keep the Trenton plant open.
Six of the GM Trenton employees who accepted the SAAA
package filed this suit against GM on January 31, 1995 in
federal district court. Plaintiffs asserted three state-law
claims: fraud, negligent misrepresentation, and age
discrimination. Plaintiffs also filed an action in the same
court on June 21, 1995 against Local # 731 and against the
UAW (collectively "the Union"), alleging breach of the duty
of fair representation. Both suits were filed by plaintiffs on
behalf of themselves and a putative class of former Trenton
workers. The District Court consolidated the two actions,
later dismissed the age discrimination claim against GM,
and thereafter denied plaintiffs' motion for class
certification in the GM action. However, the court permitted
amendments adding 185 individual plaintiffs.
Plaintiffs then filed an amended two-count complaint.
Count one is directed at GM and alleges fraud; count two
6
is against the Union and alleges a breach of the duty of fair
representation. The complaint alleges that from December
3, 1992 to March 2, 1993--the period during which the
early retirement option was available--GM falsely
represented to the Trenton employees that the plant would
close and that no efforts were being made to keep the plant
open, when in fact the company was actively seeking to sell
the factory as a going concern. GM knowingly made these
false representations, the complaint alleges, to induce the
employees to take the early retirement package (thereby
presumably making the plant more attractive to potential
buyers). The complaint alleges that the 191 plaintiffs relied
on GM's representations to their detriment by giving up
their jobs for a retirement package that they would not
have accepted if they had known that there was a
possibility of the plant's staying open. GM and the Union
defendants moved for summary judgment.
The District Court granted summary judgment in favor of
the Union, and that issue is not before us. At the same
time, it denied GM's motion for summary judgment, ruling
that the fraud claim was not preempted by either the LMRA
or the NLRA and that, on the basis of the record evidence,
a reasonable jury could conclude that the plaintiffs satisfied
the elements of common-law fraud under New Jersey law.
At GM's request, the court certified and we accepted two
issues for interlocutory appeal under 28 U.S.C. S 1292(b):
whether plaintiffs' fraud claim against GM is preempted by
(1) section 301 of the LMRA, or (2) sections 7 and 8 of the
NLRA under the principles of so-called "Garmon
preemption." Our standard of review is plenary. See Travitz
v. Northeast Dep't. ILGWU Health and Welfare Fund, 13
F.3d 704, 708 (3d Cir. 1994).
II.
DISCUSSION
The District Court's certification order accurately frames
the issues:
(1) whether plaintiffs' fraud claim is preempted by
S 301 of the Labor-Management Relations Act ("LMRA"),
7
29 U.S.C. S 185, because resolution of this claim is
substantially dependent upon analysis of the terms of
the GM-UAW collective bargaining agreements; [and]
(2) whether plaintiffs' fraud claim is preempted by SS 7
and 8 of the National Labor Relations Act ("NLRA"),
particularly the Garmon preemption doctrine[.]
Voilas v. General Motors Corp., Nos. 95-487, 95-2960, slip
op. at 2 (D.N.J. Sept. 2, 1997). We address these issues in
turn.
A.
Section 301 Preemption
GM argues that plaintiffs' fraud claim runs afoul of the
preemption doctrine that has developed around section 301
of the LMRA, 29 U.S.C. S 185. This is so, argues GM,
because resolution of plaintiffs' fraud claims would require
analysis and interpretation of collective bargaining
agreements between the UAW and GM, an undertaking not
permitted by the LMRA preemption doctrine.
Section 301(a) of the LMRA states, in relevant part:
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. S 185(a).
The Supreme Court, in Textile Workers Union of America
v. Lincoln Mills, 353 U.S. 448, 455-56 (1957), made clear
that this provision is not merely jurisdictional, but is also
one that calls on the federal courts to create a uniform
federal common law of collective bargaining, with the
primacy of arbitral resolution of industrial disputes as its
centerpiece. Accordingly, the Court has held that state laws
that might produce differing interpretations of the parties'
8
obligations under a collective bargaining agreement are
preempted. See Local 174, Teamsters of Am. v. Lucas Flour
Co., 369 U.S. 95, 103-04 (1962). The Lucas Flour Court
explained the particular need for uniformity under section
301 thus:
The possibility that individual contract terms might
have different meanings under state and federal law
would inevitably exert a disruptive influence upon both
the negotiation and administration of collective
agreements. Because neither party could be certain of
the rights which it had obtained or conceded, the
process of negotiating an agreement would be made
immeasurably more difficult by the necessity of trying
to formulate contract provisions in such a way as to
contain the same meaning under two or more systems
of law which might someday be invoked in enforcing
the contract.
Id. at 103.
The jurisprudence of preemption of state-law claims
under section 301 thereafter evolved in a series of Supreme
Court cases decided from 1985 to 1994. The standard for
determining when a state claim is preempted was first
articulated in Allis-Chalmers Corp. v. Lueck, 471 U.S. 202(1985). In that case, an employee, who had suffered an
injury that qualified him for disability benefits under his
collective bargaining agreement, filed a tort claim against
his employer for bad-faith processing of an insurance claim
under a Wisconsin bad-faith tort statute. He alleged that
the employer had harassed him for filing the claim and had
directed the insurer to cease making payments to him. The
Supreme Court found the claim preempted. In so doing, it
stressed that the mere characterization of the claim as
sounding in tort rather than contract did not bar the
operation of section 301 preemption and reasoned that
preemption of the employee's claim was necessary in order
to avoid "allow[ing] parties to evade the requirements of
S 301 by relabeling their contract claims as claims for
tortious breach of contract." Id. at 211.
The Allis-Chalmers Court articulated the standard for
preemption as follows: "[W]hen resolution of a state-law
9
claim is substantially dependent upon analysis of the terms
of an agreement made between the parties in a labor
contract, that claim must either be treated as a S 301 claim
or dismissed as pre-empted . . . ." Id. at 220 (citation
omitted). Applying this standard, the Court concluded that
in that particular case "[t]he duties imposed and rights
established through the state tort . . . derive from the rights
and obligations established by the [collective bargaining]
contract," and that, consequently, resolution of the issue
would "inevitably . . . involve contract interpretation." Id. at
217-18.
The Court reiterated this standard two years later in
Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987), where, in
contrast to Allis-Chalmers, the Court concluded that there
was no preemption of employees' state law claims. The
employees had filed suit in state court against Caterpillar,
alleging a state law claim of breach of their individual
contracts with the employer based on its representations
that "they could look forward to indefinite and lasting
employment" and that "they could count on the corporation
to take care of them." Id. at 388 (citation omitted).
Caterpillar removed the action to federal court, relying on
the doctrine of "complete preemption." The Supreme Court
concluded that the claims did not arise under federal law,
that the lawsuit was not preempted, and that therefore it
was improperly removed. The Court stated:
Respondents allege that Caterpillar has entered into
and breached individual employment contracts with
them. Section 301 says nothing about the content or
validity of individual employment contracts. It is true
that respondents, bargaining unit members at the time
of the plant closing, possessed substantial rights under
the collective agreement, and could have brought suit
under S 301. As masters of the complaint, however,
they chose not to do so.
Moreover, . . . respondents' complaint is not
substantially dependent upon interpretation of the
collective-bargaining agreement. It does not rely upon
the collective agreement indirectly, nor does it address
the relationship between the individual contracts and
the collective agreement.
10
Id. at 394-95. Thus, under Caterpillar, employees have the
option of vindicating their interests by means of either a
section 301 action or an action brought under state law, as
long as the state-law action as pleaded does not require
interpretation of the collective bargaining contract.
The Court further elaborated the principles governing
section 301 analysis in Lingle v. Norge Division of Magic
Chef, Inc., 486 U.S. 399 (1987). In Lingle, the employee filed
suit against her employer in state court, alleging retaliatory
discharge for filing a workers' compensation claim, a tort
recognized by the Illinois courts. The employer removed the
action to federal court, and then was successful in moving
to dismiss on the ground of preemption. The Supreme
Court disagreed, holding that the claim was not preempted.
The Court reasoned that the elements of the relevant cause
of action--discharge or threats of discharge coupled with
intent to deter or interfere with the exercise of rights under
the worker's compensation law--did not implicate the
collective bargaining agreement. It stated, "Each of these
purely factual questions pertains to the conduct of the
employee and the conduct and the motivation of the
employer. Neither of the elements requires a court to
interpret any term of a collective-bargaining agreement." Id.
at 407.
The Lingle Court distinguished Allis-Chalmers and Lucas
Floor on that basis, explaining that it had found the claims
in those cases preempted because the state law claims were
not "independent" of the collective bargaining agreements.
Id. at 407 & n.7. The Court recognized that"the state-law
analysis [of the claim for retaliatory discharge] might well
involve attention to the same factual considerations as the
contractual determination of whether Lingle was fired for
just cause." Id. at 408. But, it stated, "such parallelism" did
not make "the state-law analysis dependent upon the
contractual analysis." Id. It continued,"Even if dispute
resolution pursuant to a collective-bargaining agreement,
on the one hand, and state law, on the other, would require
addressing precisely the same set of facts, as long as the
state-law claim can be resolved without interpreting the
agreement itself, the claim is `independent' of the agreement
for S 301 pre-emption purposes." Id. at 409-410.
11
The Lingle Court explained that section 301 preemption
is premised on a policy of preserving the effectiveness of
arbitration by preventing employees from end-running the
dispute resolution process: "Today's decision should make
clear that interpretation of collective-bargaining agreements
remains firmly in the arbitral realm; judges can determine
questions of state law involving labor-management relations
only if such questions do not require construing collective-
bargaining agreements." Id. at 411 (footnote omitted).
Further, the Court emphasized that "the mere fact that a
broad contractual protection . . . may provide a remedy for
conduct that coincidentally violates state law does not
make the existence or the contours of the state-law
violation dependent upon the [collective bargaining
agreement]." Id. at 412-13. It is of interest that all three
decisions, Allis-Chalmers, Caterpillar, and Lingle, were
unanimous.
The Court's latest word on this subject came in its 1994
decision in Livadas v. Bradshaw, 512 U.S. 107 (1994). This
case involved a California statute that imposed a penalty on
employers who failed to pay accrued wages immediately
upon the discharge of an employee. The State Labor
Commissioner construed state law to bar the state from
enforcing the penalty when the employee was covered by a
collective bargaining agreement. Livadas, an employee
covered by a collective bargaining agreement, filed a claim
with the state's enforcement division to recover the penalty
after she was fired from her supermarket job. When her
application was denied because of the state's policy,
Livadas sued in federal court, challenging the policy as
preempted by the federal labor laws. Looking at it in
reverse, Livadas claimed that her state law claim was not
preempted by the federal labor laws.
The principal issue in the Livadas case was not
preemption by section 301 of the LMRA, which is focused
on the enforcement of collective bargaining agreements, but
by section 7 of the NLRA, which grants employees certain
rights, notably "the right to self-organization, to form, join,
or assist labor organizations, to bargain collectively . . . ,
and to engage in other concerted activities for the purpose
of collective bargaining or other mutual aid or protection."
12
29 U.S.C. S 157. That is, Livadas argued that the
Commissioner's policy of enforcing the penalty with respect
to non-union workers while refusing to do so with respect
to union workers interfered with the rights granted by
section 7. The Court agreed with Livadas that the
Commissioner's policy discriminated between union and
nonunion workers, interfered with Livadas's rights under
section 7 of the NLRA, and was therefore preempted. In
reaching this conclusion, however, the Court had to
address the Commissioner's contention that section 301
preempted Livadas's late-wage-payment claim and thereby
compelled the state policy. Writing for what was again a
unanimous Court, Justice Souter offered the following
summary of the Court's section 301 doctrine:
[T]he pre-emption rule has been applied only to assure
that the purposes animating S 301 will be frustrated
neither by state laws purporting to determine
"questions relating to what the parties to a labor
agreement agreed, and what legal consequences were
intended to flow from breaches of that agreement," nor
by parties' efforts to renege on their arbitration
promises by "relabeling" as tort suits actions simply
alleging breaches of duties assumed in collective-
bargaining agreements.
In Lueck and in Lingle . . . , we underscored the point
that S 301 cannot be read broadly to pre-empt
nonnegotiable rights conferred on individual employees
as a matter of state law, and we stressed that it is the
legal character of a claim, as "independent" of rights
under the collective-bargaining agreement, . . . that
decides whether a state cause of action may go forward.
Finally, we were clear that when the meaning of
contract terms is not the subject of dispute, the bare
fact that a collective-bargaining agreement will be
consulted in the course of state-law litigation plainly
does not require the claim to be extinguished.
Id. at 122-24 (citations and footnotes omitted). Accordingly,
the Court concluded that Livadas's action seeking
enforcement of the state law penalty was not precluded and
that the Commissioner's policy declining to enforce her
state law right was preempted.
13
In a similar analysis shortly thereafter, the Court
emphasized the limitations on its Lingle holding in
Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246 (1994), a
case involving the "virtually identical" standard for
preemption under the Railway Labor Act, id. at 260. Like
Lingle, Hawaiian Airlines involved an employee's claim of
retaliatory discharge. Noting the similarity to the Lingle
facts, the Court stressed that "the existence of a potential
[collective bargaining agreement]-based remedy [does] not
deprive an employee of independent remedies available
under state law" and reiterated that factual questions about
an employee's or employer's motives or conduct do not
require interpretation of the collective bargaining agreement.1
Id. at 261.
We had occasion to apply the Court's section 301
jurisprudence with respect to a fraud claim in Trans Penn
Wax Corp. v. McCandless, 50 F.3d 217 (3d Cir. 1995). The
plaintiffs in Trans Penn, employees covered by a collective
bargaining agreement, brought claims against their
employer for breach of contract, fraud, and intentional
infliction of emotional distress. The gravamen of the
complaint was that Trans Penn had made promises to the
employees that they would retain their jobs if they
decertified their union and that, after the employees did so,
the employer reneged on those promises. We held that none
of these claims were preempted by section 301. Of
particular relevance to the present case is our holding on
the fraud claim. Emphasizing the distinction made in Lingle
_________________________________________________________________
1. It is also worth noting that a recent opinion of the Supreme Court,
Textron Lycoming Reciprocating Engine Div., AVCO Corp. v. United
Automobile, Aerospace, Agricultural Implement Workers of America,
International Union, 118 S.Ct. 1626 (1998), has taken a very narrow view
of federal jurisdiction under section 301. The UAW sued Textron, alleging
that the employer fraudulently induced the union to sign the collective
bargaining agreement. The court held that because the suit alleged only
the invalidity of the collective bargaining agreement, and did not allege
an actual violation of the collective bargaining agreement, there was no
federal jurisdiction. Although Textron did not involve section 301
preemption, it did signal a narrow approach to section 301 jurisdiction.
Because jurisdiction under section 301 is the obverse of preemption, the
Textron decision suggests a correspondingly narrow scope for
preemption.
14
between factual questions about motive, on the one hand,
and the interpretation of a collective bargaining agreement,
on the other, we concluded that "[a]n examination of the
employer's behavior, motivation, and statements does not
substantially depend upon the terms of the collective
bargaining agreement." Id. at 232.
With these principles in mind, we turn to the case before
us. To reiterate, plaintiffs contend that GM committed
common-law fraud by intentionally lying to the employees
about the status of the Trenton plant in order to induce
them to leave voluntarily, thereby reducing the payroll. The
New Jersey Supreme Court has stated that "[a]
misrepresentation amounting to actual legal fraud consists
of a material representation of a presently existing or past
fact, made with knowledge of its falsity and with the
intention that the other party rely thereon, resulting in
reliance by that party to his detriment." Jewish Ctr. of
Sussex County v. Whale, 432 A.2d 521, 524 (N.J. 1981).
GM urges that a decision whether these elements have
been shown would require the kind of interpretation of the
collective bargaining agreement prohibited by the section
301 preemption doctrine. We are unpersuaded.
GM first focuses on the intent requirement, contending
that resolution of the issue of GM's intent "requires
interpretation of the collectively-bargained Special
Accelerated Attrition Agreement." Appellant's Br. at 23.
GM's intent in entering into the SAAA, however, is not the
question put in issue by plaintiffs' complaint. Rather,
plaintiffs focus on GM's intent in representing that closure
of the plant was imminent. The amended complaint plainly
alleges that "GM intentionally misrepresented to Plaintiffs
the status of the plant closing." App. at 187."GM made the
misrepresentations, including the omission of information,
for the purpose of inducing Plaintiffs to quit their jobs and
accept the SAAA." App. at 188. Hence, plaintiffs are not
claiming that GM misrepresented the SAAA, but rather they
are claiming that GM intentionally lied to them in order to
induce them to end their employment with GM and take
the SAAA. The resolution of this claim in no way requires
an interpretation of the SAAA.
15
GM's arguments on materiality, reasonable reliance, and
detriment are predicated on a single idea--that the
representations cannot be material unless there were no
options available to the employees other than the SAAA
package. Again, GM misapprehends the nature of plaintiffs'
claim. The materiality question in this case does not focus
on the availability of other options but on whether GM's
announcement of the impending closure of the Trenton
plant was a representation of a fact (1) that the employees
would reasonably consider important in making choices
about their employment, or (2) that GM actually or
constructively knew would inform the employees' choices.
Under New Jersey law, a fact is material if "a reasonable
[person] would attach importance to its existence or
nonexistence in determining his [or her] choice of action in
the transaction in question," or if "the maker of the
representation knows or has reason to know that its
recipient regards or is likely to regard the matter as
important in determining his [or her] choice of action,
although a reasonable [person] would not so regard it."
Strawn v. Canuso, 657 A.2d 420, 431 n.4 (N.J.
1995)(quoting Restatement (Second) of Torts S 538(2)
(1977)). The resolution of these questions does not call
upon the court to conduct an investigation into the terms
of the collective bargaining agreements between the parties;
it simply requires a determination of whether and how the
announced closure of the plant would affect the decisions
of the employees.
GM further argues that the "reasonable reliance"
question requires interpretation of the collective bargaining
agreement because one cannot determine whether the
plaintiffs acted reasonably without weighing all of the
contractual options available to them. We note at the outset
that although the parties use the term "reasonable" to
describe the level of reliance necessary to support a fraud
cause of action, the New Jersey cases have yet to address
specifically what kind of reliance is necessary. See B.F.
Hirsch v. Enright Ref. Co., 751 F.2d 628, 632 (3d Cir.
1984)("It is not entirely clear to what extent New Jersey law
requires that the reliance be justifiable."). New Jersey cases
speak of both "reasonable" and "justifiable" reliance.
16
Compare Judson v. Peoples Bank and Trust Co., 134 A.2d
761, 765 (N.J. 1957)(using "justifiable reliance"), and Van
Dam Egg Co. v. Allendale Farms, Inc., 489 A.2d 1209, 1211
(N.J. Super. Ct. App. Div. 1985) (adopting "justifiable
reliance"), with Louis Schlesinger Co. v. Wilson, 127 A.2d
13, 18 (N.J. 1956) (stating that action sounding in deceit
requires "reasonable reliance"), and Carroll v. Celloco
Partnership, 713 A.2d 509, 516 (N.J. Super. Ct. App. Div.
1998)(stating that common-law fraud requires "reasonable
reliance"). As the Supreme Court has recently reminded us,
these terms carry different meanings: justifiable reliance
generally connotes a subjective standard, while "reasonable
reliance" usually suggests an objective standard and,
possibly, some measure of a duty to investigate on the part
of the claimant. See Field v. Mans, 516 U.S. 59, 70-75
(1995) (surveying the common law of fraud as it stood in
1978).
For present purposes, we need not predict which
formulation the New Jersey Supreme Court will adopt, for
both of these standards share a common general inquiry--
a focus on the credence given the representation by the
claimant. That is, the reliance inquiry is not, as GM
suggests, an investigation of the wisdom of the particular
choice made by the claimant, but instead whether the
claimant was acting justifiably or reasonably in giving
credence to the alleged misrepresentation. See id. at 70-71.
In this case, then, the reliance question focuses on whether
GM's repeated insistence that the plant was going to close
was a representation worthy of belief. Patently, this is not
a question that depends upon an interpretation of the
collective bargaining agreement. In Trans Penn, we
considered, and rejected, a nearly identical argument when
considering the elements of fraud under Pennsylvania law:
"The essence of the employees' [fraud] case is proof of
justifiable reliance on the separate guarantees[i.e., the
company's promise of job security], not on the collective
bargaining agreements." 50 F.3d at 232.
For similar reasons, we reject GM's contention that
resolving whether the employees' reliance was detrimental
would require an investigation of the terms of the collective
bargaining agreements. To be sure, we anticipate that at
17
trial, principally in determining damages, the question
whether the plaintiffs were worse off for having taken early
retirement may arise. However, the fact that the parties'
agreements may be referred to in the course of deciding this
issue is of little moment to the preemption question before
us. As the Court emphasized in Livadas, "the bare fact that
a collective-bargaining agreement will be consulted in the
course of state-law litigation plainly does not require the
claim to be extinguished." 512 U.S. at 124 (citation
omitted). Similarly, as the Court stated in Lingle:
A collective-bargaining agreement may, of course,
contain information such as rate of pay and other
economic benefits that might be helpful in determining
the damages to which a worker prevailing in a state-
law suit is entitled. Although federal law would govern
the interpretation of the agreement to determine the
proper damages, the underlying state-law claim, not
otherwise pre-empted, would stand. Thus, as a general
proposition, a state-law claim may depend for its
resolution upon both the interpretation of a collective-
bargaining agreement and a separate state-law analysis
that does not turn on the agreement. In such a case,
federal law would govern the interpretation of the
agreement, but the separate state-law analysis would
not be thereby pre-empted.
486 U.S. at 413 n. 12 (citation omitted).
GM also raises an alternative argument that the fraud
claim is founded directly on rights created by the collective
bargaining agreement because any duty to disclose on the
part of GM could only arise under the contract. In support
of this contention, GM cites our decision in Lightning Lube,
Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993), for the
proposition that "a fraud claim based upon silence is not
actionable unless there exists an affirmative duty to
disclose; and such duty arises only when there is actually
or essentially a fiduciary relationship." Appellant's Br. at
33.
The first difficulty with this argument is that plaintiffs do
not base their fraud claim on GM's silence. The plaintiffs
have alleged affirmative misrepresentations to the
18
employees, rather than a failure to disclose simpliciter. As
stated by the Appellate Division of the New Jersey Superior
Court, "Even where no duty to speak exists, one who elects
to speak must tell the truth when it is apparent that
another may reasonably rely on the statements made."
Strawn v. Canuso, 638 A.2d 141, 149 (N.J. Super. App. Div.
1994), aff'd, 657 A.2d 420 (N.J. 1995). Therefore, the
relevance of our discussion in Lightning Lube of New Jersey
law concerning fraud claims based on silence is
questionable at best. Furthermore, to the extent that
Lightning Lube is pertinent here, it is contrary to GM's
position. In that case, we stated: "[W]here a claim for fraud
is based on silence or concealment, New Jersey courts will
not imply a duty to disclose, unless such disclosure is
necessary to make a previous statement true or the parties
share a `special relationship.' " 4 F.3d at 1185 (quoting
Berman v. Gurwicz, 458 A.2d 1311, 1313 (N.J. Super. Ct.
Ch. Div. 1981)). At minimum, plaintiffs have alleged, and
provided record support for, a "previous statement" that is
untrue without a timely disclosure of the company's plan to
pursue sale of the plant.
In sum, the fraud claim in this case is not directly based
upon the collective bargaining agreements in force between
the parties; nor will the resolution of the elements of
common-law fraud require the interpretation of those
bargaining agreements. Plaintiffs, in pursuing their fraud
claim, are seeking vindication of a "nonnegotiable right[ ]
conferred on individual employees as a matter of state law"
that is " `independent' of rights under the collective-
bargaining agreement." Livadas, 512 U.S. at 123.
Resolution of the common-law fraud issue in this action
will not frustrate the uniform development of federal law
governing labor contract interpretation nor allow the
employees to sidestep the grievance machinery by dressing
up a contract grievance as a tort. Consequently there is no
ground for section 301 preemption in this case.
Accordingly, we turn to the question whether the NLRA
preempts plaintiffs' cause of action.
19
B.
Garmon Preemption
GM also urges that the plaintiffs' fraud claims are
preempted by sections 7 and 8 of the NLRA under the
principles of Garmon preemption, a doctrine originating in
the Supreme Court's decision in San Diego Building Trades
Council v. Garmon, 359 U.S. 236 (1959). Garmon
preemption protects the exclusive jurisdiction of the NLRB
over unfair labor practice proceedings; accordingly, if a
cause of action implicates protected concerted activity
under section 7 of the NLRA or conduct that would be
prohibited as an unfair labor practice under section 8 of the
NLRA, the cause of action is preempted. See id. at 242-44.
The Court summarized the nature of Garmon preemption
in Belknap, Inc. v. Hale, 463 U.S. 491 (1983):
[S]tate regulations and causes of action are
presumptively preempted if they concern conduct that
is actually or arguably either prohibited or protected by
the Act. The state regulation or cause of action may,
however, be sustained if the behavior to be regulated is
behavior that is of only peripheral concern to the
federal law or touches interests deeply rooted in local
feeling and responsibility.
Id. at 498 (citations omitted).
In International Longshoremen's Association v. Davis, 476
U.S. 380 (1986), the Court elaborated on what it meant by
"arguably" in the prior Garmon preemption cases:
If the word "arguably" is to mean anything, it must
mean that the party claiming pre-emption is required
to demonstrate that his case is one that the Board
could legally decide in [the suing employee's] favor.
That is, a party asserting pre-emption must advance
an interpretation of the Act that is not plainly contrary
to its language and that has not been "authoritatively
rejected" by the courts or the Board. The party must
then put forth enough evidence to enable the court to
find that the Board reasonably could uphold a claim
based on such an interpretation.
20
Id. at 395 (citation omitted). The party claiming preemption
bears the burden of demonstrating that the challenged
activity is arguably prohibited by the NLRA. Id.GM urges that the conduct which is the subject of
plaintiffs' complaint would constitute a refusal to bargain
under section 8(a)(5) of the Act and/or bargaining in bad
faith under section 8(d) of the Act. Section 8(a)(5) makes it
an unfair labor practice for an employer "to refuse to
bargain collectively with the representatives of his
employees" and section 8(d) imposes a requirement that
such bargaining be done "in good faith." 29 U.S.C.
SS 158(a)(5), (d). However, the duties to bargain and to do
so in good faith only attach to the "mandatory subjects of
bargaining," which are those set forth in section 8(d), i.e.,
"wages, hours, and other terms and conditions of
employment." Local Union No. 189, Amalgamated Meat
Cutters & Butcher Workmen of N. Am., AFL-CIO v. Jewel Tea
Co., 381 U.S. 676, 685 (1965) (citation omitted); see also
NLRB v. Katz, 369 U.S. 736, 742-43 (1962).
If an employer imposes a unilateral change with respect
to a mandatory subject, it thereby violates the statutory
duty to bargain and is subject to the Board's remedial
order. See Katz, 369 U.S. at 742-43. But, conversely, a
unilateral change as to a non-mandatory subject and the
refusal to bargain over a non-mandatory subject are not
unfair labor practices. NLRB v. Wooster Div. of Borg-Warner,
356 U.S. 342, 349 (1958). The decision to close a plant is
plainly one that the employer can make and announce
unilaterally; that decision is not a mandatory subject of
bargaining. See First Nat'l. Maintenance Corp. v. NLRB, 452
U.S. 666, 686 (1981). But see id. at 677 n.15 (noting that
employer has a duty to bargain over the effects of such a
closure). Consequently, there is no Board jurisdiction, and
therefore no Garmon preemption, regarding complaints that
an employer refused to bargain over a plant closing.
It is true, as GM argues, that the employer's duty to
bargain in good faith is a continuing one, and that it is not
dispositive that formal collective negotiations were not
occurring at the time of an alleged breach of sections 8(a)(5)
and 8(d). However, the alleged fraud was not committed in
connection with any part of the collective bargaining
21
process nor does it touch and concern a mandatory duty on
the part of the employer. The plaintiffs do not allege that
any bargaining between the Union and GM was in bad
faith, or that the retirement benefits that they received were
other than provided for them under the relevant agreement.
Because GM has no duty under the NLRA to bargain over
its decision regarding the closing of a plant, First Nat'l
Maintenance, 452 U.S. at 679 n.15, and the plaintiffs'
complaint does not allege that GM breached its duty to
bargain over effects, the matter that forms the basis of this
fraud action--viz., GM's intent vel non to close its Trenton
plant--cannot be recast as an unfair labor practice under
either section 8(d) or section 8(a)(5). Where, as here, the
claim is that the employer committed fraud in a direct
communication to the employees on the subject of a plant
closure, there is no NLRA preemption.
Comparison with the very cases cited by GM underscores
why the District Court correctly found no preemption here.
For example, in Serrano v. Jones & Laughlin Steel Co., LTV,
790 F.2d 1279 (6th Cir. 1986), the employees' fraud claims
that were held preempted implicated the bargaining process
directly because the employees claimed that the employer
defrauded them by extracting concessions in bargaining
while falsely promising to invest in the plant to keep it
going. The Serrano court stated: "[T]he gravamen of the
three fraud charges is that J & L did not bargain in good
faith in obtaining concessions from the Union in the
[collective bargaining] agreement." Unlike Serrano, this case
does not concern the employer's extraction of concessions
from the union in bargaining, but rather concerns GM's
alleged fraudulent announcement that the plant would
close, an announcement that was independent of the
bargaining process.
This distinction holds true for the other cases cited by
GM where the employees' claims were preempted. See
Parker v. Connors Steel Co., 855 F.2d 1510, 1515-18 (11th
Cir. 1988)(fraud claim relating to concessions obtained by
employer during bargaining); Kolentus v. Avco Corp., 798
F.2d 949, 960-62 (7th Cir. 1986)(claim of fraudulent
nondisclosure of plan to close plant during contract
negotiations); see also Talbot v. Robert Matthews Distrib.
22
Co., 961 F.2d 654, 660 (7th Cir. 1992) (finding preemption
of claim that bargaining-unit work was improperly
transferred without a union vote because claim was
equivalent to charge that employer unilaterally changed
terms and conditions of employment in violation of section
8(a)(5)). In contrast to those cases, here there is no
necessary nexus between the challenged representations
and collective bargaining.
Courts considering cases that more closely parallel the
situation here have found no preemption. In Wells v.
General Motors Corp., 881 F.2d 166 (5th Cir. 1989),
employees alleged that the employer offered false
inducements in order to persuade the employees to accept
a voluntary termination plan which, like the one in this
case, was the product of prior collective bargaining. The
employer was alleged to have misrepresented the
employees' eligibility for rehire if they accepted the plan.
The court found the fraud claim was not preempted under
Garmon principles or section 301. The court reasoned that
the claim could not be construed as one of bargaining in
bad faith, and emphasized that eligibility for future
employment is not a mandatory bargaining subject.
Turning then to whether the complaint could be recast as
an allegation of direct dealing with the employees, the court
stated, in a passage equally applicable here: "For better or
worse, the bargaining process had served its function, and
the union representatives had fulfilled their role [by
negotiating the voluntary termination agreement]. It was
then left to the individual employees to choose whether they
would opt for the plan, and it is upon that choice that GM's
alleged inducements operated." Id. at 171-72. To the same
effect is the Ninth Circuit's decision in Milne Employees
Association v. Sun Carriers, 960 F.2d 1401 (9th Cir. 1992)
(finding no preemption where plaintiffs raised fraud claims
based on the allegation that the employer made
representations of continuing employment while actively
concealing plans to close the plant).
In short, GM has not met its burden of demonstrating
that this case is one that the Board could legally decide in
the employees' favor. GM has not shown that its alleged
misrepresentation to the employees would be an unfair
23
labor practice. And, as noted previously, plaintiffs' fraud
claim does not require interpretation of the collective
agreements between the parties such that preemption
under LMRA section 301 would be appropriate.
III.
CONCLUSION
For the foregoing reasons, we will affirm the District
Court's denial of GM's summary judgment motion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
24