Mathews v. Twin City Construction Co. , 323 N.W.2d 901 ( 1982 )

WOLLMAN, Chief Justice.

This is an appeal from orders dismissing appellant’s complaint. We reverse and remand.

In his complaint praying for general and punitive damages from appellees, Twin City Construction Company, Inc. (Company), and Iron Workers Local Union No. 184 (Union), appellant alleged that appellees had terminated his employment because of his non-membership in the union, in violation of the South Dakota right-to-work law (SDCL 60-8-3).¹ In granting the motion to dismiss, the trial court concluded that it was without jurisdiction to consider appellant’s claim inasmuch as the activity complained of was within the exclusive jurisdiction of the National Labor Relations Board (NLRB).

According to the allegations in his complaint, appellant, a non-union worker, was hired by the Company to work at the Pierre Mall construction site in November 1979. Appellant worked into early 1980, when he was laid off when construction operations were suspended because of inclement weather. After being called back to work in March 1980, “on or about March 2, 1980 ... [appellant] was advised by an agent and employee of Twin City that [his] employment had to be terminated, and that because of [his] non-membership in the defendant Union his services could no longer be used on said project.” Appellant’s complaint further alleged that “the defendant Union and defendant Twin City had an agreement which required membership in an [sic] union organization as a prerequisite to employment on the project . . . and as a result of the enforcement of said agreement by all of the defendants .. . defendants, jointly and severally, caused the employment of [appellant] by Twin City to be terminated because of his non-union status

The basic principles of the labor law preemption doctrine were expressed by the United States Supreme Court in San Diego Building Trades Council, Etc. v. Garmon, 359 U.S. 236, 244, 79 S.Ct. 773, 779, 3 L.Ed.2d 775, 782 (1959):

When it is clear or may fairly be assumed that the activities which a State purports to regulate are protected by § 7 of the National Labor Relations Act, or constitute an unfair labor practice under § 8, due regard for the federal enactment requires that state jurisdiction must yield. To leave the States free to regulate conduct so plainly within the central aim of federal regulation involves too great a danger of conflict between power asserted by Congress and requirements imposed by state law....

See also Sears, Roebuck & Co. v. San Diego Cty., Etc., 436 U.S. 180, 98 S.Ct. 1745, 56 L.Ed.2d 209 (1978); Farmer v. United Broth. of C. & J. of America, Local 25, 430 U.S. 290, 97 S.Ct. 1056, 51 L.Ed.2d 338 (1977); Amalgamated Ass’n of St., E. R. & M. C. Emp. v. Lockridge, 403 U.S. 274, 91 S.Ct. 1909, 29 L.Ed.2d 473 (1971); Retail Clerks Int. Ass’n, L. 1625 v. Schermerhorn, 375 U.S. 96, 84 S.Ct. 219, 11 L.Ed.2d 179 (Schermerhorn II) (1963); and Retail Clerks Inter. Ass’n v. Schermerhorn, 373 U.S. 746, 83 S.Ct. 1461, 10 L.Ed.2d 678 (Schermerhorn I) (1963).

The trial court concluded that our decision in Stricker v. Swift Bros. Const., 260 N.W.2d 500 (S.D.1977), required it to dismiss appellant’s complaint. We believe that the trial court read our decision in Strieker too narrowly. Strieker held that because the complained of agreement between the employer and the union did not require membership in the union as a condition of employment but rather established a non-discriminatory hiring hall procedure of the type that may not be barred by a right-to-work law, the complaint alleged at most an individual instance of discriminatory discharge that fell within the jurisdiction of the NLRB under the preemption doctrine. In reaching this conclusion, the court recognized that pursuant to § 14(b) of the National Labor Relations Act and the United States Supreme Court’s decision in Schermerhorn II, supra, states may prohibit agreements requiring membership in a labor organization, or the functional equivalent thereof, as a condition of employment.

Section 14(b) of the National Labor Relations Act, 29 U.S.C.A. § 164(b), provides for an exception to the general rule stated in San Diego Building Trades Council v. Garmon, 1959, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775, that, in the absence of an overriding state interest, courts must defer to the exclusive competence of the NLRB in cases in which the activity that is the subject matter of the litigation is arguably subject to the protection of § 7 or the prohibitions of § 8 of the National Labor Relations Act. It does not empower states to ban all involuntary relationships between workers and unions. It merely allows the prohibition of “agreements requiring membership in a labor organization as a condition of employment * * 29 U.S.C.A. § 164(b) (emphasis added). See also, Laborers’ International Union v. Kunco, Inc., 1973, 8 Cir., 472 F.2d 456, 458.

The plaintiff relies on cases concluding that § 14(b) gives states the power to prohibit agency shop agreements. Retail Clerks Local 1625 v. Schermerhorn, 373 U.S. 746, 83 S.Ct. 1461, 10 L.Ed.2d 678; Retail Clerks v. Schermerhorn, 375 U.S. 96, 84 S.Ct. 219, 11 L.Ed.2d 179. These cases are distinguishable because agency shop provisions have been held to be, for all practical purposes, compulsory unionism agreements. We do not believe an exclusive, nondiscriminatory hiring hall is tantamount to a compulsory unionism agreement and the Courts of Appeals’ decisions cited supra are in accord.

Stricker v. Swift Bros. Const., supra, 260 N.W.2d at 503-504.

In ruling on the motion for summary judgment in Strieker, the trial court and this court had the benefit of deposition testimony and answers to interrogatories regarding the nature of the complained of agreement. Here, on appellees’ motion to dismiss, we consider only the allegations in appellant’s complaint that appellees had an agreement that required union membership as a prerequisite to employment. Appellees contend that the complaint alleges the existence of a closed shop agreement and thus states a claim cognizable only by the NLRB, Walles v. Intern. Bro. of Electrical Wkrs., 252 N.W.2d 701 (Iowa 1977). We conclude, however, that accepting as true, as we must on a motion to dismiss, all facts properly pleaded, Akron Savings Bank v. Charlson, 83 S.D. 251, 158 N.W.2d 523 (1968), appellant’s complaint states a cause of action based upon the existence of an agreement that is barred by the provisions of SDCL 60-8-3 and one that is thus within the jurisdiction of the courts of this state.² Whether appellant will succeed in proving these allegations is another matter, of course. We hold only that he should be given the opportunity to adduce that proof at a trial in our state courts. Accordingly, we reverse the orders appealed from and remand the case to the circuit court with directions to reinstate the complaint.

DUNN, MORGAN and HENDERSON, JJ., concur. FOSHEIM, J., concurs specially.

1 . SDCL 60 8-3 states:

No person shall be deprived of life, liberty, or property without due process of law. The right of persons to work shall not be denied or abridged on account of membership or non-membership in any labor union, or labor organization. Violation of this section is a Class 2 misdemeanor.

2 . The several kinds of union security agreements have been defined by the United States Supreme Court:

A “union shop” agreement provides that no one will be employed who does not join the union within a short time after being hired. An “agency shop” agreement generally provides that while employees do not have to join the union, they are required — usually after 30 days — to pay the union a sum equal to the union initiation fee and are obligated as well to make periodic payments to the union equal to the union dues (citation omitted). The “union shop” and “agency shop” varieties of “union security” agreements are to be distinguished from the “closed shop” agreement, barred by § 8(a)(3), which provides that the employer will hire no one who is not a member of the union at the time of hiring.

Oil, Chemical & Atomic Workers, Etc. v. Mobil Oil, 426 U.S. 407, 409, 96 S.Ct. 2140, 2141, 48 L.Ed.2d 736, 739-40 (1976) n. 1. Whether the agreement complained of by appellant in fact constitutes a “union shop” or an “agency shop” will depend upon the proof adduced.