Baldwin v. Pirelli Armstrong ( 1999 )

                            AT NASHVILLE
                                                          February 18, 1999
    SCOTT BALDWIN, J. L. SMITH, and       )              Cecil Crowson, Jr.
    KEVIN T. BROWN, individually and      )             Appellate Court Clerk
    on behalf of a class of individuals   )
    similarly situated,                   )
          Plaintiffs/Appellants,          )   Appeal No.
                                          )   01-A-01-9804-CV-00195
    VS.                                   )
                                          )   Davidson Circuit
    PIRELLI ARMSTRONG TIRE                )   No. 95C-3232
    WORKERS OF AMERICA, AND               )
    URW LOCAL UNION 670,                  )
          Defendants/Appellees.           )
                       AT NASHVILLE, TENNESSEE
    FOR APPELLANTS:                           FOR APPELLEE PIRELLI
                                              ARMSTRONG TIRE CORP.:
    Jeffrey A. Greene
    John W. Barringer, Jr.                    Charles Hampton White
    Goodlettsville, Tennessee                 Richard L. Colbert
                                              Nashville, Tennessee
    Robert L. Delaney
    Nashville, Tennessee                      FOR APPELLEE UNITED RUBBER,
                                              CORK, LINOLEUM and PLASTIC
                                              WORKERS OF AMERICA:
                                              Charles R. Armstrong
                                              Akron, Ohio 44320
                                              FOR APPELLEE URW
                                              LOCAL UNION 670:
                                              George E. Barrett
                                              Phillip A. Purcell
                                              Nashville, Tennessee
                              REVERSED AND REMANDED
                                              BEN H. CANTRELL,
                                              PRESIDING JUDGE, M.S.
                  When replacement workers were fired to make room for the returning
    union employees at the end of a strike, the replacement workers brought suit against
    the employer for breach of contract and retaliatory discharge, and against the local
    and international unions for intentional interference with their contract. The trial court
    granted the employer’s motion to dismiss the breach of contract count, because it
    believed the individual contracts had been subsumed into the collective bargaining
    agreement, but it overruled the motion to dismiss the retaliatory discharge count. The
    court granted the unions’ motion to dismiss, because it believed the complaint did not
    state a cause of action for intentional interference with an employment at will contract.
    We reverse the judgment of the trial court.
                                         a. The Facts
                  Since this case was decided on a motion to dismiss we take the facts
    from a liberal construction of the complaint, Huckeby v. Spangler, 
    521 S.W.2d 568
    (Tenn. 1975), and we assume the facts in the complaint are true, Cornpropst v. Sloan,
    528 S.W.2d 188
     (Tenn. 1975).
                  The complaint alleges that Pirelli Armstrong Tire Corporation (Pirelli)
    operated a manufacturing plant in Madison, Tennessee where substantially all of the
    hourly workers were represented by the United Rubber, Cork, Linoleum and Plastic
    Workers Union. The Pirelli workers were members of Local 670. In July of 1994, the
    workers went out on strike. Pirelli hired some replacement workers, and after
    declaring that the parties had “bargained to an impasse,” the company terminated the
    strikers and began to hire “permanent” replacement workers. All the replacement
    workers were hired with an express or implied promise that they would not be
    terminated solely to make room for the returning strikers.
                  In March of 1995, the union and the company entered into a new
    collective bargaining agreement (CBA). The company began to rehire the union
    members and, under pressure from the local and the national unions, to fire the
    replacement workers for pretextual reasons. Ultimately all of the replacement workers
    were fired.
                                 b. The Procedural History
                  The named plaintiffs brought an action against the company for a breach
    of contract and for a retaliatory discharge. The complaint sought to recover treble
    damages from the unions for an intentional interference with the plaintiffs’ contract of
    employment with the company. See Tenn. Code Ann. § 42-50-109
                  The defendants jointly removed the case to the federal district court, but
    that court remanded the counts containing the causes of action referred to above.
    The defendants then filed motions to dismiss under Rule 12.02(6), Tenn. R. Civ. Proc.
    The trial judge overruled the company’s motion to dismiss the retaliatory discharge
    claim but granted the motions as to the other counts.
                                   Retaliatory Discharge
                  We will deal first with the company’s contention that the trial judge erred
    in failing to dismiss the claim for retaliatory discharge. The elements of such a cause
    of action are fairly simple: “An employment at will relationship; a clear declaration of
    public policy which imposes duties on the employee or employer; and discharge of the
    employee for refusing to violate those duties.” Reynolds v. Ozark Motor Lines, Inc.,
    887 S.W.2d 822
     at 825 (Tenn. 1994). The Reynolds court cited examples of a
    retaliatory discharge from other jurisdictions where employees had been fired for:
    refusing to commit perjury; refusing to ignore a lawful subpoena; refusing to ignore a
    subpoena to jury duty; refusing to falsify records in product labeling; and refusing to
    falsely certify that products had been tested when they had not. Id. at 824, citing
    Chism v. Mid-South Milling Co., 
    762 S.W.2d 552
     at 556 (Tenn. 1988). Our own cases
    have recognized a case of retaliatory discharge where an employee has been fired
    for making a workers’ compensation claim, Clanton v. Cain Sloan, 
    677 S.W.2d 441
    (Tenn. 1984), and the legislature has decreed that “no employee shall be discharged
    or terminated solely for refusing to participate in, or for refusing to remain silent about,
    illegal activities.” Tenn. Code Ann. § 50-1-304.
                  In this case the complaint alleges the following facts:
                          As of the filing of this complaint, on information and
                  belief, none of the permanent replacement workers hired
                  during the strike for hourly-rate positions remain employed
                  by PIRELLI.
                         On information and belief, when negotiating the
                  new collective bargaining agreement ratified on March 27,
                  1995, representatives of PIRELLI, on the one hand, and
                  the URW and URW LOCAL 670, on the other hand,
                  discussed the issue of whether or not the jobs previously
                  vacated by striking URW members and filled by the
                  permanent replacement workers could be made available
                  to URW members following the end of the strike.
                          In the negotiations that resulted in the new
                  collective bargaining agreement ratified on March 27,
                  1995, PIRELLI and the URW and URW LOCAL 670
                  agreed that all striking members of the URW would be re-
                  hired by PIRELLI, despite and with full knowledge of the
                  fact that PIRELLI had already hired the permanent
                  replacement workers to fill the positions previously
                  occupied by striking members of the URW and URW
                  LOCAL 670.
                          On information and belief, after the end of the
                   strike and through the termination of the permanent
                   workers, the URW and URW LOCAL 670 did not permit
                   any person they knew to have been a permanent
                   replacement worker hired by PIRELLI during the strike to
                 join the URW or URW LOCAL 670 in order to remain
                 employed at PIRELLI following the end of the strike.
                 In addition, in count one the complaint makes the following allegations:
                        Tennessee is a “right to work” state, in which it is
                 contrary to public policy for an employer either to refuse
                 to hire or to discharge an employee simply because the
                 employee is not a member of a labor union.
                        The “right to work” in Tennessee without being
                 compelled to belong to a labor union is a clear public
                 policy evidenced by the unambiguous statutory provision
                 of T.C.A. § 50-1-201 (1991).
                       PIRELLI’s termination of the permanent
                 replacement workers who are members of the Plaintiff
                 Class violated the “right to work” public policy of
                 Tennessee and was for this reason wrongful.
                      The members of the Plaintiff Class have suffered
                 damage as a result of their termination by PIRELLI.
                         The damages suffered by the members of the
                 Plaintiff Class include but are not limited to lost wages
                 and benefits, consequential damages and emotional
                         In terminating the members of the Plaintiff Class,
                 PIRELLI acted intentionally, fraudulently, maliciously
                 and/or recklessly because PIRELLI knew that it was a
                 violation of both Tennessee and federal law to terminate
                 employees based on the fact the employees were not
                 union members, but nevertheless did so alleging grounds
                 for termination which were known to be false in an effort
                 to cover up the real (but illegal) reason for termination. As
                 a result, PIRELLI is liable for punitive damages.
                 As we read the complaint it does not state a claim for a retaliatory
    discharge. It does not allege that the replacement workers were fired for refusing to
    join the union. The complaint alleges that the union and the company agreed that the
    striking employees would be rehired. A necessary consequence of that agreement
    was that the replacement workers had to go, but the connection between that fact and
    union membership is not stated in the complaint.
                  We take no position on whether the right to work law, Tenn. Code Ann.
    § 50-1-201, creates a private right of action for its violation. The appellants state
    emphatically that they are not asserting a cause of action for violating the statute, but
    they rely on the statute as a clear statement of public policy on which to base a claim
    of retaliatory discharge.
                                     Breach of Contract
                  We are of the opinion that the complaint states a cause of action for
    breach of contract. A fair reading of the complaint reveals that the plaintiffs alleged
    (1) that they were hired with an express or implied promise that they would not be
    fired in order to make room for the returning strikers (see paragraphs 41(a) and 54 of
    the complaint), and (2) that the company breached that promise when it settled the
    strike with the union. The company’s promises were more than a vague promise of
    “permanent” employment which creates no more than an employment at will. See
    Savage v. Spur Distributing Company, 
    228 S.W.2d 122
     (Tenn. App. 1950).
                  The trial judge found, however, that the plaintiffs’ contract with the
    company was subsumed into the collective bargaining agreement subsequently
    entered into by the company and the union. From a reading of the cases we find that
    the courts use that expression to indicate that the individual contracts were displaced
    by the subsequent collective bargaining agreement (CBA) or that the dispute was
    preempted by federal law.
                                 a. The Displacement Issue
                 The only authority cited by either the company or the union that the
    individual contracts with the replacement workers were displaced by the CBA is Beals
    v. Kiewit Pacific Co., 
    114 F.3d 892
     (9th Cir. 1997). Beals is a preemption case in
    which the Ninth Circuit held that an employee could not maintain a state action
    seeking to enforce an employment contract entered into when the employer and the
    union were operating under an existing CBA. To the extent that the separate contract
    was inconsistent with the CBA, “the CBA controls and any claims seeking to enforce
    the terms of the [separate contract] are preempted. 114 F.3d at 894.
                 The Beals court distinguished Caterpillar, Inc. v. Williams, 
    482 U.S. 386
    (1987), in which the company allegedly entered into agreements with some of its
    employees while they were in managerial positions. When the employees were later
    downgraded to hourly positions, the company argued that “their individual employment
    agreements were subsumed into, or eliminated by, the collective bargaining
    agreement.” The court rejected this argument saying:
                 Thus, individual employment contracts are not inevitably
                 superseded by any subsequent collective agreement
                 covering an individual employee, and claims based upon
                 them may arise under state law. Caterpillar’s basic error
                 is its failure to recognize that a plaintiff covered by a
                 collective-bargaining agreement is permitted to assert
                 legal rights independent of that agreement, including
                 state-law contract rights, so long as the contract relied
                 upon is not a collective-bargaining agreement.
    482 U.S. at 396.
                 Beals distinguished Caterpillar because it involved “an individual
    employment contract negotiated for a position not covered by the CBA, at a time when
    the employee was not covered by the CBA. 114 F.3d at 894. That is the situation
    involved in this case. The appellants negotiated a contract at a time when neither
    they nor the company were under a CBA. Therefore, we think the contracts they
    negotiated were not subsumed into the subsequent CBA.
                                       b. Preemption
                  For most of the same reasons appearing in the preceding section we
    hold that the appellants’ independent contract claims are not preempted by the
    National Labor Relations Act (NLRA) nor by Section 301 of the Labor Managment
    Relations Act (LMRA). Section 301 preempts state law claims that are based directly
    on rights created by a CBA or claims that are substantially dependent on an
    interpretation of a CBA. Caterpillar, Inc. v. Williams, 
    482 U.S. 386
     (1987). In Belknap,
    Inc. v. Hale, 
    462 U.S. 491
    , 498 (1983), the Supreme Court described two doctrines
    that determine whether state causes of action are preempted by the NLRA:
                  Under the first, set out in San Diego Building Trades
                  Council v Garmon, 
    359 U.S. 236
    3 L. Ed. 2d 775
    79 S. Ct. 773
     (1959), state regulations and causes of action are
                  presumptively pre-empted if they concern conduct that is
                  actually or arguably either prohibited or protected by the
                  Act. Id., at 245, 
    3 L. Ed. 2d 775
    79 S. Ct. 773
    . The state
                  regulation or cause or 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
    3 L. Ed. 2d 775
    79 S. Ct. 773
    ; Sears, Roebuck &
                  Co. v Carpenters, 
    436 U.S. 180
    , 200, 
    56 L. Ed. 2d 209
    98 S. Ct. 1745
     (1978); Farmer v Carpenters, 
    430 U.S. 290
    51 L. Ed. 2d 338
    97 S. Ct. 1056
     (1977). In such
                  cases, the State’s interest in controlling or remedying the
                  effects of the conduct is balanced against both the
                  interference with the National Labor Relations Board’s
                  ability to adjudicate controversies committed to it by the
                  Act, Farmer v Carpenters, supra, at 297, 
    51 L. Ed. 2d 338
    97 S. Ct. 1056
    ; Sears Roebuck & Co. v Carpenters, 436
                  US, at 200, 
    56 L. Ed. 2d 209
    98 S. Ct. 1745
    , and the risk
                  that the State will sanction conduct that the Act protects.
                  Id., at 205, 
    56 L. Ed. 2d 209
    98 S. Ct. 1745
    . The second
                  pre-emption doctrine, set out in Machinists v Wisconsin
                  Employment Relations Comm’n, 
    427 U.S. 132
    49 L. Ed. 2d 396
    96 S. Ct. 2548
     (1976), proscribes state regulation and
                  state-law causes of action concerning conduct that
                  Congress intended to be unregulated, id., at 140, 
    49 L. Ed. 2d
    96 S. Ct. 2548
    , conduct that was to remain a part
                  of the self-help remedies left to the combatants in labor
                  disputes, id., at 147-148, 
    49 L. Ed. 2d 396
    96 S. Ct. 2548
    In Belknap the court decided that facts remarkably like the facts in this case did not
    bring the dispute within either of the NLRA preemption doctrines.
                  We think Caterpillar answers the question of whether this controversy
    is preempted by Section 301 of the LMRA. Considering only the allegations in the
    amended complaint we see no allegations that the dispute involves rights created by
    a CBA, and without the CBA even being in this record we cannot see how the
    appellants’ claims involve an interpretation of the CBA.
                          Interference with Employment Contract
                  The trial judge dismissed the tortious interference count because it
    believed the appellants’ contract had been subsumed within the CBA negotiated by
    the union. On appeal the only argument made by the local union is that one cannot
    interfere with a contract to which it is a party. (Citing Forrester v. Stockstill, 
    869 S.W.2d 328
     (Tenn. 1994).
                  As we have pointed out, however, this action is not based on the CBA
    negotiated by Local 670. And the intentional interference with at-will employment by
    a third party without privilege or justification is actionable. Forrester at 330; Ladd v.
    Roane Hosiery, Inc., 
    556 S.W.2d 758
     (Tenn. 1977); Dukes v. Brotherhood of Painters,
    235 S.W.2d 7
     (Tenn. 1950). The allegations in the complaint are sufficient to state
    a cause of action against the local union.
                  Although the national union argues on appeal that it is a separate entity
    from the local union, and that there are no specific allegations against it, the complaint
    does specifically refer to the “URW and URW Local 670". In paragraph 61, the
    complaint alleges that “The URW and URW Local 670 intended to cause Pirelli to
    terminate the employment of all the permanent replacement workers.” The complaint
    goes on to allege that both defendants created pressure on Pirelli to terminate the
    appellants (paragraph 65) and that in inducing Pirelli to terminate the appellants, both
    defendants acted with malice and fraudulent intent (paragraph 70).
                  Whether the appellants can prove any of their allegations remains to be
    seen, but at this stage of the litigation, the complaint states a cause of action for
    intentional interference with contract against both union defendants.
                  The judgment of the court below is reversed as indicated herein and the
    cause is remanded to the Circuit Court of Davidson County for further proceedings.
    Tax the costs on appeal one-third to the appellants and two-thirds to the appellees.
                                                      BEN H. CANTRELL,
                                                      PRESIDING JUDGE, M.S.
                                             - 10 -