855 F.2d 1510 (11th Cir. 1988), 87-7607, Parker v. Connors Steel Co.

Docket Nº:87-7607.
Citation:855 F.2d 1510
Party Name:4 Indiv.Empl.Rts.Cas. 111 Calvin L. PARKER; Gene A. Childers; Maple L. Copeland; Will Goodman; Nathaniel Grant; Thomas Ray Loveless; Ruben I. Pierce; Joe D. Pressley; Virgil Lee Weatherspoon, on their own behalf and on behalf of all other hourly wage employees of Connors Steel Company similarly situated, and as representatives of a class of persons
Case Date:September 29, 1988
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1510

855 F.2d 1510 (11th Cir. 1988)

4 Indiv.Empl.Rts.Cas. 111

Calvin L. PARKER; Gene A. Childers; Maple L. Copeland;

Will Goodman; Nathaniel Grant; Thomas Ray Loveless; Ruben

I. Pierce; Joe D. Pressley; Virgil Lee Weatherspoon, on

their own behalf and on behalf of all other hourly wage

employees of Connors Steel Company similarly situated, and

as representatives of a class of persons consisting of those

employees who on or after June 1, 1982, were employed as

hourly wage earners by Connors Steel Company and represented

by the United Steelworkers of America, AFL-CIO and its Local

Union No. 2250, Plaintiffs-Appellants,

v.

CONNORS STEEL COMPANY; H.K. Porter Company, Inc.; and

United Steelworkers of America, AFL-CIO, CLC,

Defendants-Appellees,

Carl L. Statum; Tom Kimbrell; and James E. Norman, Defendants.

No. 87-7607.

United States Court of Appeals, Eleventh Circuit

September 29, 1988

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W. Eugene Rutledge, Rutledge & Kelly, P.C., Kay S. Kelly, Birmingham, Ala., for plaintiffs-appellants.

Franklin G. Shuler, Jr., Cooper, Mitch, Crawford & Kuykendall, Jerome A. Cooper, Birmingham, Ala., for United Steelworkers of America, AFL-CIO-CLC.

Harry L. Hopkins, Lange, Simpson, Robinson & Somerville, Duncan B. Blair, Birmingham, Ala., for Connors Steel Co. & H.K. Porter Co., Inc.

Appeal from the United States District Court for the Northern District of Alabama.

Before HATCHETT and COX, Circuit Judges, and FLOYD R. GIBSON [*], Senior Circuit Judge.

FLOYD R. GIBSON, Senior Circuit Judge:

Appellants, former employees of Connors Steel Company (Connors) and putative class representatives of approximately 600 former Connors employees, appeal an order of the district court granting summary judgment to Connors, H.K. Porter Company, Inc. (H.K. Porter), and United Steelworkers of America, AFL-CIO, CLC (Union), in this complicated dispute which followed the closing of Connors's steel plant in Birmingham, Alabama. The employees sued Connors, its parent corporation H.K. Porter (Connors and H.K. Porter are collectively referred to as the "Company"), and the Union alleging fraud, a hybrid Sec. 301/fair representation claim, breach of the duty of fair representation, and breach of a collective bargaining agreement (CBA or agreement) and two concession agreements.

The district court concluded that the state law fraud claims were preempted by sections 7 and 8 of the National Labor Relations Act (NLRA or Labor Act). The district court also determined that there were no genuine issues of material fact and that the Union was entitled to summary judgment on the fair representation claim

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by the former employees as a matter of law. Finding that the Company's liability under section 301 of the Labor Management Relations Act (LMRA) was conditional on the Union's breaching its duty of fair representation, the district court granted the Company's motion for summary judgment. We affirm.

BACKGROUND

This case arose out of two concession agreements given by the employees to the Company which provided for an emergency reduction in wages and benefits. The first concession agreement became effective on September 1, 1982 and reduced wages by twenty percent, reduced certain benefits, and provided for complete repayment of all wage and benefit concessions if Connors returned to profitability. Connors required the concessions to keep its Birmingham 1 plant open because it was facing vigorous competition in the reinforcing steel bar market from "mini-mills" and had incurred $1,594,000 in losses during the first five months of 1982.

Connors believed that given its staggering losses H.K. Porter would close the Birmingham plant if the workers did not approve the concessions. The Union met with Connors's representatives and based on its review of Connors's financial records it decided to recommend the concession package to its membership. The Union membership subsequently approved the concession agreement.

Losses at Connors continued to mount despite the implementation of the concession agreement and the relief it provided. By the end of 1982 Connors's yearly losses exceeded $9,000,000.

In January 1983 negotiations began on a second concession agreement which was ratified by the union membership 2 and went into effect on February 27, 1983. The concessions included a reduction of hourly wages by twenty percent, elimination of supplemental unemployment contributions, savings and vacation benefits, Sunday premiums, shift differentials, and vision and dental benefits. The second package of concessions seemed to reverse the trend of mounting losses. In February 1983 Connors lost $1,010,000 and this monthly loss declined in the following months to $90,000 by August 1983.

The CBA, as modified by the two concession agreements, was set to expire on September 1, 1983, so Connors began negotiating with the Union on a new agreement to become effective upon the expiration of the prior agreement. Connors's final proposal for a new agreement was rejected by the union membership on August 8, 1983. The following day Connors gave the Union notice that the plant would close on September 1. Connors and the Union agreed that, pursuant to the grievance and arbitration provisions of the CBA, all differences between the parties with respect to payment of benefits upon plant closure would be resolved through arbitration.

In October 1983 a group of former Connors employees met to discuss the benefits that Connors proposed to pay them as a result of the plant closure. Seven grievances were prepared complaining that: vacation pay had not been fully paid; all employees at closing were entitled to layoff status and the benefits resulting therefrom; and the employees should be paid the value of the benefits given up in the concession agreements. Connors and the Union agreed to present these grievances to an arbitrator for resolution along with the other issues that they had already agreed to arbitrate.

Prior to the arbitration hearing the employees filed two unfair labor practice charges with the National Labor Relations Board (NLRB or Board). The employees alleged that Connors had bargained in bad faith in violation of section 8(a)(5) of the NLRA and that the Union violated its duty of fair representation under section 8(b) of the Act. Shortly after the charges were

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filed the Board informed the employees that the charges had been investigated but further proceedings were not warranted because the charges were not filed within section 10(b)'s six month limitations period. The employees appealed the dismissal of the charges to the NLRB General Counsel, but the appeal was denied.

The employees then filed this lawsuit in Alabama state court alleging: 1) various breaches of the Union's duty of fair representation; 2) a breach of the CBA and concession agreements by Connors; and 3) fraud and bad faith against the Company in negotiating and inducing the employees to ratify the two concession agreements. The case was then removed to federal court.

After the case was removed the arbitration hearing took place. The arbitrator was presented with all disputes between Connors and the Union including the seven grievances filed by the employees. The arbitrator issued a forty-three page decision finding in favor of the Union on two of the grievances. Connors then complied with the arbitrator's award by issuing checks to 586 former employees totaling $243,392.66.

Thereafter, the district court granted Connors, H.K. Porter, and the Union summary judgment. The court concluded that the employees' state law fraud claims were preempted by sections 7 and 8 of the NLRA. The court dismissed the fair representation claims against the Union finding that "[n]either ineffectiveness nor ineptitude gives rise to a claim for breach of this duty." Finally, the district court granted summary judgment to Connors and H.K. Porter because their liability for breach of the CBA under Sec. 301 was conditional on a finding that the Union breached its duty of fair representation.

DISCUSSION

This case is unique because the employees are seeking redress for claims that have already been the subject of an arbitration proceeding and presented to the NLRB as unfair labor practices. Because the employees received only a partial award in the arbitration proceeding and because the NLRB dismissed their unfair labor charges, the employees turned to state court to pursue relief based primarily on state tort theories. The case was removed and decided on the Company and Union's motions for summary judgment. Now on appeal we are faced with the following questions: 1) the significance of the arbitration award on the claims raised by the employees; 2) the significance of the NLRB's dismissal of the unfair labor practice charges filed by the employees; 3) whether the employees' claims are preempted by sections 7 and 8 of the NLRA or section 301 of the LMRA; and finally, we must determine whether the district court was correct when it granted summary judgment dismissing the employees' claims of breach of the duty of fair representation by the Union and breach of the CBA by the Company. 3

  1. State Law Fraud Claims

    The crux of the employees' state law fraud claims is that the Company fraudulently obtained the 1982 and 1983 concession agreements by representing that it would keep the Birmingham steel plant open if the employees granted the concessions. The employees also allege that the Company intended to close the plant from the very beginning and obtained the concessions in order to reduce the costs associated with the plant closing.

    The...

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