Wells v. General Motors Corp.

• Decision Date: 24 August 1989
• Docket Number: No. 88-4665,88-4665
• Citation: 881 F.2d 166
• Parties: 132 L.R.R.M. (BNA) 2241, 58 USLW 2164, 58 USLW 2227, 113 Lab.Cas. P 11,524, 4 Indiv.Empl.Rts.Cas. 1392, 11 Employee Benefits Ca 2375 Mary R. WELLS, et al., Plaintiffs-Appellees, v. GENERAL MOTORS CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 166

881 F.2d 166

132 L.R.R.M. (BNA) 2241, 58 USLW 2164,

58 USLW 2227,

113 Lab.Cas. P 11,524,

4 Indiv.Empl.Rts.Cas. 1392,

11 Employee Benefits Ca 2375

Mary R. WELLS, et al., Plaintiffs-Appellees, v. GENERAL MOTORS CORPORATION, Defendant-Appellant.

No. 88-4665.

United States Court of Appeals, Fifth Circuit.

Aug. 24, 1989.

Rehearing and Rehearing En Banc Denied Sept. 28, 1989.

Paul O. Miller, III, W. Thomas Siler, Jr., Miller, Milam & Moeller, Jackson, Miss., for defendant-appellant.

Richard C. Roberts, III, Edward J. Currie, Jr., Whitman B. Johnson, III, Jackson, Miss., for plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Mississippi.

Before REAVLEY, POLITZ, and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

We review here another case involving alleged promises made and broken in the highly-charged environment of large-scale layoffs and shifts in the labor market. ¹ The thirty-two plaintiffs in this action are former employees at the Packard Electric plant, a subsidiary of General Motors Corporation ("GM"), in Clinton, Mississippi. When GM announced layoffs in 1983, it negotiated with the union a separation agreement, according to which employees could opt for a severance payment in lieu of preserving their seniority and rehire rights. At meetings to explain the plan, a GM representative allegedly told the employees that they could be rehired if new jobs were created, although they would have to apply like everyone else. Plaintiffs contended that when new positions opened in 1985, management informed them they were ineligible under the severance plan.

The plaintiffs sought redress in the district court, basing jurisdiction upon diversity, and positioning their claims upon theories of state law fraud and misrepresentation. GM moved for summary judgment on the ground that the district court lacked subject matter jurisdiction since the proper forum was the National Labor Relations Board ("NLRB" or "Board"). In the alternative, GM claimed that plaintiffs' state law claims were preempted by federal law. The district court denied the motion and certified the question for interlocutory appeal. We accepted the case for review and now affirm, holding that the NLRB has no jurisdiction and that state law governs the action.

I. Right To Be Considered for Rehire.

In 1982, demand for domestic automobiles began to slump, resulting in planned layoffs at the Packard Electric plant ("the plant"). A committee comprised of both union and management created the Voluntary Termination of Employment Plan (the "VTEP"), offering severance pay, either in lump-sum or two-year-installment payments, to those who agreed to resign. This much the parties agree upon; they differ with respect to GM's position concerning the future employment eligibility of those who opted for the VTEP.

GM's version of the facts contradicts that of the plaintiffs and their union in every important respect. GM contends that the parties raised the issue of "rehire rights" in bargaining over the VTEP and that GM officials specifically told union representatives that employees opting for VTEP would not be eligible for rehire. Plaintiffs and their union claim that the representatives asked about future eligibility and were told that would be "no problem." GM alleges that during collective bargaining over the plan's details, management negotiators told union negotiators that employees who accepted plan benefits would not be eligible for rehire. GM further contends that when its officials presented the plan to the employees, they told the employees that those accepting plan benefits would be ineligible for rehire. Lastly, GM reads the VTEP itself as "vague" and "ambiguous" on the issue of employee eligibility for rehire.

Plaintiffs would explain the differing factual accounts as a semantic miscue: GM's references were to "rehire rights," a term of art as between the parties that denotes those rights held by laid-off employees under the general collective bargaining agreement. Such rehire rights would include the rights of laid-off employees to be called back in a certain priority, to have their seniority and benefits reinstated, to work at a particular wage level, and so forth. In contrast, plaintiffs assert that the issue of "future employment eligibility" was independent of the discussion of rehire rights, concerned only the potential for those who opted for VTEP of ever being GM employees again, and was not the subject of collective bargaining.

Plaintiffs, who are thirty-two former GM employees who opted for VTEP, brought independent actions in federal district court, premising jurisdiction upon diversity and alleging (1) that GM, when presenting the VTEP to employees, offered false inducements to employees to opt for the VTEP, in the form of promises concerning future employment eligibility; (2) that GM knew these inducements and representations were false; (3) that plaintiffs relied upon these representations in accepting the plan; and (4) that plaintiffs were injured as a result of this reliance.

II. Subject Matter Jurisdiction: Is This a Case for the

NLRB?

Congress vested exclusive jurisdiction in the NLRB over conduct that is "arguably protected or arguably prohibited" by sections 7 and 8 of the NLRA. See International Longshoremen's Ass'n v. Davis, 476 U.S. 380, 394, 106 S.Ct. 1904, 1914, 90 L.Ed.2d 389 (1986). ² These sections protect the right of the employees to engage in collective bargaining and prohibit both management and labor from engaging in the enumerated unfair labor practices. 29 U.S.C. Secs. 157, 158. GM bears the burden of showing that the challenged conduct is arguably protected or prohibited by the NLRA. See Davis, 476 U.S. at 395, 106 S.Ct. at 1914. It presents three arguments designed to meet this burden and invoke NLRB jurisdiction. We deal with each argument in turn, reviewing them as did the district court; that is, after examining the record de novo we resolve all reasonable doubts and draw all reasonable inferences in favor of the non-movant, and then determine whether the movant is entitled to judgment as a matter of law. Schuster v. Martin, 861 F.2d 1369, 1371 (5th Cir.1988).

A. Mandatory Subjects of Bargaining.

First, GM contends that future employment eligibility is a mandatory subject of bargaining under 29 U.S.C. Sec. 158(d); hence, plaintiffs' claims about GM's representations necessarily implicate GM's good faith in bargaining, or in failing to bargain, ³ over the future-employment issue. GM also asserts that its conduct was arguably prohibited or protected by the NLRA because section 8(a)(5) requires employers to bargain with union representatives before modifying policies that affect mandatory subjects of bargaining. See Armour & Co., 280 NLRB 824, 826 (1986). ⁴

The district court assumed arguendo that the VTEP was a mandatory subject of bargaining, such that GM had a duty to bargain with union representatives over the VTEP. ⁵ But the court concluded that the issue of future eligibility for rehire was not, in itself, a mandatory subject of bargaining so as to require GM to engage in bargaining over that issue as well: "The fact that the matter at issue here, eligibility for future employment, in retrospect could have been and perhaps should have been included within [the VTEP] does not render that topic a fortiori a mandatory subject of bargaining."

We agree. As plaintiffs observe, the company's evaluation and consideration of individual applicants for employment lies "at the very core of entrepreneurial control." The Supreme Court has held that these types of managerial decisions are not mandatory subjects of bargaining. See Ford Motor Co. v. NLRB, 441 U.S. 488, 498, 99 S.Ct. 1842, 1849, 60 L.Ed.2d 420 (1979) (quoting Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203, 222, 85 S.Ct. 398, 409, 13 L.Ed.2d 233 (1964) (Stewart, J., concurring)). An employer's failure or refusal to bargain over a non-mandatory subject does not violate section 8(a)(5). ⁶ See NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 349, 78 S.Ct. 718, 722, 2 L.Ed.2d 823 (1958).

Thus, the fact that future eligibility for rehire might, in the context of the VTEP, have an economic value for those workers who accepted the plan, or that GM raised the issue during collective bargaining (a claim which plaintiffs contest), does not transmogrify a management prerogative into a mandatory subject of bargaining. The status of the issue of future eligibility does not change by virtue of its relation to, or even its purported inclusion in, a union-management agreement concerning other mandatory subjects of bargaining. See Wooster, id. As plaintiffs note, to hold otherwise would provide both management and labor with a "bootstrap" with which to make any bargaining subject a mandatory one.

B. Bargaining Directly with Employees.

Section 8(a)(5) of the NLRA requires employers to bargain in good faith with employee representatives. We have read that section to preclude employers from circumventing those representatives by bargaining directly with employees. See Standard Fittings Co. v. NLRB, 845 F.2d 1311, 1317 (5th Cir.1988). GM asserts that in making its representations to the group of employees who attended the VTEP meetings, it engaged in conduct "arguably prohibited" by the NLRA. Thus, GM maintains that the NLRB is the appropriate forum to hear even the claims of those whose conduct the Act arguably prohibits; in even more basic terms, the implication of GM's argument is that if its conduct indeed was wrong, it is the Board that should declare it so. We hold, however, that Davis defeats GM's attempt to invoke the NLRB's exclusive jurisdiction in this fashion.

In Davis, the Court gave the following construction to the phrase "arguably protected or prohibited":

If the word 'arguably' is to mean anything, it must mean that the party claiming pre-emption is required to demonstrate...