Terwilliger v. Greyhound Lines, Inc.
| Decision Date | 26 September 1989 |
| Docket Number | No. 87-1236,87-1236 |
| Citation | 882 F.2d 1033 |
| Parties | 132 L.R.R.M. (BNA) 2001, 58 USLW 2163, 112 Lab.Cas. P 11,393, 4 Indiv.Empl.Rts.Cas. 1063 Marion TERWILLIGER and Doris Terwilliger, Plaintiffs-Appellees, v. GREYHOUND LINES, INC., a foreign corporation, and James Shelby, jointly and severally, Defendants-Appellants, M.J. Jorgensen, Defendant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Ronald G. Acho (argued), Cummings, McClorey, Davis, and Acho, P.C., Livonia, Mich., for defendants-appellants.
Donald R. Day, Phoenix, Ariz., for Greyhound Lines.
J. Douglas Peters, Charfoos, Christensen & Archer, David R. Parker (argued), Detroit, Mich., for plaintiffs-appellees.
Before ENGEL, Chief Judge *; MERRITT and KRUPANSKY, Circuit Judges.
Defendant Greyhound Lines, Inc. ("Greyhound") appeals the judgment of the district court awarding plaintiff Marion Terwilliger damages following a jury determination that Greyhound committed fraud and misrepresentation under Michigan law against Terwilliger by denying Terwilliger's application for reemployment in 1971. For the reasons stated below, we find that Terwilliger's state-law claim is preempted by Section 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185, and hold that this case should have been dismissed for Terwilliger's failure to exhaust the remedies available in the collective bargaining agreement.
Marion Terwilliger was first employed as a bus driver by Greyhound in 1943 and was a member of the local chapter of the Amalgamated Transit Union ("Union") throughout his employment. In 1966, after Terwilliger experienced heart problems, his doctor disqualified him from employment as a bus driver with Greyhound. Pursuant to his rights under the collective bargaining agreement between Greyhound and the Union, Terwilliger was then granted disability pension status. In 1970, Terwilliger passed the Department of Transportation physical and began driving buses for a local carrier, and in 1971, he reapplied to Greyhound for employment. His application included a recommendation of fitness for employment from his personal physician.
Pursuant to the collective bargaining agreement, Greyhound referred Terwilliger to an independent physician, Dr. Herman Kantor, for a second examination. Dr. Kantor's report did not recommend him for reemployment. The report listed two reasons for the recommendation: Terwilliger's vision was below standard and a Department of Transportation code number relating to heart disease. After Greyhound asked Dr. Kantor to clarify his findings, Kantor sent a letter and a second examination report which stated that Terwilliger's vision was below standard, but that his heart condition met the Department of Transportation standards, though possibly not Greyhound's internal standards. 1 Greyhound then denied Terwilliger's petition for reemployment. Terwilliger wrote a letter to the Union challenging Greyhound's denial of his reinstatement.
Based only on the letter from Terwilliger's physician and Dr. Kantor's initial report, 2 the Union was faced with disagreeing physicians regarding Terwilliger's heart condition. Article 12 of the Collective Bargaining Agreement provides for this situation:
Employees failing to pass medical examinations by competent medical authority approved by the Company may be disqualified for service. This disqualified employee or the Union may, within ten (10) days after such examination make written request to the Company for further examination by the employee and the other by the Company.... In the event of disagreement between the two physicians, a representative of the Company and a representative of the Union shall meet within ten (10) days from the date of written notice of disagreement between the physicians, to select a third physician. The third physician shall make an examination and the findings of a majority of three shall rule.
Following this procedure, the Union and Greyhound decided upon a third physician, Dr. Breneman, a cardiologist. Dr. Breneman determined that Terwilliger should not be reemployed by Greyhound due to his heart condition. Based on this report, Greyhound confirmed its denial of Terwilliger's reapplication for employment in 1971.
The Union advised Terwilliger that it could do nothing more for him and in 1973 he hired a lawyer to sue Greyhound. In 1980, Terwilliger learned that his attorney had not yet filed suit, and Terwilliger's separate malpractice action against the lawyer was settled for $225,000 in 1985. 3 In 1981, Terwilliger again sought reinstatement with Greyhound. Greyhound denied his request because he refused to provide updated medical reports on his condition. Terwilliger remained on disability status until 1983, when he reached his normal retirement age.
In the course of Terwilliger's malpractice action against his lawyer in 1984, Terwilliger first gained access to the second examination report by Dr. Kantor. In July, 1985, he discovered an internal Greyhound memo 4 which he claims is evidence that Greyhound fraudulently withheld the second examination report in order to deny his reinstatement. Terwilliger claims that discovery of this memo in 1985 first led him to believe that Dr. Kantor had recommended nonreinstatement based on Terwilliger's vision alone and that there did exist a second report.
In August 1985, Terwilliger filed the present suit seeking back pay and other damages, alleging state-law claims for breach of contract, negligence, and fraud and misrepresentation through Greyhound's denial of his reinstatement in 1971. Terwilliger claimed that Greyhound employees intentionally changed the first report by Dr. Kantor and concealed the second report in order to secure the Union's agreement to an examination by a third physician, all as part of a Greyhound plot to not rehire Terwilliger as a driver. At trial, with only the fraud and misrepresentation claim remaining, the jury returned a verdict for Terwilliger, awarding him $250,000 in actual damages and $500,000 in consequential damages. Pursuant to pretrial agreement, this was set-off by the $225,000 from Terwilliger's previous attorney malpractice award, resulting in a total award of $525,000. Greyhound appeals.
Section 301(a) of the Labor Management Relations Act, 29 U.S.C. Sec. 185(a), provides:
Suits for violation of contracts between an employer and a labor organization representing employees ... may be brought in any district court of the United States having jurisdiction of the parties....
The Supreme Court has determined that section 301 not only confers federal jurisdiction over controversies involving collective bargaining agreements, but also authorizes the federal courts to fashion a body of federal law for the enforcement of section 301. Textile Workers v. Lincoln Mills, 353 U.S. 448, 451, 77 S.Ct. 912, 915, 1 L.Ed.2d 972 (1957). In Teamsters v. Lucas Flour, 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962), the Court determined that the federal law preempts local law so that a uniform body of labor law can be developed to avoid conflicts in the interpretation of collective bargaining agreements. Then, in Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 213, 105 S.Ct. 1904, 1912, 85 L.Ed.2d 206 (1985), the Court determined that the preemptive effect of the federal labor law extended to state-law tort claims which are "inextricably intertwined with consideration of the terms of the labor contract" as well as pure contract claims. In 1987, the Court summarized the preemption doctrine as follows: "Section 301 governs claims founded directly on rights created by collective bargaining agreements, and also claims substantially dependent on analysis of a collective bargaining agreement." Caterpillar Inc. v. Williams, 482 U.S. 386, 107 S.Ct. 2425, 2431, 96 L.Ed.2d 318 (1987).
In 1988, the Supreme Court clarified the scope of the terms "substantially dependent on analysis of a collective bargaining agreement" and "inextricably intertwined" in a tort context in Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988). Lingle involved a claim of retaliatory discharge for filing a worker's compensation claim. The Court held that the claim was not preempted because "resolution of the statelaw claim [did] not require construing the collective-bargaining agreement." Id. 108 S.Ct. at 1882. The Court noted that the two elements of retaliatory discharge, that the employee was discharged or threatened with discharge, and that the employer's motive was to deter him from exercising his rights under the Worker's Compensation Act, were purely factual and did not involve interpretation of the terms of the agreement. Id.
On the basis of Lingle, this court has recently reconsidered a claim of tortious interference with a contract by a third party and found no preemption of that state-law claim because the claim could be resolved without interpreting the collective bargaining agreement. Dougherty v. Parsec, 872 F.2d 766 (6th Cir.1989). Dougherty involved a claim against a non-signatory to a collective bargaining agreement who was not bound by the terms of the contract and thus not bound to the arbitration process for resolution of disputes. The court recognized that a major policy underlying the preemption principle was "that permitting state law claims would allow plaintiffs to avoid the fundamental labor policy that contract disputes should be decided by arbitrators in the first instance." Id. at 771. Because the defendant was a third party to the contract and the relationship of the parties was not defined by the contract, there was no basis for preemption because a dispute between them would not have been subject to arbitration initially. Thus the court determined that preemption principles did not apply.
This court, en banc, also recently considered the issue...
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