Alexander v. Standard Oil Co.

• Court: Appellate Court of Illinois
• Writing for the Court: GEORGE J. MORAN; KARNS; EBERSPACHER
• Citation: Alexander v. Standard Oil Co., 53 Ill.App.3d 690, 368 N.E.2d 1010, 11 Ill.Dec. 402 (Ill. App. 1977)
• Decision Date: 06 October 1977
• Docket Number: No. 76-214,76-214
• Parties: , 11 Ill.Dec. 402, 97 L.R.R.M. (BNA) 2102, 83 Lab.Cas. P 10,333 J. D. ALEXANDER et al., Plaintiffs-Appellees, v. STANDARD OIL COMPANY, an Indiana Corporation, and American Oil Company, a Maryland Corporation, Defendants-Appellants.

Page 1010

368 N.E.2d 1010

53 Ill.App.3d 690, 11 Ill.Dec. 402,

97 L.R.R.M. (BNA) 2102,

83 Lab.Cas. P 10,333

J. D. ALEXANDER et al., Plaintiffs-Appellees, v. STANDARD OIL COMPANY, an Indiana Corporation, and American Oil Company, a Maryland Corporation, Defendants-Appellants.

No. 76-214.

Appellate Court of Illinois, Fifth District.

Oct. 6, 1977.

John W. Noble, Jr., Martin M. Ruken, Robert J. Rubin, Chicago, James K. Almeter, Alton (Friedman & Koven, Chicago, and Hoagland, Maucker, Bernard & Almeter, Alton, of counsel), for defendants-appellants.

Edward L. Welch, Edwardsville, for plaintiffs-appellees.

GEORGE J. MORAN, Justice.

This case involves a dispute over commission rates between the plaintiffs, individual commission agents, and the defendants, American Oil Company and Standard Oil Company. The plaintiffs are employees of the defendants pursuant to individual contracts of employment, and are also members of the Central States Petroleum Union, Local 123, which serves as the plaintiffs' collective bargaining agent with the defendants.

On September 1, 1970, a "working agreement" was executed between Local 123 and the defendants. The agreement provided that defendants would pay each plaintiff:

(a) a percentage commission based on plaintiffs' sales of specified products, and

(b) a commission based on a percentage of the gross sales price on defendants' direct sales of other products to plaintiffs' customers within each plaintiff's territory (cross-sell commission arrangement).

The plaintiffs' individual contracts with defendants contain similar provisions which are meshed with the union negotiated working agreement, the total relationship between an individual agent and the defendants being governed by both agreements. However, the working agreement is to govern and control all inconsistencies with the individual contracts except as to duration and termination in which case the individual contract governs.

Collective bargaining for a new contract between the defendants and the union commenced prior to the working agreement's expiration date of August 31, 1973. The contract was extended until August 31, 1974, during which time collective bargaining continued. In bargaining for the new contract the defendants maintained that the inflated cost of petroleum products had created windfall profits for the agents and hence proposed:

(1) that plaintiffs' commissions be based on the price in effect on September 1, 1973, and

(2) elimination of the cross-sell commission arrangement.

The defendants announced that this position would be implemented in the event of a bargaining impasse.

On November 21, 1974, the union filed charges before the National Labor Relations Board claiming that defendants violated sections 8(a)(1) and (5) of the National Labor Relations Act (NLRA) (29 U.S.C. sec. 151 et seq.) by seeking to implement company proposals without bargaining in good faith.

On January 1, 1975, defendants began paying commissions to plaintiffs based on the September 1, 1973 price rate and discontinued the cross-sell commissions.

On May 9, 1975, the Acting Regional Director of the National Labor Relations Board refused to issue a complaint on the charges filed by the union. This decision was upheld on appeal by the General Counsel's office on July 16, 1975.

On March 1, 1976, the plaintiffs filed a complaint against the defendants in the circuit court of Madison County alleging approximately $400,000 in damages for breach of contract. Damages were based upon nonpayment of cross-sell commissions and the difference between commissions actually paid (based on September 1, 1973 prices) and a higher rate claimed, for sales made after January 1, 1975. Defendants moved to dismiss the complaint on the ground that jurisdiction of the court was pre-empted by the National Labor Relations Act. Agents who chose not to become jobbers were either continued as agents or terminated according to a "Mutual Cancellation of Employment" and a "Final Settlement Agreement". Both of the agreements contained language which could be pleaded in bar of the damage claim. Consequently, plaintiffs moved the trial court to restrain and enjoin defendants from requiring plaintiffs to sign such agreements as a condition of conversion to jobber status.

An evidentiary hearing regarding defendants' motion to dismiss and plaintiffs' motion for a preliminary injunction was held on March 22, 1976. On March 29, 1976, the trial court denied both the motion to dismiss and the motion for a preliminary injunction. Defendants then filed a motion to reconsider, requesting in the alternative the specific findings necessary under Supreme Court Rule 308 (Ill.Rev.Stat.1975, ch. 110A, par. 308), which led to this appeal. Plaintiffs filed a motion in opposition thereto and renewed their request for a preliminary injunction in the event the trial court made the requisite findings for this appeal. The trial court denied the motion to reconsider, entered the requisite findings, and granted the preliminary injunction. Defendants then filed an interlocutory appeal from the injunctive order.

This court granted leave to appeal on the jurisdictional issue and consolidated the appeals.

The primary issue to be considered is whether the circuit court has jurisdiction to hear and decide a claim of contract violation or whether such jurisdiction is preempted by the National Labor Relations Act. We believe the circuit court's jurisdiction is not preempted by federal law.

The preemption doctrine is predicated on the theory that a single national labor policy is desirable and that such policy can best be administered and applied by the National Labor Relations Board. Consequently, "when an activity is protected by section 7 of the NLRA or prohibited by section 8 of that Act, State jurisdiction is preempted." May Dept. Stores v. Teamsters Local 743, 64 Ill.2d 153, 159, 355 N.E.2d 7, 9, citing as authority Weber v. Anheuser-Busch, Inc. (1955), 348 U.S. 468, 75 S.Ct. 480, 99 L.Ed. 546. It is also clear that "(w)hen an activity is arguably subject to § 7 or § 8 of the Act, the States * * * must defer to the exclusive competence of the National Labor Relations Board * * *." May Dept. Stores, 64 Ill.2d 153, 159, 355 N.E.2d 7, 9, citing San Diego Building Trades Council, Local 2020 v. Garmon, 359 U.S. 236, 245, 79 S.Ct. 773, 780, 3 L.Ed.2d 775, 783.

The preemption doctrine is not however, a doctrine without exceptions. In Garmon the Supreme Court noted that state jurisdiction was not preempted "where the activity regulated was a merely peripheral concern of the Labor Management Relations Act" or "where the regulated conduct touched interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, we could not infer that Congress had deprived the States of the power to act." 359 U.S. 236, 243-44, 79 S.Ct. 773, 779, 3 L.Ed.2d 775, 782.

Furthermore, the mere filing of a charge by the plaintiffs' union before the NLRB does not divest the state court of jurisdiction which otherwise results from the exceptions listed in Garmon. (May Dept. Stores v. Teamsters Local 743, 64 Ill.2d 153, 355 N.E.2d 7.) Nor does the refusal of the general counsel of the NLRB to issue a complaint bar suit for violation of the collective bargaining agreement. (See Sheet Metal Workers Local 59 v. J. E. Workman, Inc., 343 F.Supp. 480 (D.Del.1972); Ruzicka v. General Motors Corp., 336 F.Supp. 824 (E.D.Mich.1972).) The refusal to issue a complaint is not res judicata because it is not final. NLRB v. Baltimore Transit Co., 140 F.2d 51 (4th Cir. 1944), cert. denied 321 U.S. 795, 64 S.Ct. 848, 88 L.Ed. 1084 (1944).

Relying on Lodge 76, International Association of Machinists & Aerospace Workers v. Wisconsin Employment Relations Commission, 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396, and People v. Federal Tools & Plastics, 62 Ill.2d 549, 344 N.E.2d 1, defendant contends that the circuit court's jurisdiction is preempted. Both cases involved a finding of preemption in an area Congress intended to remain unregulated and left to the free play of economic forces, commonly referred to as "economic self-help." However, we believe that breach of contract was not an area intended by Congress to fall within the preemption principle. Congress specifically rejected a proposal that would have made a breach of contract an unfair labor practice, and hence, subject to the NLRB. Instead, Congress decided to make collective bargaining agreements enforceable in the courts. (See Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483.) By making collective bargaining agreements enforceable in the courts, we believe it was not the intent of Congress to leave breach of contract matters to the free play of economic forces. Therefore, we hold that the economic self-help doctrine is inapplicable to this case. See May Dept. Stores v. Teamsters Local 743, 64 Ill.2d 153, 355 N.E.2d 7.

Plaintiffs contend that the trial court had jurisdiction to entertain their action under section 301 of the Labor Management Relations Act (LMRA) ( 29 U.S.C., sec. 185). Defendants argue that plaintiffs' reliance on section 301 of the LMRA is misplaced since the collective bargaining agreement had expired well before the date of the alleged breach.

Section 301 of the LMRA specifically provides that:

"Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce * * * may be brought in any district court of the United States having jurisdiction of the parties * * *."

As interpreted by the courts, section 301 of the LMRA does not preempt state court jurisdiction. The various state courts exercise concurrent jurisdiction with the federal courts over actions involving the construction or enforcement of collective bargaining agreements. (Humphrey v. Moore, 375 U.S 335, 84 S.Ct. 363, 11 L.Ed.2d 370; ...