Conaway v. Webster City Products Co., 87-902

• Decision Date: 23 November 1988
• Docket Number: No. 87-902,87-902
• Citation: 431 N.W.2d 795
• Parties: 130 L.R.R.M. (BNA) 2486, 4 IER Cases 107 Merry CONAWAY, Appellant, v. WEBSTER CITY PRODUCTS CO., Appellee. Darlene PLAIN, Appellant, v. WEBSTER CITY PRODUCTS CO., Appellee.
• Court: Iowa Supreme Court

Page 795

431 N.W.2d 795

130 L.R.R.M. (BNA) 2486, 4 IER Cases 107

Merry CONAWAY, Appellant, v. WEBSTER CITY PRODUCTS CO., Appellee.

Darlene PLAIN, Appellant, v. WEBSTER CITY PRODUCTS CO., Appellee.

No. 87-902.

Supreme Court of Iowa.

Nov. 23, 1988.

Tito W. Trevino and James E. Fitzgerald of the Trevino Law Office, Fort Dodge, for appellants.

Lawrence A. Reich and Michael S. Sheehan of Lederer, Reich, Sheldon & Connelly, Chicago, Ill., and David H. Goldman of Black, Reimer & Goldman, Des Moines, for appellee.

Considered by McGIVERIN, C.J., and SCHULTZ, LAVORATO, NEUMAN, and SNELL, JJ.

LAVORATO, Justice.

In Springer v. Weeks & Leo Co., we recognized a common law tort action for retaliatory discharge based on the filing of a workers' compensation claim by an at-will employee. 429 N.W.2d 558, 559 (Iowa 1988). We said such conduct by an employer "offends against a clearly articulated public policy of this state." Id. We are now called upon to decide whether an employee covered by a collective-bargaining agreement providing a contractual remedy for discharge without just cause may maintain such an action. The district court, predicting our decision in Springer, held that the action is preempted by section 301 of the federal Labor Management Relations Act (LMRA). See 29 U.S.C. § 185(a). We disagree. Accordingly, we reverse and remand.

I. Background Facts and Proceedings.

Merry Conaway and Darlene Plain were employed by Webster City Products Company (Company) under a collective-bargaining agreement between the Company and their union, U.A.W. Local No. 442. The agreement contains a grievance and arbitration procedure to settle disputes, including those involving employees' discharges. The agreement also provides that the decision of the arbitrator in resolving such disputes shall be final and binding on all parties. Under the agreement employees may be discharged for "just cause." The agreement also provides that an employee may be discharged for being absent from work for three consecutive days without proof of injury or illness, or for being absent because of injury or illness for more than two years.

The Company alleges that Conaway's employment was terminated pursuant to the three-day absence provision and Plain's pursuant to the two-year absence provision. Conaway and Plain had filed claims for workers' compensation before being discharged.

Both employees filed identical petitions at law against the Company. Each alleged that her discharge violated the collective-bargaining agreement (Count I in each petition) and public policy (Count II in each petition).

The Company filed motions to dismiss in both cases. See Iowa R.Civ.P. 216. The district court consolidated the cases for the purpose of hearing on both motions. They were not, however, consolidated for trial.

In arguments to the district court, the employees asserted that violations of public policy had occurred because both discharges were in retaliation for the filing of workers' compensation claims. Treating the motions as summary judgment motions, the court granted both.

In its ruling, the district court assumed from the dicta in our prior cases that we would recognize an action for termination of at-will employment in retaliation for the filing of workers' compensation claims. The court, however, relying on Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985), held that the two actions were preempted by section 301 of the LMRA. The court's rationale for the preemption holding was that the actions were "inextricably intertwined" with the collective-bargaining agreement. Concluding that the actions were really section 301 claims, the court dismissed the cases for failure to exhaust the grievance and arbitration procedures provided by the collective-bargaining agreement. It is from this ruling that the plaintiffs appeal.

Preliminarily, we address the plaintiffs' assertion that the district court erred in treating the motions to dismiss as motions for summary judgment. Our resolution of the primary issue in this case, which we think is a legal question, makes it unnecessary for us to reach the procedural issue.

II. The Preemption Issue.

The article VI supremacy clause of the United States Constitution gives Congress power to preempt state law. Lueck, 471 U.S. at 208, 105 S.Ct. at 1909, 85 L.Ed.2d at 213. Though Congress has power to legislate in the area of labor relations, it has not opted to occupy the entire field. Id. Thus, congressional intent is the "ultimate touchstone" on the question of whether and to what extent section 301 of the LMRA preempts state law. Id. at 208, 105 S.Ct. at 1909-10, 85 L.Ed.2d at 213. The issue then is whether section 301 of the LMRA evinces congressional intent to preempt common law actions grounded on retaliatory discharges for the filing of workers' compensation claims by employees subject to a collective-bargaining agreement. Cf. Baldracchi v. Pratt & Whitney Aircraft Div., 814 F.2d 102, 104 (2d Cir.1987).

Section 301 of the LMRA gives federal courts subject matter jurisdiction over suits involving violations of collective-bargaining agreements. Id. It provides in relevant part:

Suits for violation of contracts between an employee and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.

29 U.S.C. § 185(a). At the time the district court rendered its ruling in these two cases, several important principles involving application of section 301 had emerged from a trilogy of Supreme Court cases.

First, besides providing federal court jurisdiction over controversies involving collective-bargaining agreements, section 301 "authorizes federal courts to fashion a body of federal law for the enforcement of these ... agreements." Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 451, 77 S.Ct. 912, 915, 1 L.Ed.2d 972, 977 (1957). Second, section 301 requires a court to use federal, rather than state, rules of contract interpretation in interpreting collective-bargaining agreements. This approach insures uniform interpretation of collective-bargaining agreements, thereby promoting the peaceable, consistent resolution of labor-management disputes. Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 102-04, 82 S.Ct. 571, 576-77, 7 L.Ed.2d 593, 598-600 (1962). And finally, when a state-law claim is substantially dependent upon an analysis of the terms of a collective-bargaining agreement, the claim must either be treated as a section 301 claim, subject to any grievance and arbitration provision provided by the agreement, or be dismissed as preempted by federal labor law. See Lueck, 471 U.S. at 217-19, 105 S.Ct. at 1914-15, 85 L.Ed.2d at 219-20.

Generally, Congress does not clearly state in the legislation whether it intends to preempt state laws. When that happens, courts "normally sustain local regulation of the same subject matter unless it conflicts with federal law or would frustrate the federal scheme, or unless the courts discern from the totality of the circumstances that Congress sought to occupy the field to the exclusion of the states." Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1190, 55 L.Ed.2d 443, 450 (1978). The three principles from Lincoln Mills, Lucas Flour Co., and Lueck focus on the "frustration" rationale underlying the preemption doctrine. Thus, the bigger question is whether our newly-recognized action for retaliatory discharge, as applied, would frustrate the federal labor-contract scheme established by section 301. Cf. Lueck, 471 U.S. at 209, 105 S.Ct. at 1910, 85 L.Ed.2d at 214.

While the present cases were pending on appeal, the Supreme Court decided Lingle v. Norge Div. of Magic Chef, 486 U.S. 399, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988), a case that we think is controlling here. The question presented there, as the Court phrased it, was "whether an employee covered by a collective-bargaining agreement that provides her with a contractual remedy for discharge without just cause may enforce her state law remedy for retaliatory discharge." Id. at ---, 108 S.Ct. at 1879, 100 L.Ed.2d at 415.

The facts in Lingle are straightforward and uncomplicated. After the petitioner notified her employer, the respondent, that she had been injured in the course of her employment and was requesting compensation under the Illinois Workers' Compensation Act, she was discharged for filing an allegedly false workers' compensation claim. The union representing the petitioner filed a grievance pursuant to a collective-bargaining agreement provision that protected employees from discharge except for "just" cause and that provided for arbitration of disputes between the employer and employee concerning the effect or interpretation of the agreement.

While arbitration was pending, the petitioner filed a retaliatory discharge action in an Illinois state court, alleging that she had been discharged for exercising her workers' compensation rights. After a motion for removal to the federal district court by the respondent, that court dismissed the complaint as preempted. Relying on Lueck, the court concluded that the retaliatory discharge claim was "inextricably intertwined" with the collective-bargaining provision prohibiting discharge without cause, and that allowing the state-law action to proceed would undermine the arbitration procedure in the collective-bargaining agreement.

The Seventh Circuit Court of Appeals agreed with the federal district court and affirmed. The court noted that the Eighth Circuit had held that section 301 preempted these actions while the Second, Third, and Tenth Circuits had held otherwise. Nevertheless, the court concluded that the "better reasoned c...