DeTomaso v. Pan American World Airways, Inc.

• Decision Date: 25 November 1985
• Citation: 184 Cal.App.3d 344,220 Cal.Rptr. 493
• Court: California Court of Appeals Court of Appeals
• Parties: Previously published at 184 Cal.App.3d 344 184 Cal.App.3d 344 John DeTOMASO, Plaintiff, Appellant and Cross-Respondent, v. PAN AMERICAN WORLD AIRWAYS, INC., Defendant, Respondent and Cross-Appellant. Civ. B006675.

Page 493

220 Cal.Rptr. 493

Previously published at 184 Cal.App.3d 344

184 Cal.App.3d 344

John DeTOMASO, Plaintiff, Appellant and Cross-Respondent, v. PAN AMERICAN WORLD AIRWAYS, INC., Defendant, Respondent and Cross-Appellant.

Civ. B006675.

Court of Appeal, Second District, Division 3, California.

Nov. 25, 1985.

As Modified Nov. 25, 1985.

Review Granted Feb. 18, 1986.

Robert N. Cleaves, Los Angeles, for plaintiff, appellant and cross-respondent.

Belcher, Henzie, Biegenzahn & Walker, and George M. Henzie and E. Lee Horton Los Angeles, for defendant, respondent and cross-appellant.

KLEIN, Presiding Justice.

Plaintiff and appellant John DeTomaso (DeTomaso) appeals from an order conditionally granting defendant and respondent Pan American World Airways, Inc.'s (Pan Am) motion for a new trial.

Pan Am cross-appeals from the judgment in favor of DeTomaso, from the order denying its motion for judgment notwithstanding the verdict, from the order denying its motion for new trial as to all issues, and from the order conditionally granting its motion for new trial.

Because the federal Railway Labor Act (RLA) did not preempt the causes of action alleged in the complaint, and for the reasons discussed herein, the order granting a new trial is set aside, and the judgment is affirmed and reinstated.

PROCEDURAL AND FACTUAL BACKGROUND

During September 1978, DeTomaso, an 11 year employee of Pan Am, purchased three bins of salvage from the airline for a total of $300. Such transactions were not prohibited by company policy, and DeTomaso had previously purchased abandoned cargo from Pan Am. Pan Am subsequently discovered that some of the cargo was not abandoned, and on October 17, 1978, Jim Startzell, Director of Security for Pan Am, together with an FBI agent, visited DeTomaso at his workplace to inquire about the cargo.

The three of them went to DeTomaso's house to look at the salvage items in the garage. In the presence and hearing of DeTomaso's 10-year old son, Startzell accused DeTomaso of theft. The FBI agent confiscated part of the cargo and turned it over to Continental Airlines. On October 24, 1978, Startzell reported the matter as a theft to John Solomito, Pan Am's Director of Cargo, as well as to the airline's Director of Security at JFK Airport in New York and to the Labor Relations Manager.

DeTomaso was fired on January 11, 1979, for "fraud, dishonesty and abuse of company policy." That same day, DeTomaso filed a grievance, which was denied.

DeTomaso then sued Pan Am for defamation, intentional infliction of emotional distress, and breach of warranty of title to the property he had purchased. On March 9, 1979, a Field Board Hearing took place following which DeTomaso was reinstated with back pay. DeTomaso then amended his complaint to delete a prayer for loss of wages and related benefits. The trial of the case resulted in a jury verdict for DeTomaso in the amount of $265,000 general damages and $300,000 punitive damages.

Pan Am moved for a new trial on the grounds of (1) excessive damages, (2) insufficiency of the evidence to sustain the verdict, and (3) errors of law in instructing the jury on emotional distress, defamation and punitive damages. The trial court granted Pan Am's motion for new trial as to damages only, unless DeTomaso agreed to accept $156,607 in general damages and $50,000 in punitive damages. DeTomaso refused to accept the remittitur. The appeal and cross-appeal followed.

CONTENTIONS

DeTomaso contends the order granting the new trial must be reversed and the judgment reinstated, as the order failed to specify the grounds upon which the motion was granted.

Pan Am contends reversible errors occurred in that: (1) the RLA, 45 U.S.C. § 151, et seq. provided the exclusive remedy for claims arising out of the investigation and termination of DeTomaso; (2) mutual mistake that salvage was being sold by Pan Am and purchased by DeTomaso prevented the formation of an enforceable contract, so that DeTomaso would be barred from recovering for property he acquired pursuant to the mistake; (3) the damages were excessive; (4) the trial court erred in instructing the jury on punitive damages, absent a showing that Pan Am either authorized or ratified the conduct; (5) the statements complained of, if made were privileged, were made without malice, were true, and were neither authorized nor ratified by Pan Am, so that an award of punitive damages was improper; and (6) the trial court erred in denying Pan Am's motion for a mistrial the grounds of which were the presence of DeTomaso's ill child in the courthouse.

DISCUSSION

1. DeTomaso's claims for damages arising out of defamation and the intentional infliction of emotional distress are not preempted by the federal RLA as the harms he suffered are outside its ambit.

a. The RLA's purpose and scope.

The RLA was enacted in 1926 "to provide for the prompt and orderly settlement of all disputes growing out of grievances or out of the interpretation or application of agreements covering rates of pay, rules, or working conditions." (45 U.S.C. § 151a (5).) In 1936 Congress enlarged the coverage of the RLA to include the airline industry. (45 U.S.C. §§ 181-188.)

One of the RLA's primary purposes is to minimize interruptions in the nation's transportation services by strikes and labor disputes. (Machinists v. Central Airlines, Inc. (1963) 372 U.S. 682, 687, 83 S.Ct. 956, 959, 10 L.Ed.2d 67.) To effectuate that purpose, the RLA provides for the creation of adjustment boards to arbitrate disputes between employees and carriers growing out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions, the so-called minor disputes. A "minor dispute" has been interpreted as being a dispute arising from the interpretation and application of an existing agreement. (Elgin, J. & E.R. Co. v. Burley (1945) 325 U.S. 711, 723-724, 65 S.Ct. 1282, 1290, 89 L.Ed. 1886.) The arbitration provisions for minor disputes are mandatory, and preempt state remedies. (Andrews v. Louisville & Nashville R. Co. (1972) 406 U.S. 320, 92 S.Ct. 1562, 32 L.Ed.2d 95.) Following the rule that state courts should be guided by federal legislation and case law in matters presenting jurisidictional issues (Northwestern etc. R. Co. v. Ind. Acc. Com. (1946) 73 Cal.App.2d 367, 375, 166 P.2d 334), we apply federal authority to the case before us.

b. The causes of action alleged here are not within the RLA.

Pan Am contends the same facts and circumstances forming the factual basis for the defamation and intentional infliction of emotional distress causes of action were inextricably intertwined with the issues to be determined in the grievance proceeding and appeal, as provided for in the RLA. Therefore, it argues DeTomaso's claims are "minor disputes," subject to the exclusive remedy provisions and dispute resolving machinery set up by the RLA, and, in fact, utilized by DeTomaso because of his contested discharge.

It is well settled that garden variety wrongful discharge actions, so-called "minor disputes" involving rights under the collective bargaining agreement are subject to the mandatory arbitration procedure provided in the RLA, and are routinely held to be within the exclusive jurisdiction of the arbitral authority created by the statute. (Peterson v. Air Line Pilots Ass'n, Intern. (4th Cir.1985) 759 F.2d 1161, 1169.)

However, this is not a case where a plaintiff is simply trying to relabel claims arising from a discharge, as was attempted in Magnuson v. Burlington Northern, Inc. (9th Cir.1978) 576 F.2d 1367, cert. den. 439 U.S. 930, 99 S.Ct. 318, 58 L.Ed.2d 323. The gravamen of DeTomaso's claims is not wrongful discharge; DeTomaso claims to be the victim of torts which are legally independent of any contractual claims or grievances he may have that are arbitrable.

For that same reason, Pan Am's reliance on the recent Supreme Court case of Allis-Chalmers Corp. v. Lueck (1985) 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206, is misplaced. In that case, an employee brought a state tort action for bad faith delay in making disability benefit payments due under a collective bargaining agreement. Allis-Chalmers is not on point here as the torts alleged by DeTomaso are factually distinguishable, and as indicated, independent of any arbitrable contractual claims or grievances.

We reject the reasoning of Majors v. U.S. Air, Inc. (D.Md.1981) 525 F.Supp. 853, which reaches a result advocated by Pan Am. In Majors, the plaintiff sued his employer for false imprisonment and defamation as a result of his detention by his supervisors in an investigation of theft of company property. The court held that so long as the claim is founded on some incident of the employment relationship, it is a minor dispute governed by the RLA, whether or not it is expressly governed by the collective bargaining agreement. (Id., at p. 857.)

Majors was soundly criticized in Raybourn v. Burlington Northern R. Co. (W.D.Mo.1985) 602 F.Supp. 385, 388, which noted that under Majors, "no matter how outrageous the conduct of an employer's investigation of possible misconduct by an employee was, a state cause of action would be preempted. For example, an employee whose home was broken into to search for evidence of a breach of company rules, e.g., theft of company property, would have no valid cause of action."

The exclusive remedy provisions of the RLA for minor disputes do not shield an employer from liability in tort for all outrageous acts that are committed in an employment setting.

In enacting the RLA, there was no effort to regulate labor-management relations in that portion of the economy comprehensively, or to divert from the courts every controversy between an employee and a railroad employer. (Raybourn v. Burlington Northern R. Co., supra, 602 F.Supp. at p. 387.) Courts in this circuit and in others have rejected efforts to push all controversies...