Dirks v. Sioux Valley Empire Elec. Ass'n, Inc., 16463

• Citation: 450 N.W.2d 426,5 Indiv.Empl.Rts.Cas. 273
• Decision Date: 25 May 1989
• Docket Number: No. 16463,16463
• Parties: 133 L.R.R.M. (BNA) 2885, 114 Lab.Cas. P 11,883, 5 Indiv.Empl.Rts.Cas. 273 Lawrence DIRKS, Plaintiff and Appellant, v. SIOUX VALLEY EMPIRE ELECTRIC ASSOCIATION, INC., Defendant and Appellee. . Considered on Briefs
• Court: Supreme Court of South Dakota

Page 426

450 N.W.2d 426

133 L.R.R.M. (BNA) 2885, 114 Lab.Cas. P

11,883,

5 Indiv.Empl.Rts.Cas. 273

Lawrence DIRKS, Plaintiff and Appellant, v. SIOUX VALLEY EMPIRE ELECTRIC ASSOCIATION, INC., Defendant

and Appellee.

No. 16463.

Supreme Court of South Dakota.

Considered on Briefs May 25, 1989.

Reassigned Dec. 4, 1989.

Decided Jan. 17, 1990.

Jerome B. Lammers of Lammers, Lammers & Kleibacker, Madison, for plaintiff and appellant.

Timothy M. Gebhart of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant and appellee.

MORGAN, Justice (on reassignment).

Lawrence Dirks (Dirks) appeals a summary judgment which dismissed his actions for (1) breach of employment contract, and (2) violation of right-to-work laws. We affirm.

Dirks, a journeyman electrician, was employed by Sioux Valley Empire Electric Association (Sioux Valley) from 1980 until July of 1984. In July 1984, a collective-bargaining agreement existed between Sioux Valley and Local Union 426 of the International Brotherhood of Electrical Workers. That agreement provided that no employee could be discharged "without cause" and established a four-step grievance and arbitration procedure for resolving disputes over alleged violations of the agreement.

On July 5, 1984, Dirks was suspended for striking fellow employee Larry Lund (Lund). The incident occurred earlier that morning when Dirks asked Lund if he would let Dirks use a particular truck for his work duties that day. Lund said he needed the truck. Dirks accused Lund of lying. Lund and several employees stated that Dirks struck Lund on the shoulder with a closed fist. Dirks claimed he merely tapped Lund to get his attention.

On July 13, 1984, Dirks' employment was terminated. In terminating Dirks' employment, Joe Norton (Norton), Sioux Valley's director of member services, relied upon an operating guide established by Sioux Valley's board of directors. A portion of that operating guide provided:

Employees who are past their probationary period are subject to discipline, suspension or discharge only for cause. Non-probationary employees will be subject to immediate discharge only for major violations, such as theft.

Norton said striking a fellow employee constituted "cause" and a "major violation." The operating guide also noted its subservience to the collective-bargaining agreement in cases of conflicts. "Where these practices are found to be in conflict with ... other contractual agreements, the provisions of such ... contracts shall apply."

Dirks, who was not a union member, submitted a grievance on July 9, 1984. After his termination, Dirks wrote James Kiley (Kiley), Sioux Valley's manager, and said he wanted to pursue remedies under the operating guide. Kiley told Dirks his employment and grievance were governed by the collective-bargaining agreement. After another exchange of letters in which Dirks stated he was not a union member and Kiley reiterated that the collective-bargaining agreement applied, Dirks filed a written grievance on July 31, 1984, in accordance with the third step of the collective-bargaining agreement. In accordance therewith, a meeting was held on September 20, 1984. Dirks, who appeared with counsel, took the position that the agreement did not apply and his appearance was not consent to it applying. The decision to discharge Dirks was upheld. Dirks' counsel then initiated the fourth and final step of the collective-bargaining grievance procedure, arbitration. Dirks' counsel reiterated Dirks' position that the agreement did not apply. The arbitration committee met on November 30 and December 7, 1984. After reviewing all the evidence, the committee voted unanimously to support the decision to discharge Dirks.

Dirks subsequently filed suit against Sioux Valley, alleging breach of his employment contract and violation of his right to work. The trial court granted summary judgment in favor of Sioux Valley on both claims. The court stated that the collective-bargaining agreement covered all employees of Sioux Valley, including non-union employees, and, since Dirks was subject to the collective-bargaining agreement, his breach of contract action under state law was preempted by Section 301(a) of the Labor Management Relations Act of 1947, 61 Stat. 156, 29 U.S.C. Sec. 185(a) (Sec. 301). The court further held there was no evidence to support Dirks' claim that his right-to-work was knowingly and willfully violated.

Dirks raises the following issues:

(1) Whether the trial court erred in granting summary judgment on the basis that Dirks' breach of contract claim is barred by the collective bargaining and the federal Labor Management Relations Act.

(2) Whether the trial court erred in granting summary judgment on Dirks' claim that his right to work was violated.

Our standard of review on these two issues is well established. It is fundamental that summary judgment cannot be granted if there are questions of fact to be determined. Groseth Intern., Inc. v. Tenneco, Inc., 410 N.W.2d 159 (S.D.1987). However, construction of a written contract is a question of law for this court to consider. Delzer Construction Co. v. South Dakota Bd. of Trans., 275 N.W.2d 352 (S.D.1979).

Dirks claims the trial court erred in holding that the breach of contract action was preempted by Sec. 301. Section 301(a) provides:

Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this act, 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.

The Supreme Court has held that, under Sec. 301, federal labor law preempts state law in relation to a collective-bargaining agreement. Allis Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). The rationale for this preemption rule is the need for uniformity and predictability in the interpretation of labor contract disputes. Id. Applying both state and federal law to such disputes could be disruptive:

The possibility that individual contract terms might have different meanings under state and federal law would inevitably exert a disruptive influence upon both the negotiation and administration of collective agreements. Because neither party could be certain of the rights which it had obtained or conceded, the process of negotiating an agreement would be made immeasurably more difficult by the necessity of trying to formulate contract provisions in such a way as to contain the same meaning under two or more systems of law which might someday be invoked in enforcing the contract.

Teamsters v. Lucas Flour Co., 369 U.S. 95, 103, 82 S.Ct. 571, 577, 7 L.Ed.2d 593, 599 (1962). Whether the preemption rule applies to a contract dispute depends upon "whether evaluation of the [claim] is inextricably intertwined with consideration of the terms of the labor contract." Allis Chalmers, 471 U.S. at 213, 105 S.Ct. at 1912, 85 L.Ed.2d at 216. If so, the rule applies. Conversely, if the claim may be resolved pursuant to state law that "prescribe[s] conduct, or establish[es] rights and obligations, independent of a labor contract," preemption by Sec. 301 will not arise. Id., 471 U.S. at 212, 105 S.Ct. at 1912, 85 L.Ed.2d at 216.

Dirks contends that interpretation of the collective-bargaining agreement is unnecessary to resolve his claim initiated under the operating guide. This myopic stance disregards the provision of the operating guide that states that where its "practices conflict with other contractual agreements, the provisions of such ... contracts shall apply."

Here, the operating guide conflicts with the collective-bargaining procedures for termination of employees for cause. While it is true that both the collective-bargaining agreement and the operating guide only permit the discharge of a non-probationary employee for cause, there is an inherent conflict in the procedure for termination. The collective-bargaining agreement sets out a four-step grievance procedure before an employee may be discharged. The one-page operating guide provides no such protection; therefore, its lack of protections is in "conflict with ... other contractual agreements" found in the collective-bargaining agreement. By the operating guide's own language, it is preempted by the collective-bargaining agreement. Dirks may not give up more favorable benefits secured by the collective-bargaining agreement. The United States Supreme Court has said that an individual contract may not forfeit these superior rights found in the collective-bargaining agreement.

But, however engaged, an employee becomes entitled by virtue of the Labor Relations Act somewhat as a third party beneficiary to all benefits of the collective trade agreement, even if on his own he would yield to less favorable terms. The individual hiring contract is subsidiary to the terms of the trade agreement and may not waive any of its benefits. (Emphasis supplied.)

J.I. Case Co. v. Labor Board, 321 U.S. 332, 336, 64 S.Ct. 576, 579, 88 L.Ed. 762 (1944). Thus, even if Dirks had an independent contract, it became subsidiary to the collective bargaining agreement and requires reference to it.

Nor are we persuaded by Dirks' retrogressive theory that the operating guide is an independent contract because there is nothing in the collective bargaining prohibiting its application. ¹ In support of this proposition and in recognition of the fact that the Supreme Court has said that individual employment contracts could exist outside the collective-bargaining agreement, Dirks cites us to Caterpillar Inc. v. Williams, 482 U.S. 386, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). That case is wholly distinguishable from the facts at hand. As the Court said:

It [the independent contract] does not rely upon the collective agreement indirectly, nor does...