Garley v. Sandia Corp.

• Decision Date: 03 January 2001
• Docket Number: No. 99-2255,99-2255
• Citation: 236 F.3d 1200
• Parties: (10th Cir. 2000) ELOY GARLEY, Plaintiff-Appellant, v. SANDIA CORPORATION d/b/a SANDIA LABORATORIES, Defendant-Appellee
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1200

236 F.3d 1200 (10th Cir. 2000)

ELOY GARLEY, Plaintiff-Appellant, v. SANDIA CORPORATION d/b/a SANDIA LABORATORIES, Defendant-Appellee.

No. 99-2255

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

January 3, 2001

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO. (D.C. No. CIV-98-1127 JC/RLP)

[Copyrighted Material Omitted] Michael D. Armstrong, Albuquerque, New Mexico for Appellant.

Robert P. Tinnin, Jr. (Ryan M. Randall with him on the brief), Hinkle, Cox, Eaton, Coffield & Hensley, LLP, Albuquerque, New Mexico for Appellee.

Before TACHA, HOLLOWAY and BALDOCK, Circuit Judges.

HOLLOWAY, Circuit Judge.

Plaintiff/Appellant Eloy Garley brought this action against Sandia Corporation (Sandia) in New Mexico State District Court on August 17, 1998 alleging six state law causes of action arising out of his employment at Sandia. Garley alleged: (1) breach of implied contract; (2) breach of the duty of good faith and fair dealing; (3) retaliation; (4) civil conspiracy; (5) defamation; and (6) intentional infliction of emotional distress. Sandia removed the complaint to the United States District Court for the District of New Mexico on September 14, 1998.

Sandia then moved to dismiss Garley's suit on the ground that it failed to state a claim on which relief may be granted. Garley moved to remand the case back to state court. The judge denied Garley's motion to remand and conditionally granted Sandia's motion to dismiss on the ground that Garley's state law claims were preempted by 301 of the Labor Management Relations Act ("LMRA"). The court granted Garley thirty days in which to amend his complaint to state 301 claims. When Garley failed to amend his complaint accordingly, the court, sua sponte, unconditionally granted Sandia's motion to dismiss. On appeal, Garley claims error in: (1) the district court's failure to grant his motion to remand the case to state court; and (2) it's decision to grant Sandia's motion to dismiss. We have jurisdiction pursuant to 28 U.S.C. 1291.

I

A FACTUAL BACKGROUND

Garley is a mechanic with Sandia and serves as a union steward for the Atomic Projects and Production Workers Metal Trades Council, AFL-CIO ("Union"). The Union has a collective bargaining agreement ("CBA") with Sandia. In 1996, after an investigation into possible timecard fraud by Garley, Sandia terminated Garley's employment. Following procedures set forth in the CBA, the Union, acting on Garley's behalf, processed a grievance through arbitration.

On March 27, 1998, after arbitration hearings in October and December 1997, the arbitrator found that Sandia had failed to carry its burden of establishing just cause to support Garley's termination, and directed that Garley be reinstated with full back pay, benefits, and unbroken seniority. On April 7, 1998, Sandia complied with the order and reinstated Garley. On August 14, 1998, Garley filed a complaint in New Mexico state court stating state law claims arising from allegations that several members of Sandia's management conspired to levy against him false accusations of timecard fraud. Garley's version of the events leading to his termination, as alleged in his amended complaint, follows.

Garley alleged that as a union steward he was permitted under Articles 6 and 9 of the CBA to leave his post to attend to Union business. Complying with the procedural requirements of those articles, Garley averred that he would fill out a form 9614 documenting the times during which he attended to Union business, and that he would also customarily have his supervisor sign the form. Garley alleged that despite complying with these procedures, on April 19, 1996 he was confronted by his immediate supervisor, Mr. Rose, who demanded to know where he was going, and Garley says he responded he was leaving to attend to Union business.

Garley alleged in his First Amended Complaint that Mr. Rose, who had a "personal axe to grind and a racist aversion toward plaintiff," initiated an investigation into timecard fraud, and that Mr. Rose related his "unsubstantiated allegations" to Mr. Fraser, the manager of Sandia's Employee and Labor Relations. Mr. Fraser and Mr. Harty (another Sandia management official) then advised Mr. Rose to contact Mr. O'Neill, Sandia's in-house investigator, to conduct surveillance of Garley to catch him committing timecard fraud, and that as a result Mr. O'Neill did conduct surveillance of Garley, including following his vehicle on three occasions. App. at 54. Garley alleges that after this surveillance, Mr. Rose ordered him to attend an "interview" where Mr. O'Neill confronted him with dates and times of the surveillance. Id. at 54-55. Garley alleged that during this "interview" he was neither asked to explain his activities nor informed of the allegations against him. Id. at 55.

Garley alleges that Mr. Rose reported the results of O'Neill's surveillance to two members of the Disciplinary Review Committee, id. at 56, and that Mr. Rose explained that the reason there was no written statement by Garley was because Garley had refused to provide one. Id. at 56. Garley asserts, however, that during the seven month investigation he was never asked to give an explanation of his activities, either verbally or in writing. Id. Garley alleges that the Disciplinary Review Committee on receiving the report that he committed timecard fraud (which amounted to three and one-half hours, totaling $80.00), terminated his employment, effective December 16, 1996. Id.

The Union commenced grievance proceedings on Garley's behalf which were inconclusive, and the parties agreed to binding arbitration. Id. at 48. Hearings were held on October 13 and 14 and on December 1, 1997. The proceedings were terminated on January 30, 1998, and on March 27, 1998 the arbitrator found the charge of timecard fraud lacked sufficient proof. Id. at 49. The arbitrator ordered Sandia to reinstate Garley to his job with full back pay, benefits, and unbroken seniority. Sandia reinstated Garley on April 7, 1998. Id. at 49.

B PROCEDURAL BACKGROUND

As noted, Garley filed suit in New Mexico state court in August 1998, alleging six state law claims: (1) breach of implied contract; (2) breach of the duty of good faith and fair dealing; (3) retaliation; (4) civil conspiracy; (5) defamation; and (6) intentional infliction of emotional distress. On September 14, 1998, Sandia filed a notice of removal in the United States District Court for the District of New Mexico on the ground that Garley's suit could have been commenced as an original action in federal court under 28 U.S.C. 1331 because, according to Sandia, the state law claims were preempted by federal law under 301 of the LMRA.¹ Consequently, the case was removable to federal court under 28 U.S.C. 1441.

After the removal Sandia filed a motion to dismiss for failure to state a claim upon which relief may be granted under Fed. R. Civ. P. 12(b)(6). Sandia argued: (1) Garley's state law claims were preempted by 301 of the LMRA; and (2) Garley failed to state a cause of action under state law. Sandia argued that four of Garley's state law claims (civil conspiracy, defamation, breach of contract, and intentional infliction of emotional distress) were preempted by 301 and should be dismissed because they were based on Sandia's investigation and termination of Garley. Consequently, they depend "wholly upon an interpretation of what investigatory and disciplinary actions Defendant was authorized to take under the CBA . . ." App. at 78. Sandia further argued that Garley's two remaining state law claims (retaliation and breach of the duty of good faith and fair dealing) were preempted by 301 because they require review of the arbitrator's award and the terms of the collective bargaining agreement. See id. at 80.

The same day Sandia filed its motion to dismiss, Garley filed his First Amended Complaint. Garley states that at the time of filing his amended complaint on September 18, 1998, there had been no filing by Sandia except its notice of removal in connection with Sandia's preemption argument. From the amended complaint Garley excised all references to the CBA, thereby attempting to show that his complaint was not based on the collective bargaining agreement and was not preempted by 301.

The First Amended Complaint restated Garley's six state law claims. First, he alleged that the activities of four of Sandia's representatives (Rose, O'Neill, Fraser, and Harty) constituted a civil conspiracy to deprive him of his employment, income, benefits, and to impugn his reputation.² App. at 53. More specifically, Garley based his civil conspiracy claim on Rose's timecard fraud investigation; his conveyance of "unsubstantiated allegations" to Fraser and the subsequent surveillance; and the conduct of the "interview," where O'Neill confronted Garley with dates and times when he had conducted surveillance against him and where Garley alleged that he was neither asked to explain his activities nor informed of the allegations against him. Id. at 55. In addition, Garley alleged that when Fraser became manager of Sandia's Employee and Labor Relations, he altered the composition of the Disciplinary Review Committee (the entity which rules on disciplinary actions against employees who violate Sandia's Code of Ethics), so that a Union representative was no longer included on the Committee. Garley also alleged that Fraser changed the Committee's procedures so that notice of meetings was no longer given to employees or their union. Garley maintained that this "civil conspiracy" resulted in the Committee's wrongful determination that he had committed timecard fraud, leading to his termination on December 16, 1996, a determination later overturned by the grievance arbitrator but which nonetheless deprived him of his livelihood and tarnished his reputation.

Second, Garley alleged breach of implied contract. In support of this claim, Garley maintained...