Hasten v. Phillips Petroleum Co., 77-1808

• Decision Date: 06 February 1981
• Docket Number: No. 77-1808,77-1808
• Citation: 640 F.2d 274
• Parties: 106 L.R.R.M. (BNA) 2547, 90 Lab.Cas. P 12,558 William E. HASTEN, Plaintiff-Appellant, v. PHILLIPS PETROLEUM COMPANY and American Stevedoring Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 274

640 F.2d 274

106 L.R.R.M. (BNA) 2547, 90 Lab.Cas. P 12,558

William E. HASTEN, Plaintiff-Appellant, v. PHILLIPS PETROLEUM COMPANY and American Stevedoring

Corporation, Defendants-Appellees.

No. 77-1808.

United States Court of Appeals, Tenth Circuit.

Argued April 18, 1979.

Decided Feb. 6, 1981.

John Ivan of Ivan & Earnshaw, Shawnee Mission, Kan., for plaintiff-appellant.

David K. Fromme, Overland Park, Kan. (Weeks, Thomas, Lysaught, Bingham & Mustain, Chartered, Overland Park, Kan., were with him on brief) for defendant-appellee, American Stevedoring Corp.

Robert D. Benham, McAnany, Van Cleave & Phillips, P. A., Kansas City, Kan., on brief for defendant-appellee, Phillips Petroleum Co.

Before SETH, Chief Judge, and HOLLOWAY and LOGAN, Circuit Judges.

HOLLOWAY, Circuit Judge.

In this diversity action plaintiff-appellant William E. Hasten seeks reversal of a summary judgment entered in favor of the defendants-appellees Phillips Petroleum Company (Phillips) and American Stevedoring Corporation (American). The plaintiff seeks to recover damages for an allegedly malicious libel by a letter to him from American notifying him of his discharge from employment on the asserted basis of dishonesty. ¹ After discovery was completed and a pretrial conference held, Phillips and American filed motions for summary judgment. Argument on the motions was heard by the district court which subsequently sustained the motions on the ground that "libel suits for termination or suspension notices or statements specifically contemplated by a collective bargaining agreement are barred" under the "absolute privilege" doctrine of General Motors Corp. v. Mendicki, 367 F.2d 66 (10th Cir.) (II R. 269). This timely appeal followed.

I

The following facts are undisputed. American and Phillips entered into a written agreement whereby American agreed to supply truck drivers to Phillips for the purpose of hauling and delivering petroleum products. Plaintiff was hired by American in April 1974 and assigned to drive for Phillips. On June 20, 1974, American entered into a collective bargaining agreement with Teamsters' Local Union No. 41. Upon his employment with American, plaintiff transferred his membership from Teamsters Local Union No. 541 to Local Union No. 41 and, at all times pertinent to this lawsuit, was subject to the provisions of the agreement between American and Local No. 41.

Article 9 of the collective bargaining agreement provides for the suspension and/or discharge of employees for infractions of work rules. ² Under this Article an employee is generally entitled to at least one (1) written warning notice of the complaint against him prior to discharge or suspension for a rules violation. However immediate discharge, without a prior warning notice, is permitted for certain specified causes, including dishonesty. If an employee is discharged, Article 9 requires the employer to provide a written notice of discharge to the employee and the union.

Article 10 of the collective bargaining agreement provides the "grievance machinery" for settling "any controversy" which might arise between the employer, the employee, and the union. (I Supp. R.10.) This Article binds both labor and management to follow a detailed, step by step procedure for the consideration and resolution of disputes.

On June 18, 1975, American sent plaintiff a "discharge letter" notifying him that in accordance with Article 9 of the collective bargaining agreement his employment with American had been terminated for "dishonesty." (I R. 20, 52). The letter then enumerated the specific events which American relied on. In essence, the letter charged that plaintiff, while an employee of American, had driven a truck for another company at the same time that he had made a claim for workman's compensation benefits and had told American officials that he was unable to work as a result of an earlier accident which he had while driving for Phillips.

Although there is some dispute as to who actually initiated the grievance proceedings, it is clear that such proceedings were held to determine the validity of plaintiff's discharge. After hearing the evidence from both sides, a joint committee established pursuant to the collective bargaining agreement determined that the letter of discharge should be withdrawn and that all copies of the letter be removed from plaintiff's personnel file. It also determined that the parties should select a neutral qualified physician to examine the plaintiff to determine if he was physically capable of driving a truck and that the decision of the physician would be final and binding on all the parties. After a physician was selected, the plaintiff declined to make an appointment for a physical exam. See III R. 43, 121-25, Exh. 1, 4.

After these grievance proceedings plaintiff brought this libel action claiming, inter alia, that the statement and accusations in the discharge letter were false, untrue, and malicious; that the letter was published with actual malice, ill will, and hatred toward him; and that the defamatory statements damaged his reputation and standing in the community, caused mental anguish and personal, financial, and business injury. (I R. 4-6.) Both defendants filed motions for summary judgment arguing, inter alia, that the statements in the discharge letter were absolutely privileged since they were required by the collective bargaining agreement. (I R. 89, 96; II R. 153, 252, 245). Agreeing with the defendants, the district court held that termination notices contemplated by a collective bargaining agreement are absolutely privileged under the rationale of General Motors Corp. v. Mendicki, supra, and that libel suits based on such notices are "barred." (II R. 268-69).

On appeal plaintiff argues that no privilege should apply under Mendicki as to statements not made in course of actual grievance or arbitration proceedings, that the Mendicki case did not involve a knowingly false and malicious statement as does this case, that Supreme Court decisions recognize the availability of state tort actions in cases of actual malice, and that Kansas law which provides only a conditional privilege should be applied here.

II

As his first ground for reversal, plaintiff argues that in any event the doctrine of unqualified or absolute privilege does not apply to libelous statements made outside of the collective bargaining and grievance process provided for in the collective bargaining agreement. More specifically, he says that the discharge letter, which was allegedly libelous, was not a statement made as a part of a bargaining session as in Mendicki.

It is true that the statements in question were made in the June 18, 1975, discharge letter, ³ and were not statements made during a conference or proceeding relating to a grievance. The district court held, however, that the distinction between statements made in the course of a bargaining session to adjust a grievance and the statements in the discharge letter was of little significance and that the federal policy encouraging collective bargaining and frankness in labor disputes applies to termination notices as well as to bargaining sessions. (II R. 269).

We agree. Article 9 of the agreement requires that "(d)ischarge must be by proper written notice to the employee and the Union." (I Supp. R.10). Thus, the discharge letter was a step required by the agreement. A subsequent challenge to the discharge would seem clearly to premise a "dispute" subject to the grievance machinery provided by Article 10 of the agreement. (I Supp. R.10). Thus, with respect to a grievance and arbitration proceeding, the discharge letter was a part of the entire proceeding contemplated by the provisions of the agreement for the grievance machinery. See Marsh v. Pacific Motor Trucking Co., 77 Lab.Cas. (CCH) P 11,135 at 19,894 (U.S.D.C., C.D.Cal.); Macy v. Trans World Airlines, Inc., 381 F.Supp. 142, 148 (W.D.Va.).

Therefore, the written discharge notice comes within the grievance procedure and is not beyond the protection of the Mendicki decision merely because it was the initial notice triggering the procedure, and not a statement made during oral grievance proceedings.

III

The more serious question before us is whether the unqualified privilege recognized in Mendicki applies to this libel action where the plaintiff claims that the libelous statements of dishonesty were "false, untrue and malicious, and were made by defendant (American), who knew or had reason to know that such statements were false, untrue and malicious, or who had reckless disregard for the truth or the falsity of such statements." (I R. 4).

Plaintiff argues that an unqualified privilege should not apply here, that the court in Mendicki was not faced with a malicious and knowingly false defamatory statement, that under principles announced in Supreme Court decisions libel actions can be maintained if the defamatory publication was made with knowledge that it was false or with reckless disregard for whether it was false or not, and that the Kansas law of qualified privilege should be applied. (Appellant's Brief at 11, 15-17).

We must examine some of the decisions dealing with situations where state or federal claims may be barred or preempted. In San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775, the Supreme Court provided general guidelines for determining the "extent to which the variegated laws of the several States are displaced by a single, uniform, national rule." Id. at 241, 79 S.Ct. at 777. It concluded that federal and state court jurisdiction over a given class of cases was not preempted by federal labor policy where the activity in question "was a merely peripheral concern of the Labor Management Relations Act .... (o)r where the regulated conduct touched interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional...