Hill v. J.C. Penney, Inc.

• Decision Date: 07 June 1993
• Docket Number: No. 14764-5-II,14764-5-II
• Citation: 852 P.2d 1111,70 Wn.App. 225
• Parties: Robin Bartley HILL, Respondent, v. J.C. PENNEY, INC., a corporation, Appellant. Division 2
• Court: Washington Court of Appeals

Page 225

70 Wn.App. 225

852 P.2d 1111

Robin Bartley HILL, Respondent, v. J.C. PENNEY, INC., a corporation, Appellant.

No. 14764-5-II.

Court of Appeals of Washington,

Division 2.

June 7, 1993.

Thomas A. Lemly, David Wright Tremaine, Seattle, for appellant

Richard D. Smith, Smith and Jordan, Tacoma, for respondent.

SEINFELD, Judge.

J.C. Penney, Inc., appeals a superior court judgment against it for the wrongful discharge of Robin Bartley Hill, arguing that the trial court lacked jurisdiction; that Hill did not have a contractual right to be fired only for cause; that Hill was fired for cause; and that Hill failed to mitigate her damages. Hill cross-appeals, challenging a summary judgment dismissing several causes of action related to her discharge. We affirm the summary judgment in J.C. Penney's favor and reverse Hill's judgment against Penney.

Penney hired Hill as a temporary sales associate at its Tacoma Mall store on November 8, 1983. Hill later became a regular sales associate. Shortly after beginning work, Hill joined the union representing Penney employees. The collective bargaining agreement (CBA) between Penney and its employees provided that employees would be subject to discharge only for good cause and that violation of store rules constituted good cause. The CBA expired on May 31, 1985; a Penney terminated Hill's employment on June 7, 1985, stating as its reason that Hill "was observed allowing removal of merchandise, which was the property of the Company, for which there was no payment or receipt of exchangeable merchandise." In a pre-termination interview, Penney's security manager described three separate dates when security staff made these observations. ¹

successor agreement did not become effective until October 23, 1985.

When Penney hired Hill, she received an "Associate Handbook" describing the company's sales and customer philosophy and store safety policy. The Handbook also contained a summary of benefits and customer services, a code for dress and behavior, and lists of rules under three subheads: "General Information", "Rules We Work With", and "Sales Procedure Rules". Three of the "Rules We Work With" stated that violation "will result in" or is "cause for dismissal"; the other rules did not state consequences for violation. The handbook did not explain or promise any discharge, disciplinary, promotion, or evaluation procedures.

A removable form on the back page of the handbook referred to the booklet as "Store Rules and Regulations" and required compliance with the rules. Hill signed such a form, indicating she received the handbook, understood the rules and acknowledged that she could "be dismissed for infraction of any of these rules." Hill also attended an orientation at which store personnel reviewed the handbook with new employees and provided initial training.

The sales procedure rules found in the handbook were also posted on an employee bulletin board, with the notation that "Infraction of Any One of Them is Sufficient Cause for Immediate Dismissal." Sales Procedure Rule 1 stated, in part: "No merchandise is to be sold for less or more than its marked retail price", and Rule 2 provided, in part: "Each sale must be rung on the cash register [or].... [R]ecorded on the proper In addition to the handbook, Penney also distributed a Personnel Procedures Manual to management only. The manual contained guidelines for discharge but also stated that the guidelines were not binding or contractual. Hill never saw the manual while an employee.

                sales slip at the time of the transaction....  The correct sales receipt must be given to the customer, placed in or attached to the package."   Penney later stated that it fired Hill for violations of Rules 1 and 2
                

In early 1985, Hill informed Penney that she planned to quit. Steve Gering, then acting as Personnel Manager of the Tacoma Mall store, told Hill that she was a good employee, that he did not want her to leave, and that she would be receiving a raise soon. Shortly thereafter, Gering approved and Hill received an unscheduled merit raise of $1.05 per hour to $5 per hour. While working at Penney, Hill received a job offer from a different company. She declined, but did not inform Penney of the other offer.

Hill filed suit against Penney on July 22, 1986, stating claims for wrongful discharge based on implied contract to terminate only for cause, outrage, bad faith termination, defamation, invasion of privacy, false light, termination violating public policy, and termination violating due process. Penney twice petitioned for removal of the action to federal district court, arguing that the federal court had jurisdiction because resolution of Hill's claims would involve interpretation of the CBA. Hill moved to remand, asserting that her complaint did not allege a violation of the CBA. Each time the federal court remanded to the Pierce County Superior Court. In its order granting Penney partial summary judgment, the superior court dismissed all of Hill's claims except her implied contract claim.

Following a trial to the court, the trial judge awarded Hill $75,000 in damages plus attorney fees and costs for a total judgment of $89,257. Penney appeals.

Jurisdiction And Preemption

The trial court based its determination that Hill had a right to be discharged only for cause on the provisions of the Federal law can preempt state labor law and deny state court jurisdiction under three theories, more completely explained below: (1) § 301(a) of the Labor Management Relations Act (LMRA), currently codified as 29 U.S.C. § 185(a); (2) the Garmon doctrine, San Diego Bldg. Trades Coun. v. Garmon, 359 U.S. 236, 242-45, 79 S.Ct. 773, 778-79, 3 L.Ed.2d 775 (1959); and (3) the Machinists doctrine, Lodge 76, Int'l Ass'n of Machinists v. Wisconsin Empl. Relations Comm'n, 427 U.S. 132, 140, 147-51, 96 S.Ct. 2548, 2553, 49 L.Ed.2d 396 (1976). Beaman v. Yakima Vly. Disposal, Inc., 116 Wash.2d 697, 703, 807 P.2d 849 (1991); Commodore v. University Mechanical Contractors, 120 Wash.2d 120, 125-26, 839 P.2d 314 (1992).

                expired CBA.   Penney argues that federal labor law preempts state law with regard to a possible CBA claim and that the trial court lacked subject matter jurisdiction to consider a breach of contract claim based on an expired CBA
                

In general, the LMRA reserves issues touching on industrial relations and national labor policy to the exclusive jurisdiction of the National Labor Relations Board (NLRB). Lumber Prod. Indus. Workers Local 1054 v. West Coast Indus. Relations Ass'n, Inc., 775 F.2d 1042, 1045 (9th Cir.1985) (hereinafter Lumber Prod.). However, § 301(a) allows state and federal courts to exercise concurrent jurisdiction over suits alleging violation of a collective bargaining agreement. Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 403 n. 2, 108 S.Ct. 1877, 1880 n. 2, 100 L.Ed.2d 410 (1988); Lumber Prod., 775 F.2d at 1045. Federal substantive law applies. Joinette v. Local 20, Hotel & Motel Restaurant Employees & Bartenders Union, 106 Wash.2d 355, 362, 722 P.2d 83 (1986).

Jurisdiction under § 301 is dependent on breach of the agreement. Lumber Prod., 775 F.2d at 1047. The rights and liabilities of parties to a § 301 action must be the product of the agreement itself and not of some other origin. Lumber Prod., 775 F.2d at 1046. Thus, an expired CBA cannot provide § 301 jurisdiction. Lumber Prod., 775 F.2d at 1046. Since Hill's CBA expired before she was Hill contends her claim is not barred from state court consideration because it is based on an expired CBA and, thus, not controlled by the operation of § 301(a). See Overby v. Chevron USA, 884 F.2d 470, 474 (9th Cir.1989). However, the Garmon doctrine prevents her from using the expired CBA as a vehicle for obtaining access to state court.

fired, state court jurisdiction cannot be based on § 301(a) concurrent jurisdiction.

Under the Garmon doctrine, if a state law claim is based on an activity "arguably subject to § 7 or § 8" ² of the LMRA, the NLRB has exclusive jurisdiction. Lumber Prod., 775 F.2d at 1047-48 (quoting Garmon, 359 U.S. at 245, 79 S.Ct. at 779); accord Beaman, 116 Wash.2d at 704, 807 P.2d 849. Courts do not apply this test mechanically, but "if a crucial element of a state court action is identical to an element of an unfair labor practice ... arguably covered" by §§ 7 or 8, the state court may not hear the claim; the NLRB has exclusive jurisdiction. Lumber Prod., 775 F.2d at 1048; see Beaman, 116 Wash.2d at 704-06, 807 P.2d 849.

Section 8(a)(5) of the NLRA makes it an unfair labor practice for an employer to change unilaterally the terms and conditions of employment following the expiration of an agreement. 29 U.S.C. § 158(a)(5); Lumber Prod., 775 F.2d at 1046. The employer must maintain the status quo as to working conditions and wages under the agreement during negotiations for a new agreement. NLRB v. Southwest Sec. Equip. Corp., 736 F.2d 1332, 1337 (9th Cir.1984), cert. denied, 470 U.S. 1087, 105 S.Ct. 1854, 85 L.Ed.2d 151 (1985). Thus, the terms of an expired agreement "survive" in the limited sense of defining the status quo maintained under § 8(a)(5). Overby, 884 F.2d at 474. The terms surviving are the essential components of the employer-employee relationship. See Southwest Sec. Equip. Corp., 736 F.2d at 1337-38.

The clause in Hill's CBA requiring a showing of good cause prior to discharge is a term of employment and arguably an Thus, the state court lacked jurisdiction to consider claims based on the CBA, because § 301(a) applies only to an existing contract, or to claims based on the expired CBA, because the Garmon doctrine places exclusive jurisdiction in the NLRB. Hill argues, in the alternative, that state law recognizes an independent and alternative basis for the survival of the good cause contract provision. Here, however, she runs afoul of the third preemption theory, the Machinists doctrine. Machinists, 427 U.S. at...