Hobson v. American Cast Iron Pipe Co.

• Decision Date: 14 February 1997
• Citation: 690 So.2d 341
• Parties: 134 Lab.Cas. P 58,265, 12 IER Cases 980 Fred HOBSON v. AMERICAN CAST IRON PIPE COMPANY. 1951243.
• Court: Alabama Supreme Court

Page 341

690 So.2d 341

134 Lab.Cas. P 58,265, 12 IER Cases 980

Fred HOBSON v. AMERICAN CAST IRON PIPE COMPANY.

1951243.

Supreme Court of Alabama.

Feb. 14, 1997.

Claudia H. Pearson of Nakamura & Quinn, Birmingham, for Appellant.

Chris Mitchell and Tammy L. Dobbs of Costangy, Brooks & Smith, L.L.C., Birmingham, for Respondent.

HOOPER, Chief Justice.

Fred Hobson appeals from a summary judgment in favor of the defendant, American Cast Iron Pipe Company (ACIPCO). Hobson also attempts to appeal the trial court's denial of his motion for summary judgment. We affirm.

I. Facts

Hobson was an employee of ACIPCO from September 1975 until August 1994. His job as a tandum truck operator was classified as a "safety critical job" or a "safety sensitive job." He, therefore, fell within ACIPCO's substance abuse screening policy. In August 1994, Mr. Hobson was terminated when his drug test returned positive for Butalbitol, a controlled substance classified as a barbiturate, in violation of ACIPCO's corporate Rule 15. Corporate Rule 15 prohibits reporting to work with a blood alcohol level equal to or higher than .05% or with drug levels in urine equal to or higher than certain levels allowed for particular drugs. This was Hobson's second violation of Rule 15. The first violation had occurred in January 1993, when he tested positive for alcohol in a drug screening following a workplace incident. Corporate policy requires the termination of any employee upon a second violation of Rule 15.

Hobson appealed his termination by means of a Peer Review Panel (Panel), an internal grievance procedure. According to a document announcing ACIPCO's "Peer Review Policy," the Panel could review management's actions only to ensure that corporate policy and procedure are followed; it could not change corporate policy. When the Peer Review Policy was adopted, the "joint boards" that managed ACIPCO agreed that decisions of the Peer Review Panel could be overturned by a joint decision of the Board of Operatives, which represents employee interests, and the Board of Management, which represents management concerns. The joint boards agreed to retain a privilege of veto over the Panel, with the understanding that without a veto the Panel's decisions would otherwise be "final and binding." However, the employees' representatives on the Board of Operatives told employees that the decisions of the Panel would be "final and binding," without explaining the veto power of the joint board.

Hobson's Panel met and determined that the cutoff level for Rule 15 was too low for the substance for which Hobson tested positive. As a result of this determination, the Panel decided that Hobson should be reinstated with back pay, provided, however, that he passed another drug test. Hobson passed the second drug test, but it revealed that he did have some level of alcohol in his system. Management notified the Panel that its decision would be overturned because, management said, the Panel had acted outside the scope of its powers. Management asserted that the Panel's decision was an unauthorized attempt to change corporate policy. Management told the Panel that the authorized purpose of the Panel was to review management's actions. Acting on this information, Hobson's Panel reconsidered its ruling and decided that it did not have enough information to render a decision. It requested that another panel, constituted differently, consider the matter. Hobson refused to call for a second panel.

Hobson then sued ACIPCO, alleging breach of contract and seeking reinstatement, back pay, damages for mental anguish, and punitive damages. Both parties moved for a summary judgment at the conclusion of discovery. Hobson based his motion on the argument that the Panel's decision was, in effect, final and binding arbitration; ACIPCO based its motion on its assertion that Hobson was an at-will employee and could be terminated at any time for any reason. Both summary judgment motions were denied. ACIPCO filed a second motion for summary judgment, after the trial judge expressed concern over the timing of some language that was added to the employee handbook and over the handbook's relation to Hobson's alleged at-will status. This second motion for summary judgment was denied. ACIPCO filed a third motion for summary judgment related to the issue of damages. The trial court held that neither punitive damages nor damages for mental anguish were available on a breach of contract claim and that public policy precluded reinstatement and back pay based on a discharge arising from an employee's positive result on a workplace drug test. Thus, the trial court granted the motion and entered a summary judgment for ACIPCO on all claims.

II. Status of Peer Review Panel

Hobson argues that the summary judgment was improper because, he says, the trial court failed to recognize that the Panel members were acting as a group of arbitrators and that their decision was therefore entitled to substantial deference. To give an arbitration ruling "substantial deference" would require that it be upheld despite factual or legal error, provided that there is no serious error and that the arbitrator applied the contract and acted within the arbitrator's scope of authority. United Paperworkers International Union v. Misco, 484 U.S. 29, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987). First, we note that Hobson provides no support for his argument that the Panel was in effect a form of arbitration, but merely offers the conclusory statement that this internal grievance procedure was arbitration. This Court has previously held that an internal grievance procedure is not arbitration. Carter v. Board of Trustees, 431 So.2d 529 (Ala.1983)(holding that an internal grievance committee's power to hear wrongful termination claims did not transform the committee's proceeding into a form of arbitration); City of Bessemer v. Personnel Bd. of Jefferson County, 420 So.2d 6 (Ala.1982)(holding that the procedure of an internal committee that could render binding decisions did not constitute arbitration, but was merely a means of grievance resolution). Therefore, we reject Hobson's contentions that the ACIPCO Panel proceeding was a form of arbitration. Second, even if we considered the Panel's decision to be a form of arbitration, we would conclude that it is not entitled to substantial deference, because the evidence shows that the Panel went beyond the scope of its authority by finding that the acceptable level for the drug for which Hobson tested positive was too low.

III. Hobson's Claims for Damages for Emotional Distress and for Punitive Damages

In reviewing the disposition of a motion for summary judgment, "we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact," Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988), and whether the movant was "entitled to a judgment as a matter of law." Wright v. Wright 654 So.2d 542 (Ala.1995); Rule 56(c), Ala.R.Civ.P. When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present substantial evidence creating such an issue. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). Evidence is "substantial" if it is of "such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." Wright, 654 So.2d at 543 (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989)). Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Wilma Corp. v. Fleming Foods of Alabama, Inc. 613 So.2d 359 (Ala.1993); Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990). Hobson presented no genuine issue of material fact as to these two claims for damages. ACIPCO was entitled to a judgment as a matter of law on those claims.

In his complaint, Hobson requests damages for emotional distress and requests punitive damages, both based on the alleged breach of the peer review contract between him and ACIPCO. Hobson contends that by attempting to overrule the Panel and by requesting that the Panel reconsider its decision, ACIPCO breached the peer review contract, which stated that all decisions of the Peer Review Panel are "final and binding." It is a well-settled principle of law that damages for a breach of contract are the amount of the loss suffered by a party harmed by the breach. Corson v. Universal Door Systems, Inc., 596 So.2d 565 (Ala.1991); James S. Kemper & Co. Southeast, Inc....