Holland v. Cline Bros. Min. Co., Inc., Civ. A. No. 3:93-1170.

• Decision Date: 01 February 1995
• Docket Number: Civ. A. No. 3:93-1170.
• Citation: 877 F. Supp. 308
• Parties: Michael H. HOLLAND, et al., Plaintiffs, v. CLINE BROTHERS MINING CO., INC., et al., Defendants, CLINE BROTHERS MINING CO., INC., Third-Party Plaintiff, v. UNITED MINE WORKERS OF AMERICA, AFL-CIO, Third-Party Defendant.
• Court: U.S. District Court — Southern District of West Virginia

877 F. Supp. 308

Michael H. HOLLAND, et al., Plaintiffs, v. CLINE BROTHERS MINING CO., INC., et al., Defendants, CLINE BROTHERS MINING CO., INC., Third-Party Plaintiff, v. UNITED MINE WORKERS OF AMERICA, AFL-CIO, Third-Party Defendant.

Civ. A. No. 3:93-1170.

United States District Court, S.D. West Virginia, Huntington Division.

February 1, 1995.

COPYRIGHT MATERIAL OMITTED

Mary Jane Pickens, Shari L. Collias, Susan Cannon-Ryan, Caldwell, Cannon-Ryan & Riffee, Charleston, WV, Howard D. Deiner, David W. Allen, Gen. Counsel, Kenneth M. Johnson, Assoc. Gen. Counsel, U.M.W.A. Health & Retirement Funds, Office of the Gen. Counsel, Washington, DC, for Michael H. Holland, Marty D. Hudson, Elliot A. Segal, Paul R. Dean, United Mine Workers of America 1950 Pension Trust, United Mine Workers of America 1974 Pension Trust, Thomas O.S. Rand, William P. Hobgood, Carlton R. Sickles, Gail R. Wilensky, United Mine Workers of America Combined Benefit Fund.

David W. Allen, U.M.W.A. Health & Retirement Funds, Washington, DC, Susan Cannon-Ryan, Caldwell, Cannon-Ryan & Riffee, Charleston, WV, Kenneth Johnson, Howard D. Deiner, U.M.W.A. Health & Retirement Funds, Office of the Gen. Counsel, Washington, DC, for Joseph J. Stahl, II.

Erwin L. Conrad, Conrad & Clay, Fayetteville, WV, Dannie B. Fogleman, Coleman, Coxson, Penello, Fogleman & Cowen, P.C., Washington, DC, for Cline Bros. Min. Co., Inc., Lake Energy, Inc.

The Matewan Nat. Bank, pro se.

Thomas K. Fast, Conrad & Clay, Fayetteville, WV, for Kara Coal Co., interested party Lake Energy, Inc., Little Hope Min., Inc.

Leah Q. Griffin, Office of the Atty. Gen. of West Virginia, Workers' Compensation Litigation Unit, Charleston, WV, for State of W.V., Dept. of Commerce, Labor and Environmental Resources, Bureau of Employment Programs, Div. of Workers' Compensation, Coal Workers' Pneumoconiosis Fund.

Joseph A. Lazell, Office of the Atty. Gen., Nitro, WV, for Div. of Environmental Protection of the W.V. Dept. of Commerce, Labor and Environmental Resources.

Daynus Jividen, Office of Atty. Gen., Charleston, WV, for W.V. Div. of Labor.

C. Terry Owen, Deputy Atty. Gen., Workers' Compensation Litigation Unit, Charleston, WV, for State of W.V., Bureau of Employment Programs, Div. of Workers' Compensation, Office of Employer Accounts.

John R. Mooney, Marilyn L. Baker, Elizabeth A. Saindon, Beins, Axelrod, Osborne, Mooney & Green, Washington, DC, Charles F. Donnelly, Hostler Law Office, Charleston, WV, Robert H. Stropp, Jr., Gen. Counsel, Intern. Union, U.M.W.A., Washington, DC, for United Mine Workers of America, AFL-CIO.

MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending are Third-Party Defendant United Mine Workers of America, AFL-CIO's ("UMWA") motions to dismiss the third-party complaints. Third-party Plaintiffs Lake Energy, Inc. ("Lake Energy") and Cline Brothers Mining Co., Inc. ("Cline Brothers") have responded, and the UMWA has replied.¹ The motion is ripe for adjudication.

I.

The plaintiffs are certain Trust Funds and their representatives ("Funds") established by the UMWA. They have sued both Lake Energy and Cline Brothers ("the Companies") for contributions the Companies were obligated to make pursuant to the 1984 National Bituminous Coal Wage Agreement ("1984 NBCWA").² Under the 1984 NBCWA the Companies were obligated to pay the Funds $1.11 for every ton of coal they mined. In 1987 the Companies entered into second collective bargaining agreements with the UMWA whereby they became obligated to pay to the Funds only $0.25 per ton of coal mined. The Funds contend the 1987 agreements could not lower the Companies' payments because any lowering would constitute a breach of the 1984 NBCWA.

After the Funds initiated this litigation, the Companies impleaded the UMWA, asserting the following claims: 1) If the Companies are liable to the Funds, the UMWA breached the 1987 agreements by failing to secure reduced contributions; 2) If the reductions in contributions are deemed ineffective, then the 1987 agreement is void for mistake or impossibility; and 3) If the contribution reductions are ineffective, the UMWA procured the 1987 agreement through fraud or misrepresentation.

II.

A.

The UMWA contends the Companies' claims of fraud and misrepresentation are preempted by the National Labor Relations Act, 29 U.S.C. § 151, et seq. The UMWA argues any claim it committed fraud or misrepresented its position to induce the Companies to enter into contracts to reduce contributions to the Funds amounts to an allegation of a violation of 29 U.S.C. § 158(b)(3), which states: "It shall be an unfair labor practice for a labor organization or its agents ... to refuse to bargain collectively with an employer." "Collective bargaining" includes negotiating an agreement in "good faith," 29 U.S.C. § 158(d).³ The UMWA suggests any claim of fraudulent inducement or misrepresentation in the formation of the 1987 agreements is actually a claim it failed to bargain collectively in good faith, and thereby falls within the exclusive jurisdiction of the National Labor Relations Board ("NLRB"). On the other hand, the Companies argue their claims of fraud and/or misrepresentation are not preempted by the NLRA but rather fall within an exception to the NLRB's exclusive jurisdiction found within Section 301 of the Labor Management Relations Act ("LMRA"), Title 29 U.S.C. § 185.⁴

Generally, where conduct is either arguably protected or prohibited by the NLRA, the NLRA preempts state causes of action (such as fraud or misrepresentation). In Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 83, 102 S.Ct. 851, 859, 70 L.Ed.2d 833 (1982) the Supreme Court stated, "The National Labor Relations Board is vested with primary jurisdiction to determine what is or is not an unfair labor practice." In Local 926, Intern. Union of Operating Engineers, AFL-CIO v. Jones, 460 U.S. 669, 676, 103 S.Ct. 1453, 1458-59, 75 L.Ed.2d 368 (1983) the Supreme Court discussed the circumstances when NLRA preemption occurs:

"Our approach to the preemption issue has thus been stated: First we determine whether the conduct that the State seeks to regulate or to make the basis of liability is actually or arguably protected or prohibited by the NLRA. Although the `San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959) guidelines are not to be applied in a literal mechanical fashion,' Sears, Roebuck & Co. v. San Diego County District Council of Carpenters, 436 U.S. 180, 188, 98 S.Ct. 1745, 1752, 56 L.Ed.2d 209 (1978), if the conduct at issue is arguably prohibited or protected otherwise applicable state law and procedures are ordinarily pre-empted. Farmer v. Carpenters, 430 U.S. 290, 296, 97 S.Ct. 1056, 1061, 51 L.Ed.2d 338 (1977). When, however, the conduct at issue is only a peripheral concern of the Act or touches on interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, it could not be inferred that Congress intended to deprive the State of the power to act, we refuse to invalidate state regulation or sanction of the conduct. Garmon, supra, 359 U.S., at 243-44, 79 S.Ct., at 778."

In Sears, Roebuck & Co. v. San Diego County Dist. Council of Carpenters, 436 U.S. 180, 197, 98 S.Ct. 1745, 1757, 56 L.Ed.2d 209 (1978) the Supreme Court explained:

"The critical inquiry in the Garmon analysis is not whether the State is enforcing a law relating specifically to labor relations or one of general application but whether the controversy presented to the state court is identical to ... or different from ... that which could have been, but was not, presented to the Labor Board. For it is only in the former situation that a state court's exercise of jurisdiction necessarily involves a risk of interference with the unfair labor practice jurisdiction of the Board which the arguably prohibited branch of the Garmon doctrine was designed to avoid."

However, when an activity can be defined as both an unfair labor practice under the NLRA and as a violation of a collective bargaining agreement pursuant to Section 301 of the LMRA, the jurisdiction of the NLRB is not exclusive, but concurrent with the courts:

"When an activity is either arguably protected by § 7 or arguably prohibited by § 8 of the NLRA, the preemption doctrine developed in Garmon and its progeny, teaches that ordinarily the states as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference with national policy is to be averted. When, however, the activity in question also constitutes a breach of a collective bargaining agreement, the Board's authority is not exclusive and does not destroy the jurisdiction of the courts under § 301. * * * This exception was fashioned because the history of § 301 reveals that Congress deliberately chose to leave the enforcement of collective agreements to the usual processes of the law. Thus we have said that the Garmon doctrine is not relevant to actions within the purview of § 301, which may be brought in either state or federal courts." (citations and internal quotation marks omitted). William E. Arnold Co. v. Carpenters Dist. Council of Jacksonville and Vicinity, 417 U.S. 12, 15-16, 94 S.Ct. 2069, 2972, 40 L.Ed.2d 620 (1974).

Accord Richardson v. Kruchko & Fries, 966 F.2d 153, 156 n. 1 (4th Cir.1992) ("Section 301(a) of the LMRA gives both federal and state courts subject-matter jurisdiction over suits alleging a breach of the collective bargaining agreement between an employer and a labor organization. If conduct that constitutes an unfair labor practice also violates the collective bargaining agreement, then federal and state courts and the NLRB exercise concurrent jurisdiction.").

Moreover, there is a "strong policy" embodied in the LMRA favoring judicial enforcement of collective bargaining contracts over the exclusive jurisdiction of the NLRB in cases...