Payne v. Pennzoil Corp., 2

• Decision Date: 06 June 1983
• Docket Number: No. 2,CA-CIV,2
• Citation: 138 Ariz. 52,672 P.2d 1322
• Parties: Clarence R. PAYNE and Mary Payne, husband and wife, Plaintiffs/Appellants, v. PENNZOIL CORPORATION, a corporation; Duval Corporation, a corporation; C.O. Gracey; Jessie Romero; and J.W. Fortson, Defendants/Appellees. 4670.
• Court: Arizona Court of Appeals

Page 1322

672 P.2d 1322

138 Ariz. 52

Clarence R. PAYNE and Mary Payne, husband and wife, Plaintiffs/Appellants, v. PENNZOIL CORPORATION, a corporation; Duval Corporation, a corporation; C.O. Gracey; Jessie Romero; and J.W. Fortson, Defendants/Appellees.

No. 2 CA-CIV 4670.

Court of Appeals of Arizona,

Division 2.

June 6, 1983.

Rehearing Denied Oct. 3, 1983.

Review Denied Dec. 6, 1983.

Robert Q. Hoyt and Edwin B. McLean, Tucson, for plaintiffs/appellants

Bilby, Shoenhair, Warnock & Dolph, P.C. by John A. Robertson, Tucson, for defendants/appellees.

OPINION

BIRDSALL, Judge.

The trial court granted the appellees' motion to dismiss Count One of the appellants' complaint as to the appellees C.O. Gracey, Jessie Romero and J.W. Fortson and Count Three which was directed only against the appellees Pennzoil Corporation and Duval Corporation. The motion to dismiss was based on lack of subject matter jurisdiction and failure to state a claim. Rule 12(b), Arizona Rules of Civil Procedure, 16 A.R.S. The appellees filed two affidavits in support of their motion. No objection appears to have been made and the court did not exclude the affidavits, but in fact considered them. Therefore the disposition was in the nature of summary judgment. Partin v. Olney, 121 Ariz. 448, 591 P.2d 74 (App.1978). The judgment contained Rule 54(b), Arizona Rules of Civil Procedure, 16 A.R.S. direction, and this appeal followed.

The appellant Clarence Payne was an employee of the appellee Duval. The appellee Gracey was the labor relations supervisor, the appellee Romero was the senior safety supervisor and the appellee Fortson was the industrial relations superintendent at the Duval mine where Clarence Payne was employed. The complaint alleges that the mine was owned and operated jointly by Duval and Pennzoil. The two companies deny that Pennzoil was so involved.

Count One of the complaint alleged that these three employees and other defendants wrongfully interfered with Payne's employment contract. In that count the appellants claimed that Clarence was injured on the job resulting in a claim for workmen's compensation; that the three individual appellees, and others, performed secret surveillance of his activities after his injury which eventually resulted in his discharge.

Count Three was for wrongful termination of his employment contract. The appellants alleged that Clarence had suffered two industrial injuries, one being the injury in Count One, and because of his two resulting compensation claims the employer fired him.

The motion to dismiss and the accompanying affidavits show that there was a collective bargaining agreement in existence at the mine whereby the United Steelworkers was the sole and exclusive representative of the employees for matters included therein. By virtue of this agreement Payne could be discharged only "for just cause" whereas otherwise, without the agreement, his employment would be "at will". The agreement further provided for a grievance committee and a procedure for settlement of disputes between the company and the covered employees. If no settlement was achieved differences were to be submitted to arbitration. The arbitration rules made the arbitration decision final. Where the discharge of an employee, as here, was alleged to be without just cause, the preliminary steps in the grievance procedure could be eliminated.

The appellants contend on appeal:

1) that the termination involved here was not a matter included within the collective bargaining agreement,

2) that the handling of the grievance warranted exceptions to the submission of the matter to arbitration, and

3) that the trial court erred in dismissing Count One as to the three appellees for the reason given. In this regard the court's under advisement minute entry ruling contains the following:

"However, inasmuch as the employers and the named employees, Gracey, Romero and Fortson, are represented by the same counsel and no conflict has been alleged by them, the Court can assume that they were acting within the scope of their authority and that they, therefore, cannot be held for tortious interference with contractual relations."

We affirm.

The Discharge

The appellants allege that Payne was discharged for pursuing his constitutional and statutory rights to compensation for his industrial injuries. See Ariz. Const. Art. XVIII, §§ 3, ¹ 7 and 8; Employer's Liability Law, A.R.S. § 23-801, et seq.; Workmen's Compensation Law, A.R.S. § 23-901, et seq. and in particular A.R.S. § 23-907. For that reason they assert that the arbitration provided under the collective bargaining agreement should not be exclusive. They argue that the appellees' action was retaliatory and against public policy. They contend (1) that an agreement to submit all disputes that may arise to arbitration cannot oust the court of jurisdiction absolutely, citing Gates v. Arizona Brewing Co., 54 Ariz. 266, 95 P.2d 49 (1939) and Fineg v. Pickrell, 81 Ariz. 313, 305 P.2d 455 (1956); (2) that the parties are bound to arbitrate only those issues which by clear language they have agreed to arbitrate, citing Clarke v. Asarco, Inc., 123 Ariz. 587, 601, 123 P.2d 587 (1979) and State Farm Fire and Casualty Co. v. Rossini, 14 Ariz.App. 235, 482 P.2d 484 (1971); vac'd on other grounds, 107 Ariz. 561, 490 P.2d 567; and (3) that arbitration may not resolve issues that go beyond the scope of the submission agreement, citing Clark v. Asarco, Inc., supra; Goldsberry v. Hohn, 120 Ariz. 40, 583 P.2d 1360 (App.1978) and Allstate Ins. Co. v. Cook, 21 Ariz.App. 313, 519 P.2d 66 (1974).

We are not persuaded that any of these reasons are applicable here. The agreement, at least by implication, makes an included employees' wrongful discharge a covered grievance. ² An agreement containing provisions for arbitration should be liberally construed with any doubt resolved in favor of the arbitration. New Pueblo Const. Inc. v. Lake Patagonia Rec. Ass'n, 12 Ariz.App. 13, 467 P.2d 88 (1970). Other courts have found an alleged retaliatory discharge covered by similar agreements. See Cook v. Caterpillar Tractor Co., 85 Ill.App.3d 402, 40 Ill.Dec. 864, 407 N.E.2d 95 (1980); Johnson v. Hydraulic Research and Manufacturing Co., 70 Cal.App.3d 675, 139 Cal.Rptr. 136 (1977).

The response of the parties and the union to Payne's discharge also convinces us that the agreement was intended to provide the procedure for remedying a wrongful discharge. The affidavit of appellee Gracey states, in part, that the union filed a grievance on Clarence's behalf alleging "wrongful discharge", that the company denied the grievance, and that the union later advised the company they would not arbitrate because the grievance was without merit. The construction that the parties themselves place on an agreement is indicative of its meaning. Assoc. Students of the Univ. of Ariz. v. Ariz. Bd. of Regents, 120 Ariz. 100, 584 P.2d 564 (App.1978), cert. denied, 440 U.S. 913, 99 S.Ct. 1226-27, 59 L.Ed.2d 462 (1979).

Payne contends that even if the discharge is covered by the agreement he should not be required to arbitrate. We disagree. New Pueblo Constr. Inc., supra; A.R.S. § 12-1501, et seq. The agreement provided for an exclusive remedy. It also expressly states that the decision of the arbitrator will be accepted as final. The U.S. Supreme Court has held that the employee must at least attempt to exhaust the exclusive procedures of a bargaining agreement. Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965). And see Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967) and Clayton v. International Union, Etc., 451 U.S. 679, 101 S.Ct. 2088, 68 L.Ed.2d 538 (1981).

The Supreme Court has permitted limited exceptions to the exhaustion requirement when an employee filed suit pursuant to a federal statute providing a statutory remedy for matters also covered by a collective bargaining agreement. Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) (minimum wage and overtime claim covered by Fair Labor Standards Act); Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974) (discriminatory discharge covered by Federal Civil Rights Act); U.S. Bulk Carriers, Inc. v. Arguelles, 400 U.S. 351, 91 S.Ct. 409, 27 L.Ed.2d 456 (1971) (federal statutory right of seaman to collect wages). Count Three was properly dismissed because the collective bargaining agreement provided an exclusive remedy for resolution of the appellants' claim.

Handling of the Grievance

The appellants argue that the union mishandled their grievance. The affidavit of appellee Gracey states, in part, that the union filed a grievance on Clarence's behalf alleging "wrongful discharge", that the company denied the grievance, and that the union later advised the company they would not arbitrate because the grievance was without merit. The union is not a party either here or in the trial court. Therefore, this argument is misdirected. In addition, there are neither allegations nor "evidence" to support the claims that the union mishandled the grievance.

The Individual Appellees

The appellees do not even argue that the dismissal of the three Duval employees from Count One should be affirmed for the reason given by the trial court, i.e., that since they are represented by the same counsel and no conflict has been alleged, the court could assume they were acting within their authority and therefore they cannot be guilty of tortious interference with the employment contract. No authority is cited by anyone for this proposition and we reject it. However, the appellees urge other reasons for affirmance. They refer us to the affidavit of M.H. Campbell, Duval's director of industrial relations which states that the three appellees were all acting within the scope of...