United Paperworkers Intern. Union, AFL-CIO, Local 274 v. Champion Intern. Corp.

• Decision Date: 19 April 1996
• Docket Number: Nos. 95-1025,95-1252,AFL-CI,LOCAL,s. 95-1025
• Citation: 81 F.3d 798
• Parties: 152 L.R.R.M. (BNA) 2095, 131 Lab.Cas. P 11,551 UNITED PAPERWORKERS INTERNATIONAL UNION,274; Michael J. Fiedler, Plaintiffs--Appellees/Cross-Appellants, v. CHAMPION INTERNATIONAL CORPORATION, Defendant--Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 798

81 F.3d 798

152 L.R.R.M. (BNA) 2095, 131 Lab.Cas. P 11,551

UNITED PAPERWORKERS INTERNATIONAL UNION, AFL-CIO, LOCAL 274 Michael J. Fiedler, Plaintiffs--Appellees/Cross-Appellants, v. CHAMPION INTERNATIONAL CORPORATION Defendant--Appellant/Cross-Appellee.

Nos. 95-1025, 95-1252.

United States Court of Appeals Eighth Circuit.

Submitted Oct. 18, 1995.

Decided April 19, 1996.

Appeals from the United States District Court for the District of Minnesota; David S. Doty, Judge.

David Ranheim, Minneapolis, MN, argued. Michael Wahoske and Christopher T. Shaheen, briefed, for appellant.

Stephen D. Gordon, Minneapolis, MN, argued. Paul W. Iversen, briefed, for appellee.

Before McMILLIAN, Circuit Judge, WHITE, ^* Associate Justice (Ret.), and LOKEN, Circuit Judge.

LOKEN, Circuit Judge.

Champion International Corporation ("Champion") fired employee Michael J. Fiedler following an incident of sabotage at Champion's pulp and paper mill in Sartell, Minnesota. Two months earlier, Champion had terminated the collective bargaining agreement ("CBA") governing the Sartell work force. When fired, Fiedler was president of Local 274 of the United Paperworkers International Union ("Local 274" or "the Union"). Champion denied his grievance. With the CBA's arbitration provision abrogated, Fiedler and the Union then commenced this action under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, claiming no good cause for Fiedler's termination. A jury agreed and awarded Fiedler $632,000 in front and back pay. The district court denied Champion's post-trial motions, and Champion appeals, raising a difficult § 301 issue. Fiedler and the Union cross-appeal the denial of reinstatement, punitive damages, and attorneys' fees. Concluding that Champion was prejudiced by an erroneous instruction regarding interim labor agreements, we remand for a new trial.

I. Factual Background.

This case involves two distinct episodes: the unsuccessful collective bargaining efforts of Champion and the Union in November and December 1989, and the events leading up to Fiedler's termination in February and March 1990. We will summarize the two episodes separately, seeking of course to view all disputed facts in the light most favorable to the jury's verdict.

A. The CBA Expires. In March 1989, with a three-year CBA about to expire, the Union notified Champion that it wished to negotiate a new CBA. The existing CBA expired on June 1, with negotiations in progress. The expired agreement remained in effect under a provision that permitted either party to terminate upon ten days notice. Dissatisfied with the on-going negotiations, Champion gave notice it would terminate the CBA on December 1.

Just prior to the December 1 termination date, Champion notified the Union and the Sartell employees that it would unilaterally modify certain terms and conditions of the expired CBA. Of greatest relevance here, Champion abrogated its prior agreement to submit unresolved grievances to binding arbitration. Local 274's President (Fiedler's predecessor) expressed great concern over these unsettling developments. Champion's Human Resources Manager, Ken Ebert, responded, "Just calm down, you still have a contract, it is just these terms we are pulling out."

Shortly thereafter, Ebert complained to the Union's International Representative, Marv Finendale, that Local 274's leaders were stirring up trouble with Sartell employees, telling them that there was no contract in place. Ebert explained that Champion proposed to post a notice to employees stating that most of the terms of the terminated CBA would remain in effect. Finendale replied, "I could live with that."

Champion posted this notice on December 1. After listing three changes in working conditions, it stated, "All other provisions, including wages and benefits, of the expired Agreement remain intact until further notice." On December 10, again with prior notice to the Union and employees, Champion unilaterally implemented six additional changes to the terms and conditions of the expired CBA. Champion described these changes as "encompassed within the Company's bargaining proposals." None of Champion's unilateral changes affected two sections of the expired CBA that, Fiedler claims, preclude Champion from terminating a member of the bargaining unit without good cause.

Champion and the Union eventually negotiated a new CBA. But that agreement is irrelevant to this lawsuit because it was not effective until November 1990, long after Fiedler's termination.

B. Fiedler's Termination. Fiedler worked at the Sartell mill as an assistant power plant operator. Early in the morning of February 15, 1990, an alarm sounded indicating that four disks housed in computers located in the mill's control room had failed. Champion's investigation suggested that the disks had been deliberately erased with a hand-held magnet during a two-minute period when Fiedler was the only employee working in the control room. Fiedler denied tampering with the disks or observing anyone else do so. Champion fired Fiedler on March 27, 1990, stating that Fiedler was "the person who was responsible for such damage."

Lacking Champion's agreement to submit the denial of Fiedler's grievance to arbitration, Fiedler and the Union sued in Minnesota state court, alleging wrongful discharge (plus other claims no longer at issue). Champion removed the case to federal court. During the nine-day trial, Union witnesses testified that they considered Champion's posted notices to constitute an interim "implemented contract." On the discharge issue, Fiedler presented evidence that many persons had access to the control room, that the failed disks did not interrupt mill operations, that Champion in terminating Fiedler ignored evidence that another employee had been responsible for an earlier disk erasure, and that most members of the mill's management did not believe Fiedler erased the disks. The jury found that Champion terminated Fiedler without the good cause required under its interim agreement with the Union. It awarded him $136,980 in back pay and $495,197 in front pay. The district court granted the Union's motion for prejudgment interest, denied all other post-verdict motions, and this appeal followed.

II. The Legal Setting.

Section 8(a)(5) of the National Labor Relations Act, 29 U.S.C. § 158(a)(5), requires an employer to bargain in good faith with a union representing its employees. After a CBA has expired, § 8(a)(5) requires that the employer maintain the status quo, that is, the terms of the expired contract, during negotiations for a new agreement. However, these "are no longer agreed-upon terms; they are terms imposed by law, at least so far as there is no unilateral right to change them." Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 206, 111 S.Ct. 2215, 2225, 115 L.Ed.2d 177 (1991).

Moreover, when the parties have bargained to an impasse, the employer may unilaterally change terms and conditions of employ, so long as these changes are consistent with offers that the union has rejected. See NLRB v. Katz, 369 U.S. 736, 743-45, 82 S.Ct. 1107, 1111-13, 8 L.Ed.2d 230 (1962). The federal labor laws protect the use of such economic pressures by both sides to the collective bargaining process. See NLRB v. Insurance Agents' Int'l Union, 361 U.S. 477, 489, 80 S.Ct. 419, 427, 4 L.Ed.2d 454 (1960) (NLRB may not outlaw union's post-expiration "Work Without a Contract" program of slow-downs and sit-ins). Of course, the purpose of this economic hurly-burly is to bring the obstinate negotiators back to the bargaining table, somewhat the worse for wear, but without violence or the need for a government-imposed settlement.

Section 301 confers federal jurisdiction over claims "for violation of contracts between an employer and a labor organization representing employees." If there was no such contract between Champion and the Union, then Fiedler's § 301 wrongful discharge claim must be dismissed. ¹ After a CBA expires, it cannot provide § 301 jurisdiction for post-expiration claims, and any state law claims that the terms of the expired CBA form an "implied contract" are preempted. See Derrico v. Sheehan Emergency Hosp., 844 F.2d 22, 25-29 (2d Cir.1988), cited approvingly in Litton, 501 U.S. at 206, 111 S.Ct. at 2225; Teamsters Local Union 238 v. C.R.S.T., Inc., 795 F.2d 1400, 1404 (8th Cir.) (en banc), cert. denied, 479 U.S. 1007, 107 S.Ct. 647, 93 L.Ed.2d 702 (1986).

Champion's unilateral implementation of employment conditions after bargaining to an impasse does not, without more, provide a contractual basis for § 301 jurisdiction. See UAW, Local 33 v. R.E. Dietz Co., 996 F.2d 592, 595 (2d Cir.1993); Chicago Typographical Union No. 16 v. Chicago Sun-Times, Inc., 935 F.2d 1501, 1510 (7th Cir.1991) ("An implemented final offer is not contractual; it is unilateral"); UMW v. Big Horn Coal Co., 916 F.2d 1499 (10th Cir.1990), cert. denied, 502 U.S. 1095, 112 S.Ct. 1172, 117 L.Ed.2d 417 (1992). Champion's compliance with the terms it has implemented may be enforced, but not under § 301, and not under state law, which is preempted. See Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 102-04, 82 S.Ct. 571, 576-77, 7 L.Ed.2d 593 (1962). Rather, non-compliance may be remedied only by the NLRB, as happened in Taft Broadcasting Co. v. NLRB, 441 F.2d 1382 (8th Cir.1971). See Litton, 501 U.S. at 201, 111 S.Ct. at 2222.

However, § 301 jurisdiction is not limited to formal CBAs. That statute provides a federal forum for any "agreement between employers and labor organizations significant to the maintenance of labor peace between them." Retail Clerks Int'l Assoc., Local Unions Nos. 128 & 633 v. Lion Dry Goods, Inc., 369 U.S. 17, 28, 82 S.Ct. 541, 548, 7 L.Ed.2d 503 (1962). When a CBA has been terminated, the parties have bargained to an impasse, and the employer has unilaterally implemented all or part of its final offer, § 301 jurisdiction will lie...