Vaughn v. Pacific Northwest Bell Telephone Co.

• Decision Date: 06 May 1980
• Parties: , 106 L.R.R.M. (BNA) 2063 Sandra VAUGHN, Respondent, v. PACIFIC NORTHWEST BELL TELEPHONE COMPANY, a Washington Corporation, Petitioner. TC A7803-03484, CA 11708; SC 26385.
• Court: Oregon Supreme Court

Page 281

611 P.2d 281

289 Or. 73, 106 L.R.R.M. (BNA) 2063

Sandra VAUGHN, Respondent, v. PACIFIC NORTHWEST BELL TELEPHONE COMPANY, a Washington

Corporation, Petitioner.

TC A7803-03484, CA 11708; SC 26385.

Supreme Court of Oregon.

Argued and Submitted Feb. 6, 1980.

Decided May 6, 1980.

[289 Or. 74-B] Jonathan T. Harnish, of Bullard, Korshoj & Smith, P. C., Portland, argued the cause and filed the brief for petitioner.

Robert K. Udziela, Portland, argued the cause for respondent. With him on the briefs were Pozzi, Wilson, Atchison, Kahn & O'Leary, Portland.

Before DENECKE, C. J., and TONGUE, HOWELL, LENT, LINDE and PETERSON, JJ.

LENT, Justice.

The issue in this case is the proper relationship between two possible remedies available to a discharged employee: (a) the grievance and arbitration remedy in the collective bargaining agreement and (b) the suit pursuant to ORS 659.121(1) ¹ for injunctive relief from unlawful employment practices.

The plaintiff, Sandra Vaughn, on March 3, 1978, filed a complaint in circuit court alleging that on August 30, 1977, she sustained an injury compensable under the Workers' Compensation Law in the course of her employment with defendant, Pacific Northwest Bell Telephone Company, that on February 1, 1978, she presented defendant with a physician's certificate which approved her return to her regular employment, and that defendant committed an unlawful employment practice by refusing to reemploy her. The plaintiff sought a money judgment for lost wages, an order reinstating plaintiff to her job, an order restraining defendant from engaging in the unlawful employment practice, punitive damages, and attorneys' fees.

The defendant in its answer admitted that plaintiff sustained an injury and that in February, 1978, she presented a physician's certificate which indicated she could return to work. The defendant alleged as affirmative defenses: (1) that on or about December 8, 1977, the plaintiff had failed to accept proffered work on a restricted basis which was suitable to her physical condition, and (2) that defendant terminated plaintiff effective December 30, 1977, because plaintiff had misrepresented her physical condition and the extent of disability.

The defendant moved for summary judgment on the ground that the circuit court lacked jurisdiction ² to grant the relief requested by the plaintiff. An affidavit submitted by defendant asserted the following additional facts. The plaintiff is a member of a bargaining unit represented by the Communication Workers of America (hereinafter "Union"). The defendant and Union are parties to a collective bargaining agreement dated August 7, 1977. The plaintiff received a termination letter on January 28, 1978, notifying plaintiff she was terminated as of December 30, 1977. The plaintiff initiated the grievance procedure on February 1, 1978. Grievance hearings were held on February 7, February 13, and March 3, 1978. The final grievance hearing provided for in the agreement had not been held when plaintiff commenced her suit.

The defendant argued that the plaintiff's discharge is a matter covered by the collective bargaining agreement, ³ therefore the grievance procedures constitute plaintiff's exclusive remedy. The plaintiff argued that the grievance procedures in the collective bargaining agreement are irrelevant because her claim is based on an independent statutory scheme for relief from unlawful employment practices pursuant to ORS 659.121, 659.410, and 659.415. ⁴

The circuit court granted the defendant's motion for summary judgment and the plaintiff appealed to the Court of Appeals. The Court of Appeals reversed the summary judgment order, holding that plaintiff's statutory claim was an independent remedy which is not foreclosed by the availability of grievance procedures under a collective bargaining agreement. Vaughn v. Pacific NW Bell, 40 Or.App. 427, 432-433, 595 P.2d 829 (1979). This court allowed review, ORS 2.520; 288 Or. 81 (1979).

The defendant raises three basic contentions on appeal: first, that because the plaintiff was discharged prior to her demand for reinstatement, she cannot bring suit for injunctive relief pursuant to ORS 659.121(1); second, that under both federal and state law, the collective bargaining agreement constitutes plaintiff's exclusive remedy; and third, that the plaintiff is required to exhaust the grievance remedy before she can seek judicial relief.

I. The timing of the discharge

The defendant first claims that because the plaintiff was discharged in January, 1978, prior to her demand for reinstatement in February, 1978, she cannot bring suit for injunctive relief pursuant to ORS 659.121(1) and 659.415, and therefore she is limited to the grievance and arbitration remedies in the collective bargaining agreement.

ORS 659.415 provides that a worker who has sustained a compensable injury "shall be reinstated." The defendant argues that the statute forbids only "nonreinstatement" of a worker after the worker has made a demand for reinstatement. The defendant concludes that because the plaintiff was discharged prior to a demand for reinstatement, she is left only the remedies in the collective bargaining agreement.

We reject this argument because "nonreinstatement" and "discharge" mean the same thing to a worker, and the timing of such a discharge should not by itself determine the worker's forum for seeking a remedy. The scenario of worker discharges following a compensable injury and lost time can fall into two patterns: (1) the worker loses time due to a compensable injury, demands reinstatement, and is refused reinstatement, that is, is "discharged" after the demand; or (2) a worker loses time due to a compensable injury, is notified during this time that he is discharged, and then demands reinstatement. It might seem that ORS 659.415 requires reinstatement of the worker even if the employer has just cause to "discharge" by refusing to reinstate but as will appear later nothing in ORS Chapter 659 prevents an employer from discharging a worker for just cause. If the worker is discharged for just cause, the employer can prove this in the grievance proceeding or as a matter of defense in a suit pursuant to ORS 659.121. The worker's right to bring suit for injunctive relief pursuant to ORS 659.121(1) must be based on reasoned policy rather than fortuitous timing.

II. The exclusivity of the remedies in the collective bargaining agreement

The defendant claims that the grievance and arbitration procedures under the collective bargaining agreement provide plaintiff's exclusive remedy. The defendant argues that federal law favoring exclusivity of arbitration remedies preempts the state statutes in this case. The defendant also argues that even if the statutes are not preempted, state law also requires exclusivity of the arbitration remedies.

A. Federal preemption

The plaintiff as a member of the Union is subject to the collective bargaining agreement executed by the Union. The Union represents the employees in an industry affecting interstate commerce. NLRA § 301(b), 29 U.S.C § 185. The defendant is an "employer" within the meaning of and subject to the National Labor Relations Act, NLRA § 2(2), 29 U.S.C. § 152. The claim in this case involves an employee discharge, which is a matter covered by the collective bargaining agreement. The defendant argues that these undisputed facts require that federal law be applied, and that federal law favoring exclusivity of grievance remedies preempts the state laws in this case.

The defendant characterizes this lawsuit as an employee's suit to enforce rights under the collective bargaining agreement, that is, the right not to be discharged except for just cause. In Textile Workers v. Lincoln Mills, 353 U.S. 448, 456-457, 77 S.Ct. 912, 917-918, 1 L.Ed.2d 972 (1957), the Supreme Court held that federal law must be applied in actions to enforce rights under a collective bargaining agreement.

We could answer the defendant's preemption argument by construing plaintiff's lawsuit as a suit to enforce independent statutory rights, not a suit to enforce rights under the collective bargaining agreement, therefore federal law does not preempt. Our examination of federal law, however, leads us to conclude that even if federal law is applied, the statutes in this case are not preempted.

In Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965), the Supreme Court cited the legislative policy in § 203(d) of the Labor Management Relations Act of 1947 (LMRA), 29 U.S.C. § 173(d), which states in effect that contract grievance procedures are a preferred method for settling labor disputes. ⁵ The Court stated, "If a grievance procedure cannot be made exclusive, it loses much of its desirability as a method of settlement." 379 U.S. at 653, 85 S.Ct. at 617. The Court pointed out that the Union's handling of grievance procedures complements its status as exclusive bargaining representative. The Court also pointed out that a rule favoring exclusivity gives the union and the employer the ability to establish a uniform and exclusive method for orderly settlement of employee grievances. 379 U.S. at 653, 85 S.Ct. at 616. The Court held that the federal rule favoring exclusivity of grievance remedies preempted a state law which did not require resort to grievance procedures in an action for workers' severance pay. 379 U.S. at 657, 85 S.Ct. at 618.

The Supreme Court has stated that federal labor law will preempt state law when the exercise of state power over a particular area of activity threatens interference with clearly indicated federal labor policy. San Diego Building Trades Council v. Garmon, 359 U.S. 236, 243, 79 S.Ct. 773, 778, 3 L.Ed.2d 775 (1959). The Court, however, has also stated that states do have power to regulate activity which is a "peripheral concern" of the Labor Management Relations Act, or where the regulated conduct touches...