Waddoups v. Amalgamated Sugar Co.

• Decision Date: 23 July 2002
• Docket Number: No. 20000776.,20000776.
• Parties: Blake William WADDOUPS, and James Edward Sparrow, Jr., Plaintiffs and Appellants, v. The AMALGAMATED SUGAR COMPANY, a Utah corporation, et al., Defendants and Appellees.
• Court: Utah Supreme Court

54 P.3d 1054

2002 UT 69

2002 Utah 69

Blake William WADDOUPS, and James Edward Sparrow, Jr., Plaintiffs and Appellants, v. The AMALGAMATED SUGAR COMPANY, a Utah corporation, et al., Defendants and Appellees.

No. 20000776.

Supreme Court of Utah.

July 23, 2002.

Rehearing Denied August 29, 2002.

Trent J. Waddoups, Salt Lake City, for plaintiffs.

W. Mark Gavre, Salt Lake City, for defendants.

WILKINS, Justice:

¶ 1 Plaintiffs appeal two district court orders: an order granting summary judgment on plaintiffs' initial complaint and an order granting a motion to dismiss plaintiffs' amended complaint. We affirm both orders.

FACTUAL AND PROCEDURAL CONTEXT

I. FACTUAL BACKGROUND

¶ 2 Defendant Amalgamated Sugar Company ("Amalgamated") operates a sugar processing plant near Twin Falls, Idaho. Amalgamated is headquartered in Ogden, Utah. Plaintiffs Blake Waddoups and James Sparrow worked at the Twin Falls plant as "bulk loaders," operating the system that loaded sugar into rail cars. Waddoups was hired in 1985, and Sparrow was hired in 1989. While plaintiffs were employed with Amalgamated, another employee, Michael Davis, died as a result of an accident at the Twin Falls plant. On February 16, 1995, Davis's arm was caught in the bulk-loading system's conveyor belt and was torn from his body, causing him to bleed to death.

¶ 3 During the accident, blood and flesh from Davis's arm contaminated the sugar present in the system. Plaintiffs insist contaminated sugar mixed with uncontaminated sugar when contaminated sugar moved through the production system and mixed with the sugar in Amalgamated's storage silos. Plaintiffs base this contention on their involvement in the cleanup process, and they state that they informed Amalgamated of this problem.

¶ 4 Following the February 16 accident, Waddoups placed "Quarantined" signs on both rail cars that contained the contaminated sugar. One week later, on February 23, Amalgamated officials told employees that the contaminated sugar would be destroyed. Around this time, Waddoups, accompanied by Sparrow, informed Amalgamated that he thought the sugar stored in the silos was also contaminated. Amalgamated claims the contaminated sugar loaded on the day of the accident was shipped to an animal feed producer; plaintiffs allege Amalgamated shipped contaminated sugar for human consumption, a criminal violation of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301-397 (2002). See 21 U.S.C. §§ 331, 333, 342 (2002).

¶ 5 In March 1995, plaintiffs informed Amalgamated of their fear of being implicated in criminal sales of contaminated sugar by virtue of their approval of sugar shipments. They told Amalgamated that they did not want to sign documentation that accompanied shipments of sugar until Amalgamated investigated the extent of the contamination. Amalgamated allegedly threatened plaintiffs with termination.

¶ 6 In May 1995, plaintiffs reported to Amalgamated that they believed the rail cars that delivered the contaminated sugar had not been adequately cleaned upon return to the factory, thereby contaminating other sugar. On May 18, Waddoups threatened to reveal his knowledge to food safety agencies or the media. Waddoups was suspended for two days and warned to stop discussing the matter. Sparrow was fired on May 22, 1995, and Waddoups was fired on May 28, 1995.

¶ 7 Sparrow and Waddoups were members of The American Federation of Grain Millers Union ("the Union"). The Union and Amalgamated had entered into a collective bargaining agreement. Under the collective bargaining agreement employees could be fired only for "just cause," and any discharged employee could file a grievance which could lead to binding arbitration. Plaintiffs argue, in essence, that they were fired for threatening to "blow the whistle" on Amalgamated for selling contaminated sugar. Amalgamated insists plaintiffs were fired for excessive absenteeism, which plaintiffs claim is pretextual.

II. PROCEDURAL HISTORY

¶ 8 Neither Waddoups nor Sparrow filed a grievance with the Union as provided for in the collective bargaining agreement. Instead, proceeding pro se, they filed a complaint in the second judicial district court in Ogden, Utah. Plaintiffs' initial complaint pled the following, requesting compensatory and punitive damages: (1) wrongful termination of employment in violation of public policy; (2) negligent or intentional infliction of emotional distress; (3) negligent or intentional interference with a prospective economic advantage; and (4) conspiracy.¹ Amalgamated moved for summary judgment. Plaintiffs opposed the motion, disputing defendant's factual contentions and legal conclusions. The trial court granted summary judgment in favor of Amalgamated. The trial court determined that (1) the plaintiffs' claims were governed by Idaho, not Utah, law; (2) the claim for wrongful discharge in violation of Utah public policy failed to state a claim under Idaho law; (3) the claim for intentional and/or negligent infliction of emotional distress was preempted by the Labor Management Relations Act, specifically 29 U.S.C. § 185(a); (4) the claim for interference with a prospective economic advantage was not supported by evidence of defendant interfering with any actual or potential contractual, employment, or other relationship; and (5) the conspiracy claim lacked evidentiary support. However, the court granted plaintiffs "leave to file an amended complaint asserting a claim under Idaho law for wrongful discharge in violation of Idaho public policy."

¶ 9 Plaintiffs filed a notice of appeal of this order, and the district court issued an order certifying the matter under rule 54(b) of the Utah Rules of Civil Procedure. The appeal was summarily dismissed by this court, however, without prejudice, because the district court's order was uncertifiable based on Kennecott Corp. v. Utah State Tax Commission, 814 P.2d 1099 (Utah 1991). We further declined to treat plaintiff's appeal of the non-final order as a petition to appeal from an interlocutory order under rule 5(a) of the Utah Rules of Appellate Procedure. See id. at 1102.

¶ 10 Despite the fact that the district court granted plaintiffs leave only to plead a cause of action for wrongful discharge in violation of Idaho public policy, plaintiffs' amended complaint alleged the following claims: (1) wrongful termination of employment in violation of Utah and Idaho public policy; (2) negligent or intentional infliction of emotional distress; (3) negligent or intentional interference with a prospective economic advantage; (4) conspiracy; and (5) compensatory and punitive damages.² Amalgamated moved to dismiss. The trial court dismissed plaintiffs' amended complaint for three reasons: (1) Idaho law recognizes wrongful discharge in violation of public policy only for at-will employees, and plaintiffs' employment was covered by a collective bargaining agreement; (2) plaintiffs never reported Amalgamated's alleged wrongdoing to a public authority and thus could not make a whistleblower wrongful discharge claim under Idaho law; and (3) plaintiffs' claim was preempted by the Labor Management Relations Act, 29 U.S.C. §§ 141-187 (2002), specifically 29 U.S.C. § 185(a).

¶ 11 Plaintiffs then filed a motion for a new trial or to alter or amend judgment. The trial court denied the motion and dismissed plaintiff's amended complaint. This appeal followed. Plaintiffs argue the trial court erred (1) in granting defendant's motion for summary judgment on plaintiffs' initial complaint, in which the district court granted plaintiffs leave to file an amended complaint, and (2) in granting defendant's motion to dismiss plaintiffs' amended complaint.

ANALYSIS

I. SUMMARY JUDGMENT

A. Choice of Law

¶ 12 We must first consider whether Idaho or Utah law applies.³ Once we determine whether Utah or Idaho law applies, we can determine whether the trial court erred in concluding that plaintiffs' claims were preempted by federal labor law. Whether a state law claim is properly dismissed as preempted by federal law is a conclusion of law that we review de novo. See Garley v. Sandia Corp., 236 F.3d 1200, 1206 (10th Cir.2001)

; see also Walker v. Union Pac. R.R. Co., 844 P.2d 335, 340 (Utah Ct.App.1992) ("The lower court's preemption determination is a legal conclusion which we review for correctness, according it no particular deference.").

¶ 13 Plaintiffs allege that Utah law applies because, among other things, their alleged injuries—the main injury being the wrongful discharge claim in violation of Utah public policy—occurred in Utah. Amalgamated, to the contrary, insists that Idaho law governs plaintiffs' claims under the test adopted by Utah, Restatement (Second) Conflict of Laws § 145 (1971).

¶ 14 "Since Utah is the forum state, Utah's choice of law rules determine the outcome of the conflict." Shaw v. Layton Constr. Co., Inc., 872 P.2d 1059, 1063 (Utah Ct.App.1994) (citing Klaxon Co. v. Stentor Elec. Mfg.Co., 313 U.S. 487, 495-96, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). In Utah we apply the "most significant relationship" approach as described in the Restatement (Second) of Conflict of Laws in determining which state's laws should apply to a given circumstance. See Am. Nat'l Fire Ins. Co. v. Farmers Ins. Exch., 927 P.2d 186, 190 (Utah 1996)

(holding "that the most significant relationship test as explained in Restatement of Conflict section 188 is the appropriate rule for Utah courts to apply to a conflict of laws question in a contract dispute"); see also Records v. Briggs, 887 P.2d 864, 867-68 (Utah Ct.App.1994) (explaining that this court has adopted the "most significant relationship" test over the previously used lex loci approach for torts and likely intended to apply the approach for other types of claims, and identifying federal cases that concluded we "would apply the `most significant relationship' test in contract matters as well as tort matters").

1. Characterization of...