White v. National Steel Corp.

Decision Date03 July 1991
Docket NumberNos. 90-3036,90-3053,s. 90-3036
Citation938 F.2d 474
Parties137 L.R.R.M. (BNA) 2916, 60 USLW 2140, 119 Lab.Cas. P 10,800, 6 Indiv.Empl.Rts.Cas. 1798 Arthur Dale WHITE, James Anderson, James H. Baker, Thomas A. Balon, Richard S. Barber, Larry G. Bell, David S. Bickler, Robert L. Billick, Edward Bittner, Todd A. Blair, Richard Blancato, Robert A. Bray, Jr., Harry V. Brown, Jr., James H. Browning, James William Bullock, Charles A. Clark, Edward Dhayer, Ralph Anthony Dibacco, William R. Duncan, Jr., Domenic F. Frio, Dorsey R. Garrett, William F. Garrison, James A. Gracie, III, Thomas M. Grishkevich, David R. Harbin, James W. Hazlett, Rena Hess, Phillip E. Johnson, Jerry G. Jones, Robert L. Jones, Joseph P. Karas, Bartley Robert Kirkbride, Lloyd A. Klages, David J. Kondik, Frank W. Kruger, Jr., Charles L. Lacey, Timothy C. Lawson, Ernest H. McCormick, Joseph W. Mayernick, Boley Dale Mermon, Patricia Mlodzik, Charles D. Murray, Dale E. Poole, Charles Prince, Larry C. Riggle, William B. Riggs, Robert J. Ryan, Jr., John S. Sciance, Kenneth M. Seiple, John R. Selmon, Jr., Dennis D. Shirer, Ronald L. Spring, Robert L. Sutton, Frederick C. Tate, Stephen F. Tucker, Hoy L. Van Horn, Frederick R. Welshans, Charles F. West, Donald L. White, John W. Cominsky, Walter F. Mrozek, Dominic A. Tedeschi, Jr., Plaintiffs-Appellants, v. NATIONAL STEEL CORPORATION, Defendant-Appellee. Arthur Dale WHITE, James Anderson, James H. Baker, Thomas A. Balon, Richard S. Barber, Larry G. Bell, David S. Bickler, Robert L. Billick, Edward Bittner, Todd A. Blair, Richard Blancato, Robert A. Bray, Jr., Harry V. Brown, Jr., James H. Browning, James William Bullock, Charles A. Clark, Edward Dhayer, Ralph Anthony Dibacco, William R. Duncan, Jr., Domenic F. Frio, Dorsey R. Garrett, William F. Garrison, James A. Gracie, III, Thomas M. Grishkevich, David R. Harbin, James W. Hazlett, Rena Hess, Phillip E. Johnson, Jerry G. Jones, Robert L. Jones, Joseph P. Karas, Bartley Robert Kirkbride, Lloyd A. Klages, David J. Kondik, Frank W. Kruger, Jr., Charles L. Lacey, Timothy
CourtU.S. Court of Appeals — Fourth Circuit

Carl H. Hellerstedt, Jr., argued, Volk, Frankovitch, Anetakis, Recht, Robertson & Hellerstedt (Carl Nicholas Frankovitch, John Archer McCreary, Jr., on brief), Pittsburgh, Pa., for plaintiff-appellant.

Ronald George Backer, argued, Rothman, Gordon, Foreman & Groudine, P.C. (William P. Bresnahan, Henry C. Berns, on brief), Pittsburgh, Pa., for appellees.

Before SPROUSE and WILKINSON, Circuit Judges, and ELLIS, District Judge for the Eastern District of Virginia, sitting by designation.

WILKINSON, Circuit Judge:

This case concerns the proper scope of federal and state regulation of employment relationships. The issues arise from layoffs of steel workers which occurred in 1982 at the Weirton Division of the National Steel Corporation in West Virginia. The plaintiffs are former union members who accepted management positions after National Steel allegedly made them promises of job security, including the right to return to their former positions in bargaining units. They maintain that their layoffs from salaried management positions constituted breaches of their individual employment contracts which are actionable under state law and that National Steel fraudulently induced them into accepting management positions.

National Steel responds that plaintiffs' claims are actually for breaches of collective bargaining agreements and must be pursued under Sec. 301 of the Labor-Management Relations Act, 29 U.S.C. Sec. 185 or dismissed as preempted. Furthermore, National argues that subsequent changes in the governing collective bargaining agreements prohibited plaintiffs' returning to their former bargaining units and that the individual contracts must yield as preempted. We hold that plaintiffs' claims are primarily grounded in individual employment contracts and not in collective bargaining agreements. Although a subsequent collective bargaining agreement does preempt any specific performance of individual contracts that plaintiffs might seek, damages are still available under state law theories. We additionally hold that summary judgment should have been granted to National Steel on plaintiffs' state law claims for fraud, and remand for application of the proper evidentiary standard to plaintiffs' breach of contract claims.

I.

Plaintiffs in this case are sixty-two employees of the Weirton Division of the National Steel Corporation who were laid off from their salaried management positions in 1982. Virtually every plaintiff was promoted to management from a job that was covered by a collective bargaining agreement. While the employees had accumulated seniority and thus some degree of job security in their former bargaining units, the management positions they accepted were not covered by collective bargaining agreements (i.e., were "exempt" positions) and did not generally provide for any job security.

The employees assert that they entered into oral employment contracts with National Steel which allowed them to retain their earned seniority in their new positions and provided them with the right to return to their former bargaining unit positions with their accumulated seniority intact should their management positions be terminated or should they otherwise wish to return. They claim that National Steel breached those contracts by failing to accord them promised seniority and by refusing to return them to their former positions. They also allege that National Steel fraudulently induced them to enter into their employment contracts and committed several other torts in discharging them.

The plaintiffs' claims can be divided into three general types: breach of contract, fraud, and other various torts. Only the contract and fraud claims are before us on appeal. We shall summarize in turn the specific claims in each type.

Plaintiffs' first four counts allege breach of contract. Counts One and Two contain the claims of forty-five former hourly rate workers who had all been members of the Production and Maintenance (P & M) bargaining unit of the Independent Steelworkers Union (union). As such, their terms of employment had been covered by a collective bargaining agreement which was periodically renegotiated between the union and National. Under the collective bargaining agreements that had been in effect until 1980, layoffs of hourly workers were determined primarily by "company seniority," or the length of time an employee had been with National Steel in any capacity. This provided workers who had uninterrupted company seniority some degree of job security. Exempt employees, however, were not covered by any collective agreement and thus enjoyed no such security.

National Steel had often promoted hourly rate employees to exempt management positions at times of increased business when it needed more foremen and managers. Because the company sometimes found it difficult to persuade hourly employees with seniority to accept often temporary management positions with no job security, it developed a flexible approach. When the workload declined, National often would return the recently promoted workers to their former positions in the bargaining unit with their accumulated seniority restored. Although the practice of returning management employees to the P & M bargaining unit was not prohibited by the collective bargaining agreement, it nevertheless caused unrest within the unit. Often when these employees returned, they displaced recently hired hourly employees who then would have to be laid off. As a result of the dissatisfaction engendered by this practice, the collective bargaining agreement that was installed on August 1, 1980 prohibited the return of a management employee to hourly employment if the return would result in hourly employees being laid off or if the reason for the supervisor's return was the elimination of the supervisory position. In addition, a returning employee would no longer be granted any company seniority credit for the time he spent outside the unit.

Count One contains the contract claims of forty-two former P & M employees who accepted management positions before the new collective agreement took effect on August 1, 1980. Count Two contains the contract claims of three plaintiffs who left the P & M unit after August 1, 1980. All forty-five assert that National Steel promised to use company seniority as the basis to determine layoffs from management and then breached its contracts by instead using "exempt seniority," or the tenure in only a management position, to calculate layoffs. The plaintiffs in Count One also assert that their management employment contracts with National Steel included the term that they would be able to return to their former P & M unit with full accumulated company seniority in the event they were laid off from management. Plaintiffs in Count Two, who left the P & M unit after the collective bargaining agreement placed limits on their ability to return, do not assert that National gave them such promises.

The second major group of plaintiffs, listed in Count Three, consists of fifteen employees who were promoted to exempt management jobs from salaried non-exempt (SNE) positions. Many of these positions were clerical. Prior to 1976, these employees had no written job protection. In 1976, National Steel published a...

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