Case Title: Anthony v. Verizon Va., Inc.

Citation: 

Docket Number: 130681

State: virginia

Court: Virginia Supreme Court

Date: 2014-06-05T00:00:00Z

Document:
Present:  Kinser, C.J., Lemons, Millette, Mims, McClanahan, and 
Powell, JJ., and Russell, S.J. 
 
RICHARD ANTHONY, ET AL. 
 
v.  Record No. 130681 
 
 
 
OPINION BY 
 
 
 
 
 
 
   JUSTICE DONALD W. LEMONS 
VERIZON VIRGINIA, INC.,   
 
    June 5, 2014 
ET AL. 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF PORTSMOUTH 
James A. Cales, Jr., Judge1 
 
 
In this appeal, we consider whether the Circuit Court of 
the City of Portsmouth ("circuit court") erred by holding that 
the plaintiffs' state law claims were completely preempted by § 
301(a) of the Labor Management Relations Act of 1947 ("LMRA"), 
29 U.S.C. § 185(a), and by granting the demurrers filed by 
Verizon Virginia, Inc. ("Verizon") and the Communication Workers 
of America, AFL-CIO District 2 (the "CWA"). 
I. Allegations in the Complaint and Proceedings 
Richard Anthony, Michael Giles, Jeremy Autry, George 
Cummings, James Hodge, William Murden, Jeffrey Reynolds, Pharoah 
Mosby, Christopher Lee, and Ricky Rosser (collectively, 
"employees") are technicians formerly employed by Verizon.  Each 
was a member of the CWA. 
In May 2010, the employees allegedly received an Enhanced 
Income Security Plan ("EISP") which stated that Verizon had a 
                                                        
1 Judge Cales retired after issuing his letter opinion on 
December 27, 2012.  Judge James C. Hawks entered the final 
order. 
 
2 
surplus of 12,000 employees and potentially would conduct a 
layoff.  Originally, the employees were told their jobs were not 
in jeopardy given their seniority.  However, on June 15, 2010, 
the employees were told by the CWA and Verizon (collectively, 
"defendants") that their jobs were subject to termination in 
August 2010; and if they did not accept the EISP and voluntarily 
resign, they would not receive any enhanced severance benefits.2  
Given this information, each of the employees accepted the EISP 
and their employment with Verizon was terminated on July 3, 
2010. 
 
According to the complaints, the Virginia Employment 
Commission conducted a hearing shortly after the employees 
accepted the EISPs.  In the hearing, Verizon allegedly claimed 
there was not a surplus, the employees' jobs were never in 
jeopardy, and the employees voluntarily resigned.  Additionally, 
Verizon allegedly advertised a shortage of 200 technicians in 
                                                        
2 The EISP offered each of the employees: (1) a $50,000 one-time 
cash bonus; (2) acceleration of pension band increase; (3) a 
guaranteed interest rate for pension lump sum conversion; (4) 
waiver of age-based pension reductions; and (5) increased cap on 
EISP payment.  The EISP stated: "This Offer provides lucrative 
financial incentives to eligible Associates who choose to 
voluntarily leave Verizon. . . .  The Company does not intend to 
offer these special enhancements again, so it is extremely 
important that you take the time to thoroughly review the 
enclosed materials and consider volunteering for this generous 
One-Time Offer. . . .  ACT NOW . . . if you decide to volunteer 
for this Offer, you must fax a signed copy of the enclosed form 
no later than June 16, 2010." 
 
3 
the employees' region shortly after representing to the 
employees that there was a surplus. 
On October 7, 2011, Richard Anthony filed a complaint in 
the circuit court alleging actual and constructive fraud against 
Verizon and constructive fraud against the CWA: 
The defendants, CWA and Verizon, 
negligently misrepresented material facts 
with the intent that plaintiff would rely 
upon such representations. 
 
The plaintiff relied upon the 
aforementioned negligent misrepresentations 
made by the defendants to his detriment and 
sustained substantial damages. 
 
The defendant, Verizon, misrepresented 
material facts, knowingly and intentionally, 
with the intent to mislead plaintiff, and 
plaintiff relied upon such 
misrepresentations to his detriment causing 
him to sustain substantial financial losses 
and damages. 
 
Anthony alleges that he and similarly situated employees were 
"misled . . . in order to obtain their signatures to the 
[Enhanced Income Security Plan], thereby removing those workers 
with more seniority, higher salaries and more fringe benefits 
from [the] payroll."  Michael Giles, Jeremy Autry, and George 
Cummings filed virtually identical complaints on October 10, 
2011.  James Hodge, William Murden, Jeffrey Reynolds, Pharoah 
Mosby, and Christopher Lee filed similar complaints on October 
13, 2011.  Finally, on October 14, 2011, Ricky Rosser filed his 
 
4 
complaint alleging actual and constructive fraud and negligent 
infliction of emotional distress. 
After the employees filed their complaints in circuit 
court, the defendants filed notices of removal to the United 
States District Court for the Eastern District of Virginia 
("federal district court"), arguing that the employees' state-
law claims were completely preempted by § 301 of the LMRA.  The 
notices of removal stated that "[b]ecause each of these claims 
will require a reviewing court to interpret the parties' 
collective bargaining agreements, and because each is 
inextricably intertwined with the terms of those agreements, 
this action falls squarely within the ambit of Section 301 of 
the LMRA."  The defendants also filed motions in the district 
court under Rule 12(b)(6) of the Federal Rules of Civil 
Procedure seeking to dismiss each of the employees' claims.  In 
response, the employees filed motions to remand to state court. 
Based on these filings, the federal district court entered 
an order on July 2, 2012, denying the defendants' motions to 
dismiss and granting the employees' motions to remand.  The 
federal district court held: 
 
Defendants argue that Plaintiff[s] must 
refer to the collective bargaining agreement 
in two ways: First, the collective 
bargaining agreement is relevant to 
determining whether Plaintiff[s] [were] 
really at risk of being terminated.  Second, 
Plaintiff[s] will have to show that [their] 
 
5 
fear of termination was reasonable despite 
any protections that [they] had under the 
collective bargaining agreement. 
 
 
Defendants' first argument is 
unpersuasive.  Even if the collective 
bargaining agreement reinforces Plaintiffs' 
claim[s] that [they were] not actually at 
risk of termination, Plaintiff[s] do[] not 
rely on the agreement, but instead rel[y] on 
Verizon's hiring practices in late 2010 to 
show that [they] [were] in no danger of 
being fired, and that Defendants' 
representations to the contrary were false. 
 
 
Defendants' second argument also fails.  
Plaintiff[s] do[] not contend that 
Defendants failed to warn [them] of 
something for which they were duty-bound to 
warn.  Williams v. Nat’l Football League, 
582 F.3d 863, 881 & n.14 (8th Cir. 2009).  
Nor do [they] assert that Defendants made 
false factual allegations that were tailored 
to satisfy the collective bargaining 
agreement.  Augustin v. SecTek, Inc., 807 
F.Supp.2d 519, 525 (E.D. Va. 2011). 
 
 
Instead, Plaintiff[s] claim[] that 
[they] relied on an affirmative statement 
that Verizon intended to do something 
(terminate [them]), which was possibly 
prohibited by the collective bargaining 
agreement.  Regardless of whether the 
collective bargaining agreement prohibited 
Verizon from firing Plaintiff[s], [their] 
reliance on statements, made by both [their] 
union and employer, that Verizon was likely 
to fire [them] in violation of the 
collective bargaining agreement was 
reasonable. 
 
 
When the case was remanded to circuit court, Verizon and 
the CWA filed demurrers to each of the complaints, arguing the 
state-law claims were completely preempted by § 301 of the LMRA.  
 
6 
Although the federal district court had previously decided that 
the employees' state-law claims were not completely preempted 
and there was no federal jurisdiction, the circuit court 
considered the defendants' complete preemption argument.  The 
circuit court consolidated these cases and, following a hearing, 
it issued a letter opinion on December 27, 2012, holding: 
Plaintiffs' claims do in fact require the 
interpretation of the collective bargaining 
agreement (CBA) between Verizon and the 
Union representatives.  Specifically, the 
Plaintiff[s] allege[] that Verizon 
determined it had a "surplus" of employees 
which prompted the issuance of a severance 
package to the defendants.  It was this 
surplus that then triggered the alleged 
misrepresentations to the Plaintiffs.  The 
Complaint goes on to state that Verizon then 
went before the State Corporation Commission3 
and stated that they did not have a surplus 
in regards to the Plaintiffs' jobs.  Were 
this case to continue these facts would be 
hotly litigated and the term surplus would 
supply the heat. 
 
Unfortunately, for the Plaintiffs such a 
surplus is provided for in the CBA.  Such an 
event, in this context, carries with it 
duties and responsibilities for Verizon and 
the Union . . . .  The acts that were 
undertaken by the Defendants will be at 
issue and those acts are governed by the 
CBA.  Therefore, allegations such as are 
before this Court, would require this 
judicial body to inquire as to what actions 
were taken and why, which would cast our net 
of inquiry squarely over the CBA.  This is 
                                                        
3 The circuit court's ruling incorrectly refers to the State 
Corporation Commission.  The plaintiffs' pleadings actually 
alleged that Verizon appeared before the Virginia Employment 
Commission. 
 
7 
flatly forbidden under superseding federal 
law. 
 
On March 26, 2013, following a rehearing, the circuit court 
granted the defendants' demurrers on the ground of complete 
preemption, and dismissed the cases with prejudice.  The 
employees filed timely notices of appeal and we granted an 
appeal based on their single assignment of error: 
The circuit court erred in dismissing the 
Appellants['] Complaint on the basis that section 301 
of the Labor Management Relations Act ("LMRA"), 29 
U.S.C. § 185, preempts the Appellants['] claims. 
 
II. 
Analysis 
A. Standard of Review 
Whether the employees' state law claims for actual and 
constructive fraud and negligent infliction of emotional 
distress are completely preempted by § 301 of the LMRA is a 
question of federal law reviewed de novo.  See Maretta v. 
Hillman, 283 Va. 34, 40, 722 S.E.2d 32, 34 (2012).  Whether a 
state claim is completely preempted by federal law is a question 
of congressional intent: "The purpose of Congress is the 
ultimate touchstone."  Malone v. White Motor Corp., 435 U.S. 
497, 504 (1978).  "While the nature of the state tort is a 
matter of state law, the question whether the . . . tort is 
sufficiently independent of federal contract interpretation to 
avoid pre-emption is, of course, a question of federal 
 
8 
law."  Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 213-14 
(1985). 
"At the demurrer stage, it is not the function of the trial 
court to decide the merits of the allegations set forth in a 
complaint, but only to determine whether the factual allegations 
pled and the reasonable inferences drawn therefrom are 
sufficient to state a cause of action."  Friends of the 
Rappahannock v. Caroline Cnty. Board of Supervisors, 286 Va. 38, 
44, 743 S.E.2d 132, 135 (2013) (citing Riverview Farm Assocs. 
Va. Gen. P'ship v. Board of Supervisors of Charles County, 259 
Va. 419, 427, 528 S.E.2d 99, 103 (2000)).  On appeal, we accept 
as true "all facts properly pled, as well as reasonable 
inferences from those facts."  Steward v. Holland Family Props., 
LLC, 284 Va. 282, 286, 726 S.E.2d 251, 253 (2012). 
B. Complete Preemption 
 
 
In their demurrers before the circuit court, Verizon and 
the CWA argued the employees' claims were completely preempted: 
When a claim requires a court to 
interpret a collective bargaining agreement 
. . . in an industry affecting commerce, 
Section 301 completely preempts and wholly 
displaces the claim, even if it is pled 
under state tort law. . . . Each and every 
one of the Plaintiffs' claims are, 
therefore, completely preempted under 
Section 301, and must be either dismissed 
outright or construed as Section 301 claims. 
 
 
9 
Complete preemption is a doctrine which transmutes state 
law claims into federal claims and permits federal courts to 
exercise their removal jurisdiction, even if federal issues are 
not pleaded on the face of the complaint.  See, e.g., Lingle v. 
Norge Div. of Magic Chef, 486 U.S. 399, 403-07 
(1988).  See also Whitman v. Raley's, Inc., 886 F.2d 1177, 1181 
(9th Cir. 1989).   Complete preemption has been described as a 
narrow exception to the well-pleaded complaint 
rule.  Caterpillar Inc. v. Williams, 482 U.S. 386, 393 
(1987)("On occasion, the Court has concluded that the pre-
emptive force of a statute is so extraordinary that it converts 
an ordinary state common law complaint into one stating a 
federal claim for purposes of the well-pleaded complaint 
rule.")(internal citation and quotation marks omitted). 
The complete preemption doctrine was developed to permit 
federal courts to exercise their removal jurisdiction when state 
claims implicate uniquely federal policy concerns like 
collective-bargaining contracts between labor unions, employers, 
and employees.  When addressing claims of complete preemption, 
federal courts are required to decide whether the state law 
claims actually "arise under" federal law.  If the claims arise 
under federal law, federal courts may exercise their subject 
matter jurisdiction. 
 
10 
Complete preemption must be distinguished from ordinary 
preemption which serves as a substantive defense to state law 
claims.  Ordinary preemption — which includes express 
preemption, implied conflict preemption and implied field 
preemption — does not create federal jurisdiction.  Caterpillar, 
482 U.S. at 393. 
The differences between complete preemption and ordinary 
preemption are well-noted.  In Baldridge v. Kentucky-Ohio 
Transportation, Inc., the United States Court of Appeals for the 
Sixth Circuit stated: 
 [In Whitman v. Raley, Inc.], [t]he 
Ninth Circuit drew a helpful distinction 
between "complete preemption" and "the 
substantive defense of preemption." 
 
According to Whitman, when a district 
court, considering the removal of a suit 
alleging state law violations, decides 
whether "Congress intended a preemptive 
force so powerful as to displace entirely 
any state cause of action within the ambit 
of the federal cause of action," the court 
is considering only a jurisdictional issue.  
The focus there is "on whether it was the 
intent of Congress to make the cause of 
action a federal cause of action and 
removable despite the fact that the . . . 
complaint identifies only state claims."  
This jurisdictional inquiry is distinct from 
the question whether a legal defense of 
preemption may be raised. Whether the 
defendant has a valid preemption defense 
"would be a matter for trial" by a court 
that has concluded it has jurisdiction over 
the case.  "If the court rules that the 
claim is not completely preempted, the 
 
11 
federal court lacks jurisdiction to rule on 
the substantive preemption defense." 
 
983 F.2d 1341, 1345-46 (6th Cir. 1993)(citing Whitman, 886 F.2d 
at 1180-81). 
 
Based on the defendants' demurrer, we are only concerned 
with whether the complete preemption doctrine applies in this 
case.  See TC MidAtlantic Dev., Inc. v. Commonwealth, 280 Va. 
204, 214, 695 S.E.2d 543, 549 (2010)(only grounds stated in the 
demurrer may serve as a basis for granting the demurrer). 
i. 
The Circuit Court Erred by Dismissing the Employees' 
Claims for Lack of Jurisdiction 
 
Here, the federal district court determined the employees' 
claims were not completely preempted by § 301 and it could not 
exercise its removal jurisdiction.  It remanded to the circuit 
court to adjudicate the employees' state law claims.  Following 
remand, the circuit court dismissed the state tort claims under 
the complete preemption doctrine, apparently holding it lacked 
jurisdiction to decide claims "arising under" federal law. 
The majority of federal courts have held that remand orders 
have no preclusive effect on a state court's subsequent 
substantive decisions.  See Nordan v. Blackwater Sec. 
Consulting, LLC, 460 F.3d 576, 590 (4th Cir. 2006)("[T]he 
district court's finding that complete preemption did not create 
federal removal jurisdiction will have no preclusive effect on a 
subsequent state-court defense of federal 
 
12 
preemption."); Whitman, 886 F.2d at 1182 (when a federal court 
remands to state court for lack of federal jurisdiction, "no 
rulings of the federal court have any preclusive effect on the 
substantive matters before the state court").  In Kircher v. 
Putnam Funds Trust, 547 U.S. 633, 647 (2006), the Supreme Court 
made clear that remand orders are only conclusive as to the 
determination of federal jurisdiction and a state trial court 
may not treat the remand as if it were an appellate court: 
While the state court cannot review the 
decision to remand in an appellate way, it 
is perfectly free to reject the remanding 
court's reasoning, as we explained over a 
century ago in Missouri Pacific Railway: 
"[A]s to applications for removal on the 
ground that the cause arose under the 
Constitution, laws, or treaties of the 
United States," the finality accorded remand 
orders is appropriate because questions of 
this character "if decided against the 
claimant" in state court are "open to 
revision . . ., irrespective of the ruling 
of the [federal court] in that regard in the 
matter of removal."  Nor is there any reason 
to see things differently just because the 
remand's basis coincides entirely with the 
merits of the federal question; it is only 
the forum designation that is conclusive. 
 
(Emphasis added; internal citations omitted.)  Therefore, a 
federal district court's decision concerning its own 
jurisdiction is conclusive, and a state court is barred from 
reviewing it. 
 
 In this case, the circuit court implicitly determined that 
the employees' claims were completely preempted, that the 
 
13 
federal district court possessed exclusive jurisdiction, and 
concluded that it consequently lacked jurisdiction: 
Having had the opportunity to review 
the pleadings and the arguments presented by 
all parties, the Court hereby GRANTS the 
Defendants' demurrer/plea in bar and 
dismisses the Plaintiffs['] claim[s]. . . . 
[A]llegations such as are before this Court, 
would require this judicial body to inquire 
as to what actions were taken and why, which 
would cast our net of inquiry squarely over 
the CBA.  This is flatly forbidden under 
superseding federal law. . . . It is for 
this reason that we must grant the 
demurrer/plea in bar.4 
 
This was error. 
Clearly, the circuit court possesses jurisdiction over 
state law claims.  It remains to be answered whether a state 
court may exercise jurisdiction over a case if it finds the 
state law claims actually "arise under" federal law. 
 If the employees' claims are completely preempted, then, 
by operation of law, they are transformed from state tort claims 
to § 301 claims.5  State courts have concurrent jurisdiction to 
                                                        
4 The defendants filed demurrers.  The circuit court 
inexplicably refers to the pleadings as demurrers/pleas in bar. 
5 We agree with the Courts of Appeal for the Ninth and Tenth 
Circuits that after a finding of complete preemption the 
substantive state law claim transmutes into a federal law claim.  
See Crull v. GEM Ins. Co., 58 F.3d 1386, 1392 (9th Cir. 1995); 
Carland v. Metro. Life Ins. Co., 935 F.2d 1114, 1119 (10th Cir. 
1991), cert. denied, 502 U.S. 1020 (1991).  After a finding of 
complete preemption, state law claims need not be dismissed and 
re-filed as federal claims, because they already, by nature, 
"arise under" federal law.  See also Caterpillar, 482 U.S. at 
393 ("Once an area of state law has been completely pre-empted, 
 
14 
try § 301 claims.  Lingle, 486 U.S. at 403 (citing Charles Dowd 
Box Co. v. Courtney, 368 U.S. 502 (1962)).  If the employees had 
originally filed § 301 claims in state court, the circuit court 
would have possessed jurisdiction over those claims.  It is 
perfectly logical that the circuit court also possesses 
jurisdiction to try the employees' claims following remand – 
even if it subsequently determines the state tort theories 
actually state § 301 claims.  Therefore, the circuit court erred 
by dismissing the employees' claims, even if they were 
completely preempted. 
Even though we conclude dismissal was an improper remedy, 
we must also address the circuit court's holding that the 
employees' well-pleaded fraud and negligent infliction of 
emotional distress claims "arose under" federal law. 
ii. 
The Employees' Claims Were Not Completely Preempted 
We agree with the United States District Court for the 
Eastern District of Virginia that the employees' complaints do 
not give rise to § 301 claims.  In Allis-Chalmers Corp., the 
Supreme Court of the United States held that a state-law claim 
is transformed into a § 301 claim when it is "inextricably 
intertwined with consideration of the terms of the labor 
contract."  471 U.S. at 213.  State law claims are not 
                                                                                                                                                                                  
 
any claim purportedly based on that pre-empted state law is 
considered, from its inception, a federal claim, and therefore 
arises under federal law."). 
 
15 
completely preempted by § 301 when the state law "confers 
nonnegotiable rights on employers or employees independent of 
any right established by contract."  Id.  In Lingle, the Supreme 
Court further clarified that: "[a] purely factual question[]" 
about an employee's conduct or an employer's motives does not 
"require[] a court to interpret any term of a collective-
bargaining agreement."  486 U.S. at 407.  See also Hawaiian 
Airlines v. Norris, 512 U.S. 246, 261-62 (1994). 
In this case, the employees' state tort claims are 
completely preempted only if they implicate "rights created by 
[the] collective-bargaining agreements," or their claims are 
"substantially dependent on analysis of [the] collective-
bargaining agreement[s]."  Caterpillar, 482 U.S. at 394 
(quoting Electrical Workers v. Hechler, 481 U.S. 851, 859 n.3 
(1987)); see also Allis-Chalmers, 471 U.S. at 220.  Lingle 
directs courts to analyze § 301 preemption within the context of 
the elements of the state law claims.  486 U.S. at 403-07.  
Therefore, to resolve whether the employees' claims are within 
the complete preemptive reach of § 301, we must examine the 
elements of actual and constructive fraud and negligent 
infliction of emotional distress. 
1. Fraud Claims 
In Caperton v. A.T. Massey Coal Co., 285 Va. 537, 553, 740 
S.E.2d 1, 9 (2013), we recited the elements of common law fraud: 
 
16 
"[A] false representation of a material fact; made 
intentionally, in the case of actual fraud, or negligently, in 
the case of constructive fraud; reliance on that false 
representation to [plaintiff's] detriment; and resulting 
damage."  (Internal quotation marks omitted.)  To establish 
fraud, "it is essential that the defrauded party demonstrates 
the right to reasonably rely upon the 
misrepresentation."  Metrocall of Delaware, Inc. v. Continental 
Cellular Corp., 246 Va. 365, 374, 437 S.E.2d 189, 193-94 (1993).  
Additionally, in Caperton, we concluded that "[f]raudulent 
misrepresentation shares none of the elements of a breach of 
contract action, and the evidence required to support each claim 
is, therefore, manifestly different."  285 Va. at 553, 740 
S.E.2d at 9. 
"Lingle teaches that. . . whether the employer's actions 
make out the element[s] of [fraud] under state law -- is a 
'purely factual question.'"  Hawaiian Airlines, 512 U.S. at 266 
(quoting Lingle, 486 U.S. at 407).  Verizon and the CWA argue 
that we must interpret the CBA to determine whether there was a 
surplus and whether the employees were terminated in accord with 
the CBA.  Verizon asserts that its initial representation to the 
employees is only false if there was actually no surplus 
according to the terms of the CBA.  In contrast, the employees 
contend their allegations of Verizon's statement and counter-
 
17 
statement can prove fraudulent conduct without any reference to 
the CBA.  We must decide whether the employees, based on their 
factual allegations, can prove the elements of fraud without 
requiring analysis of the CBA.  In this case, only the falsity 
and reasonable reliance elements are in dispute. 
a. Falsity of the Representation 
The employees allege that "[o]n June 15, 2010 plaintiff[s] 
[were] told by each of the defendants that [their] employment 
was in serious jeopardy and that a decision would have to be 
made by June 16, 2010 regarding whether or not [they] would 
accept the EISP or be terminated in August, 2010." 
The employees also pled: 
Subsequent to the plaintiff[s'] 
termination[s], Verizon, before the Virginia 
Employment Commission, took the position 
that plaintiff[s'] job[s] [were] not 
surplus, that [their] job[s were] not in 
jeopardy and that [their] termination was 
voluntary. 
 
Almost immediately after plaintiff[s were] 
terminated, Verizon recalled 84 technicians 
who had previously been removed and brought 
in technicians from outside the area to meet 
its needs. 
                  . . . . 
 
Shortly after plaintiff[s'] termination[s], 
Verizon advertised for an unprecedented 200 
technicians to transfer to the Potomac 
Region where plaintiff[s] had been employed. 
 
Finally, the employees claim "the defendants misrepresented 
material facts, knowingly and intentionally [or negligently],  
 
18 
[and] caus[ed] the plaintiffs to operate under a set of beliefs 
originating with each defendant that [they] had no choice but to 
accept the EISP or be terminated from [their] employment." 
Whether Verizon had a contractual right under the CBA to 
declare a surplus and terminate the employees is not before us.  
The issue is whether Verizon and the CWA knowingly or 
negligently misrepresented material facts to induce the 
employees' resignations.  The gravamen of this inquiry is the 
veracity of the statements.  We conclude that if the plaintiffs' 
allegations are proven at trial, a trier of fact could resolve 
the falsity element without any reference to the CBA. 
In her dissent, Justice McClanahan declares that falsity 
cannot be proven without referencing the CBA.  She posits that 
the defendants could have believed that the employees' jobs were 
in jeopardy at the time they made their representation.  She 
further speculates that Verizon's purported testimony before the 
Virginia Employment Commission could have been based on its 
subsequent knowledge that the shortage had been alleviated 
through voluntary attrition. 
The employees pled that: (1) the defendants stated their 
jobs were "in serious jeopardy," and (2) Verizon then testified 
before the Virginia Employment Commission that the employees' 
jobs were "not in jeopardy."   The employees also pled that 
shortly after claiming a surplus and terminating the employees, 
 
19 
Verizon "recalled 84 technicians who had previously been removed 
[,] brought in technicians from outside the area to meet its 
needs" and subsequently "advertised for an unprecedented 200 
technicians to transfer to the Potomac Region where plaintiff[s] 
had been employed."  At the demurrer stage, we are obligated to 
accept the truthfulness of these allegations and are not 
permitted to construct alternative factual scenarios to test the 
plaintiffs' allegations.  Steward, 284 Va. at 286, 726 S.E.2d at 
253. 
The employees' allegations of a false representation are 
sufficient to survive demurrer.  The employees' complaint 
contained Verizon's two conflicting statements: (1) Verizon 
initially represented to the employees that their jobs were in 
serious jeopardy and they would be terminated if they did not 
accept the EISPs, and (2) Verizon subsequently represented to 
the Virginia Employment Commission that the employees' jobs were 
not in jeopardy and they voluntarily resigned.  The employees' 
additional allegations, including that Verizon rehired and 
transferred workers into the region and advertised openings for 
200 technicians shortly after terminating the employees, support 
an inference that the initial statement that Verizon made on 
June 15, 2010 was false. 
b. Reliance 
 
20 
 
The employees allege they would have never accepted the 
EISPs in the absence of the misrepresentation: 
The plaintiff[s] accepted the EISP 
package because of the representations made 
by each of the defendants . . . that if they 
did not do so, they would receive 
significantly fewer or no benefits after 
their termination by Verizon. 
 
The plaintiff[s] had no intention of 
accepting the EISP package before being told 
by the defendants that they were going to be 
terminated. 
            . . . . 
 
The plaintiff[s], operating under a set 
of beliefs originating with each of the 
defendants, felt [t]he[y] had no choice but 
[to] accept the EISP and acted upon those 
beliefs and representations to [their] 
detriment. 
 
             . . . . 
 
 
The plaintiff[s] relied upon such 
misrepresentations to [their] detriment 
causing [them] to sustain substantial 
financial losses and damages. 
 
The employees clearly pled that they relied on the defendants' 
statements in making their decisions to accept the EISPs. 
Justice Powell's dissent maintains that the element of 
reliance cannot be proven without referencing the CBA's term 
"surplus" and its provisions regarding termination.  She notes 
that the employees had access to the CBA and posits that the 
employees could have used their understanding of the CBA to 
detect the defendants' fraud.  However, this case is not about 
 
21 
whether Verizon complied with the CBA's provisions for 
addressing a surplus, but whether Verizon intentionally, and CWA 
negligently, stated that the employees' jobs were in jeopardy 
and that if the employees failed to accept the EISP, they would 
receive fewer or no benefits after termination. 
The common error shared by the dissents is "[the] failure 
to recognize that a plaintiff covered by a collective-bargaining 
agreement is permitted to assert legal rights independent of 
that agreement."  Caterpillar, 482 U.S. at 396 (emphasis in 
original).  In this case, based upon the pleadings, Verizon's 
statement and counterstatement render interpretation of the 
CBA's terms unnecessary.  See, e.g., Franchise Tax Bd. of Cal. 
v. Construction Laborers Vacation Trust for Southern Cal., 463 
U.S. 1, 25 n.28 (1983) ("[E]ven under § 301 we have never 
intimated that any action merely relating to a contract within 
the coverage of § 301 arises exclusively under that section.  
For instance, a state battery suit growing out of a violent 
strike would not arise under § 301 simply because the strike may 
have been a violation of an employer-union contract.").  Like 
the irrelevance of the contractual meaning of "strike" in a suit 
for battery, a trial court, viewing the allegations in this 
case, is not required to decide whether there was a "surplus" 
under the terms of the CBA or whether Verizon was complying with 
its contractual obligations under the CBA. 
 
22 
Viewing the well-pleaded allegations in these complaints as 
true, we conclude the employees stated claims for fraud based on 
facts outside the scope of the CBA.  Therefore, we hold the 
employees' well-pleaded fraud claims were not completely 
preempted by § 301 of the LMRA. 
2. Negligent Infliction of Emotional Distress Claim 
In Delk v. Columbia/HCA Healthcare Corp., 259 Va. 125, 137-
38, 523 S.E.2d 826, 833-34 (2000), this Court discussed the 
elements of a claim for negligent infliction of emotional 
distress under Virginia law: 
We adhere to the view that where conduct is 
merely negligent, not willful, wanton, or 
vindictive, and physical impact is lacking, 
there can be no recovery for emotional 
disturbance alone. We hold, however, that 
where the claim is for emotional disturbance 
and physical injury resulting therefrom, 
there may be recovery for negligent conduct, 
notwithstanding the lack of physical impact, 
provided the injured party properly pleads 
and proves by clear and convincing evidence 
that his physical injury was the natural 
result of fright or shock proximately caused 
by the defendant's negligence. In other 
words, there may be recovery in such a case 
if, but only if, there is shown a clear and 
unbroken chain of causal connection between 
the negligent act, the emotional 
disturbance, and the physical injury. 
 
(Internal quotation marks and citations omitted and emphasis in 
original.)  In this case, Ricky Rosser's negligent infliction of 
emotional distress claim is based on Verizon and the CWA's 
allegedly fraudulent conduct.  The underlying facts supporting 
 
23 
Rosser's emotional distress claim are the same as those 
supporting the fraud claims.  Accordingly, the allegation of 
emotional distress contained in Rosser's complaint is also 
outside the scope of the CBA — and therefore is not completely 
preempted. 
III. Conclusion 
The circuit court erred in holding that the employees' 
claims were completely preempted by § 301 of the LMRA and by 
dismissing those claims.  We will reverse the circuit court's 
judgment and will remand this case for further proceedings in 
accordance with this opinion. 
Reversed and remanded. 
 
 
 
JUSTICE McCLANAHAN, concurring in part and dissenting in part. 
The circuit court held that the employees' claims are 
completely preempted by Section 301 of the Labor Relations 
Management Act of 1947 ("LMRA"), 29 U.S.C. § 185, and, on this 
basis, dismissed their suits.  I agree with the majority that 
dismissal was an improper course of action and that the circuit 
court has concurrent jurisdiction to try the employees' claims 
if they are completely preempted.  I dissent from the majority's 
review of complete preemption and conclude that because the 
employees' claims require interpretation of a collective 
 
24 
bargaining agreement they are completely preempted by Section 
301. 
All of the employees sue for fraudulent misrepresentation, 
one element of which requires the employees to prove that the 
defendants' representation was false.1  Caperton v. A.T. Massey 
Coal Co., 285 Va. 537, 553, 740 S.E.2d 1, 9 (2013) 
(quoting Klaiber v. Freemason Assocs., Inc., 266 Va. 478, 485, 
587 S.E.2d 555, 558 (2003)).  The alleged misrepresentation in 
this case was the defendants' statement to the employees that 
their jobs were in serious jeopardy.  As counsel for the 
employees stated at oral argument, the allegation in the 
complaints supporting this element is that after the employees 
agreed to early termination, Verizon later told the Virginia 
Employment Commission that the employees' jobs were not in 
jeopardy.  In an apparent attempt to avoid preemption, the 
employees have tailored the face of their complaints to exclude 
interpretation of a collective bargaining agreement, and in most 
cases, under the well-pleaded complaint rule, whether a claim 
arises under federal law depends only on whether "a federal 
question is presented on the face of the plaintiff's properly 
pleaded complaint."  See Caterpillar Inc. v. Williams, 482 U.S. 
                                                        
1 As noted in the majority opinion, plaintiff Ricky Rosser's 
negligent infliction of emotional distress claim is based on the 
defendants' alleged fraudulent conduct.  Thus, this claim 
likewise will require him to prove that the defendants' 
representation was false. 
 
25 
386, 392 (1987) (citing Gully v. First Nat'l Bank, 299 U.S. 109, 
112-13 (1936)). 
But Section 301 of the LMRA is one of three federal 
statutes that the Supreme Court of the United States has held 
completely preempts state-law claims.  Lontz v. Tharp, 413 F.3d 
435, 441 (4th Cir. 2005).  "The doctrine of complete preemption 
. . . . recognizes that some federal laws evince such a strong 
federal interest that, when they apply to the facts underpinning 
the plaintiff's state-law claim, they convert that claim into 
one arising under federal law."  Barbour v. International Union, 
640 F.3d 599, 629 (4th Cir. 2011) (Agee, J., 
concurring); Caterpillar Inc., 482 U.S. at 393; Lontz, 413 F.3d 
at 441.  Complete preemption is an exception to the well-pleaded 
complaint rule, Lontz, 413 F.3d at 439, and thus Section 301 may 
completely preempt an action even where the complaint is 
tailored to allege only a state-law claim.  Franchise Tax Bd. v. 
Constr. Laborers Vacation Trust, 463 U.S. 1, 23 (1983).  
Consequently, a court must look beyond the face of the complaint 
to determine whether the claim "requires the interpretation of a 
collective-bargaining agreement" and is therefore completely 
preempted by Section 301.  Lingle v. Norge Div. of Magic Chef, 
Inc., 486 U.S. 399, 405–06, 410, 413 (1988) (discussing the 
Court's complete preemption analysis in a previous case, where 
it "began by examining the collective-bargaining 
 
26 
agreement"); Foy v. Giant Food Inc., 298 F.3d 284, 287 (4th Cir. 
2002); McCormick v. AT&T Techs., Inc., 934 F.2d 531, 534 (4th 
Cir. 1991). 
It is clear from the record in this case that the employees 
must ask the court to interpret a collective bargaining 
agreement in order to prove that the defendants' representation 
was false. 
Around the time Verizon declared an employee surplus, 
Verizon and CWA entered into a Memorandum of Agreement ("MOA"), 
a collective bargaining agreement that detailed the conditions 
in which Verizon would either retain or terminate the surplus 
employees.  See 29 U.S.C. § 185(a) (applying to "contracts 
between an employer and a labor organization").  Under Section 
VIII of the MOA, Verizon offered early termination incentive 
packages not only to surplus employees (which included these 
employees) but also to non-surplus employees.  Section VI of the 
MOA explains that if at least 12,000 combined surplus and non-
surplus employees accepted the early termination incentive 
packages, no post-August 2, 2003 hires (which included these 
employees) would be laid off.  Thus, the prospect of the 
employees being terminated to relieve the surplus was a function 
of the arrangement set out in the MOA, and in turn, the truth or 
falsity of the defendants' representation to the employees 
regarding the security of their positions depends on the terms 
 
27 
of the MOA. 
The majority asserts that Verizon's statement to the 
Virginia Employment Commission necessarily renders false the 
defendants' earlier statement to the employees.  Looking to the 
MOA, it is clear that Verizon's statement to the Virginia 
Employment Commission does not necessarily prove the falsity of 
the defendants' earlier statement to the employees. 
The MOA opened the possibility that the surplus would be 
cured in part by non-surplus employees accepting early 
termination, which in turn would spare these employees from 
layoff.  The defendants' alleged misrepresentation to the 
employees was made before the deadline for accepting early 
termination, and thus the defendants' statement was their 
evaluation of the employees' job security based on the 
defendants' knowledge at that time.  Verizon's statement to the 
Virginia Employment Commission was made months after the 
deadline with knowledge of the number of employees who in fact 
accepted early termination.  Rather than conflicting, the 
defendants' statements may be explained instead as the 
defendants' truthful prediction of the employees' job security 
given their ex ante knowledge and Verizon's relay of information 
to the Virginia Employment Commission that enough early 
terminations were in fact accepted that these employees would 
 
28 
have been spared layoff.2  Thus, even if the employees' 
allegations are true, these allegations do not necessarily prove 
the falsity of the defendants' representation to the employees.  
Instead, the employees must carry their burden and prove the 
independent falsity of the defendants' representation, which as 
discussed above requires the interpretation of the MOA.  This 
conclusion is not the product of speculation, but rather 
recognition of the inevitable issues and evidence in the case. 
Because proving the defendants' representation was false 
"requires the interpretation of a collective bargaining 
agreement," Section 301 completely preempts the employees' 
claims.  Lingle, 486 U.S. at 405–06; Foy, 298 F.3d at 
287; McCormick, 934 F.2d at 534.  After reversing the circuit 
court's dismissal of the employees' suits, I would affirm the 
circuit court's holding that Section 301 completely preempts the 
employees' claims and remand for further proceedings. 
                                                        
2 Because the factual details underlying these events were 
not included in the record, and a determination regarding the 
truthfulness of the allegations is beyond the scope of this 
appeal, I make no judgment about these matters. 
 
 
JUSTICE POWELL, concurring in part and dissenting in part. 
 
I agree with the majority’s holding that the circuit court 
erred in dismissing the employees’ claims.  I also agree with 
Justice McClanahan’s conclusion that complete preemption 
constitutes an exception to the well-pleaded complaint rule. 
However, I write separately because I do not believe the 
employees can demonstrate the reasonable reliance required to 
support a fraud claim under Virginia law without judicial 
analysis of the collective bargaining agreements.*  As a result, 
the employees’ state law claims are completely preempted by § 
301 of the Labor Management Relations Act of 1947 ("LMRA"), 29 
U.S.C. § 185. 
 
A tort action grounded in state law may be preempted by § 
301 of the LMRA where the claim depends upon analysis of the 
collective bargaining agreement between the parties. Williams v. 
National Football League, 582 F.3d 863, 874 (8th Cir. 2009). 
In Williams, the United States Court of Appeals for the Eighth 
                                                        
* The majority notes that the plaintiffs alleged reliance on 
the defendants’ representations.  However, the question is not 
merely whether the plaintiffs relied on statements made by the 
defendants, but also whether that reliance was reasonable under 
the circumstances.  Metrocall of Delaware, Inc. v. Continental 
Cellular Corp., 246 Va. 365, 374, 437 S.E.2d 189, 193-94 (1993).  
To ascertain the reasonableness of the plaintiffs’ reliance on 
these statements, a court must interpret the collective 
bargaining agreements. 
 
30 
Circuit held that the plaintiffs’ claims of fraudulent 
misrepresentation, brought under Minnesota law, were preempted 
by § 301 of the LMRA because the plaintiffs could not 
“demonstrate the requisite reasonable reliance to prevail on 
their claims without resorting to the [collective bargaining 
agreements].” Id. at 881. In Minnesota, claims of fraudulent 
misrepresentation require plaintiffs to show that they 
reasonably relied on the alleged misrepresentation. Id. at 881-
82 & n.14. The Williams court noted that, “[w]hether a 
plaintiff’s reliance was justifiable is determined in light of 
the specific information and experience it had.” Id. at 882 
(quoting Trustees of the Twin City Bricklayers Fringe Benefit 
Funds v. Superior Waterproofing, Inc., 450 F.3d 324, 331 (8th 
Cir. 2006)). Furthermore, in determining whether the plaintiff 
justifiably relied on the alleged misrepresentations, the court 
noted that  
the trier of fact would have to determine 
whether the contractual language in the 
[collective bargaining agreement] was 
ambiguous enough for a layman reasonably to 
believe that it was not contrary to the 
representations on which [the plaintiff] 
claims it relied. This would require the 
trier of fact to examine the provisions in 
[the collective bargaining agreement]. 
 
Williams, 582 F.3d at 882 (quoting Superior Waterproofing, 450 
F.3d at 332). 
 
The facts of this case are analogous to those considered by 
 
31 
the Eighth Circuit. As in Minnesota, in Virginia a plaintiff 
asserting fraudulent misrepresentation must establish “the right 
to reasonably rely upon the misrepresentation.” Metrocall of 
Delaware, Inc. v. Continental Cellular Corp., 246 Va. 365, 374, 
437 S.E.2d 189, 193-94 (1993). Reasonable reliance exists where 
the defrauded party not only believes the statement, but is “so 
thoroughly induced by it that, judging from the ordinary 
experience of mankind, in the absence of it he would not, in all 
reasonable probability, have entered into the contract or other 
transaction.” American Surety Co. v. Hannah, 143 Va. 291, 301, 
130 S.E. 411, 414 (1925). 
 
In this matter, the employees claim that they relied on the 
defendants’ assertions that there was a “surplus” of employees, 
that their employment was “in serious jeopardy,” and that the 
employees could either accept the EISP or be terminated in 
August, 2010. Furthermore, the employees claim that they were 
induced to voluntarily terminate their employment, and accept 
the EISP by the defendants’ representation that, if they chose 
not to accept the EISP, they would receive “significantly fewer 
or no benefits after [their] termination by Verizon.” 
 
The reasonableness of the employees’ reliance on these 
representations cannot be evaluated without interpreting the 
collective bargaining agreements that govern the employment 
relationship between the parties. The collective bargaining 
 
32 
agreements delineated Verizon’s ability to terminate employment, 
provided additional employment protection to more senior 
employees, and guaranteed separation benefits upon termination. 
To determine whether the employees had the right to rely on oral 
representations made by the defendants, a fact finder would 
first need to determine which protections an employee enjoyed 
under the collective bargaining agreements; second, whether 
Verizon’s representations conflicted with the collective 
bargaining agreements; and finally, whether it was reasonable 
for the employees to rely on Verizon’s oral representations, 
even where those oral representations violated the written 
guarantees contained in the collective bargaining agreements. 
Accordingly, I would hold that the employees’ state law claims 
are substantially dependent upon analysis of the collective 
bargaining agreements, and are therefore preempted by § 301 of 
the LMRA.