No. 80-153 INTHE SUPREME COURT OF THE STATE OF MONTANA 1981

HARRY J. MASSETT, Plaintiff and Appellant,

THE ANACONDA COMPANY, and METROPOLITAN LIFE INSURANCE CO., Defendants and Respondents,

Appeal from: District Court of the ThPrd Judicial District, In and for the County of Deer Lodge, The Honorable Robert Boydr Judge presiding.

Counsel of Record:

For Appellant; 

### Greg J. Skakles argued, Anaconda, Montana

For Respondents: Poore, Roth, Robischon & Robinson, Butte, Montana Robert A. Poore argued, Butte, Montana

Submitted: ~pril 24, 1981



# 2 1961 Filed:--Mr. Justice Frank B. Morrison, 

### Jr., delivered the Opinion of the Court Plaintiff, Harry J. Massett, a long-time employee of theAnaconda Company, brought an action on May 

### 10, 1976, against defendantAnaconda Company for an alleged breach of

a collective bargaining agreement. After engaging indiscovery, Anaconda moved for summary judgment. The Deer Lodge County DistrictCourt granted the motion on February 22, 1980. Plaintiff appeals. For reasons discussed below, 

### we vacate the order of the DistrictCourt granting summary judgment

# . Plaintiff was employed by the Anaconda Company from 1944 to 1975. He contends thathe became unable to work due to illness inJanuary of 1975. InApril orMay 1975, plaintiff firstdiscussed the possibility of receiving a disabilitypension with Anaconda Company personnel. Section 

### 2.2 of the pension plan provides pension benefits for an employee who has become totally disabled by bodily injury or disease so 

### as to be prevented "from engaging inany substantial gainfulwork which, inthe opinion of a qualified physician appointed by the Employing Company, 

### willbe permanent and continuous during the remainder of the Empl-oyee's lifetime" and which 

### isnot self-inflicted, the result of service inthe armed forces or the result of criminal activity. In October of 1975, plaintiff applied for a disabilitypension for the first

### time. Part of the application form supplied by the Company was to be filled outby a physician. Plaintiff took the form to Dr. John Romito who had been treating his condition. The form which Dr. Romito completed contained an erroneous definition of total disability. Itdefined the concept in

### termsof inability due to disease or bodily injury topursue any gainful employment or occupation whatsoever. The medical 

### - form contained alternateboxes for the examining physician tocheck, specifying either that the patient was or was not totally and permanently disabled. Dr. Romito did not check eitherbox, but rather attached 

### a note to the form which read:"I do not feel thispatient can be considered totallydisabled but he 

### isnot able to resume his normal employment asa smelterman due to exposure to industrial fumes." The Company processed the application for disability benefits, but ultimately rejected 

### it inNovember 1975. InDecember 1975, plaintiff's attorney requested new medical forms containing a correctdefinitionof total and permanent disability. Anaconda representative R. L. Brown provided those forms ina letter dated January 5, 1976. On the advice of counsel plaintiff came to the Company's personnel office on January 26, 1976, and spoke to the Company representative, Harry McKernan. Plaintiff told McKernan thathe would like toreceive a "conditional" 30- year retirement pension until such time ashe could reapply for and begin receivingbenefits under a disabilitypension. Under section 2.6 of the pension plan, any employee who has completed 30 years ormore of continuous service to the Company butwho has not attained the age of 60 may 

### retire and receive 

### a so-called "30-year" pension. On December 30, 1975, plaintiff's attorney had written McKernan a letter informing the Company thathe had advised his client to apply for the 30-year pension and that the Company should not construe this applicationas a waiver of plaintiff's 

### claimto a disabilitypension. Plaintiff asserts thathis poor financial condition and the Company's denial of hisoriginal application for 

### a disabilitypension necessitated his applying for a 30-year pension. Plaintiff's retirement became effective February 1, 1976. On February 6, 1976, Dr. Robert Burroughs, a cardiologist inSpokane, Washington, completed a disabilitypension form containing the correct definition of total disability and checked the box on the form indicating thatplaintiff was totally and permanently disabled. Thatmedical form was remitted to the Company on February 17, 1976. On March 24, 1976, the Company responded that, inasmuch asplaintiff had voluntarily applied for and 

### was receiving a 30-year pension, the question of his eligibility for a disability pension had become "academic." The Company refused toprocess the claim for disability benefits. Plaintiff then filed the present action. The trial court granted summary judgment to the Anaconda Company because, in

### itsview, receipt of the 30-year pension barred application for a disability pension and further that the plaintiff's failure to implement the contract'

### s grievance procedure barred the maintenance of an action in the courts. The following issues aredispositive of this appeal: 

### 1. May, under the 

### termsof the collective bargaining agreement, 

### a retiree apply for 

### a disability pension after he has been granted 

### a 30-year pension if he was disabled before he retired? 2. Was the Company guilty of bad faith inrejecting plaintiff's claim for disabilitybenefits on grounds that his receipt of a 30-year retirement barred a disability pension, thereby entitling the plaintiff tobypass the grievance procedure and litigatein the District Court? Atthe outset, we note that subjectmatter jurisdictionover this 

### case derives from section 301.(a) of the Labor Management Relations Actof 1947 (LMRA)

## , (Taf

### tHartleyAct)

## , codified at29 U.S.C. §185(a). Although, generally the National Labor Relations Actpreempts 

### state and federal courtjurisdiction toremedy conduct that

### ispermitted or prohibited by the Act (San Diego Building Trades Counci.1 v. Garmon (1959), 359 U.S. 236, 79 S.Ct. 773, 3L.Ed.2d 775), there are a number of significant exceptions. Section 301(a) of the LMRA expressly authorizes suitsinfederal court for the enforcement of a collectivebargaining agreement. Federal jurisdiction 

### isnot, however, exclusive. Ithas been specifically held that statecourts have concurrent jurisdiction under section 301 toentertain 

### a suitby an individual employee for breach of a collectivebargaining agreement. Local 174 Teamsters Union 

### et al. 

### v. Lucas Flour Co. (1962), 369 U.S. 95, 101, 82 S.Ct. 571, 7 L.Ed.2d 593; Charles Dowd Box Co. v. Courtney (1962), 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483. The substantive rules governing the interpretation of collective bargaining agreements are controlled by federal law which the federal courtsmust fashion from the policy underlying the national labor laws. Textile Workers Union v. Lincoln Mills (1957), 353 U.S. 448, 

## ?idl917-18 456-457, 77 S.Ct. 

## m, 1L.Ed.2d 972, 980-981. The courts may, however, resort tocompatible state law to find the rule that

### willbest effectuate federal policy. Li.ncol-n Mil-ls, supra, 1L.Ed.2d at981. Except in the rather narrow field of suits to compel performance of arbitration agreements 

### (see 

## -United Steelworkers v. Warrior & Gulf Nav. Co. (1960), 363 U.S. 574, 578-579, 80 S.Ct. 1347, 

### 4 L.Ed.2d 1409),

### we have found no federal authority "suggesting that the nebulous body of

### decisional law envisioned inLincoln Mills

### was tobe formulated inderogation of the common law of contracts", Lee Washington, Inc. v. Washington Motor Truck Transportation Employees Health and Welfare Trust (D.C. 

### App. 1973), 310 A.2d 604. Hence, 

### we 

### see no reason not to apply the same rules of construction incases involving collective bargaining contracts aswe apply incases dealing with contract law generally. See Clarke v. Ward Baking Co. (D.C.App. 1963), 191A.2d 450, 452. We turn now to the firstissue raised by the plaintiff

on appeal. The plain language of section 2.2 of thepension plan entitlesan employee to a disability pension if he becomes totally and permanently disabled and if he has completed ten years of continuous service to the Company. In other words, a worker with the requisite number of years of service has a vested right to a disability pension if he

can show thathe became disabled while employed with the Company. The record shows that theplaintiff had logged well in

excess of ten years of continuous service toAnaconda asof the date he ceased working for the Company. Plaintiff claims to have become disabled while he was inthe employ of the Company. If he can prove that contention, he isentitled to disabilitybenefits. The Company argues, however, that the plaintiff rendered himself ineligible for any disabilitybenefits by applying for a 30-year pension. He 

### thereby relinquished his employment status, Anaconda argues, and became a "pensioner". Only employee^"^ 

### the Company insists, may apply for disability benefits. We disagree. Plaintiff's acceptance of a 30-year pension does not constitute an electionof remedies nor a waiver.As a legal doctrine, election

### is the exercise of a choice of an alternate and inconsistentright or course of action. Full knowledge of the nature of inconsistentrights and of the necessity of choosing between them areelements of election. Eckstein v. Caldwell (1938), 61 R.I. 142, 200 A. 434, 437 (electionof remedies presupposes the knowledge of alternatives with an opportunity for choice); Frederickson

v. Nye (1924), 110 Ohio St. 459, 144N.E. 299, 301 (inorder that electionof one remedial right shallbar another, the rightsmust be inconsistent and the electionmust be made with knowledge). Plaintiff's application for a 30-year retirement can inno sense be understood as an election of

one out of two potential alternate remedies to the disability he allegedly suffered while on the job. The only disabilityrelated remedy he sought was a disabilitypension. His claim to the 30-year pension rested on a differentfactual basis, namely his 30 years of service to the Company. In short, the doctrine of election of remedies does not apply for the simple reason that the record reveals no alternate remedies from which to elect. If the plaintiff was indeed disabled while he was still

an employee with the Company, the onlyway he could lose his vested right to a disabilitypension would be by waiving that right. By definition waiver 

### is the intentional relinquishment of a known right. The record shows that the plaintiff has notwaived his claim to a disabilitypension. Heexpressly informed Anaconda representative McKernan that he wanted to take out a 30-year pension "conditionally"

## -- i.e., until he could begin receiving a disabilitypension. In addition, his attorney sent a letter to the Company stating thathis client's application for a 30-year 

### retirement, was not tobe understood as

### a waiver of his claim todisability benefits. Clearly the plaintiff did not intend to relinquish any righthe may have had to a disabilitypension. The mere fact that the Company representatives contended thatreceipt of one kind of pension precluded application for another kind did not deprive the plaintiff and his attorney of the right to interpret the provisions of the pension plan differently. The plaintiff does not claim thathe 

### isentitled to the cumulative benefits of both the disabilityand the 30-year pension. Plaintiff seeks a disabilitypension because the benefits aregreater than the benefits available under the 30-year pension plan. He laid claim to the 30-year pension "conditionally" and 

### willonly be limited to thatplan if he cannot qualify for disabilitybenefits. The next inquiry 

### iswhether the Company acted ingood faithinrefusing toprocess the application. Anaconda 

### rejected the plaintiff's application because, in

### itsview, the plaintiff had voluntarily relinquished his employment status and had become a "pensioner" by applying for a 30-year retirement. As such, the Company contended plaintiff was no longer eligible for a disability pension because under section 2.2 of the pension plan only "employees" are eligible for disability. The essential inquiry 

### iswhether Anaconda asserted that defense toplaintiff's application ingood faith. If the Company acted inbad faithinrefusing to implement arbitration, then 

### wewould allow the DistrictCourt action to go forward without resort to the procedure required by the collective bargaining agreement. We find the record tobe devoid of any indication that the Company acted inbad faith. There 

### isno evidence of anypersonal enmity towards, nor of any discrimination against, the plaintiff. Wehave considered Anaconda's defense on the merits. Because we today disagree with the Company's legal position, does notmean that the Company had no right toassert that position. Where the record lacks any affirmative evidence of bad faith, 

### wewillneither presume nor accept conclusory assertions that a litigant's claim or defense 

### isunjustified unless 

### it is sopatently frivolous as toplainly exclude any reasonable merit. Herewe hold thatAnaconda's refusal toprocess plaintiff's claim was made ingood faith. The legal question of plaintiff's eligibility for benefits

### was a matter for judicial determination. Now that the determinationhas been made, arbitrationprocedures must follow. Section 5.2 of thepension plan provides a grievance procedure to settle any medical dispute concerning an employee's eligibility for disability pensions. Under that section the Company must refer any dispute concerning an applicant's disability toa medical board for resolution. Accordingly, 

### we remand the case to the ~istrict Court with directions to order the Anaconda Company toproceed with arbitration.

We concur:

Chief JusticeMr. 

### Justice Daniel J. 

### Shea dissentsand will file a dissenting opinion 

### later.