### IN THE COURT OF APPEALS OF TE NNESSEE AT KNOX VILLE Ma y 9, 200 5 S es sio n

RALPH ALLE Y, ET AL., v. QUE BECO R WORLD K ING SPORT, I NC.,

d/ n/ a Q UEBECO R WORLD H AWKI NS, INC.

Direc t Appeal from the Circ uit Court for Haw kin s County No. CV- 151 Hon. Joh n K. Wilson, Circuit Judge

No. E2004-01274-COA- R9-CV - F ILED JULY 5, 2005

This is an interlocutory

appe al from the Trial Court’s re fusal to dismiss t he ac tion on the gr ounds that f e de ra l la ws pr e e mpt

a state a c tio n. We r e ve rs e a nddis mis s.

Te nn. R . A pp. P .3 App e al a s o f Rig ht ; J udgm e nt of t he Ci r c uit

Co ur t R e ve r se d.

H ER SCH EL P I CKE N S F RAN KS , P.J
., delivere d the opinion of the court, in which C H A RLES D. S US ANO , J R ., J ., and D. M I CH EL S WI NEY , J ., joined.

Rus se ll F . M or

ri s, Jr., a ndMic ha e l S. Mo sc he l, N a sh vil le , T e nn e sse e , f or a pp e lla nt.

W. L e wi s Jen kin s, Jr., Dy e rs bu rg , T e nn e sse e , D ou g la s T . Jen kin s, Rog e rsv il le, T e nn e sse e , C. Christopher Raines, Jr., Mount Carmel, Tennessee
, Charles R. Terry , Morristown, Tennessee, a nd Ma rk S. St aple ton , Ro g e rs vil le , T e nn e sse e , f or Ap pe lle e s.

OP IN ION

I n this a ction the Trial Court ove rruled defe ndant’s Motion to Dismiss, and de fenda nt fi le d a n A pp lic a tio n f

or I nte rl oc uto ry Ap pe a l whic h wa s g rante d by the Tria l Co urt a ndthi s Co urt.

Plaintiffs’ action alleg ed that Que becor was a corpor at i o n o rg anized and existi ng under the laws of California, but with its principal place of business i n Ki ng sport, Tenne ssee. Plaintiffs worked f

or the de fenda nt, and alleg ed that def endant published a

notice to them on November

14, 2001, which stated that their plant would be closing as of J anuary 12, 2002. Plaintiffs-2-

alleg ed that as of the date of the filing of the Complaint (Nove mber 14, 2002) the plant was still open and oper ating , and wa s b ei n g run mainly by temporary

help. Plaintiffs alleg ed that def endant intentionally , rec klessly , or neg lige ntly misrepre sented its intention to close the plant, and that

sever al other notice s had bee n published ext ending the dea dline for c losure. The y conclude d that they relied on this repr esenta tion to their detriment in that they relinquished their “ rec all rig hts” for a “pittanc e of the ir value” thinking the plant would c lose.

Pla int if fs fu rthe r a lle g e d th a t de fe nd a nt h a d c omm itt e d f ra ud or pr omi sso ry

fr a udin

makin g the state me nt, a ndthat de fe nd a nt b re a c he d it s a g re e me nt w ith plaint if fs by faili ng to c los e the pla nt, a nd fa ile d to de a l in g oo d fa ith wi th plaint if fs . Pl a int if

fs so ug ht c omp e ns a tory

da ma g e s,

as we ll as punitive damag es.

I n defe ndant’s Answe r, an a ffirma tive defe nse wa s raised that plaintiffs’ claims we re pree mpted by

Section 301 of the L abor Manag ement Relations Act, 29 U.S.C. §185, and by the National L abor Relations Act, 29 U.S.C. §151 et seq . Other de fenses i n cl u d ed wa iver, statute of limit ations, statute of fr auds, and f ailing to e x haust administrative re medies.

Def endant a dmitted that it i ssued notice on Nove mber 14, 2001, pursua nt to the Worker Adjustment and Retra ining Notific ation Act, 29 U.S.C. §2101 et seq. , tha t it ha d d e c ide d to pe rm a ne ntl y c los e the Ha wkins Cou nty plant. I t a ve rr e d th a t th e no tic e state d th a t th e plant w ou ld be entire ly

closed be fore May

1, 2002, and the first separ ation was anticipated to be g in on J anuary 12, 2002. Def

endant a lleg ed that the notice also said that if the da t es nee ded to be e x tended, supplemental notice w ould be g iven as soon as possibl e, and that the closure was a phase down of operations, with several stag es of se paration.

Def endant a dmitted the plant w a s s till partiallyoperational as of Nove mber 14, 2002, but that “all pre press, qua lityassura nce and pressroom ope rations wer e shut down” be fore the Complaint was filed, as well as “majority of t he bindery ”. Def endant admitted that it had entere d into an Effe cts Ba

rg aining Ag ree ment with plaintiffs’ union on Novembe r 29, 2001, but denied tha t plaintiffs’ ac tion should be certifie d as a c lass action.

Subsequently , defe ndant filed a Motion to Dism iss, asking the Court to dism iss the action bec ause the claims wer e pre empted by 29 U.S.C. §185 and §151 et seq ., and t h at plaintiffs

wer e bar red by the re lease enter ed into in the Ef fec ts Bar g aining Ag ree ment. The Court ente red a n Orde r on Nove mber 25, 2003, finding that the Motion to Dismi ss was not well-take n and def endant appea led.

I ssues on appe al ar e whe ther the plaintiffs’ claims are pree mpted by Section 301 of the L abor Ma nag ement Relations Act, 29 U.S.C. §185, and the N ational L abor R el at i o n s Act, 29 U.S.C. §151 et seq.; and whethe r plaintiffs’ c laims are barr ed by a g ener al rele ase of claims enter ed into on behalf of the plaintiffs by their bar g aining repr esenta tive?

Def endant arg ues that plaintiffs’ claims are pree mpted by Section 301 of the L abor-3-

Manag eme n t R elations Act, 29 U.S.C. §185, because plaintiffs’ state law cla ims deal with the construction of c ollective b ar gai n i n g ag ree ments. Section 301 provides that suits for violation of la bo r c on tr a c ts are to b e br ou g ht i n f e de ra l di stric t c ou rt , a ndthe Sup re me Cou rt ha s rule d th a t th is statute “e x presse s a fe dera l policy that the subs tantive law to apply in §301 case s ‘is fede ral law
, which the courts must fashion from the policy of our national labor laws.’ ” Allis-Chalmbers Corp. v. Lueck , 471 U.S. 202, 209 (1985), quoting Tex til e W or k e rs v . Li nc oln Mi lls
, 353 U.S. 448 (1957). Thus, the Supreme Court has held that actions involving la bor disputes must be broug ht under §301

a ndde te rm ine d a c c or din g to fe de ra l law , a ndfu rthe r that “ qu e sti on s r e la tin g to w hat th e pa rt ie s to a labor ag ree ment ag ree d, and what leg al conseque nces w ere intended to flow fr om brea ches of that ag ree ment, must be resolved by ref ere nce to uniform fede ral law , whether such questions arise in the context of a suit for bre ach of contra ct or in a suit alleg ing liability in tort.” Id. at 211.

I n this case, the T rial Court denied th e M o t i o n t o Dismiss which was base d on the pree mpti o n ar gument. I n revie wing the denial of a Motion to Dismis s, our Supreme Court ha s stated:

A Rule 12.02(6) motion to dismiss for failure to state a c laim upon which re lief ca n

b e gr an t ed t es t s o n l y t h e s u ff i ci en cy o f t h e co m p l ai n t , n o tt h e s tre n gt h o f ap l ai n t i ff 's proof a s does, for e x ample, a motion for a direc ted ver dict. The failu re to state a claim upon which r elief c an be g rante d is determined by an ex amination of the complaint alone. The b asi s for the motion is that the alleg ations contained in the

c omp la int , c on sid e re d a lon e a ndtake n as tr ue, are ins uf fi c ie nt t o s ta te a

c la im a s a

ma tte r of la w. Th e mot ion a dmi ts the truth of a ll re le va nt a nd mat eri al a ver me nts contained in the c omplaint but asserts that s u ch fa ct s do not constitute a cause of

a c tio n. I n sc ru tin izin g the c omp la int in the fa c e of a Rul e 12 .0 2(6 ) m ot io n to dismiss , courts should construe the complaint liberally in favor of the plaintiff, taking all alleg ations of fa ct there in as true. The motion should be denied unless it appear s that th e pla int if

f c a n p ro ve no se t of

fa c ts in s up po rt

of he r c la im that w ou ld e nti tle her to re lief.

Cook By and Through Uithoven v . Spinnaker's of Rivergate, Inc

. , 8 7 8 S .W.2d 934, 938 (Tenn. 1994)(c itations omi tted).

I n their Complaint, plaintiffs alleg ed fr aud/intentional mi s r e p r e sentation or neg lige nt misrepre sentation by

defe ndant in i ts s ta te me nts re g ard ing its int e nti on to c los e the plant. As thi s Court has previously

explained:

Whe n a pa rt y int e nti on a lly

mis re pr e se nts a mater ia l f a c t or pr od uc e s a

fa lse imp re ssi on in o rd e r t o mi sle a d a no the r o r t o o btain an u nd ue adv ant age ove r h im,
t h er e i s a p o s i t i v e f

ra u d

. T h e r ep re s en t at i o n m u s t h av e b ee n m ad e w i t h k n o wl ed ge of its falsity and with a fraudulent int ent. The re prese ntation must have bee n to an exis ting fac t w hich is material a nd the plaintiff must have r easona bly relied upon tha t repr esenta tion to his injury

.-4- I n commerc ial transac tions the law has re cog niz ed a l es s stringe nt standard of lia bil ity fo r f ra ud ule nt m isr e pr e se ntatio ns th an the c omm on la w a c tio n f or de c e it. On e w h o , i n t h e c o u rs e o f h i s b u s i n e s s , p ro fe s s i o n , o r e m p l o y m en t , o r d u ri n g a transac tion in which he had a pecunia ry interest, supplies fa lse i n fo rm at i o n for the g uidance of others in the ir business transac tions, is subject to liabilit y for pe cuniary los s c a us e d to the m by

the ir jus tif ia ble re lia nc e up on su c h inf orma tio n, if he fa ils to exercise r ea sonable c are or compe tence in obtaining or communicating the information. This standard of liabilitysubstitut es a r easona ble car e standard for the

c o mm o n la w s c ie n te r

r e q u ir e me n t. I n o th e r

w o r d s , in b u s in e s s tr a n sactions, a de fe nd a nt c a n b e he ld l ia

ble fo r n e g lig e nt m isr e pr e se ntatio ns

.

I n addition to the above de velopments, our courts have now r ecog nized a cause of action for promissory

fraud. Howeve r, as the a

bove ca ses illustrate, the basis for the action for fraud and dec eit is stil l the misrepre sentation of the de fe n d an t, whether intentional or neg lige nt, and som e damag e flowing fr om a justifiable re liance on the misrepre sentation.

Holt v. American Progr essive Life Ins. Co.
, 731 S.W .2d 923, 927 (Tenn. Ct. App. 1987)( citations omi tte d)

. Th us , in or de r to pr ov e the ir c la ims
, plaint if fs mus t sh ow that th e y

we re da ma g e d b y

the ir relianc e on the a lleg ed misrepr esenta tion.

P lai nt if fs a lle g e that th e y

we re da ma g e d b y

the fa c t th a t th e y

“ re lin qu ish e d th e ir ‘re call rig hts’ for a

pittance of

their value ”. I n order

to establish this, t he C o u rt m u s t l o ok to the terms of the CB A and the E BA to determine w hat those re call rig hts w ere , what they wer e worth, and whe ther they

wer e re linquished in such a way that plaintiffs wer e injured.

To determine whether

Section 301 pree mption ex ists, t h e S u p reme Court and the S i xth C i r c u i t h a v e s t a t e d t h a t t h e c o u r t m u s t l o o k a t t h e s t a t e l a w c l a i m a n d s e e i f i t s r e s o l uti on is de pe nd e nt o n a na ly sis of the te rm s o f a

c ol lec ti ve bargainin g a g re e me nt - if so , th e c la im i s pree mpted by

fede ral law

. See Allis-Chalmers Corporation

.

I n Al lis -C ha lm e rs , an employ ee broug ht an action ag ainst his e mploy er a lleg ing ba d faith in the handling of his disabil i t y cl ai m , when the disa bilityplan was a dminist ere d by the employ er pur suant to a CBA . 471 U.S. 202. The Supreme Court he ld that “s t at e- l aw ri gh t s and obligations that do not ex ist independently of private ag ree ments, and that as a result ca n be wa ived or alter ed by

ag ree ment of private p ar t i es , are pre- empted by those ag ree ments.” Id. at 213. The Court expl ained that its ana ly sis had to focus on whet h er e valuation of the tort c laim was “inextricably

intertwined with consider ation of terms of the labor c ontrac t.” Id. The Court held that sin c e the ri g ht a sse rt e d d e ri ve d f ro m th e c on tr a c t, the de te rm inatio n o f l ia bil ity wou ld n e c e ssa

ri ly involve contra ct interpre tation. Thus, the claim was pr eempted. Id.

Th is r a tio na le ha s b e e n f

oll ow e d by oth e r fe de ra l c ou rt s, inc lud ing the Sixth C ir c uit

. I n DeCoe v . Gene ral Motors Corp.
, 32 F.3d 212 (6 Cir. 1994), t he C ourt held t hat a two- prong ed th-5-

test should be used to determine whether §301 pree mption applied to a state law c laim. The Court

ex pl ain ed t hat it mu st fi rst det erm in e if pro of of the st ate law cla im requ ir ed i nt erpr eta ti on of C BA terms, then it would determine if the rig ht claimed by the plaintiff wa s cre ated by the CBA. Id. If the pr oo f r e qu ir e s c on tr a c t inte rp re ta tio n an d the ri g ht arise s fr om the c on tr a c t, the n p re e mpt ion is

war rante d. Id.
, see also Martin v. Assoc iated Truck Lines, Inc
., 80 1 F .2 d 2 46 (6 Cir . 1 98 6) (s ta te th la w misr e pr e se ntatio n cla ims we re pr e e mpt e d b e c a us e me ri ts o f a lle g a tio ns ha d to be e va luate d in lig ht o f t e rm s u se d in CB A) ; Ba le v . G e ne ra l Te le ph on e Co. of C

ali for nia , 795 F.2d 775 ( 9 Cir. th 1986)(misrepr esenta tion claims wer e pre empted whe re pr oof would re quire showing that terms of CB A w e re dif

fe re nt tha n what pl a int if

fs we re tol d) ; Gibson v. AT& T Technologies, Inc. , 782 F.2d 686 (7 Cir. 1986)(cla im that employ er withheld information about plant closing at time of of fering th

su pp le me nta l be ne fi ts, wh ic h a lle g edl y depri ve d e mpl oy e e s o f l a y of f a llo wa nc e s p ro vid e d f

or in CB A, wa s p re e mpt e d) ; M o o r e v

. G e n e r

a l M o to r s Co r p. , 739 F.2d 311 ( 8 Cir. 1984)(employ ee’ s th fraud and misrepr esenta tion c laims w ere pree mpted beca use injury alleg ed wa s violation of transfe r rig hts which exist ed under CBA)

.

Adkins v. Ge neral Motors Corp., 946 F.2d 1201 (6 Cir. 1991)
, is f actua lly simil ar, th in tha t p la in ti f

f s a ll e g e d th a t G M a n d th e u n io n c o ll u d e d in n e g o ti a ti n g a CB A w h ic h abrog ated specia l se niority rig hts c ontained in a prior CBA called the “bridg e ag ree ment”. Plaintiffs asserted that th e y we re no t told that the ne w CB A te rm inate d the ir re tr e a t rig hts , an d we re sp e c if ic a lly tol d that the new CB A did not a ffe ct the “bridg e ag ree ment” rig hts. Id. Th e Sixth C ir c uit Cou rt he ld that since damag es wer e a nece ssary element of plaintiffs’ claims, and since the damag e alleg ed wa s the loss of rig hts under a CB A, “in orde r to adjudica te t his claim, t he court below would have bee n oblige d, at a minimum, to determi n e that the ‘bridg e ag ree ment’ conf err ed such rights on the p l a i n t i f f s , t h a tt h e s u b s e q u e n tc o l l e c t i v e

- b ar g a i n i n g a g r e e m e n tab r o g a t e d t h o s e r i g h t s ”
, a n d t hu s, beca u s e ad j u dication of the c laim was substantially depende nt on analy sis of the ag ree ments, the claim was pr eempted. Id.

Plaintiffs rely

on Alongi v. Ford Motor Co.
, 386 F.3d 716 ( 6 Cir. 2004), wher ein the th plaintiffs alleg ed that def

endan t’ s a g e n t mis r e p r e s e n ted to them that their plant wa s financia lly secur e and would re main open for at least six more y ear s, and that plaintiffs would be g uara nteed positions du ri ng that tim e fr a me

. I n fi nd ing that plaint if fs ’ c la ims we re no t pr e e mpt e d, the Sixth Cir cuit pointed out that said misrepre sentations wer e made afte r the CB A was ne g otiated and r atified, a nd thus these misrepre sentations wer e individual promises and wer e not pa rt of the CBA. Id. I n other words, the a lleg ations did not require the court to apply /interpret terms of the CBA, and there fore the claim wa s not preempted. Id. Th e Cou rt e xpla ine d that thi s situatio n w a s d if fe re nt f ro m Adkins
, wher e the plaintiffs a lleg ed that they wer e fr audulently

induced to sig n a contr act whic h forf eited rig hts alleg edly

confe rre d by

another labor c ontrac t. Id.

The plaintiffs’ claims in this case a re ba sically

the same a s thos e in Adkins , i.e. pl ain ti ffs cla im th at th ey were frau du len tl y in du ced to give u p t hei r “recal l r ight s” u nd er t he C BA by entering into a dif

fer ent agr eeme nt, based on the company ’s re prese ntation that the plant’s closing

wa s im min e nt. An a ly sis of pla int if fs ’ c la ims wo uldre qu ir e the c ou rt to e xami ne the CB A t o determine if such re call rig hts ex isted and what they wer e, an d t h en to examine the subsequent-6-

ag ree ment to determine if pla intiffs relinquished the same and wer e injured the reby . Since the proof of the c laim would require interpre tation of t he contract terms, and the right c laimed to have be en lost a rose from the CB A, we c onclude, on the f oreg oing a

uthorities, that the claims are pree mpted.

Plaintiffs’ brea ch of c ontrac t claims are lik ew i s e p reempted, bec ause the Contract alleg edly brea ched is a

collective ba

rg aining ag ree ment, and not an “individual promise” as defined b y Along i

. Plaintiffs’ claims should have be en dismissed, and the Trial Court erre d in deny ing defe ndant’s Motion. We rever se t he Judgment of the T rial Court and re mand, with the cost of the

app e a l a sse sse d to pla int if fs

.

______________________________ H ER SCH EL P I CKE N S F RAN KS , P

. J.