No. 84-499 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985

DALE IvlALQUIST

## ,GEORGE BOHARSKI

## , GEORGE BELT and LOCAL 768, IBEW, Plaintiff and Appellant,

HOWARD P. FOLEY, a District of Columbia Corporation; CITY ELECTRIC, aMontana Corporation,and R.L. PAYNE COMPANY, INC., AMontana Corporation, Defendants and Respondents.

APPEAL FROM: District Court of the Fourth JudicialDistrict, In and for the County ofMissoula, The HonorableJohn S. Henson,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant: Terry Wallace argued,Missoula, Montana For Respondent: Garlington, Lohn & Robinson; CharlesE. McNeil argued,

(Foley)

## ,Missoula,Montana Corette, Smith,Pohlman & Allen; Lissa K. Swan argued,

(CityElectric),Butte,Montana Milodragovich,Dale & Dye;Karl H. Boehm, (co-counsel of City Electric)

## ,Missoula, Montana Worden,Thane & Haines; StaceyWeldele-Wade argued,

(Payne)

## ,Missoula

## ,Montana

Filed: Submitted: December 10, 1985 Decided: February 13, 1986 

## FEB131986

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## g?d~&t%~m+M ClerkMr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. This is an appeal from an order of the Fourth Judicial District Court dismissing plaintiffs' complaint on the basis that the action was preempted by federal law and the State District Court lacked subject matter jurisdiction to adjudicate the controversy. We reverse and remand for trial. This action was instituted by plaintiffs Dale Malquist, George Roharski, George Belt and Local 768, IBEW. No issue has been raised on appeal concerning standing of Local 768, IBEW, to prosecute this tort action and therefore all plaintiffswill be treated as one. In 1979, Champion International, of Bonner, Montana, began construction of an expansion project on a packaging plant in Missoula County,Montana. Champion hired Matthews, McCracken and Rutland (MM&R)of Baton Rouge,Louisiana, to do the general electrical contractingwork. In March of 1980, MM&R,Howard P. Foley Company,City Electric and R. L. Payne, Lnc., entered into a collective bargaining agreement with Local 768 of the International Brotherhood of Electrical Workers. Pursuant to the terms of the agreement signed by the parties, all electrical contractors on the project were to hire electricians through the Union referral books. Hiring could be from no other source unless labor was not available from the Union. Malquist, Boharski and Belt all placed their names in the referral book and were hired by MM&R until that companywas terminated by Champion. At this time the three plaintiffs were laid off pursuant to a reduction in force and placed their names in the referral book for future employment. Plaintiffs were referred to defendants for employment,but were refused. In September of 1980, a meeting was held between Union officials and representatives of defendant employers. AUnion business agent,Reg McMurdo, was shown a list of 20-30 names allegedly blacklisted from the project. Plaintiffs

were blacklisted. Thereafter the Local filed a complaint under the collective bargaining agreement. The Labor-Management Committee deadlocked on the issue by a 6-6 vote,and the Union then dropped the complaint for the reason that the conduct complained of was not covered in the collective bargaining agreement, which only dealt with wages, hours and conditionsofwork. Plaintiffs then filed claims in the StateDistrictCourt for the willful andmalicious blacklisting of the plaintiffs, seeking both compensatory damages and punitive damages. Two of the three defendants,R. L. Payne and City Electric,moved for summary judgment, alleging federal preemption. The District Court denied the motions for summary judgment, but dismissed the complaint, holding that blacklisting is arguably prohibited by the National Labor Relations Act

(NLRA) and thus the State District Court lacked subject matter jurisdiction. The issues presented on appeal are: 1. Whether plaintiffs' claim grounded in tort is preempted by the National Labor Relations Act, thereby denying the State DistrictCourt subject matter jurisdiction? 2. Whether plaintiffs failed to exhaust their administrative remedies? 3. Whether the action is barred by the statute of limitations? Respondents place heavy reliance upon San DiegoBuilding Trades Council v. Garmon (1959),359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775. In Garmon, supra, the United States Supreme Court established guidelines for determining respective jurisdictions of the National Labor Relations Board and the states in labormanagement relations. The Court said:When it is clear or may fairlybe assumed that the activities which a State purports to regulate are protected by 5 7 of the Natj-onalLabor Relations Act, or constitute an unfair labor practice under § 8,due regard for the federal enactment requires that state jurisdiction must yield. To leave the States free to regulate conduct so plainly within the central aim of federal regulation involves too great a danger of conflict between power asserted by Congress and requirements imposed.by state law. 359 U.S. at 244, 79 S.Ct. at 779, 3 L.Ed.2d at 782. In dismissing the complaint, the trial court placed emphasis upon the rule articulated by the Garmon court that the conductneed only be "arguably subject" to the NLFA. The language used by the Court in Garmon supports the trial court's position:



# .. . When an activity is arguably subject to 5 7 or 

### 5 8 of the Act, the States as well as the federal courts must defer to the exclusive competence of theNational Labor Relations Board if the danger of state interference with national policy is to be averted. 359 U.S. at 245, 79 S.Ct. at 780, 3 L.Ed.2d at 783. Respond.enl:s acknowled.ge that two subsequent cases modified the Garmon approach. In Sears,Roebuck & Companyv. San Diego County District Council of Carpenters (1978), 436 U.S. 180, 98 S.Ct. 1745, 56 L.Ed.2d 209,and Farmerv. United Brotherhood of Carpenters and Joiners of America, Local 25

(1977), 430 U.S. 290, 97 S.Ct. 1056, 51 L.Ed.2d 338, the Supreme Court protected the states from federal preemption when the states were controlling conduct traditionally subjectto state jurisdiction,especiallywhere the statehad a substantial interest in regulation of the conduct at issue and the state's interest was one that did not unduly interfere with federal regulation. The exception to federal preemption recognized by the United States Supreme Court has been primarily confined to a "violence"exception. Where the defendant's conductmay well have constitutedanunfair labor practice but amounted to violence, the United States Supreme Courthas decided that the state's interest inprotecting itscitizens from violence is sufficiently strong that the state's tort lawwill be allowed to regulate and punish such conduct. Farmer, 430 U.S. at 299, 97 S.Ct. at 1063, 51

We do not find respondents' authority dispositive of the fact situation here at issue. Section 39-2-803, MCA, provides: Blacklisting Prohibited. If any company or corporation in this state authorizes or allows any of its agents to blacklist or any person does blacklist any discharged employee or attempts by word or writing or any other means whatever to prevent any discharged employeeor any employeewho may have voluntarily left the company's service fromobtaining employment with anotherperson

# .

# .. such company or corporation or person is liable in punitive damages to such employee soprevented from obtaining employment, to be recovered by him in a civil action

# ..

# . . The conduct proscribed by the state statute is "blacklisting" per se. There is no requirement that blacklisting be related to an unfair labor practice. If an employer blacklists an employee for any reason, that employer is subject to tort liabilityunder S 39-2-803,MCA. In order for there to be a valid preemption in this case, we must find that blacklisting is protected by the NLRA. Section 7 of the NLRA, 29 U.S.C. S 157, relates to employee rights to self-organization,tobargain collectively and to engage in concerted activities for the purpose of bargaining collectively. The applicable provisions of S 8, specifically 29 U.S.C. S 8(a) of the NLRA, define unfair labor practices as: restraining or coercing employees in exercise of S 7 rights; dominating or interfering with a union; d.i.scriminatingin regard to hiring and tenure to encourage or discourage m.embershipin unions; discharging or discriminating against an employee because he has filed charges or given testimony under the NLRA; refusing to bargain collectively. Nothing in these sections refers toblacklisting and clearly blacklisting would not be investigated by the Roard unless the blacklisting was done for some purpose prohibited by the NLRA. Blacklisting for any purpose is unlawful inMontana. The District Court felt that it should not inquire into the reasons for the blacklisting because "arguably" blacklisting was subject to theNLRA's proscriptions. In its order the District Court said: This court is notwilling to invade theprovince of the Labor Board by staging an inquiry into blacklisting, this supposed list of electricians who were allegedly disapproved of and subsequently boycotted for, as yet, unknown reasons when they sought employment with the defendants. No one in this litigation contends that plaintiffs were blacklisted for labor-related activities. The reason for the blacklisting is unknown. Blacklisting per se is unlawful underMontana law,5 39-2-803,MCA. Plaintiffs argue that preemption is not called for because: 1. The underlying conduct, blacklisting, is not protected under theNLRA; 2. There is an overriding state interest in protecting citizens from blacklisting and it's consequent harm. This interest has been manifested in a statute awarding punitive damages forblacklisting. 3. There isno risk that this cause of action, in tort, will affect national laborpolicy. We find plaintiffs' argument compelling in light of the recent decision of the 9th Circuit Court of Appeals in Garibaldi v. Lucky Food Stores, Inc. (9th Cir. 1984), 726

Garibaldi was employed by Lucky Food Stores as a truck driver until his discharge in October, 1980. Garibaldi filed an action in state court in California alleging he waswrongfully discharged for "whistle blowing." The case was removed to federal court a-ndthe Federal District Court held that his discharge was preempted by the National Labor Management Relations Act. The Circuit Court of Appeals reversed and established guidelines for preemption which allowplaintiffs' claims in this case to go forward. In Garibaldi, supra, the Ninth Circuit placed. great emphasis upon a balancing of state and federal interests. The court quoted from the United States Supreme Court decision in Farmer, supra,wherein the Court stated: Our cases indicate, however, that inflexible application of the doctrine [of preemption in industrial relations] is to be avoided, especially where the State has a substantial interest in regulation of the conduct at issue and the State's interest is one that does not threaten undue interference with the federal regulatory scheme. Garibaldi, 726 F.2d at 1373,quoting Farmer, 430U.S. at 302, S.Ct. at 1064, 51L.Ed.2d at 351. The Ninth Circuit acknowledged that the United. States Supreme Court carefully tailored its holding to situations where the defendant1 s conduct was outra.geous and "particularly abusive." The Garibaldi court expanded the "violence" exception to embrace wrongful discharge conduct amounting only to a violation of California's public policy. While the discharge of Garibaldi may have constituted an unfair laborpractice,yet itwas significantthatCalifornia had a paramount interest in regulating violations of public policy within its state. The court in Garibaldi, 726 F.2d at 1374,said: Thus, it is clear that California's interest in providing a cause of action forviolation ofpublic policy or a statute is the enforcement of the underlying statuteorpolicy, not the regulationof the employmentrelationship. Certiorari to the United States Supreme Court was denied atThe case at bar is similar. Blacklisting per se is proscribed in Montana. The statutedoes not seek to regulate the relationship between the employer and the employee. Neither does the statute seek to regulate unfair labor practices treated in 

### 5 7or 

### 5 8 of theNLRA, 29 U.S.C. 

### 55 157 and 158. We find the rationale in Garibaldi to be persuasive and adopt it as the basis for ourdecisionhere. The court said: A claim grounded in state law for wrongful termination for public policy reasons poses no significant threat to the collective bargaining process; it does not alter the economic relationship between the employer and employee. The remedy is in tort, distinct from any contractualremedy an employee might have under the collective bargaining contract. It furthers the state's interest in protecting the general public--an interest which transcends the employment relationship. (Citationomitted.) Garibaldi, 726 F.2d at 1375. The act of blacklisting per se does not constitute an unfair labor practice. Blacklisting sounds in either (1) intentional infliction ofmental or emotional distress or (2) tortious interference with prospective orpresent contractual relationships. However, in light of the provisions of S 39-2-803, MCA, blacklisting itself constitutes tortious conduct giving rise to a civil remedy. We therefore hold that federal preemption does not exist. There is not an exhaustion question in this case. Administrative remedies are in the federal system. We here have an action grounded in tortunder state law. The conduct complained of is, as we have held, not subject to NLRA proscription. The tortious conduct complained of in state courthas no exhaustion component. Our holding that plaintiffs' claim constitutes a tort under state law requires the application of the three year statuteof limitationsapplicable to tort actions in Montana, 27-2-204,MCA. Because no specific statute of limitationsis provided under state law for blacklisting, the tort of blacklisting is covered by the general tort statute of limitations and of course the same would be true for actions grounded in intentional. infliction of mental distress and tortious interference with contractual relationships. This

causewas filedwithin twoyears of the incidents in question and is timely. We reverse and remand for trial in accordancewith the views herein expressed.

We concur:

Chief JusticeMr. Justice L. C. Gulbrandsondissenting. I respectfully dissent. Themajority holds that the conduct complainedof is not subject toNLRA proscription. Ineffect,an exception to the preemption requirement has been created by labeling the action as one in tort under state law. An opposite result

was reached in Campbellv. McLean Trucking Company (E.D.N.Y., 1984), 592 F.Supp. 1560, 1564,where the court stated: A mere labeling of the conduct complained. of, however, does not satisfy the requirementsnecessary to avoid preemption. The Supreme Court in Lockridge, 403 U.S. at 292, 91 S.Ct. at 1920,said that it is the conduct and not the legal description that is important. This substance-form problem was recognized, for example, i.n Breitegger v. C.B.S., 43 Cal.App.3d 283, 117 ~al.~~ty 699, 706 (1974),where an unfair labor practice within the Board's jurisdiction was not cognizable in State court merely by 1a.beling it an intentional tort. Section 8 of the NLRA clearly prohibits employment discrimination, and blacklisting is recognized as an unfair labor practice. Further, as indicated by Mount Desert Island Hospital and contrary to plaintiffs' State tort characterization, blacklisting has long been recognized as an unfair labor practice and, thus, prohibited by the Act. See NLRB v. Waumbec Mills, 114 F.2d 226,732-F(lst Cir.1940); Cone Bros. Contracting 

## - Co.

## , 135 N.L.R.B. 108 (1962). In short, 

### - at the least, plaintiffs' claim one is 

### - "'arguably subject to 

# . . . the Act'



# . . . [citationomitted1 

# . .

# .and therefore come[s] within the primary jurisdiction of the 

# . . . Board

# ..

# .." Abrams v. Carrier Corp., 434 F.2d 1234, 1253 (2d 

## - Cir.1970), cert. denied, 401 U.S. 1009, 91 S.Ct. 1253, 28 L.Ed.2d 545 (1971). (Emphasisin original.) Campbell, supra,592F.Supp. at 1563. The majority opinion contains the following statement: No one in this litigation contends that plaintiffs were blacklisted for labor-related activities.In fact, plaintiff's counsel, in his brief filed Zuly 5, 1984,with the trial court,declared as follows: When this case was presented to the Board,plaintiffs had to raise and prove to the Board that defendants' maintenance, circulation and other use of the blacklistwas for the purpose of discriminating against plaintiffs for activites [sic] rela.ting to self-organization, collective bargaining, concerted actions or union affilitations [sic]. 29 USC S158(a)(1)and (3). I also note that Local 768, International Brotherhood of Electrical Workers, is a party plaintiff in this action. I agree with the trial court's determination that the first issue to be decided.is whether blacklisting occurred, and if so, for what reasons. That issue is arguably within the jurisdiction of theNLRB and that Board should.be allowed to exercise its remesial authority if blacklisting activity is found. The trial court, in dismissing the ca.useconditionally without prejud.ice, clearly would entertain the plaintiff's action in tort if the NLRB found that hlacklisting occurred.

I join in the foregoj..ngdissgnt of Mr. Justice L. C. Gulbrandson.

Justice