Case Name: Larry T. VARNUM, Plaintiff-Appellant, v. NU-CAR CARRIERS, INC., Defendant-Appellee
Court: United States Court of Appeals for the Eleventh Circuit
Jurisdiction: United States
Decision Date: 1986-11-20
Citations: 804 F.2d 638
Docket Number: No. 85-3898
Parties: Larry T. VARNUM, Plaintiff-Appellant, v. NU-CAR CARRIERS, INC., Defendant-Appellee.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 804
Pages: 638–645

Head Matter:
Larry T. VARNUM, Plaintiff-Appellant, v. NU-CAR CARRIERS, INC., Defendant-Appellee.
No. 85-3898.
United States Court of Appeals, Eleventh Circuit.
Nov. 20, 1986.
Rehearing and Rehearing En Banc Denied Dec. 23, 1986.
John W. Pafford, Jacksonville, Fla., for plaintiff-appellant.
Guy O. Farmer, II, Mark V. Young, Smith & Hulsey, Jacksonville, Fla., for defendant-appellee.
Before FAY and JOHNSON, Circuit Judges, and HOFFMAN , Senior District Judge.
Honorable Walter E. Hoffman, Senior U.S. District Judge for the Eastern District of Virginia, sitting by designation.

Opinion:
JOHNSON, Circuit Judge:
This is an appeal from an order granting summary judgment to the defendant. We reverse.
I. BACKGROUND
Plaintiff-appellant Larry Varnum is a truck driver who sought employment with defendant-appellee Nu-Car Carriers, Inc., a common carrier engaged in the transport of new cars. In order to gain employment with Nu-Car, a trucker must purchase his own equipment, including a certain type of tractor-trailer not more than two years old, which equipment costs about $60,000. Appellant negotiated with a representative of appellee in May 1983 regarding employment. During their discussions, the representative told appellant that appellee allocated work according to a first-in-first-out basis that provided equal work opportunities to truckers regardless of their seniority. Truckers were paid about 65% of the gross amount that Nu-Car received for each load the trucker transported; there-. fore, the truckers' income depended on the availability of loads to transport. The statement concerning the dispatch system was consistent with the collective bargaining agreement in effect at that time between Nu-Car and the union representing Nu-Car's employees.
The representative also showed appellant computer printouts that indicated that the average monthly gross income for truckers with Nu-Car, based on the past few months, had been about $7,000. The information contained in these printouts was correct.
While appellant was negotiating about employment with Nu-Car, Nu-Car was drafting a proposal to switch to a seniority-based dispatch system. Under this dispatch system, new loads would be assigned to the most senior trucker available. Since there were usually several truckers on hand at the time Nu-Car was needed to transport a load, this system would have a disastrous effect on the new truckers: it would have the effect of laying some of them off. The new system was partially designed to enable Nu-Car to save on the costs of health care, welfare, and pension benefits. Under the new system, Nu-Car would not be required to make a weekly contribution for health care, welfare, and pension benefits for any owner-operator who did not work during a particular week.
There is evidence that the representative for Nu-Car knew of the proposal during the employment negotiations, yet failed to inform appellant of the pending change. Deposition of Paul McAllister, at 37-39; affidavit of Paul McAllister, at 1-2. More significantly, the representative knew that if the change was agreed to, his representation that appellant might earn $7,000 per month would be false.
After June 27, 1983, Nu-Car and the Union began to renegotiate the collective bargaining agreement. These negotiations resulted in a new agreement, concluded on about July 8,1983, which included a change in the dispatch procedure to a seniority-based system.
Appellant began to work for Nu-Car on June 2, 1983. For his first one-and-a-half months of employment, he was dispatched under the first-in-first-out system. The new dispatch system was then put into effect, and Varnum's income fell sharply. Varnum resigned from Nu-Car in March 1984. At the time he resigned, Varnum had not filed any grievance under the machinery provided by the collective bargaining agreement.
In November 1984, Varnum filed a complaint against Nu-Car in Florida state court alleging that Nu-Car had fraudulently misrepresented to him the conditions of employment in order to induce him to accept employment. Varnum sought compensato ry and punitive damages. In December 1984, Nu-Car removed the action to the United States District Court for the Middle District of Florida, based on diversity of citizenship.
In June 1985, Nu-Car moved for summary judgment on three grounds: (1) that the action was preempted by Section 301 of the Labor Management Relations Act, 29 U.S.C.A. § 185 ("Section 301"), which authorizes suits between labor organizations and employers for breach of a collective bargaining agreement; (2) that the action was preempted by the National Labor Relations Act ("NLRA"); and (3) that, because of the nature of the collective bargaining process, Varnum cannot possibly show a prima facie case of fraudulent misrepresentation. In late July 1985, Varnum filed a brief in response to Nu-Car's motion. A hearing on the motion was held in October 1985 before the district judge. At the conclusion of the hearing, the district judge orally ruled that the terms of Varnum's employment that were allegedly misrepresented were specifically addressed in the collective bargaining agreement. Therefore, the court held that Varnum's state law claim was preempted by Section 301 and granted summary judgment in favor of Nu-Car. However, the court gave Varnum 20 days in which to amend the complaint and allege misrepresentations with respect to subjects not covered in the collective bargaining agreement. Varnum did not amend the complaint, and he filed a timely notice of appeal from the order of the district court.
II. FRAUD CLAIM NOT PREEMPTED BY SECTION 301
The essence of appellant's complaint is that, because Nu-Car's representative knew that Nu-Car was planning to implement a seniority-based dispatch system, his representation that appellant could expect to gross about $7,000 per month was fraudulent. The district court found that the gravamen of appellant's complaint was about the change in the dispatch system. The court found that, because the terms of appellant's employment were established through the collective bargaining agreement, appellant's complaint related to the collective bargaining agreement itself. Therefore, the court found that appellant's state court claim was preempted by federal law. The district court relied upon Eitmann v. New Orleans Public Service, Inc., 730 F.2d 359 (5th Cir.1984), in which the court held that where an employee who is covered by a collective bargaining agreement seeks to redress a grievance subject to its terms, he must follow the procedures provided for in the collective bargaining agreement or seek a remedy under Section 301 for violation of that agreement.
The district court misconstrued the essence of appellant's complaint. Appellant did not complain about the seniority dispatch system itself but, rather, complained about the failure of Nu-Car to inform him of the impending change while inducing him to accept employment. Thus, appellant's complaint did not go to a term of employment covered by the collective bargaining agreement. Instead, the complaint involved Nu-Car's conduct prior to appellant's accepting employment. Because the complaint focused on conduct that occurred prior to the plaintiff's accepting employment, the case is distinguishable from Eitmann and is not preempted by Section 301. Cf. Belknap, Inc. v. Hale, 463 U.S. 491, 509-11, 103 S.Ct. 3172, 3182-83, 77 L.Ed.2d 798 (state law action for misrepresentation by employees who had replaced strikers and were subsequently discharged, although the replacements had been told prior to their accepting employment that they would be "permanent replacements," was not preempted by federal labor laws).
III. FRAUD CLAIM NOT PREEMPTED BY NATIONAL LABOR RELATIONS ACT
Appellee's second argument as to why summary judgment was appropriate is that the NLRA preempts a fraud claim based on the failure of a company to disclose an impending change to a prospective employee, where the company has not yet proposed the change to the union. Specifical ly, appellee contends that to inform a prospective employee of the company's bargaining proposal to change to a seniority-based dispatch system would have been "direct dealing" which was prohibited under the Section 9(a) of the NLRA. Appellee argues that this state law action therefore seeks to regulate conduct which is prohibited, and thus preempted, by the NLRA.
This argument would make sense if appellant's claim was that Nu-Car had a duty to disclose the fact that it was drafting a proposed change in the seniority system. However, appellant did not claim that Nu-Car had a duty to make such a disclosure; rather, appellant claimed that in the absence of such a disclosure Nu-Car should not have told him that he could earn $7,000 a month. Since appellant is not claiming that Nu-Car should have been required to do something prohibited under the NLRA, appellant's claim should not be preempted by that act.
IV. FRAUD CLAIM DOES NOT FAIL AS A MATTER OF LAW
Appellee's final argument is that Nu-Car's representations during negotiations with Varnum could not have been fraud as a matter of law. Appellee contends that prior to appellant's accepting employment with Nu-Car, the first-in-first-out dispatch system was in effect and Nu-Car could not have predicted with any certainty that the union and Nu-Car would agree on the proposed change to the seniority-based system.
The evidence was uncontroverted that the dispatch system in effect during the employment negotiations was not seniority-based. However, there was deposition and affidavit testimony by Paul McAllister, the hiring representative for Nu-Car, indicating that at the time he negotiated with Varnum he knew of the company's plan to propose a change to a seniority-based system. The evidence thus shows that, at the time Nu-Car's representative indicated to Varnum that drivers typically grossed $7,000 per month, he knew that the company was planning to propose a change to a dispatch system under which new drivers such as Varnum would earn substantially less. Under Florida law, this representation regarding what Varnum could expect to earn, in the absence of any disclosure regarding the impending change in the seniority system, could have been fraud. See Hamlen v. Fairchild Industries, Inc., 413 So.2d 800, 801 (Fla. 1st Dist.Ct.App.1982). Whether or not the representation actually was fraud is an issue for the trier of fact to decide.
V. CONCLUSION
For the reasons expressed above, the judgment of the district court granting summary judgment in favor of the defendant is REVERSED. This case is REMANDED for further proceedings.