Opinion ID: 1014470
Heading Depth: 4
Heading Rank: 1

Heading: Action Against Duke Power

Text: The Davis case is factually similar to Freeman’s case against Duke Power, and its reasoning controls the outcome. In Davis, an employee entered a settlement agreement with her employer and union that settled a grievance brought pursuant to the CBA when the employer attempted to terminate the employee for absenteeism. Davis, 310 F.3d at 246. The settlement agreement reinstated the employee and provided that the employee was subject to immediate termination, without recourse to the grievance procedures in the CBA, if she violated the settlement agreement. The employee was subsequently terminated for violating the settlement agreement, and she brought state law claims for breach of the CBA, breach of the settlement, and wrongful discharge. Id. 6 FREEMAN v. DUKE POWER CO. As relevant here, this court held that the claim for breach of the settlement agreement was preempted because it depended on rights conferred on the employee by the CBA.1 The settlement agreement derived from the CBA, in fact was entered as a result of a grievance proceeding brought pursuant to the CBA, and therefore its entire vitality and legitimacy drew from the CBA. Id. at 248. In the case at bar, the Union followed the grievance procedure in the CBA and entered into settlement negotiations with Duke Power, on Freeman’s behalf, that resulted in the Grievance Resolution and Amendment in lieu of arbitration as provided by the CBA. Without the CBA, the Grievance Resolution and Amendment would not have existed. Settlements of employee grievances that are entered pursuant to the terms of a CBA are labor contracts within the meaning of § 301, which preempts an alleged breach of the Union-negotiated agreement that settled an employee grievance. Id. at 249 (citing cases holding same). Freeman attempts to distinguish Davis on the basis that certain terms used in the Davis settlement agreement were defined in the CBA, whereas there are no terms in the Grievance Resolution or the Amendment that need to be defined by reference to the CBA. However, the Davis court did not rely on the mutuality of terms for its holding. Id. (While an independent employment contract’s mere borrowing of one or more terms from a [CBA] does not in itself bring that contract within the scope of § 301 preemption, the settlement agreement here was not an independent employment contract . . . . The Union’s [CBA] remained in full force to govern [the employee’s] employment relationship except insofar as it was modified by the settlement agreement. (internal citations omitted)). The court construed the settlement agreement as a rider to the CBA. Id. Although disputes arising over independent employment contracts unrelated to a CBA are not preempted by § 301 of the LMRA, see Caterpillar Inc. v. Williams, 482 U.S. 386, 394-95 (1987), the Griev- 1 Contrary to Freeman’s assertions that the Davis court’s discussion of the settlement agreement was dicta because Davis alleged breach of the CBA (Appellant’s Br. at 21 n.1), the Davis court addressed the claims for breach of the CBA and breach of the settlement agreement as distinct claims. FREEMAN v. DUKE POWER CO. 7 ance Resolution and the Amendment are not independent of the CBA. The employees in Caterpillar had entered separate management contracts and only later became subject to a CBA when they were demoted. Their state law action was based on the management contracts, not anything derivative of the CBA, and thus was not preempted by the LMRA. Id. at 395 & n.9. The same cannot be said in the instant case, as the Grievance Resolution and Amendment derive their entire vitality and legitimacy from the CBA. Davis, 110 F.3d at 248. The district court also determined that § 301 of the LMRA preempted Freeman’s wrongful discharge claim against Duke Power. Freeman alleged in his complaint that Duke Power wrongfully discharged him in violation of North Carolina public policy as reflected in the state constitution, which protects an individual’s right to the enjoyment of the fruits of [his] own labor. N.C. Const. art. I, § 1. Freeman’s wrongful discharge claim is preempted by the LMRA if it is inextricably intertwined with consideration of the terms of the labor contract. If the state tort law purports to define the meaning of the contract relationship, that law is pre-empted. Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 213 (1985). The Supreme Court of North Carolina has recognized a cause of action for wrongful discharge in violation of public policy as a narrow exception to North Carolina’s long-standing employment-at-will doctrine. See Coman v. Thomas Mfg. Co., 381 S.E.2d 445, 447 (N.C. 1989). However, [t]he tort of wrongful discharge arises only in the context of employment at will. Claggett v. Wake Forest Univ., 486 S.E.2d 443, 448 (N.C. Ct. App. 1997) (dismissing wrongful discharge claim brought by a university professor who was covered by a contract). Contract employees are limited to contract remedies. Resolution of the wrongful discharge claim would require a determination of the type of employment relationship between Freeman and Duke Power, regardless of whether Freeman pleads that he is a contract employee or an at-will employee. Such an analysis necessarily would involve construction of the CBA, the Grievance Resolution, and the Amendment to determine what type of employment relationship existed between Freeman and Duke Power. The wrongful discharge claim is therefore preempted by the LMRA. Allis-Chalmers, 471 U.S. at 213. 8 FREEMAN v. DUKE POWER CO. Because Freeman’s claims of breach of contract and wrongful discharge are preempted by § 301 of the LMRA and therefore raise a federal question, the district court properly retained jurisdiction over Freeman’s case against Duke Power, and no remand to state court was in order.