Opinion ID: 1420265
Heading Depth: 3
Heading Rank: 1

Heading: Pre-emption by the Labor Management Relations Act[3]

Text: The superior court concluded that Kotowski's just cause termination, sexual discrimination, and implied covenant of good faith and fair dealing claims were pre-empted by section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185. The court concluded that these claims were subject to the grievance arbitration procedures of the LMRA. It interpreted the LMRA as requiring Kotowski to present these claims within six months of the date she knew or should have known that her union would not pursue her grievance. Based on this interpretation, the superior court instructed the jury to proceed to the merits of Kotowski's just cause termination, sexual discrimination, and breach of the implied covenant of good faith and fair dealing claims only if it found that she had brought these claims within the six-month LMRA limitations period. The jury found that Kotowski had failed to proceed within the limitations period, and thus rejected these claims without addressing their merits. The jury awarded $8,494.40 for lost earnings. Norcon contends that the trial court erred by including this award in the final judgment, in view of the court's ruling that Kotowski's wrongful termination claim was subject to the LMRA and the jury's determination that the LMRA limitations period had run. The court also directed a verdict for the defendants on Kotowski's claims for unpaid wages, overtime, and penalties, finding that these claims likewise fell under the LMRA grievance procedure. On cross-appeal, Kotowski concedes that her just cause termination claim was subject to the LMRA statute of limitations, but argues that her sexual discrimination, good faith and fair dealing, unpaid wages, overtime, and penalties claims were not pre-empted.
Section 301 of the LMRA pre-empts state law claims founded directly on rights created by collective-bargaining agreements, and also claims 'substantially dependent on analysis of a collective-bargaining agreement.' Caterpillar Inc. v. Williams, 482 U.S. 386, 394, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (quoting International Bhd. of Elec. Workers v. Hechler, 481 U.S. 851, 859 n. 3, 107 S.Ct. 2161, 95 L.Ed.2d 791 (1987)). One of the primary goals of pre-emption is to ensure the effectiveness of arbitration. See Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 219, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). Congress did not intend, however, for the LMRA to pre-empt state rules that proscribe conduct, or establish rights and obligations, independent of a labor contract. Id. at 212, 105 S.Ct. 1904. States are free to create and enforce causes of action that vest rights in workers, so long as these rights can be adjudicated without having to interpret collective bargaining agreements (CBAs). See Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 411-13, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988). Before an employee may sue her employer for breach of a CBA, she must attempt to exhaust any grievance or arbitration remedies provided in the CBA. See DelCostello v. International Bhd. of Teamsters, 462 U.S. 151, 163, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983). A wrongfully discharged employee may bring an action against his employer ... provided the employee can prove that the union as bargaining agent breached its duty of fair representation in its handling of the employee's grievance. Vaca v. Sipes, 386 U.S. 171, 186, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967). The jury found such a breach in this case. The statute of limitations for such an action is six months. See DelCostello, 462 U.S. at 169-172, 103 S.Ct. 2281. In contrast, if the employee's suit against her employer is based on state law claims neither founded on rights created by a CBA nor dependent on the analysis or interpretation of the CBA, the LMRA does not pre-empt such claims; the six-month limitations period thus does not apply.
Kotowski alleged that Norcon had subjected her to sexual discrimination in violation of AS 18.80.220 through her transfer, her discharge, and the harassment directed at her. [4] The superior court agreed with Norcon's contention that, while Kotowski's sexual harassment claims were independent of the CBA, any claim that she was terminated because of her sex, that similarly situated males were not terminated is a termination for other than just cause and could have been grieved under the collective bargaining agreement. Thus the jury received separate questions concerning sexual discrimination and harassment and answered the latter, but not the former, once it determined that the six-month LMRA limitations period had run. [5] The superior court erred in preventing the jury from deciding Kotowski's discriminatory transfer and termination claim. The question of whether Kotowski's transfer and termination violated AS 18.80.220 was a question of state law, entirely independent of any understanding embodied in the collective-bargaining agreement. Livadas v. Bradshaw, 512 U.S. 107, 125, 114 S.Ct. 2068, 129 L.Ed.2d 93 (1994). The right to a non-discriminatory workplace conferred upon Kotowski by AS 18.80.220 could not be waived by any contrary contractual provision. Because it is a non-waivable state law right, no need exists to consult the CBA to determine its meaning. We were presented with a similar situation in Public Safety Employees Association v. State, 658 P.2d 769 (Alaska 1983) ( PSEA ). In PSEA, we explored the relationship between a statutory right to sue under the Uniform Residential Landlord and Tenant Act (URLTA), AS 34.03, and language in a CBA requiring arbitration for disputes involving the meaning or application of the express terms of the [CBA]. 658 P.2d at 772. We held that because the right to sue under the act cannot be prospectively bargained away, it followed that the contract remedy here cannot displace that which is provided by the act. Id. at 774-75. Thus the existence of the arbitration remedy did not preclude the exercise of the statutory remedy. See id. at 774. Even if Norcon had just cause under the terms of the CBA to terminate Kotowski once she drank on duty, this fact would not make interpretation of the CBA necessary to resolve her sexual discrimination claim. The question whether Norcon sexually discriminated against Kotowski is a factual question as to motive: did Norcon transfer and terminate Kotowski because of her gender, or did it transfer and terminate her for drinking an alcoholic beverage in violation of the zero tolerance, alcohol-free workplace policy? [6] See AS 18.80.220(a)(1). Answering this question of motive does not require interpretation of the CBA. Our conclusion is consistent with the Supreme Court's reasoning in Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 114 S.Ct. 2239, 129 L.Ed.2d 203 (1994). Norris involved a pre-emption question under the Railway Labor Act (RLA), 45 U.S.C. § 151 et seq., under which the Supreme Court applies the same pre-emption analysis as under the LMRA. See 512 U.S. at 260, 114 S.Ct. 2239. Norris was a mechanic who was terminated after he refused to sign an aircraft maintenance record certifying that repairs had been satisfactorily performed. See id. at 249-50, 114 S.Ct. 2239. Norris brought a state law wrongful discharge suit over this termination, which Hawaiian Airlines defended by arguing that resort to the CBA was necessary and Norris's suit therefore was pre-empted by the mandatory grievance procedures of the RLA. See id. at 250-51, 114 S.Ct. 2239. In Norris the Court observed that purely factual questions about an employer's conduct and motives do not require interpretation of the CBA to answer. See id. at 261, 114 S.Ct. 2239. Because Norris's state law wrongful discharge claim involved this sort of factual determination, it was not pre-empted. See id. at 266, 114 S.Ct. 2239. Furthermore, the Supreme Court was not persuaded by petitioners' contention that the state tort claims require a determination whether the discharge ... was justified by respondent's failure to sign the maintenance record, as the CBA required him to do. Id. While such a determination would have been necessary in a wrongful discharge claim alleging violation of the CBA, it was not necessary in the state law claim requiring only the purely factual determination of the employer's motive. See id. Similarly, the jury could have addressed Kotowski's sexual discrimination claim by determining whether Norcon's transfer and termination of her were motivated by gender bias. The fact that Kotowski's alcohol consumption may have been just cause under the CBA for terminating her is no more relevant than the fact that Norris's refusal to sign maintenance records may have been just cause under the CBA to terminate him in Norris. The LMRA did not pre-empt Kotowski's sexual discrimination claim.
Kotowski also claimed she was discharged in retaliation for investigating safety violations, specifically, violations of the zero tolerance, alcohol-free workplace policy in effect during the cleanup. She claims that this retaliatory discharge breached the covenant of good faith and fair dealing implied in all employment contracts. See Reed v. Municipality of Anchorage, 782 P.2d 1155, 1158 (Alaska 1989) ( Reed II ); Knight v. American Guard & Alert, Inc., 714 P.2d 788, 792 (Alaska 1986). The superior court agreed with Norcon that the implied covenant was a part of the contract, and that any claims alleging violations of the covenant were therefore claims brought under the CBA and pre-empted by the LMRA. Support for this view can be found in Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). In Allis-Chalmers, the Supreme Court reversed a decision of the Wisconsin Supreme Court which had held that a bad faith tort claim was not pre-empted by the LMRA, because it was based on an independent state law implied covenant of good faith and fair dealing. The Court observed that its pre-emption analysis must focus, then, on whether the Wisconsin tort action for breach of the duty of good faith as applied here confers nonnegotiable state-law rights on employers or employees independent of any right established by contract, or, instead, whether evaluation of the tort claim is inextricably intertwined with consideration of the terms of the labor contract. 471 U.S. at 213, 105 S.Ct. 1904. It found that [b]ecause the right asserted not only derives from the contract, but is defined by the contractual obligation of good faith, any attempt to assess liability here inevitably will involve contract interpretation. Id. at 218, 105 S.Ct. 1904. Thus the LMRA pre-empted Lueck's state law claim. See id. at 218-19, 105 S.Ct. 1904. The Supreme Court's analysis of the relationship between the bad faith tort claim, the implied covenant, and the contract in Allis-Chalmers is inapplicable to the present case, however. In Allis-Chalmers the issue was whether an employer who ordered periodic insurance cutoffs and medical reexaminations had acted in bad faith. The Court found that under Wisconsin law it appears that the parties to an insurance contract are free to bargain about what 'reasonable' performance of their contract obligation entails. Id. at 217, 105 S.Ct. 1904. Thus the employee's claim could not be resolved without referring to the terms of the contract, since the reasonableness of the cutoffs and reexaminations could only be determined by consulting such terms. In contrast, the implied covenant claim here requires no contractual interpretation. We have recognized that a retaliatory discharge gives rise to a cause of action for breach of the duty of good faith and fair dealing. See Reed II, 782 P.2d at 1158. [T]he public policy approach is largely encompassed within the implied covenant of good faith and fair dealing. Knight, 714 P.2d at 792. The fact that the whistle blower claim in this case involved the violation of a privately enforced safety policy, rather than violations of law, is irrelevant insofar as public policy favors safe workplaces. Kotowski still can bring an action for breach of the implied covenant of good faith and fair dealing if her termination was in retaliation for her reporting breaches of Exxon's zero tolerance, alcohol-free workplace policy. The CBA is irrelevant in adjudicating such an action; Kotowski and Norcon could not have contracted away Kotowski's right to report safety violations, even had they tried to do so. Nothing in the CBA could have altered, circumscribed, or defined this right. The implied covenant claim at issue can be distinguished from implied covenant claims of the sort found in Allis-Chalmers insofar as it rests on a non-negotiable right. Because the contours of this right are not defined through the bargaining process, they can be traced out without any reference to the CBA. The United States Court of Appeals for the Ninth Circuit explored the relationship between the LMRA and the Alaska implied covenant of good faith and fair dealing in Eldridge v. Felec Services, Inc., 920 F.2d 1434 (9th Cir.1990). In Eldridge, the court examined Alaska cases [7] and accurately concluded that we treat retaliatory discharge claims as violations of the implied covenant of good faith and fair dealing, that the state policy on such discharges is non-negotiable, and that Eldridge's state law implied covenant claim did not depend on any interpretation of the CBA. See id. at 1436-39. The court concluded that the implied covenant claim in that case was distinguishable from the one in Allis-Chalmers where the scope of the duty ... was defined by the express terms of the collective bargaining agreement itself. Id. at 1438. As the court observed: To defend the claim against it, Felec Services need only show that it was motivated to discharge Eldridge for reason other than to retaliate for the assertion of rights under the Alaska Workers' Compensation Act. It is irrelevant whether the company's reliance on the labor agreement was reasonable or whether its interpretation of the agreement was correct. Id. at 1439. The court's reasoning is both persuasive and applicable to Kotowski's claim. Furthermore, the Supreme Court has found other state law retaliatory discharge and public policy claims sufficiently independent under the LMRA pre-emption analysis. See Norris, 512 U.S. at 266, 114 S.Ct. 2239; Lingle, 486 U.S. at 407, 108 S.Ct. 1877. The fact that these cases involved causes of action based in tort, while breach of the implied covenant of good faith and fair dealing is an action based in contract, is irrelevant. Courts applying the LMRA pre-emption analysis should not elevate form over substance, but instead determine whether the adjudication of the right at issue requires interpretation of the CBA. See Allis-Chalmers, 471 U.S. at 211, 105 S.Ct. 1904; Eldridge, 920 F.2d at 1437. Kotowski's implied covenant of good faith and fair dealing claim was not pre-empted by the LMRA because it required no such interpretation.
Kotowski argues that her unpaid wages, overtime, and penalties claim had an independent basis in state law, was not dependent on the CBA, and should not have been taken from the jury. She bases this claim on AS 23.05.140. [8] Alaska Statute 23.05.140 confers on an employee an independent statutory right that requires no CBA interpretation to adjudicate. [9] As the Supreme Court has said in analyzing a similar California statutory right, the primary text for determining whether [the plaintiff] was entitled to a penalty was not the [CBA], but a calendar. Livadas, 512 U.S. at 124, 114 S.Ct. 2068. Insofar as Kotowski and Norcon might disagree on the applicable wage rate, and on the degree that Kotowski might claim that she was owed extended post-discharge pay or other special payments under the CBA, such claims would be pre-empted by the LMRA since their adjudication would require interpretation of the CBA. Insofar as Kotowski merely demands unpaid wages and overtime pay she never received, however, her claims could be adjudicated without reference to the CBA, as could the issue of any statutory penalties also owed. These claims were not pre-empted by the LMRA, and the superior court erred in directing a verdict concerning them. The superior court did not err when it included the $8,494.40 award for lost earnings in Kotowski's judgment. Under the affirmative answers given in the special verdict, the award addressed damages legally caused by sexual harassment. [10] Kotowski's lost earnings claims under other theories need not be retried as she has received what presumably is a full award of lost earnings. She is, however, entitled to a trial on her unpaid wages, overtime, and penalties claims.