Opinion ID: 2134951
Heading Depth: 2
Heading Rank: 3

Heading: Misrepresentation Actions.

Text: Here, the parties point to decisions from a number of federal courts of appeals which have addressed the issue of section 301 pre-emption of fraud and misrepresentation claims. While all of the courts have agreed that such claims are only pre-empted to the extent they substantially depend on the interpretation of a cba, they have reached different results on the specific question of whether in fact there would be substantial dependence in the case before them. Plaintiffs rely on decisions from the Third, Eighth, and Eleventh Circuits to support their arguments. In a case decided shortly after Lueck, the Eighth Circuit held that employees' claims of fraudulent misrepresentation were not pre-empted by section 301. Anderson v. Ford Motor Co., 803 F.2d 953, 959 (8th Cir.1986), cert. denied, 483 U.S. 1011, 107 S.Ct. 3242, 97 L.Ed.2d 747 (1987). The court explained in Anderson that the torts of fraudulent and negligent misrepresentation arise in state common law and are measured by standards of conduct and responsibility completely separate from and independent of a collective bargaining agreement. Id. at 959. Resolution of the tort claims would not interfere with the rights and duties established by the cba because the tort obligations did not arise from the labor contract. Id. Essential to its decision was the fact that the alleged representations of permanent employment were made by the employer before hiring the plaintiffs. Id. The court also ruled that the parties were not required to submit to arbitration for matters not covered by the cba. Id. at 959. In a later case involving a variety of tort claims the same court clarified the pre-emption analysis: The factual background of the entire case must be examined against an analysis of the state tort claim and a determination made whether the provisions of the collective bargaining agreement come into play.... Should affirmative defenses attempt to implicate the collective bargaining agreement, the district court should carefully analyze whether in actuality construction or interpretation of the collective bargaining agreement is required in considering such defenses. Hanks v. General Motors Corp., 859 F.2d 67, 70 (8th Cir.1988). Likewise the court of appeals in Varnum v. Nu-Car Carriers, Inc., 804 F.2d 638, 640 (11th Cir.1986), held that an employee's claim of fraudulent misrepresentation of employment conditions was not pre-empted by section 301. The court noted the complaint focused on conduct occurring prior to when the plaintiff accepted employment and did not go to a term of employment covered by the cba. Id. The Third Circuit has also concluded that an employee's claims of fraudulent and negligent misrepresentation of job security are not pre-empted. Berda v. CBS, Inc., 881 F.2d 20, 28 (3d Cir.1989). The court in Berda found that reference to the cba was not required to establish the elements of the employee's tort claims. Nor did he need to prove that the oral promise made to him prior to his employment differed from the terms of the collective bargaining agreement in order to get relief. Id. at 27. See also Milne Employees Ass'n v. Sun Carriers, Inc., 960 F.2d 1401, 1408-10 (9th Cir.1991); White v. National Steel Corp., 938 F.2d 474, 480-82 (4th Cir.1991); Wells v. General Motors Corp., 881 F.2d 166, 172-75 (5th Cir. 1989). By contrast, Rockwell points to other decisions where courts have concluded that tort claims for fraud or misrepresentation do not escape the pre-emptive force of section 301. In Bale v. General Telephone Co. of California, 795 F.2d 775, 777-78 (9th Cir.1986), laid-off employees sought damages for breach of an oral contract and for misrepresentations concerning their employment status, both made at the time of hiring. The court determined that the state tort claims `arose out of the same acts and conduct which formed the basis of' their section 301 claim. Id. at 780 (citation omitted). In order to prove their fraudulent and negligent misrepresentation claims, [the employees] would be required to show that the terms of the collective bargaining agreement differed significantly from the individual employment contracts they believe they had made. Id. Under the Lueck standard, the court found that their claims were pre-empted. Id.; see also Young v. Anthony's Fish Grottos, Inc., 830 F.2d 993, 997-98 (9th Cir.1987); Stallcop v. Kaiser Found. Hosps., 820 F.2d 1044, 1048-49 (9th Cir.1987). In Smith v. Colgate-Palmolive Co., 943 F.2d 764, 765-66 (7th Cir.1991), laid-off employees brought a fraud action against the employer for allegedly inducing them to relocate with promises of extended employment. At the time of the employer's alleged promises the employees were employed in collective bargaining positions. Id. at 771. The union had modified the cba by ratifying a specific closure agreement which addressed plant closings. Id. at 765-66. Examining the elements of fraud under state law, the court determined that proof of the element of reasonable reliance would require interpretation of the closure agreement. Id. at 766-67. See also Talbot v. Robert Matthews Distrib. Co., 961 F.2d 654, 661-62 (7th Cir.1992); Dougherty v. American Tel. & Tel. Co., 902 F.2d 201, 203-04 (2d Cir.1990); Darden v. United States Steel Corp., 830 F.2d 1116, 1118-20 (11th Cir.1987). Upon careful consideration of these decisions, we are persuaded that the Anderson analysis is more consistent with the standards set forth in Lueck and Lingle. Plaintiffs in this case claim they were told during their employment interviews and at the orientation session that they could expect employment for a period of three to five years. Based on these assurances each accepted employment with Rockwell. The elements for the tort of negligent misrepresentation are: (1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. (2) ... [T]he liability stated in Subsection (1) is limited to loss suffered (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. Larsen v. United Fed. Sav. & Loan Ass'n of Des Moines, 300 N.W.2d 281, 287 (Iowa 1981); Restatement (Second) of Torts § 552 (1977); see also 1 Iowa Civil Jury Instructions 800.1 (1991). This tort does not depend on the existence of a contractual relationship. See generally Larsen, 300 N.W.2d 281; Ryan v. Kanne, 170 N.W.2d 395 (Iowa 1969). We believe proof of these elements does not require interpretation of the cba. Instead, it turns on purely factual questions pertain[ing] to ... the conduct and motivation of the employer. Lingle, 486 U.S. at 407, 108 S.Ct. at 1882, 100 L.Ed.2d at 419; see also Anderson, 803 F.2d at 957-59; Conaway, 431 N.W.2d at 799. The reliance factor is satisfied in part by showing that the employees accepted employment with Rockwell. In addition, plaintiffs must prove their reliance was justified under the circumstances. The jury was instructed to consider the plaintiffs' information and intelligence with regard to this issue. The jury found plaintiffs met their burden. In sum, we find that none of the elements of negligent misrepresentation is substantially dependent upon analysis of the cba. Nevertheless, Rockwell argues that the cba does come into play because the plaintiffs must rely on the differences between what they were promised and what they were actually entitled to under the cba. See Bale, 795 F.2d at 780. We find the reasoning of the court in Bale unpersuasive. In this context the term interpret must be viewed narrowly. If a court were to dismiss a tort action merely because an employer raised the cba as an affirmative defense, the pre-emption doctrine would swallow the rule that employees covered by collective bargaining agreements are entitled `to assert legal rights independent of that agreement....' Milne, 960 F.2d at 1410 (citation omitted). Pre-emption is unnecessary unless consideration of a defense also substantially depends on construction of the cba. See Hanks, 859 F.2d at 70. Additionally, Rockwell ignores a crucial factual distinction between this case and the decisions holding in favor of pre-emption. In each of those decisions, with the exception of Bale, the alleged misrepresentations were made while the plaintiffs were covered by the cba. See Talbot, 961 F.2d at 662; Smith, 943 F.2d at 771; Dougherty, 902 F.2d at 202-03; Darden, 830 F.2d at 1119. Moreover, in both Smith and Darden the subject matter of the claims was expressly set forth in the cba. In contrast, each of the decisions relied on by the plaintiffs involved situations where the representations were either made prior to employment or while the employees worked outside the bargaining unit. See White, 938 F.2d at 479; Wells, 881 F.2d at 172-73; Berda, 881 F.2d at 21; Varnum, 804 F.2d at 640; Anderson, 803 F.2d at 958. Though Rockwell may have had the right to lay-off the plaintiffs under the terms of the cba, we believe it had no absolute right to escape tort liability for pre-employment misrepresentation. See Belknap, Inc. v. Hale, 463 U.S. 491, 500-01, 103 S.Ct. 3172, 3177-78, 77 L.Ed.2d 798, 808 (1983) ([I]t surely does not follow that the employer's otherwise valid promises of permanent employment are nullified by federal law and its otherwise actionable misrepresentations may not be pursued.). Further, we continue to adhere to the view that state law will not be pre-empted absent a clear statement of congressional intent to occupy an entire field, or unless it conflicts with federal law or would frustrate the federal scheme. Conaway, 431 N.W.2d at 797 (retaliatory discharge claim not pre-empted); see also Brown v. Garman, 364 N.W.2d 566, 573 (Iowa 1985) (claim for intentional infliction of emotional distress falls within the local interest exception to the pre-emption doctrine); Lewis v. Aalfs Mfg., Inc., 489 N.W.2d 47, 49 (Iowa App.1992) (disability discrimination claim not pre-empted by LMRA). We therefore hold that the plaintiffs' misrepresentation claims are not pre-empted by section 301 of the LMRA. Consequently the district court erred in setting aside the jury verdict.