Legal Document

471 U.S. 202 105 S.Ct. 1904 85 L.Ed.2d 206 ALLIS-CHALMERS CORPORATION, Petitioner,v.Roderick S. LUECK. No. 83-1748. Argued Jan. 16, 1985. Decided April Syllabus The bad-faith handling of an insurance claim, including a claim under disability plan included in collective-bargaining agreement, is tort Wisconsin law. Petitioner and labor union, which respondent employee petitioner member, are parties to agreement that incorporates self-funded administered by company providing benefits for nonoccupational injuries employees. establishes grievance procedure culminates final binding arbitration. Respondent, after suffering injury, entered into dispute over the manner insurer handled his claim. Rather than utilizing procedure, brought suit against state court, alleging bad faith seeking damages. trial court ruled favor insurer, holding had stated § 301 Labor Management Relations Act, provides suits violations agreements may be federal district court. In alternative, if were deemed arise law rather 301, it was pre-empted Court Appeals affirmed. Supreme reversed, did not as constituting violation contract but faith. reasoned distinguishable from breach-of-contract although breach duty imposed consequence relationship established contract, independent contract. Held: When resolution state-law substantially dependent upon analysis terms must either treated or dismissed labor-contract Here, respondent's should have been failure make use preempted 301. right asserted rooted could pleaded Unless governs meaning disability-benefit provisions would subject varying interpretations, congressional goal unified body subverted. Preemption also necessary preserve central role arbitration disputes. Pp. 208-221. 116 Wis.2d 559, 342 N.W.2d 699, reversed. Theophil C. Kammholz, Chicago, Ill., petitioner. Gerald Boisits, Milwaukee, Wis., respondent. Justice BLACKMUN delivered opinion Court. 1 courts made Those gone further applied this agreement. question before us whether, latter case, national laws. 2 * A. 3 Respondent Roderick Lueck began working Allis-Chalmers Corporation February 1975. He member Local 248 United Automobile, Aerospace Agricultural Implement Workers America. reference separately negotiated group health fully funded Aetna Life & Casualty Company. available illness injury all employees, such petitioner, who represented union. 4 four-step employee's grievance. This union chooses pursue far. App. 18-29. A separate letter understanding binds creates special three-part grievances. Id., at 43-44. Joint Plant Insurance Committee composed two representatives designated employer. 43. has authority resolve disputes involving "any insurance-related issues [Collective-Bargaining] Agreement." Ibid. An having complaint address first Supervisor Employee Relations. If rejected otherwise remains unresolved, then bring Committee. does matter, As indicated, permits employer request submitted neutral arbitrator agreed parties.1 5 July 1981, suffered back while carrying pig friend's house roast. notified required claims-processing subsequently filed with Aetna, accordance procedure. After evaluating physicians' reports Lueck, approved receive effective 20, day he Aetna. 6 According however, periodically order cut off payments, without reason, because failed appear doctor's appointment, hospitalization unrelated reasons. each termination, action supply additional information, restored. addition, according repeatedly requested reexamined different doctors, so believed being harassed. All Lueck's claims eventually paid, although, allegedly, until litigation.2 B 7 never attempted grieve concerning Instead, on January 18, 1982, both them Circuit Milwaukee County, they "intentionally, contemptuously, failed" payments plan, reasonable basis withholding payments. 4. breached their "to act good deal fairly [Lueck's] claims." 3. alleged result these actions incurred debts, emotional distress, physical impairment, pain suffering. sought compensatory punitive 8 Ruling cross-motions summary judgment, held Act 1947 (LMRA), 61 Stat. 156, 29 U.S.C. 185(a), that, "were instead Section 301," "preempted law." Pet. Cert. 26-27. Appeals, decision "[n]ot recommended publication official reports," id., 25, affirmed judgment ground owed no fiduciary Allis-Chalmers.3 9 Wisconsin, one justice dissenting, v. Ins. Co., 699 (1984). held, first, LMRA, therefore dismissal exhaust procedures arose out here Under law, claim: though exists Therefore, said, "irrelevant issue whether defendants exercised claim." 566, N.W.2d, 703. action, thus, suit. 10 went nevertheless §§ 8(a)(5) (d) National (NLRA), 49 452, amended, 158(a)(5) (d). Applying standard determining NLRA pre-emption enunciated San Diego Building Trades Council Garmon, 359 236, 244-245, 79 773, 779-780, 775 (1959), Farmer Carpenters, 430 290, 296-297, 97 1056, 1061-1062, 51 338 (1977), determined pre-empted. It found administration disability-claim matter only peripheral concern since payment aspect relations. On other hand, observed, substantial significance State assumed longstanding responsibility assuring prompt claims. Permitting proceed adverse impact policy, will determination breached. 11 Finally, liable agent purpose administering thus reversed appellate court's remanded case played any processing review part judgment. We granted certiorari, 469 815, 80, 83 28 (1984), determine preempts delay making due II 12 Congress' power pre-empt derived Supremacy Clause Art. VI Federal Constitution. Gibbons Ogden, Wheat. 1, L.Ed. 23 (1824). Congressional legislate area relations, course, long established. See NLRB Jones Laughlin Steel Corp., 57 615, 81 893 (1937). Congress, occupy entire field legislation.4 Thus certain intent. " 'The Congress ultimate touchstone.' Malone White Motor 435 497, 504, 98 1185, 1190, 55 443 (1978), quoting Retail Clerks Schermerhorn, 375 96, 103, 84 219, 222, 179 (1963). 13 explicitly what extent intended LMRA instances sustain local regulation "unless conflicts frustrate scheme, unless discern totality circumstances exclusion States." U.S., S.Ct., 1190. posed particular tort, applied, scheme III states: 14 "Suits contracts between organization representing employees industry affecting commerce . States jurisdiction parties. ." 185(a). 15 Textile Lincoln Mills, 353 448, 77 912, 972 (1957), expresses policy substantive apply cases "is fashion our laws." 456, 918. That seminal understood mandate common used arising contracts.5 16 pre-emptive effect analyzed Teamsters Lucas Flour 369 95, 82 571, 576, 593 (1962), where "dimensions require conclusion principles paramount covered statute [so that] raised kind [are] decided precepts policy." concluded "in enacting doctrines uniformly prevail inconsistent rules." 104, 577. 17 specified why given law: 18 "[T]he 301(a) 'is peculiarly calls uniform law.' possibility individual might meanings inevitably exert disruptive influence negotiation collective agreements. Because neither party rights obtained conceded, process negotiating immeasurably more difficult necessity trying formulate way contain same systems someday invoked enforcing Once bargain made, conflicting interpretation competing legal tend stimulate prolong its [and] impede parties' willingness agree arbitral judicial disputes." 103-104, 576-577 (footnote omitted). 19 For those reasons provision resolved rule purports define scope term 20 policies animate proper range, extend beyond violations. These "the relationships created [a collective-bargaining] agreement" defined application "an evolving grounded Bowen Postal Service, 459 212, 224-225, 103 588, 596, 74 402 (1983). interests interpretive uniformity predictability phrase interpretation. Thus, questions relating agreed, consequences flow breaches context liability tort. Any elevate form substance allow evade requirements relabeling tortious 21 Were allowed adopting term, evils addressed recur. uncertain themselves when create collect circumstances. result, reach nature proliferate. Exclusion "from ambit stultify bargaining accomplished Smith Evening News Assn., 371 195, 200, 267, 270, 246 (1962). 22 Of every employment, tangentially face says nothing about private Nor there suggestion wished give force ousting regulation.6 Such delegate unions unionized employers exempt whatever standards disfavored. Clearly, grant ability illegal extending intent section preempt rules proscribe conduct, establish obligations, contract.7 obligations do exist independently agreements, can waived altered parties, Cf. 504-505, 1189-1190 (NLRA pre-emption).8 Our focus, then, confers nonnegotiable or, instead, evaluation inextricably intertwined consideration relationship, IV 24 claim.9 While sufficiently avoid is, Though "specific one, irrelevant claim," Wis.2d, 703, appears based statement solely unassailable assumptions 25 demonstrate, proffered example, noted ultimately pay still cause through "unreasonably delaying payment" 574, 707. situation, reasoned, adjudicated reaching evidently expressly recited benefit injuries. good-faith behavior mandated "[g]ood means [only] abide specific agreement." 569, 704. 26 independence suffice assumption implied make. Rather, obligation provide timely manner, and, so, Allis-Chalmers' conduct provision. 27 contracted benefits, outside moreover, highly suspect.10 There reason assume interpreted relief. face, allows arise" (emphasis added), 43, hardly suggests And relief implication, too end dispute, within constitute "reasonable" performance sum, apparently mean explicit contractual pay. Since depends tightly bound left meant "independent" buttressed genesis operation intrinsically relates existence Hilker Western Automobile 204 Wis. 13-16, 235 N.W. 413, 414-415 (1931). "duty devolv[ed] implication express contract," which, crucially, "ascertained itself." N.W., 415. Hilker, specifically noted: "Generally speaking, faithful one's obligation; recreant thereto. understand comprehension generally necessary, we best indicate become insured giving some particularity conception written imposes carrier." 13, 414. 30 duties derive Anderson Continental 675, 689, 271 368, 375-376 assert refusal honor insured's covenant fair dealing relied proposition Restatement (Second) Contracts 205 (1981), well adoption Restatement's position Gruenberg Cal.3d 575, 108 Cal.Rptr. 480, 486, 510 P.2d 1032, 1038 (1973). sounded indication anything plead recover exemplary damages 686-687, 374.11 free entails. firmly expectations evaluated 31 derives faith, attempt assess involve necessarily relevant allegation dilatory manner. Similarly, examined inordinate number physicians medical evidence support claim.12 interpretation, therefore, underlie finding liability, regardless fact choose question.13 govern terms. life environment, C 32 derivative preserves "system industrial self-government." Steelworkers Warrior Gulf Navigation 363 581, 80 1347, 1352, 1409 (1960). take bringing Perhaps most harmful essentially directly exhausting need effectiveness underlay Court's Flour. 105, responsible, instance, interpreting pre-empted, decide lost. 33 nearly willful restated arbitrator's bypassed easily Claims vacation overtime pay, work assignment, unfair discharge—in short, whole range traditionally arbitration—could instance permitted sidestep lose effectiveness, Republic Corp. Maddox, 379 650, 653, 614, 616, 580 (1965), eviscerate tenet arbitrator, interpret instance. V 34 asserts brings cannot vary name appended action. 35 perhaps worth emphasizing narrow focus today. pass laws governing employment plans. hold asserting full fleshed case-by-case basis. see Avco Aero Lodge 735, 390 557, 88 1235, 126 (1968), 652, 36 ordered. 37 POWELL took case. "Questions [Joint Insurance] Committee's shall referred it, processed three steps ., presented once discussed resolved." 564, 701-702 correctly exclusively Vaca Sipes, 386 171, 184, 87 903, 913, 842 (1967); 652-653, 616-617, (1965). permissive "may" sufficient overcome presumption contract's procedures. 658-659, 619-620. period up March 12, 1982. find record fact. affidavit dated 22, Allis-Chalmers, states received 15, 33. 18. particular, arguably constituted practice 158(a)(5), reasoning (1977). "We declare touches concerns complex interrelationships employers, unions; obviously, much Coach Employees Lockridge, 403 274, 289, 91 1909, 1919, 473 (1971). Brown Hotel Restaurant Employees, 468 491, 104 3179, 373 (1984); Garner Teamsters, 346 485, 488, 161, 164, 228 (1953). Charles Dowd Box Co. Courtney, 368 502, 519, 483 concurrent suggest consider factors NLRA. Cox, Recent Developments Law Preemption, 41 Ohio St.L.J. 277, 294-300 (1980). pre-empts 'upset balance management expressed policy.' Machinists Employment Comm'n, 427 132, 146, 96 2548, 2556, 396 (1976), Morton, 377 252, 260, 1253, 1258, 280 (1964). New York Telephone Dept., 440 99 1328, 59 553 (1979). involves considerations related distinct here. discuss kinds preemption protect Board. 101, n. 9, briefed Retirement Income Security 1974, 829, 1001 et seq. occasion ERISA. 1144(b)(2)(B). Analogously, view pension simply empowered come "There little doubt statutes labor-management wages, hours, conditions subjects compulsory bargaining. But forecloses regulatory respect issues, plans, bargaining." 1189-1190. Alexander Gardner-Denver 415 36, 94 1011, 39 147 (1974), conferred "on collectively foster processes bargaining," 51, 1021, distinguished individual's avoided other. 565, 702. alternatively suggested relevant, "would minor controversy." 570, 705. doctrine aspects controversy NLRB, Garmon apply. 570-571, discussion concerned NLRB's primary charges. addressing protecting Board's jurisdiction, "confuse[d] actual protection Board." 3186. So-called requires balancing interests. present govern. situation irrelevant, acting Commerce Clause, provided prevail. 502-503, 3185-3186. counsel during oral argument. acknowledged obtain Tr. Oral Arg. 25. Counsel argued entitled "I'm going something for. benefits. That's it. [I]f continued sporadically Mr. wouldn't able grievance." 35. Kranzush Badger Mutual 56, 64, 307 256, 261 (1981) ("The parties"). Given tort's surprising. "Good enforcement emphasizes faithfulness consistency justified party." 205, Comment a, p. 100 (1981). Questions independent, nonnegotiable, state-imposed similar problems responsible claimants, developed system overlapping continuing eligibility verified physicians, canceling Deposition Karen Smaglik 17-23, 28-30; A.J. Abplanalp 5-15. Had trial, factual departed question, Prior principal even "fairly debatable" made. 691, 376 (1978). denied "absence basis" "knowledge reckless disregard basis," denial actionable 693, 377. Even announced change derivation evaluate liability. purposes

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