Petition — Allstate Insurance v. Cannata

Supreme Court, U. S,

Aon F IL E D. a

| MAR 25 1977

| cuss popan 2, CLERK

~~

In the Supreme Court of the

United States

Octoser Term, 1976

ALLSTATE INSURANCE COMPANY,

Petttioner,

vs.

JosepH A. CANNATA,

Respondent.

Petition for a Writ of Certiorari

To the Court of Appeal of the State of California,

First Appeliate District, Division Three

Cooper, Wurre & CooPer

CuHarLes W. Kenapy

R. Barry CHuRTON

44 Montgomery Street, Suite 3300

San Francisco, California 94104

Attorneys for Petitioner

SORG PRINTING COMPANY OF CALIFORNIA, 346 FIRST STREET, SAN FRANCISCO 94105

SUBJECT INDEX

Page

Opinions and Orders Below .2.0............2.......secceceeseseereeeseeeee 1

III. Scchictisiatiatastathccnieh satan scidinaaenbdgaadadaphisiebedgiipvanindiasiss 2

I a cttaniniaesaiiicanth 2

Constitutional and Statutory Provisions Involved ........ 2

arama OE Gam CT aniiiseeceenesesceerseeeneoupesceenoneernene 3

Presentation of the Federal Question ~.......................... 7

Reasons for Granting the Writ ~..........02202020.0.------ 8

I. The Court of Appeal Deliberately Refused to Con-

cede That California’s Jurisdiction Over This

Case Is Preempted by Federal Law ........................ 8

A. The Basie Preemption Rule Is That States

Are Foreclosed from Jurisdiction Over Any

Conduct Arguably an Unfair Labor Practice

SEIT TIE IMEI» eisiistenicbsaieshidanbicanseniciaieidasssiaaiduemnateniens 9

B. The Special Findings That a Material

Reason for His Discharge Was Pro-Union

Activity or Statements Established That

Plaintiff’s Discharge Was Arguably an Un-

ee I SPINE casiniespinecisisenmeshniseinbacnestiesssitennees 11

C. The Court of Appeal Misunderstood the Pre-

einption tule or Misapplied a Recognized

ES TRIED sitcsarnnrnniiecerseinienimsnpeioniaainssnsatic 15

ii Sussect INDEX

Page

D. A State Court May Not Ignore Jury Find-

ings and Evidence Showing That the Conduct

in Issue Was an Unfair Labor Practice ........ 20

Il. This Court’s Decision in Farmer v. Carpenters

Mandates the Grant of This Petition and the Sum-

mary Reversal of the Decision of the Court of

DRI osc cccccaccsnesennszerentecsnemnanscnamipeimnainaanaamaaisinilantee 21

I a ccccccisnsinssnisstnsniiivsinnincsiicnsiiaitihidnhiiiiianniiaenaaammenns 23

TABLE OF AUTHORITIES CITED

CasEs

Pages

Amalgamated Association of Motor Coach Employees

v. Lockridge, 403 U.S. 274 (1971) -.2....2......-c-ccceeceeeee 18, 19

Beasley v. Food Fair of North Carolina, Inc., et al.,

ee ee ED eerieeninicretinenineioinidtabeisinanien 6

Department of Banking v. Pink, 317 U.S. 264 (1942)

we.diem. SIG US. SOB (1DGB) na ccccccccsececesccceccescecceecovecsses 2

Farmer v. United Brotherhood of Carpenters and

Joiners of America, Local 25, et al., U.S.L.W., 45

L.W. 4263, (opinion filed March 7, 1977)....9, 10, 15, 16, 19,

21, 22, 23

Garner v. Teamsters’ Union, 346 U.S. 485 (1953) -....... 24

Gibbons v. Ogden, 22 U.S. 1 (1824) 0000... eeeeeee 10

Guss v. Utah Labor Board, 353 U.S. 1 (1957) -.............. 24

International Association of Machinists v. Gonzales,

Se Sa EE EID: sinctesssinischsiesmicntnireniansersiniiiitiapecnienitinn 16, 17

Iron Workers Union v. Perko, 373 U.S. 701 (1963)...... 6

Local 100, Association of Journeymen and Apprenti-

ces v. Borden, 373 U.S. 690 (1963) ....................-.00-.- 20

Mushroom Transportation v. N.L.R.B., 330 F.2d 683

8 Ne eR 14

N & G Chrysler-Plymouth, 186 N.L.R.B. No. 45, CCH,

Fess Sh; SF Fa ee eee 13, 14

Nash v. Florida Industrial Comm’n., 389 U.S. 235

III cisodechiiahshdnieetainimitAisdaisesinitdansdalanaiabadleibiinsiinniaiiittmabiane 24

N.L.R.B. v. Buddies Supermarkets, 481 F.2d 714 (5th

CEE | cesiicscssseceilamsisheiidlNnicteschatsiitieeniiiiidenpnienpascieditiiiasssiien 14

iv TABLE oF AuTHORITIES CITED

Pages

N.L.R.B. v. Great Dane Trailers, 388 U.S. 26, 34 (1967) 15

N.L.R.B. v. Quest-Shon Mark Brassiere Company, 185

F.2d 285 (2d Cir. 1950) cert.den., 342 U.S. 812

CRED nc.ncccccstsnscensesicteitinimenia 13

N.L.R.B. v. Washington Aluminum Company, 370 U.S.

en nn re 13

Randolph Division, Ethan Allen, Inc. v. N.L.R.B., 513

ef ®, Fb of: 3 ee 14

Ridgely Manufacturing Co. v. N.L.R.B., 510 F.2d 185

(TOD. Cae. BIGTD xiesinccsnsvinisseesnsessnaiianiiadmaan 14

Root-Carlin, Ine., 92 N.L.R.B. No. 203, 27 L.R.R.M.

BE CIE) cccecscccssvcessscessenceseceerensetennsssiinnenaiaiasaianaan 13

S. A. Healy Co. v. N.L.R.B., 435 F.2d 314 (10th Cir.

|) an See T NTN He 14

San Diego Building Trades v. Garmon, 359 U.S. 236

(TD) encesecevercsnsovssesnenectitcsateneienetneniianiiaaa 9, 10, 15, 18

San Diego Building Trades v. Garmon, 45 Cal.2d 657

(2B) onencvrcesecessensesnciessioesinsneueneesenessssnisialssaanininiiinaannnnnnnn 9

San Diego Building Trades v. Garmon, 353 U.S. 26

(TT) <...rereccecsssesnensasesessssnteisasthitnestatsasieiiiassisiananannnn 9

San Diego Building Trades v. Garmon, 49 Cal.2d 595

(DBT) meecsnrececesesecsevsuistnscsnnsvaesenenseeanesaliinnainnnn 9

Salt River Valley Water Users’ Ass’n v. N.L.R.B., 206

ee Fy Ce ee 14

Sears Roebuck & Co. v. San Diego Council of Car-

penters, 17 Cal. 893 (1976) cert.granted, ...... US.

cannieh (RDU T) ..conssssvsscnesensensiecestinensuinananiasnniniaaaian

United States v. Healy, 376 U.S. 75 (1964) ~............. 2

TasLe or AutHorities CiTep V

Pages

Unrrep States Constitution

Constitution of the United States, Article VI, Clause

LLL LESLIE 2, 10

Copes

California Code of Civil Procedure, Section 625 ........ 7

Judicial Code, 28 U.S.C., Section 1257(3) 0000...

STATUTES

Labor Management Relations Act:

Section 2(3) (29 USC, Section 152(3)) 20000. 3

Section 7 (29 USC, Section 157) 00000. 3, 6, 9,11, 12

Section 8 (29 USC, Seetion 158) 20000. 3, 6, 9

Section 8(a)(1) (29 USC, Section 158(a)(1))........ 3, 11, 12

Section 8(a)(3) (29 USC, Section 158(a)(3))........ 3, 11, 12

Section 8(b)(2) (29 USC, Section 158(b)(2))....... 19

MISCELLANEOUS

California Rules of Court, Rule 976 02. l

In the Supreme Court of the

United States’ -

Octoser Tram, 1976

ALLsTaTE InsurRANCE CoMPANY,

Petitioner,

vs.

JosepH A. CANNATA,

Respondent.

Petition for a Writ of Certiorari

To the Court of Appeal of the State of California,

First Appellate District, Division Three

The petitioner, Allstate Insurance Company, (“All-

state”), defendant in the above-entitled action, respectfully

prays that a Writ of Certiorari issue to review the judg-

ment and opinion of the Court of Appeal of the State of

California, First Appellate District, Division Three

(“Court of Appeal’’) entered in this proceeding on October

20, 1976.

The opinion of the Court of Appeal in Cannata v. All-

state Insurance Company (“Opinion”) is reproduced as

Appendix A.’

1. Pursuant to Rule 976, California Rules of Court, the subject

opinion was not certified for publication in the Official Reports.

2

The order of the Court of Appeal denying Allstate’s

Petition for Rehearing, not officially reported, is repro-

duced as Appendix B.

The order of the California Supreme Court denying

Allstate’s Petition for Hearing, not officially reported, is

reproduced as Appendix C.

The judgment of the Court of Appeal was entered on

October 20, 1976. A timely Petition for Rehearing was

denied by the Court of Appeal on November 19, 1976. A

Petition for Hearing before the California Supreme Court

was timely filed and was denied by that Court on Decem-

ber 29, 1976. This Petition for a Writ of Certiscrari was

filed within ninety (90) days of that date, and is therefore

timely. Department of Banking v. Pink, 317 U.S. 264, 266

(1942), re. den., 318 U.S. 802 (1943); United States v.

Healy, 376 U.S. 75, 77-80 (1964).

This Court’s jurisdiction is invoked under 28 U.S.C.

§ 1257(3).

QUESTIONS PRESENTED

1. Should state court jurisdiction over employer con-

duct, i.e., discharge of an employee for pro-union activity

or statements, be pre-empted by federal law?

2. Is a state court free to ignore special jury findings

and refuse to apply the “arguably” rule mandated by San

Diego Building Trades v. Garmon?

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Constitution of the United States Article VI, Clause 2:

“This Constitution, and the Laws of the United States

which shall be made in Pursuance thereof; and all

+

3

Treaties made, or which shall be made, under the

Authority of the United States, shall be the supreme

Law of the Land; and the Judges in every State shall

be bound thereby, any Thing in the Constitution or

Laws of any State to the Contrary notwithstanding.”

29 U.S.C. § 157:

Employees shall have the right to self-organization,

to form, join or assist labor organizations, to bargain

collectively through representatives of their own

choosing, and to engage in other concerted activities

for the purpose of collective bargainins or other

mutual aid or protection, and shall also «ve the right

to refrain from any or all of such activities except to |

the extent that such right may be affected by an agree-

ment requiring membership in a labor organization is

a condition of employment as authorized in Section

8(a) (3).

29 U.S.C. § 158a:

It shall be an unfair labor practice for an employer—

(1) to interfere with, restrain, or coerce employees

in the exercise of their rights guaranteed in Sec-

tion 157;...

(3) by discrimination in regard to hire or tenure

of employment or any term or condition of employ-

ment to encourage or discourage membership in

any labor organization.

STATEMENT OF THE CASE

Petitioner, Allstate, seeks this Court’s review of a judg-

ment rendered against it in an action brought by respond-

ent for breach of an employment ccntract and fraud. A jury

returned verdicts of $150,000 compensatory damages and

$500,000 punitive damages in favor of respondent and judg-

ment was entered accordingly. The action arose out of the

termination of respondent’s employment with Allstate on

May 26, 1968.

+

On October 3, 1960, respondent was hired as a claims

adjustor in Allstate’s San Francisco District Office. He

progressed in the skills of claims adjusting and in July,

1962 he was promoted to casualty claim examiner, In

March, 1964, respondent was promoted to casualty claims

supervisor. He held that position until his termination in

May, 1968.

Respondent pleaded and at trial offered evidence which

he claimed showed that his termination was the result of

the fraudulent conduct of Allstate in misrepresenting at

the outset of his employment in 1960 that it was a fair and

ethical company, that he could continue to work for Allstate

until his normal retirement at age 62 so long as he sub-

stantially complied with all of Allstate’s directions save

those which would be unlawful, and that if his employment

was ever in jeopardy he would be given notice and the

opportunity to improve. During his employment respond-

ent became increasingly critical of Allstate’s policies,

including those relating to the handling and disposition of

insurance claims. He critcized several of Allstate’s policies

in front of his colleagues and subordinates.

Respondent also defied Allstate’s policy regarding union

activity among its adjustors. He encouraged union organ-

ization despite his knowledge that management wanted no

unions at Allstate. Respondent also criticized Allstate’s no-

union policy and on one occasion invited several other

adjustors to his or another adjustcor’s residence where he

and several claim adjustors met to discuss organization of

the union among claim adjustors.

A memorandum in the Allstate employee relations file

dated September 5, 1967 advises management that “2

people in S.F. Joe Canata Supr. Tom Gedge dispatch adj.

would he interested in organizing. Canata’s brother is a

union organizer for unknown group.”

5

On May 3, i968 respondent’s immediate superior wrote

the Regional Manager recommending that respondent be

dismissed for his unsatisfactory attitude and exercising

unsatisfactory leadership as a supervisor. The first para-

graph of that three-paragraph letter is devoted to respond-

ent’s pro-union activities and statements:

On May 2, Casualty Director Bud Danen was in the

San Francisco office in connection with our telephone

investigation claim handling. While Bud was there he

had a conversation with Joe Cannata in which Joe said

the he understood the union was getting a foothold.

Bud asked what he meant by ‘foothold’ and Joe re-

plied, ‘Well, there is a lot of talk about a union among

claims men.’ Bud then said, ‘We don’t need one at All-

state’ and Cannata replied, ‘I don’t know, I think it

might do a lot of good to have one here.’

The letter concluded as follows:

“T therefore recommend that we dismiss him immedi-

ately for an unsatisfactory attitude and exercising un-

satisfactory leadership.”

Respondent was terminated on May 21, 1968. He commenced

this action by filing suit on May 13, 1969. Jury trial of this

action began on August 5, 1974. On September 6, 1974 the

jury returned a verdict in favor of respondent, awarding

him $150,000 compensatory and $500,000 punitive damages.

In addition to the general verdict, the jury returned an-

swers to two special interrogratories which had been sub-

mitted to them by the trial judge:

“1. We find the Plaintiff, Josepx A. Cannata when

he was terminated by Defendant, ALustaTe INsuRANCE

ComPANy, a corporation, held a position as a:

Managerial employee ie

Non-managerial employee ([X]

6

2. Were pro-union activity or statements a material

factor in the termination of employment of Plaintiff,

Josep A. Cannata, by Defendant, Auistate Insur-

ANCE CoMPany, a corporation:

[X] Yes [ ] No.”

These special interrogatories had been submitted to the

jury by the trial judge after extended discussions and

arguments by the parties arising out of Allstate’s requested

instruction to the jury on the subject of respondent’s pro-

union activity.

On review the Court of Appeal found that these findings

were supported by substantial evidence :*

This finding was supported by substantial evidence,

as previously discussed. (Opinion, p. 4).

The Court of Appeal also found that the record con-

tained evidence that by discharging respondent, Allstate

attempted to “chill” or interfere with employee’s rights®

under the Act:

There can be no question here that there is evidence

that Allstate was at least attempting to ‘chill’ the em-

ployee’s right under Section 7, if not in fact interfere

with that right. (Opinion, p. 7).

The Court of Appeal, however, disregarded the jury’s

special findings as “surplusage”, and held that because

Cannata’s union activity was “peripheral to the case” Cali-

2. Though the Court of Appeal referred to the findings in the

singular, its discussion of their significance shows that it was con-

sidering both.

3. Since the special finding held that plaintiff was a nonman-

agerial employee he is an employee within the meaning of § 2(3)

of the N.L.R.A. and entitled to the protection of § 7 and § 8 of the

Act. The Court of Appeal agreed. Even if plaintiff had been a

managerial employee, suit upon his discharge would have been

preempted. Tron Workers Union v. Perko, 373 U.S. 701, 707

(1963); Beasley v. Food Fair of North Carolina, Inc., et al., 416

U.S. 653 (1974).

7

fornia’s jurisdiction to award money damages was not pre-

empted. Accordingly, it affirmed the judgment of the trial

court. The Court of Appeal denied Allstate’s petition for

rehearing and the California Supreme Court denied a peti-

tion for hearing with three of the seven justices voting to

grant the petition. The judgment of the Court of Appeal

thereby became final, which judgment is the subject of this

petition.

PRESENTATION OF THE FEDERAL QUESTION

The federal question for which this petition seeks review

was seasonably raised by petitioner during the trial. This

was done by the proffer of an instruction to the jury by

petitioner to the effect that if the jury found respondent

was terminated for pro-union activity, solicitation or sym-

pathy, it could not return a verdict for him. This and simi-

lar instructions were refused by the trial court which, after

hearing argument by counsel, determined to present the

labor preemption issue to the jury in the form of special

interrogatories pursuant to California Code of Civil Pro-

cedure, Section 625. Petitioner submitted a form of such

interrogatories, but the trial court refused it as presented

and submitted its own form to the jury (Statement of the

Case, p. 6).

Following rendition of the jury verdict, petitioner timely

filed and argued post-trial motions, one of which was to

vacate the judgment for respondent and enter judgment of

dismissal on the ground that under the provisions of Cali-

fornia Code of Civil Procedure, Section 625, the general

verdict was inconsistent with the special findings and was

controlled by such findings. The argument was premised on

the principle that since the jury’s special findings meant

that respondent’s discharge by petitioner was arguably an

8

unfair labor practice, the cause of action was preempted

and the trial court had no jurisdiction to enter any judg-

ment for respondent. This motion was denied and a timely

appeal was taken therefrom.

REASONS FOR GRANTING THE WRIT

1. The Court of Appeal Deliberately Refused to Concede That

California's Jurisdiction Over This Case Is Preempted by

Federal Law.

Notwithstanding a jury finding (found by the Court of

Appeal to be supported by substantial evidence) that All-

state’s discharge of plaintiff was motivated, in material

part, by his pro-union activities or statements, the Court of

Appeal refused to apply the doctrine of federal preemption

and order dismissal of the action. In concluding the pre-

emption doctrine was inapplicable because plaintiff’s union

activities were “peripheral to the case”, the Court of Appeal

invented a totally new and unsupported formulation of the

preemption rule which is in clear and present conflict with

the many relevant decisions of this Court. This Court is

continually called upon to exercise its responsibility to in-

sure that the state courts do not infringe upon federal juris-

diction. One area where federal jurisdiction is paramount is

in labor relations which, for present purposes, are ex-

clusively governed by the National Labor Relations Act,

as amended (“Act”). The Court of Appeal’s decision below

is a flagrant and direct intrusion into the exclusive juris-

diction of the National Labor Relations Board (“Board”).

This Court should therefore grant the petition for certiorari

in order to set aside the decision below and restore the

proper balance between state and federal power in the sensi-

tive area of labor relations.

9

A. THE BASIC PREEMPTION RULE IS THAT STATES ARE FORECLOSED

FROM JURISDICTION OVER ANY CONDUCT ARGUABLY AN UNFAIR

LABOR PRACTICE UNDER THE ACT.

Sections 7 and 8 of the Act (29 U.S.C. §§ 157, 158) define

protected and prohibited labor activities. In San Diego

Building Trades v. Garmon, 359 U.S. 236, 244 (1959)* this

Court ruled that in passing the Act, Congress mandated

uniform application of its rules regarding employment rela-

tions and elimination of conflicts resulting from varying

local statutes and rules of decision regarding labor prob-

lems. The Court explained:

Regardless of the mode adopted, to allow the States

to control conduct which is the subject of national

regulation would create potential frustration of

national purposes. (Jd. at 244).

Prompted by these considerations, this Court established

the federal preemption rule governing the employment rela-

tions area, and held that if the conduct in question is “argu-

ably subject to §7 or §8 of the Act, the States .. . must

defer to the exclusive competence of the National Labor

Relations Board . . .” (Jd. at 245, emphasis added.)

This preemption rule was recently reaffirmed in Farmer

v. United Brotherhood of Carpenters and Joiners of

America, Local 25, et al., U.'S.L.W., 45 L.W. 4263, 4265

(opinion filed March 7, 1977) where a unanimous Court

through Justice Powell stated:

4. The history of the Garmon litigation is significant. In San

Diego Building Trades v. Garmon, 45 Cal.2d 657 (1955) the Cali-

fornia Supreme Court upheld a damage award to an employer

based on a union’s secondary picketing. The United States Supreme

Court reversed in San Diego Building Trades vy. Garmon, 353 U.S.

26 (1957) on the basis of preemption, and remanded. The Cali-

fornia Supreme Court then held that the union activities consti-

tuted a tort under state law, and reaffirmed the award. (49 Cal.2d

595). However, the United States Supreme Court again reversed

the California Supreme Court in Garmon II.

10

When it is clear or may fairly be assumed that the

activities which a State purports to regulate are pro-

tected by §7 of the National Labor Relations Act, or

constitute an unfair labor practice under § 8, due

regard for the federal enactment requires that state

jurisdiction must yield. To leave the States free to

regulate conduct so plainly within the central aim of

federal regulation involves too great a danger of con-

flict between power asserted by Congress and require-

ments imposed by State law. (359 U.S. at 244.)

The crucial feature of the rule is that the conduct in

question need only be arguably subject to sections 7 or 8

of the Act to oust the state court of jurisdiction. In Garmon,

supra, Mr. Justice Frankfurter explained why only this

minimal threshold is required to trigger the preemption

rule:

At times it has not been clear whether the particular

activity regulated by the States was governed by §7

or § 8 or was, perhaps, outside both these sections. But

courts are not primary tribunals to adjudicate such

issues. It is essential to the administration of the Act

that these determinations be left in the first instance

to the National Labor Relations Board. (Garmon,

supra at 244-5).

This rule of preemption is an expression by this Court of

binding federal law, and under the supremacy clause of the

United States Constitution, the Court of Appeal was re-

quired to apply such rule. United States Constitution Article

VI, Clause 2; Gibbons v. Ogden, 22 U.S. 1 (1824).

The rule of preemption was established long ago by this

Court with both clarity and vigor. It has been reaffirmed on

several occasions in equally convincing terms. Here the

Court of Appeal was presented with facts specially found by

11

a jury, and with a record which by its own concession was

consistent with the application of the preemption rule. Yet,

it chose to ignore its duty and, in a thinly disguised effort

to preserve what it considered to be a proper result, dis-

obeyed the unequivocal directions of this Court to terminate

state jurisdiction over this dispute. The Court of Appeal

judgment stands in open defiance to the many decisions of

this Court which compel preemption in these circumstances.

So clear is the path and so cogent the mandate that the

judgment below appears to be a deliberate confrontation

with the preemption decisions of this Court. It should be

dealt with accordingly.

B. THE SPECIAL FINDINGS THAT A MATERIAL REASON FOR HIS DIS-

CHARGE WAS PRO-UNION ACTIVITY OR STATEMENTS ESTABLISHED

THAT PLAINTIFF'S DISCHARGE WAS ARGUABLY AN UNFAIR LABOR

PRACTICE.

Section 8(a)3 of the Act makes it an unfair labor practice

for an employer:

by discrimination in regard to hire or tenure of em-

ployment or any term or condition of employment to

encourage or discourage membership in any labor

organization ... (29 U.S.C. § 158(a)(3)).

Section 8(a)1 makes it an unfair labor practice for an

employer:

to interfere with, restrain, or coerce employees in

the exercise of the rights guaranteed in § [7] ... (29

U.S.C. § 158(a)1).

Section 7 states:

Employees shall have the right to self-organization,

to form, join, or assist labor organizations, to bargain

collectively through representatives of their own

choosing, and to engage im other concerted activities

for the purpose of collective bargaining or other mu-

12

tual aid or protection, and shall also have the right to

refrain from any or all of such activities . . . (29

U.S.C. § 157; emphasis added.)

Petitioner contends that the Court of Appeal need have

gone no further in its consideration of this issue than to

measure the effect of the special findings of the jury and

its own review of the trial record against the quoted pro-

visions. The jury found that Allstate discharged respond-

ent, in material part, because of his pro-union activity and

statements. Such conduct, at the very least, arguably falls

within the prohibitions of Section 8(a)(3) of the Act. It

requires no citation of cases or elaborate exercise in logic

to reach this conclusion. The very words of Section 8(a) (3)

proscribe discrimination in tenure of employment to dis-

courage membership in any labor organization. What else

is discharge for pro-union activity or statements than the

grossest form of such discrimination? Again, in Section 7,

one finds that employees are protected in their right to self-

organization or to form, join or assist labor organizations

and that Section 8(a)(1) flatly prohibits employer inter-

ference with these rights. The Court of Appeal found that

“(T |here can be no question here that there is evidence that

Allstate was at least attempting to ‘chill’ the employee’s

rights under Section 7, if not in fact interfere with that

right.” (Opinion, p. 7). Petitioner urges that the nearly

perfect alignment between the facts found by the Court

of Appeal and the prohibitions of the statutory provisions

should have compelled a ruling that Allstate’s conduct was

arguably an unfair labor practice, per se, without any fur-

ther examination of case authority on the subject. The

question was closed at that point.

However, if further inquiry on this subject was deemed

necessary, it is clear that the same result should have

13

obtained. Together the quoted statutory provisions have

been interpreted to guarantee employees or even a single

employee the right_to enagage in a broad spectrum of ac-

tivities for mutual aid and protection ranging from organ-

izing unions to merely discussing them. It has been the

position of respondent throughout this litigation that be-

cause there was no evidence in the record of activity of a

formally constituted labor organization, this was not really

a “labor” case wherein the doctrine of preemption would

have any application. As this Court knows, the argument

is wholly specious. ,

This Court long ago decided that there need be no formal

labor organization on the scene to qualify the jointly spon-

sored activities of employees as “concerted activities” for

purposes of their protection under Section 7 of the Act.

N.L.R.B. v. Washington Aluminum Company, 370 U.S. 9

(1962). There it was held that unorganized workers who

walk out to protest coldness of their work area are pro-

tected in these activities even though no formal demand

was made upon their employer to rectify this condition of

employment prior to their walkout and no labor union was

present. Lower federal courts and the Board have con-

sistently bowed to this line of authority. Thus, where two

employees merely discuss the need for union organization,

they are protected by section 7. In Root-Carlin, Inc., 92

N.L.R.B. No. 203, 27 L.R.R.M. 1235 (1951), discharge of

an employee for such a discussion was held to violate 8(a)1

and 8(a)3. In N.L.R.B. v. Quest-Shon Mark Brassiere Com-

pany, 185 F.2d 285 (2d Cir. 1950) cert. den. 342 U.S. 812

(1951) several employees discussed organizing and circu-

lated a petition to probe union interest. None were union

members. The court ruled that their discharge was an un-

fair labor practice. In N. & G. Chrysler-Plymouth, 186

14

N.L.R.B. No. 45, CCH Lab.L.Rep. 922, 423 (1970) the

Board ruled that discharge of an employee for suggesting

to co-workers that they should organize a union was a vio-

lation of sections 8(a)1 and 8(a)3.

Even mere griping and complaining are protected activi-

ties within the meaning of section 7 when there is contem-

plation of collective activity. N.L.R.B. v. Buddies Super-

markets, 481 F.2d 714, 717-718 (5th Cir. 1973); Mushroom

Transportation v. N.L.R.B., 330 F.2d 683 (3rd Cir. 1964).

Activity designed to further the interests of more than

one worker is “concerted activit[y] for the purpose of

. . mutual aid or protection” within the meaning of sec-

tion 7 even though only one person may be active. Salt

River Valley Water Users’ Ass’n. v. N.L.R.B., 206 F.2d

325, 328 (9th Cir. 1953); Randolph Division, Ethan Allen,

Ine. v. N.L.R.B., 513 F.2d 706 (1st Cir. 1975).

Finally, a discharge is an unfair labor practice even if

it is motivated only im part by anti-union animus. Ridgely

Manufacturing Co. v. N.L.R.B., 510 F.2d 185, 186 (D.C. Cir.

1975) ; S. A. Healy Co. v. N.L.R.B., 4385 F.2d 314, 316 (10th

Cir. 1970). In this case the jury found that plaintiff’s pro-

union activity or statements were a material factor in his

discharge.

These authorities show that if individual action is for

the purpose of mutual aid, then it is afforded the same

level of protection as organized group or union activities.

These cases also demonstrate, beyond any reasonable

doubt, that the special findings compel the conclusion that

respondent’s discharge was arguably an unfair labor prac-

tice, for the jury found that he was discharged, in material

part, for pro-union activity or statements. Indeed, there

is no more effective means of discouraging “pro-union

15

activity or statements” than by firing those employees who

engage in it.®

Here again, the Court of Appeal was confronted with jury

findings and trial record which demanded the application

of the preemption doctrine. The Court of Appeal delib-

erately sidestepped its judicial duty and, on the basis of

its own completely novel and unprecedented distortion of

the Garmon test, refused to terminate state jurisdiction.

Such discretionary abuse cannot stand uncorrected.

Cc. THE COURT OF APPEAL MISUNDERSTOOD THE PREEMPTION RULE OR

MISAPPLIED A RECOGNIZED EXCEPTION THERETO.

The few well-defined exceptions to the preemption rule

are frequently grouped under two headings: (1) activities

merely peripheral to the concerns of the Act; and (2) con-

duct touching interests so deeply rooted in local responsi-

bility that it cannot be concluded in enacting the Act that

Congress intended to deprive the states of jurisdiction.

See Garmon, at 243, 244. The second group of exceptions

may be put to one side since none of these exceptions ap-

plies to the instant case and neither respondent nor the

Court of Appeal has suggested the contrary. More par-

ticularly, nothing contained in this Court’s recent opinion

in Farmer v. United Brotherhood of Carpenters and Join-

ers of America Local 25, et al, supra, compels a different

result. Nothing appears either in the pleadings or the evi-

dence of the instant case which begins to approach from

afar the egregious conduct complained of and the injury

5. Intent to discriminate is conclusively presumed when the

employer’s conduct is deemed “inherently destructive’’ of impor-

tant employee rights and presumed if it coule. have affected em-

ployee rights to some extent. V.L.R.B. v. Great Dane Trailers, 388

U.S. 26, 34 (1967). Under this standard the requisite intent would

be conclusively presumed in this ease, for what could be more de-

structive of employee rights than discharge?

16

sustained in Farmer. Mr. Justice Powell was precise in

limiting the permissible cause of action in Farmer, inten-

tional infliction of emotional distress, to a situation where

“the defendants had intentionally engaged in ‘outrageous

conduct, threats, intimidation, and words’ which caused

Hill to suffer ‘grievous mental and emotional distress as

well as great physical damage’” (supra at 4266). To

further close the loop around this precisely limited excep-

tion to the preemption rule, Mr. Justice Powell was again

careful to point out that employment discrimination within

the federal regulatory scheme cannot itself become the

predicate for the “outrageous” conduct upon which a state

court tort action can be based. State court recovery may

only proceed from additional facts over and above employ-

ment discrimination which satisfy the requirement for

recovery based upon state tort law. In the instant case it

is obvious that the additional facts are not present.

The Court of Appeal may have misconstrued the first

exception and erroneously applied it to this case.* It pur-

ported to rely upon /nternational Association of Machinists

v. Gonzales, 356 U.S. 617 (1958) and Sears Roebuck & Co.

v. San Diego Council of Carpenters, 17 Cal.3d 893 (1976)

cert. granted ...... USS. ...... (1977) as authority for its dis-

torted formulation of the “perhipheral” test. Indeed, the

real “peripheral” test had its gensis in the Gonzales opinion.

However, Gonzales provides no authority for holding that

the preemption rule is inapplicable where the protected

union activity is merely peripheral to the case. Mr. Justice

Frankfurter’s opinion in Gonzales explains why a suit over

purely internal union matters is not preempted:

6. Because of the ambiguity of the Opinion (see Opinion, p. 7)

in this regard, it cannot be determined whether the Court of Ap-

peal believed the Garmon preemption rule did not apply in the

17

... the potential conflict is too contingent, too remotely

related to the public interest expressed in the Taft-

Hartley Act, to justify depriving state courts of juris-

diction to vindicate the personal rights of an ousted

union member. (/d. at 621; emphasis added.)

This holding was based on the Supreme Court’s perception

that the conduct involved in Gonzales, because it related

solely to internal union matters, was remotely connected

to the purpose of the Act. Gonzales does not hold or even

remotely suggest that where “evidence of . . . unionization

activities ... [is] merely peripheral to the case .. . [there

is] an insufficient basis for depriving the state court of

jurisdiction.” (Court of Appeal Opinion, p. 7.)

Likewise, in Sears, Roebuck & Co. v. San Diego County

Council of Carpenters, swpra, the California Supreme Court

properly recognized in dictum that the Gonzales exception

to the preemption rule is justified “where the activity

regulated was a merely peripheral concern of the Labor

Management Relations Act.” (Id, at 901).

These decisions demonstrate that the “peripheral” excep-

tion is limited to cases where the conduct in question is

peripheral to the concerns of the Act. All prior decisions of

this Court have confined this exception to disputes arising

from purely internal union matters. The case at bar does

not concern itself with internal union matters and it cannot

be seriously contended that discharge of an employee for

pro-union activity or statements is peripheral to the con-

cerns of the Act. Thus, these decisions furnish no authority

for the Court of Appeal’s misconception that the preemp-

tion rule was inapplicable.

Moreover, the “peripheral to the case” standard invented

by the Court of Appeal is in direct conflict with and under-

first instance or that the case at bar fell within the so-called

“peripheral’’ exception articulated in Gonzalez. In either case, its

reasoning is fatally flawed.

18

mines the basic policy of Garmon and its progeny. This

Court’s opinion in Garmon makes clear the policies of the

Act require that any judicial action, seeking either injunc-

tive relief or damages because of conduct which is argu-

ably an unfair labor practice must be preempted:

Our main concern is with delimiting areas of conduct

which must be free from state regulation if national

policy is to be left unhampered. Such regulation can

be as effectively exerted through an award of damages

as through some form of preventive relief. The obliga-

tion to pay compensation can be, indeed is designed

to be, a potent method of governing conduct and con-

trolling policy. Even the States’ salutary effort to re-

dress private wrongs or grant compensation for past

harm cannot be exerted to regulate activities that are

potentially subject to the exclusive federal regulatory

scheme. (Id. at 246; emphasis added.)

and earlier:

Nor has it mattered whether the States have acted

through the laws of broad general application rather

than laws specifically directed towards the governance

of industrial relations. Regardless of the mode adopted,

to allow the States to control conduct which is the sub-

ject of national regulations would create potential

frustration of national purposes, (Jd. at 244; em-

phasis added, footnotes omitted.)

Thus, suits for discharge, whether based on tort, contract,

or any other comomn law theory, have consistently been

held preempted if the discharge was arguably an unfair

labor practice. In Amalgamated Association of Motor Coach

Employees vy. Lockridge, 403 U.S. 274 (1971) this Court

reversed a union member’s judgment for damages against

a union for breach of contract and procurement of dis-

19

charge.’ The Court found the discharge to be arguably an

unfair labor practice, and explained:

“At bottom, of course, the Union’s action in procuring

T.ockridge’s dismissal from employment is the conduct

which Idaho Courts have sought to regulate...

“(T]t would seem that this case indeed represents one

of the clearest instances where the Garmon principle

. .. Should operate to oust state court jurisdiction.”

(Id. at 292-293 ; emphasis added.)

Discharge is discharge, and the language of Lockridge

applies with even more force to this case. Like Lockridge,

at the “bottom” of this case, is conduct causing a discharge.

Indeed, the instant case presents the perfect example of that

which is the intended object of the protections or prohibi-

tions of the Act. Here we are dealing with the relationship

of employer-employee uncomplicated by the presence of a

labor organization as the supporting actor in the drama of

discharge. One cannot imagine a relationship, and an act

in derogation of that relationship, more central to the con-

cerns of the Act than is presented by this case, i.e., an

employer’s termination of an employee because of his pro-

union activities or statements.

It is Allstate’s conduct—discharging respondent for pro-

union activity or statements-—which triggers preemption.

Whether pro-union activity is peripheral to the case is

simply immaterial and the Court of Appeal fell into stark

error in concluding otherwise.

7. For a union to cause or attempt to cause an employee ’s dis-

charge for his union membership or non-membership is an unfair

labor practice under § 8(b)2 of the N.L.R.A. and within the ex-

elusive jurisdiction of the N.L.R.B. Petitioner submits that the

recent opinion in Farmer v. United Brotherhood of Carpenters and

Joiners of America Local 25, et al., supra, specifically reaffirms the

soundness of the Lockridge decision and these arguments based

upon the Lockridge holding.

20

The special findings* of the jury and the evidence sup-

porting them require the conclusion that, at the very least,

Allstate’s discharge of petitioner was arguably an unfair

labor practice.

D. A STATE COURT MAY NOT IGNORE JURY FINDINGS AND EVIDENCE

SHOWING THAT THE CONDUCT IN ISSUE WAS AN UNFAIR LABOR

PRACTICE.

This Court has yet to declare the sources to which a state

court must look to determine whether the conduct it is con-

cerned with is arguably an unfair labor practice. In this

ease, the Court of Appeal believed that it was free to ignore

the special findings of the jury which unavoidably lead to

the conclusion that the conduct in question was arguably

an unfair labor practice. In addition, the Court of Appeal

ignored substantial portions of the trial record as well,

stating that the record “as a whole” made it appear that

the question of unfair labor practice was “peripheral to the

ease,” If this Court’s ruling, that passage of the Act by

Congress mandated uniform application of federal in place

of state law is to have meaning, then such cavalier disregard

of these sources cannot be permitted. If a state court is

free to select which sources of evidence it will credit in

making the threshold finding of whether a particular course

of conduct was preempted, there is no meaning left to the

term “arguably.”

A state court, jealously seeking to preserve its own juris-

diction, might disregard those sources which clearly point,

as here, to a conclusion that an unfair labor practice argu-

8. In the case of Local 100, Association of Journeymen and

Apprentices v. Borden, 373 U.S. 690 (1963), this Court specifically

endorsed the use of the special findings of a jury as the test for

preemption. It held that, on the basis of special jury findings, the

defendant’s conduct was arguably an unfair labor practice, and

that therefore the jurisdiction of the Texas courts was preempted.

6 Oa aS ee

21

ably had been committed, It might consider itself free to

credit only those sources which point to the conclusion that

the exercise of state jurisdiction was proper. If the preemp-

tion rule is to have vitality at all, this Court should now

mandate that those sources of evidence properly before a

state court on appellate review must be received and acted

upon regardless of the result. No state court should be free

to “weigh” the evidence in the fashion of the Court of

Appeal here to determine whether a particular case was

“in essence” not one which involved a labor relations ques-

tion. It is not within the prerogative of a state court to

engage in such a process when this Court has previously

ordained the proper course to be followed.

ll. This Court's Decision in Farmer v. Carpenters Mandates the

Grant of This Petition and the Summary Reversal of the Deci-

sion of the Court of Appeal.

Any doubt that this case was subject to the federal

preemption rule has been erased by this Court’s decision

in Farmer v. United Brotherhood of Carpenters and

Joiners of America, Local 25, et al., swpra. In reaching its

determination that the cause of action presented therein

was beyond the purview of the preemption rule, this Court

made a number of affirmative statements clearly defining

the boundaries of the zone of preemption. Consideration

of the causes of action sued upon by the respondent in

this case and for which he received huge money damages,

compels the conclusion that the case is clearly subject to

preemption and should never have been allowed to go to

judgment.

In Farmer this Court required that for a state tort action

to proceed, it must appear that the gravamen of that tort

be wholly separate and apart from the merits of the under-

lying labor dispute:

22

But something more is required before concurrent

State court jurisdiction can be permitted. Simply

stated, it is essential that the state tort be either un-

related to employment discrimination or a function of

the particularly abusive manner in which the discrim-

ination is accomplished or threatened rather than a

function of the actual or threatened discrimination

itself. (Id., at 4267)

If one removes the underlying employment discrimina-

tion arguably perpetrated on the respondent, there is

nothing left. The jury specially found that the respondent

was terminated in material part by reason of his pro-

union activity or statements. As demonstrated earlier in

this Petition, termination of employment is the central

concern of the Act. It does no good to claim, as did respond-

ent, that this termination of employment happens to be the

breach of an oral contract or the culmination of petitioner’s

fraudulent behavior toward plaintiff. As recognized num-

erous times throughout the Court of Appeal’s Opinion,

this case was one of wrongful termination of employment.

The independent unrelated circumstances which Justice

Powell stressed are the pre-requisite for escape from the

federal preemption rule are simply not present here.

Petitioner emphasizes that what this Court found to be a

risk in the Farmer case is a reality. Mr. Justice Powell was

concerned that the Farmer jury may have rested its award

of damages upon the employment discrimination practices

against Mr. Hill rather than solely upon the abusive and

unrelated activities of the union in its infliction of emo-

tional distress upon him. The jury’s verdict was vacated so

that it could be properly instructed upon retrial that dam-

ages may not be based upon the union’s discriminatory

conduct. Here, there is more than a ris that respondent

a es

23

may have been awarded damages for federally protected

activity; The forbidden result has occurred. The jury

specially found that respondent was terminated for his

pro-union activity or statements (conduct which is neces-

sarily employment discrimination prohibited by §§ 8a(1)

and (3) of the Act) and awarded total damages of $650,000.

In the face of this Court’s holding in Farmer, the instant

verdicts for both general and punitive damages cannot

stand.

Petitioner would also call the Court’s attention to the

amount of the damages awarded to respondent in light of

Justice Powell’s admonition that:

We also repeat the state courts have the responsi-

bility in cases of this kind to assure that the damages

awarded are not excessive. See, Linn vs. Plant Guard

Workers, 383 U.S. at 65-66. (Id., 4267.)

Surely, damages of the amounts awarded respondent, par-

ticularly the punitive damages in the amount of $500,000,

show that this rule has been disobeyed.

CONCLUSION

The Judgment below appears to be a deliberate con-

frontation with the preemption decisions of this Court. In

outright defiance of this Court’s repeated declarations that

a state court may exercise no jurisdiction over union con-

duct which is even “arguably” an unfair labor practice

under the Act, the Court of Appeal at one and the same

time asserts jurisdiction over petitioner’s conduct and holds

that special jury findings compelling the eqnelusion that an

unfair labor practice has been committed were supported

by substantial evidence. Petitioner submits that the Opin-

ion contains an irreconcilable internal inconsistency which

can only be resolved by a finding of federal preemption.

24

A state court decision thus according supremacy to the

state over federal law is at war with the mandate of the

supremacy clause that federal law shall be accorded the

sovereign rank throughout the United States. Such a deci-

sion cannot survive as it will continue to breed litigation

in derogation of federal law; litigation until now stilled

by the federal preemption and supremacy standards.

Especially must a state decision in definance of the

supremacy clause be reversed, when, as here, the Court

of Appeal has presumed to impose state jurisdiction on

an activity which Congress has regulated by uniform

national policy, in this case, union conduct regulated in

the Act. The Act is “of course the law of the land which

no state law can modify or repeal,” Nash v. Florida Indus-

trial Comm’n., 389 U.S, 235, 238 (1967), “{a] national sys-

tem for the implementation of this country’s labor policies

** *” id., at 239, and, in addition, prescribing a “central-

ized administration of specially designed procedures

[which Congress considered] was necessary to obtain uni-

form application of its substantive rules and to avoid these

diversities and conflicts likely to result from a variety of

local procedures and attitudes towards labor contro-

versies,” Garner v. Teamsters’ Union, 346 U.S. 485, 490

(1953), a national system in which “, . . Congress has

expressed its judgment in favor of uniformity.” Guss v.

Utah Labor Board, 353 U.S. 1, 10-11 (1957).

The decision of the Court of Appeal does precisely what

Congress and this Court have forbidden. It is a step toward

different labor policies and labor laws being enforced

throughout the land, emanating from the varying local

attitudes towards labor controversies, thwarting uniform

administration and enforcement of the national system

for the implementation of this country’s labor policies.

25

Twenty-one years ago, California sought to secede from

that national system in Garmon and was twice rebuffed

by this Court. California here again seeks to secede from

that national system. This attempt at secession must like-

wise be blocked by this Court.

For the reasons stated herein, this Petition should be

granted and the judgment and decision of the Court of

Appeal below be summarily reversed.

Dated: March 24, 1977.

Respectfully submitted,

Cooper, Waite & Coorer

CuarLes W. Kenapy

R. Barry CHurtTon

Attorneys for Petitioner

Appendix A

NOT TO BE PUBLISHED >

IN OFFICIAL REPORTS

In the Court of Appeal of the State of California

First Appellate District, Division Three

1 Civil 37878

(Sup. Ct. No. 603623)

Filed

Oct. 20, 1976

Court of

Appeal

First App.

Dist.

Clifford C.

Porter, Clerk

Joseph A. Cannata,

Plaintiff and Respondent,

vs.

Allstate Insurance Company,

Defendant an Appellant.

Allstate Insurance Company appeals from a judgment

after trial by jury in favor of Joseph A. Cannata, in the sum

of $150,000 compensatory damages and $500,000 punitive

damages.

1. The threshold issue to be determined here is whether

the trial court lacked jurisdiction bec. use of federal pre-

emption under the Labor Management Relations Act. (29

US.C., § 141 et seq.)

Cannata by his complaint sought to recover damages for

the wrongful termination of his employment with Allstate.

Four causes of action were pled, two based upon breach of

an alleged oral contract and two for fraudulent misrepre-

2 Appendiz

sentation. The complaint set forth in some detail the factual

bases upon which Cannata relied in support of his allega-

tion of wrongful termination of his employment. The gen-

eral thrust of the complaint was that he was terminated for

criticizing what he believed to be the immoral and unethical

policies of Allstate as they related to Cannata’s work as an

insurance claims adjuster. None of the allegations made

reference to any conduct relating to unionization activities

by Cannata, nor was there an allegation that he was termi-

nated for his pro-union philosophy or activities.

In his opening statement, the attorney for Cannata made

reference to possible evidence of Cannata’s pro-union activi-

ties and stated, “perhaps this is one of the reasons they

decided to get rid of him.” Evidence was introduced that

Cannata, while an Allstate employee, voiced approval of

union organization and criticized Allstate’s non-union pol-

icy. He once invited other adjusters to a meeting to discuss

the possibility of organizing a union among the claims

adjusters. There is also evidence that he was discouraged

by his employer in such activities. A substantial portion of

the testimony regarding unions came from Allstate officials,

who tried to explain Allstate’s policy. The policy was that

Allstate was not anti-union, but when employees talked

about unionization, the management wanted to know so that

they could correct the alleged deficiencies that inspired the

unionization talk. The testimony of several witnesses, in-

cluding Cannata, regarding Cannata’s union activities and

Allstate’s policies regarding unions, that is, the total refer-

ence to unions in the record, appears on less than 125 pages

of a total reporter's transcript of 2,538 pages. Two out of 75

documents placed in evidence have some reference to Can-

nata’s union discussions. Mention was made briefly by coun-

sel for both parties, in their opening statements and closing

arguments, of Cannata’s unionization activities and All-

state’s reaction thereto.

ee

ln, Manet. 0 Rte os od

Appendiz 3

The thrust of Allstate’s defense was that Cannata was

terminated for disloyalty to the company by being critical

of its valid policies and, generally, because Cannata did not

have the right attitude. One Allstate official (Keller Potter),

under questioning by Allstate’s attorney, testified that a

supervisory employee like Cannata, who did not report

unionization talk by fellow employees, would be considered

disloyal and such would be, at least in part, sufficient

grounds for termination.

The jury made two special findings upon which Allstate

relies in asserting its contention that the state court lacked

jurisdiction. Those findings are as follows:

“1. We find the plaintiff, JoserH A. Cannata, when he

was terminated by Defendant, Auistate [nsuR-

ANCE CoMPANY, a corporation, held a position as a:

Managerial employee [f ]

Non-Managerial employee [X ]

“2 Were pro-union activity or statements a material

factor in the termination of Plaintiff, Josepn A.

Cannata, by Defendant, ALLstaTe INsuRANCE Com-

PANY, a corporation :

[X] Yes [ ] No.”

On the basis of these special findings, appellant Allstate

contends that Cannata’s discharge was arguably an unfair

labor practice within the meaning of the Labor Management

Relations Act (Act), and that the trial court therefore was

without jurisdiction. It is asserted that exclusive jurisdic-

tion rested in the National Labor Relations Board (NLRB).

Reliance is placed primarily upon the United States Su-

preme Court decision in San Diego Unions v. Garmon

(1959) 359 U.S. 236.

Respondent argues that the special findings of the jury

do not establish an unfair labor practice such as to preempt

4 Appendiz

state jurisdiction, and that there is no evidence to support

the claim that Cannata’s discharge was an unfair labor

practice within the meaning of the Act. In addition, re-

spondent contends that the issue should have been raised

prior to trial, by demurrer or by petition for removal to

federal court. Questions of subject matter jurisdiction are

never waived and may be raised at any stage of the pro-

ceedings, even on appeal. The very nature of subject matter

jurisdiction is such that it cannot be conferred by consent,

waiver or estoppel. (Consolidated Theatres, Inc. v. Theatri-

cal Stage Employees Union (1968) 69 Cal.2d 713, 721;

Russell v. Electrical Workers Local 569 (1966) 64 Cal.2d 22;

1 Witkin, Cal. Procedure (2d ed. 1970) Jurisdiction, § 10,

pp. 534-535, and cases there cited.) Hence, it may be con-

cluded that the jurisdictional issue raised by appellant is

properly cognizable by this court on appeal.

We first examine the effect of the special finding. Special

interrogatories to a jury are permitted at the discretion of

the trial court. Where a special finding of fact is inconsist-

ent with the general verdict, the former controls the latter.

(Code Civ. Proc., § 625.) The purpose of the special inter-

rogatory is to test the validity of the genera! verdict by

determining whether all facts essential to support the

general verdict were established to the satisfaction of the

jury. (4 Witkin, Cal. Procedure (2d ed. 1970) Trial, § 266,

pp. 3074-3075.) Normally, a finding supported by substan-

tial evidence will not be disturbed on appeal. This finding

was supported by substantial evidence, as previously dis-_

cussed. Here, however, the special finding is surplusage, and

as such may be disregarded. (See 48 Cal.Jur.2d., Trial,

§ 252, p. 262.) Whether a court has jurisdiction of a particu-

lar cause is a matter of law to be determined by the court.

The court itself is vested with the jurisdiction to determine

Appendiz | 5

its own jurisdiction. (1 Witkin, Cal. Procedure (2d ed. 1970)

Jurisdiction, § 230 et seq., p. 767 et seq.) Any finding by a

jury regarding the jurisdiction of a court is therefore neces-

sarily surplusage, as that determination is within the ex-

clusive province of the court. Since the special finding here

is surplusage, it does not affect the general verdict. We

must review the evidence to determine if the state court had

jurisdiction.

It is now firmly established that the Act preempts both

state and federal court jurisdiction to remedy conduct that

is arguably prohibited or protected by the Act. (Motor

Coach Employees v. Lockridge (1971) 403 U.S. 274, 276;

Plumbers’ Union v. Borden (1963) 373 U.S. 690, 693-696 ;

San Diego Unions v. Garmon (1969) 369 U.S. 236, 244-245;

Hill v. United Brotherhood of Carpenters etc. of America

(1975) 49 Cal.App.3d 614, 620, cert. granted 96 S.Ct. 876.)

Sections 7 and 8 of the Act (29 U.S.C., §§ 157, 158) are

broad provisions governing both protected “concerted ac-

tivities” of employees and unfair labor practices on the part

of employers.

In San Diego Unions v. Garmon (1958) 359 U.S. 236, the

court stated (at pp. 244-245):

At times it has not been clear whether the particular

activity regulated by the States was governed by § 7 or

$8 or was, perhaps, outside both these sections. But

courts are not primary tribunals to adjudicate such

issues. It is essential to the administration of the Act

that these determinations he left in the first instance

to the National Labor Relations Board. What is out-

side the scope of this Court’s authority cannot remain

within a State’s power and state jurisdiction too must

yield to the exclusive primary competence of the

Board. See, e.g., Garner v. Teamsters Union, 346 US.

485, especially at 489-491; Weber v. Anheuser-Busch,

6 Appendix

Inc., 348 U.S. 468. ... When an activity is arguably sub-

ject to §7 or $8 of the Act, the States as well as the

federal courts must defer to the exclusive competence

of the National Labor Relations Board if the danger of

state interference with national policy is to be averted.

(Emphasis added.)

The first inquiry in any case involving such a claim of

federal preemption must be whether the conduct called into

question may reasonably be asserted to be subject to NLRB

cognizance. (Plumbers’ Union v. Borden, supra, 373 U.S.

690, 694.) It is not necessary that the court determine

whether the activity in question was federally protected or

prohibited ; it is sufficient to find that it is “reasonably argu-

able” that the matter comes within the Board’s jurisdiction.

(373 U.S. at p. 696.) |

Section 8(a)(2) of the Act makes it an unfair Jabor prac-

tice for an employer to interfere with the formation or

administration of any labor organization. Section 8(a) (3)

prohibits discrimination in regard to the hire or tenure

of employment or any term or condition of employment to

encourage or discourage membership in any labor organi-

zation. Section 8(a)(1) makes it an unfair labor practice

for an employer to interfere with, restrain, or coerce em-

ployees in the exercise of the rights guaranteed in section

7. Section 7 states:

Employees shall have the right to self-organization,

to form, join, or assist labor organizations, to bargain

collectively through representatives of their own

choosing, and to engage in other concerted activities

for the purpose of collective bargaining or other mu-

tual aid or protection, and shall also have the right

to refrain from any or all of such activties.

It has been held that interference with rights of employees

to engage in concerted activities for the purpose of collec-

Appendiz 7

tive bargaining or other mutual aid and protection, includ-

ing discharge of employees for the exercise of those rights,

is an unfair labor practice. (N.L.R.B. v. E. W. Buschman

Co. (6th Cir. 1967) 380 F.2d 255.)

There can be no question here that there is evidence

that Allstate was at least attempting to “chill” the em-

ployee’s right under section 7, if not in fact interfere with

that right (emphasis added). The jurisdictional question,

however, must be resolved by our evaluation of whether

that part of Allstate’s activity in this case was merely

peripheral or was sufficient to make the case a “reasonably

arguable” unfair labor practice case.

The pleadings did not alert the parties to the question

of preemption. It appears that before trial the unioniza-

tion issue surfaced, with the discovery by Allstate of a

misfiled document regarding Cannata’s termination that

made reference to his unionization activities. However,

during the trial the question of unionization activities re-

ceived only minimal attention, as previously noted. The

vast bulk of evidence in this case addressed itself to All-

state’s claims policies, personnel policies, agreements with

Cannata, and damages. We have no difficulty in holding

that upon the evidence Cannata’s unionization activities

were merely peripheral to the case, and as such an insuffi-

cient basis for depriving the state court of jurisdiction.

(Cf. International Assn. of Machinists v. Gonzales (i958)

356 U.S. 617; Sears Roebuck & Co. v. San Diego County

Dist. Council of Carpenters (1976) 17 Cal.3d 893, 901.) We

cannot say from the total evidence that Cannata’s dis-

charge was arguably an unfair labor practice within the

meaning of the Act, thereby depriving the state court of

jurisdiction.

8 Appendix

Cannata’s assertion that he does not come within the

protection of sections 7 and 8 of the Act because he was

a supervisory employee, is without merit. Below, he urged

that he was a non-management employee. The testimony

of his superiors was that he was considered a non-manage-

ment employee. Moreover, it has been held that state

courts lack jurisdiction of a dispute despite the proposi-

tion that the plaintiff is a supervisor asserting exemption

from the scope of the Board’s jurisdiction if the presence

of NLRB jurisdiction is arguable. (Writers’ Guild of

America West, Inc. v. Superior Court (1975) 53 Cal.App.3d

468, 474.) Respondent argues that the terms “managerial”

and “non-managerial” as used in the special verdicts were

ambiguous, that the word “supervisor? should have been

used. However, the jury instruction defining the term

“managerial employee” was in effect the definition of “su-

pervisor” contained in the Act.

2. Appellant contends that the causes of action alleged

in the complaint are barred by the statute of frauds. Prior

to the court’s instructing the jury, appellant withdrew its

instructions on the statute of frauds defense, Respondent

accordingly withdrew his proposed instructions relating

to circumstances taking a case out of the statute of frauds,

i.e., part performance and estoppel. Thus the issue of the

statute of frauds and the related concepts of part perform-

ance and estoppel were never before the jury. Having with-

drawn the defense at trial, appellant is precluded from

raising it on appeal. (See 6 Witkin, Cal. Procedure (2d ed.

1971) Appeal, §§ 266-273, 276, pp. 4257-4262, 4264-4265.)

3. Appellant next contends that the admission of Can-

nata’s testimony regarding Allstate’s practices and policies

in dealing with claims was prejudicial. The evidence was

clearly relevant. (Evid. Code, §§ 350-351, 210; Witkin, Cal.

ee

Appendiz 9

Evidence (2d ed, 1966) §§ 302-303, pp. 266-267.) The testi-

mony complained of regarded alleged unlawful and unethi-

eal policies of Allstate which were the factual basis of the

employment misrepresentation. We conclude that the trial

court did not abuse its discretion in admitting such evi-

dence. (Evid. Code, § 352.)

4. Appellant next contends that the court erred in deny-

ing its motions for nonsuit and a directed verdict as to

the cause of action alleging malicious and fraudulent mis-

representation by Allstate that Cannata would fully par-

ticipate in a profit-sharing pension fund when, in fact, it

was company policy to terminate large numbers of em-

ployees who had just commenced participation or were

shortly to participate in the program. Appellant urges

that there was no evidence to support the cause of action.

We indulge in every legitimate inference from the evi-

dence in favor of respondent and disregard the contradict-

ing evidence. (4 Witkin, Cal. Procedure (2d ed. 1971) Trial,

§ 353, pp. 3152-3153.) There was evidence that Allstate

made efforts to terminate personnel over 50 vears of age

just as they commenced participation in the plan, and ex-

amples of involuntary termination of employees who were

about to become eligible. This is substantial evidence to

support the allegation.

5. Appellant further contends that the court’s instruc-

tions as to fraud were erroneous. The instruction given is

based upon Civil Code section 1572 and is substantially

similar to that proposed by appellant. Instructions in the

language of an applicable statute are properly given. (4

Witkin, Cal. Procedure (2d ed. 1971) Trial, § 201, p. 3019.)

Furthermore, the jury was specifically instructed to deter-

mine “whether any statement that plaintiff would not be

required to do anything which violated his conscience was

10 Appendiz

a statement of fact by Allstate or whether it was merely

a statement of its opinion as to future occurrences at the

_ time that it was made. If the statements were statements

of opinion only and not of material fact, they cannot be a

basis of liability for fraud.” This is a proper instruction.

(Crandall v. Parks (1908) 152 Cal. 772.)

6. Appellant contends that there is no substantial evi-

dence that Allstate personnel had authority to grant Can-

nata “non-terminable” employment. The evidence offered,

however, and apparently accepted by the jury, was that

Cannata was offered employment until retirement at age

62 or 63, on condition that he follow the lawful directions

of his superiors and that he would be given notice so that

he might improve his performance if his job became in

jeopardy. Judson Branch, the President of Allstate, testified

that whatever “commitments Allstate would make to a new

employee, the person who hired him and interviewed him

in the claims department would have the authority to make

those commitments.” Keller Potter, Allstate regional man-

ager, testified to substantially the same effect. There was

clear actual authority to make the employment representa-

tions alleged to have been made. The jury obviously

accepted Cannata’s account of the facts, and its determina-

tion must be upheld on appeal. (Crawford v. Southern

Pacific Co. (1935) 3 Cal.2d 427, 429.)

7. Appellant next contends that the damages awarded

are excessive as a matter of law. It is argued that the

award of compensatory damages is unsupported by the

evidence and was based upon speculation and conjecture.

Similar arguments were set forth by appellant in support

of its motion for new trial, which was denied by the lower

court. The primary duty to scrutinize the jury’s verdict

rests on the trial court, which is necessarily more familiar

Appendiz 11

with the evidence than the appellate court. Thus, while the

trial court’s determination is not binding upon a reviewing

court, the granting or denying of a new trial on ‘he basis of

excessive damages is generally upheld. (Bertero v. National

General Corp. (1974) 13 Cal.3d 43, 64.)

Dr. Robert Miller, an economist called as an expert wit-

ness by respondent, testified to Cannata’s compromised

future earnings as a result of his termination. Dr. Miller

gave his opinion of the amounts respondent could have

expected to accumulate, in wages and pension, had he stayed

with Allstate and attained the position of regional claims

manager (the position both parties concede Cannata would

have had to attain to support the jury’s compensation dam-

age determination). Dr. Miller then computed the amounts

respondent would probably earn in his current job with the

Environmental Protection Agency.

There was ample evidence from which the jury could

infer that respondent would have been promoted had he

not been terminated. A performance evaluation by

McGeachy in 1962 that Cannata “has the ability to advance

far in claims work”; a personnel record note in 1962 that

Cannata “shows potential for advancement”; a perform-

ance evaluation in 1966 that Cannata “has the ability to

join the management group”; Regional Manager Potter’s

letter in 1966 that “Cannata will be ready for DSO Man-

ager by July, 1967”; an employee salary review report in

1967 that Cannata is “deserving of this merit increase be-

cause of his continued high performance” and that he has

“the potential for advancement to a higher position,” are

ample evidence to support an implied finding of promot-

ability and negate the allegation that the verdict was based

on conjecture. The reviewing court must uphold an award

of damages whenever possible, and all presumptions are in

12 Appendix

favor of the judgment. (Bertero v. National General Corp.,

supra, 13 Cal.3d at p. 61.)

8. As its final assignment of error, appellant contends

that there was insufficient evidence of fraud to support an

award of punitive damages, and that the jury’s verdict was

“motivated by antipathy for Allstate and its claims prac-

tices.”

It is well settled that there is no fixed standard by which

punitive damages can be determined, and both the award

and the amount thereof are left to the discretion of the

jury, upon a consideration of all the circumstances, subject

to the general rule that the award will be rejected if it is

without support in the evidence. (4 Witkin, Summary of

Cal. Law (8th ed. 1974) Torts, § 867, p. 3155.) Viewing the

facts in a light most favorable to the judgment, it appears

from the record that there was sufficient evidence upon

which to base a finding of fraud. (Bertero v. National Gen-

eral Corp., swpra, 13 Cal.3d at p. 65.) The amount of the

award, though substantial, is not disproportionate to the

compensatory damage award.

Judgment is affirmed.

We concur:

Brown (H. C.), J.

Appendix 13

Appendix B

Court of Appeal of the State of Califorma

In and for the

First Appellate District

Division THREE

No. 37878

(Sup. Ct. No, 603623)

Joseph A. Cannata,

Plaintiff,

vs.

Allstate Insurance Company,

Defendant.

By THe Court:

The petition for rehearing is hereby denied.

Dated Nov. 19, 1976

DRAPER, P. J.

14 Appendiz

Appendix C

ORDER DENYING HEARING

After Judgment By the Court of Appeal

ist District, Division 3, Civil No. 37878

In the Supreme Court of the State of California

IN BANK

Cannata

v.

Allstate Insurance Company

Supreme Court Filed

Dec. 29, 1976

G. E. BISHEL, Clerk

Appellant’s petition for hearing DENIED.

McComb, J., Clark, J., and Richardson, J., are of the

opi.ion that the petition should be granted.

WRIGHT

Chief Justice