Amicus Curiae Brief — Pacific Gas & Electric Co. v. Tellez

No. 87-261

IN THE

Supreme Court of the United States

October Term 1987

PACIFIC GAS & ELECTRIC COMPANY,

Petitioner,

VS.

THOMAS TELLEZ,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MOTION FOR LEAVE TO FILE BRIEF AND BRIEF OF

THE CALIFORNIA EMPLOYMENT LAW COUNCIL

AND TEXAS EMPLOYMENT LAW COUNCIL AS

AMICI CURIAE IN SUPPORT OF THE PETITION

Of Counsel:

PAUL GROSSMAN PAUL W. CANE, JR.

General Counsel Counsel of Record

CALIFORNIA EMPLOYMENT PAUL, HASTINGS,

LAW COUNCIL JANOFSKY & WALKER

555 South Flower Street

W. CARL JORDAN Los Angeles, California 90071

General Counsel (213) 489-4000

TEXAS EMPLOYMENT

LAW COUNCIL

Attorneys for Amici Curtae

Lawyers Bnef Service / Legal Publishers / (213) 383-4457 / (714) 720-1510

mae ee yen

MOTION FOR LEAVE TO FILE BRIEF

OF THE CALIFORNIA EMPLOYMENT

LAW COUNCIL AND TEXAS

EMPLOYMENT LAW COUNCIL AS

AMICI CURIAE IN SUPPORT OF THE

PETITION

The California Employment Law Council (CELC) and

the Texas Employment Law Council (TELC) (collectively

‘‘amici’’) hereby move, pursuant to Rule 36.1 of the Rules

of this Court, for leave to file the attached brief amici curiae

in support of the petition for certiorari. Consent to the filing

of this brief has been obtained from counsel for petitioner.”

Counsel for the respondent has withheld consent.

Amici are voluntary, nonprofit organizations composed

of more than 100 members, employing more than 600,000

persons, representing a broad segment of the employer

community in California and Texas. Amici were formed to

promote the common interests of employers and the public

in sound procedures and laws pertaining to employment

practices. Petitioner Pacific Gas & Electric Company is not

a member of CELC or TELC.

Many members of amici are parties to collective

bargaining agreements. Amici are concerned about the

disrupting and destabilizing impact upon employers, unions

and employees, of allowing individuals covered by collective

bargaining agreements to circumvent agreed-upon griev-

ance machinery. No one, including an already overbur-

dened court system, benefits from duplicative litigation in

multiple fora. Accordingly, amici request leave to file this

brief, and they urge reversal of the court of appeals.

* A copy of the consent letter is being filed concurrently with the

Clerk of the Court.

ite

WHEREFORE, amici respectfully request that their

motion be granted.

DATED: September 11, 1987

Respectfully submitted.

PAUL W. CANE, JR.

Counsel of Record

PAUL, HASTINGS,

JANOFSKY & WALKER

Attorneys for Amici Curiae

oe oo

TABLE OF CONTENTS

Page

MOTION FOR LEAVE TO FILE BRIEF .................. A-1

TABLE GF AUTHIORITIES ciccrcsccescccsccscescscscssessscsssesssszesss ili

SE I PROG vacsusninsivsscrsinoneisinsscsdesesacnssersnstscssaasnsuscsinenses l

RE I” REE PRIME B SGD oe cscccessscesnaxnrssvnsonincsosncnaensssaane l

REASONS FOR GRANTING THE WRIT .............00004. l

I. FACTS AND SUMMARY OF POSITION ............ 1

Pix POG sccs0i sic benbicilennstlaiach bcuaibanamnonnddaavneseebaneseninestenninian l

B. Summary of Position ...................sscccsccrcsesrcssessrcese 3

Il. REVIEW IS NECESSARY TO RESOLVE

A HOPELESS CONFLICT IN THE CIR-

CUITS AND STATE SUPREME COURTS .......... 5

A. This Court In Allis-Chalmers Emphasized

The Primacy Of Arbitration Over Tort

PTY TERMED ........cccescccccssscssesccsnresseassssssesnsvscnsssnsesssooes 5

B. The Lower Courts Now Are In Hopeless

PET oncnesssnrsasessrarsassasersoseressaavessonsvenensenaessssnaasinens 6

IT].

IV.

ae

There is a clear conflict on the

SOON ATER RM RMA Stat

There also is a clear conflict on the

emotional-distress issue ............ccccccccececeeeee

C. In Light Of Caterpillar, There Is A

Particular Need For This Court To G t

| RR Mc BOE LSI Cleats AY Cee os Le

THE COURT SHOULD GRANT CERT-

IORARI TO REEMPHASIZE THE PRIM-

ACY OF ARBITRATION IN RESOLVING

WORKPLACE DISPUTES

A. Arbitration Is The Method Of Choice For

Resolving Day-To-Day Workplace Dis-

putes

B. The Ninth Circuit’s Opinion Reflects

Confusion About The Nature Of Arbitra-

tion And The Judicial Role In Labor

Contract Interpretation

1.

CONCLUSION

Arbitrators can and do hear and

resolve claims like those brought by

IE sscercickccccaccnsssistnoscnsnscintscimwiansoncesisa

The court of appeals exceeded its

jurisdiction by purporting to interpret

the contract in place of the arbitrator .....

POPP HOHET SHEE SOHHEEHHEESESEHEEEESEEEEEEOOES EO EEEEE EEE SEE ESEEESESEOS

eee eee ee eee ee eee ee ee

POP R TORRE HHEHEEE SEE H EEE HEEHOE HEHE EEE EEE EE Eeeeee

Page

—1li—

TABLE OF AUTHORITIES

Page

Federal Cases

Allis-Chalmers Corp. v. Lueck

471 US. 202 CIDED) ..2.00050..00008... i, #7, 1, Ta

Andersen v. Ford Motor Co.

803 F.2d 953 (8th Cir. 1986),

cert. denied, 55 U.S.L.W.

3583 (Fume 22, 1987) ...............cccccccsccscssesecesessserscosens 4

AT&T Technologies, Inc. v.

Communications Workers

475 US. 643, 54 U.S.L.W. 4339

(April 7, 1986) ........ cicddtabasNasiabinicuccdmscemaetamasbuasniocas 18

Bailey v. Bicknell Minerals, Inc.

819 F.2d 690 (7th Cir. 1987) ...........ccccccccscesecseees 15

Barnes v. Avis Rent A Car System, Inc.

466 F. Supp. 907 (D.D.C. 1979) ..ccccceeeesceeeseeeees 13

Beers v. Southern Pacific Transportation Co.

703 F.2d 425 (Sth Cir. 1963) ......cccccrrcccccescccsesees . 10

Belknap, Inc. v. Hale

AG3 UG. 491 (1983S) cncccrrserrcccccrrcccccscrsccescossessnecesssasscs 4

Carter v. Smith Food King

765 F.2d 916 (9th Cir. 1985) ......ccccceccccccsesseceeees 10

aniline

Page

Caterpillar Inc. v. Williams

55 U.S.L.W. 4804 (June 9, 1987) ...... 1, 4, 11, 20

Farmer v. Carpenters

SIP UR. B00 CIGCED stint 4, 13

General Motors Corp. v. Mendicki

367 F.2d 66 (10th Cir. 1966) oocccccccccccceccceees 13

Green v. Hughes Aircraft Co.

630 F. Supp. 423 (S.D. Cal. 1985) ooo.ccccccccccccscee. 8

Gregory v. Simon Brothers, Inc.

640 F. Supp. 1252 (N.D. Ind. 1986) .0.000.00.......... 8

Hasten v. Phillips Petroleum Co.

640 F.2d 274 (10th Cir. 1981) oo. 13, 20

John Wiley & Sons, Inc. v. Livingston

776 US. TAS (1D6O) ct 15

Keehr v. Consolidated Freightways, Inc.

S62 Fa 153 (Pe Cae, SOG) ccsctseatereene 8

Linn v. United Plant Guard Workers

353 US. 33 (IDOE siccitedndencaseuee ee

Magnuson v. Burlington Northern, Inc.

576 F.2d 1367 (9th Cir.), cert. denied,

939 US. 9B CIT bscumociiasei eee . 10

Page

Malia v. RCA Corp.

794 F.2d 909 (3d Cir. 1986),

cert. denied, 55 U.S.L.W. 3837

(Jue 15, 1987) ..cccccsccsessessereeecerseeseesessensenesnanesnneseazens 4

Mann v. Georgia-Pacific Corp.

651 F. Supp. 580 (E.D. Ark. 1986) «.......:.-+ 10

Olguin v. Inspiration Consolidated Copper Co.

740 F.2d 1468 (9th Cir. 1984) ....... esacsouseauaii ae

Pacific Gas & Electric Co. v. Tellez

817 F.2d 536 (9th Cir. 1987) ......cccccceeeeeeees passim

Pilot Life Insurance Co. v. Dedeaux

481 U.S. —, 55 US.L.W. 4471

(April 7, 1987) ......ccccsescescesseseeseeeeeens cnaniacbesienesebanell 18

San Diego Building Trades Council v. Garmon

359 U.S. 236 (1959) .ncecccccccccccceseessssnseereeereneeeeees 4, 18

Scott v. General Motors Corp.

645 F. Supp. 914 (E.D. Mo. 1986)... 8

Strachan v. Union Oil Co.

768 F.2d 703 (Sth Cir. 1985) ............ 3, 6-8, 14

Truex v. Garrett Freightlines, Inc.

784 F.2d 1347 (9th Cir. 1985) .........cccccceeceeeeeeees 10

United Auto Workers v. Park-Ohio Industries, Inc.

No. C 85-1761 (N.D. Ohio May 1, 1987) ....... 10

—

United Steelworkers v. American

Manufacturing Co.

Be RM Ae ee

United Steelworkers v. Enterprise

Wheel & Car Corp.

ME 8 ERR nee eon

United Steelworkers v. Warrior &

Guif Navigation Co.

RC

Varnum v. Nu-Car Carriers, Inc.

804 F.2d 638 (llth Cir. 1986),

cert. denied, 55 U.S.L.W. 3775

I a

Viestenz v. Fleming Companies, Inc.

681 F.2d 699 (10th Cir.), cert. denied.

Re Te, RN OI cesta inde er eras on

Weidner v. General Battery Corp.

No. 86-3555 (E.D. Pa. April 9, 1987) .........

State Cases

Cole v. Fair Oaks Fire Protection Dist.

43 Cal. 3d 148, 233 Cal. Rptr. 308 (1987)

DeTomaso v. Pan American World Airways, Inc.

43 Cal. 3d 517, 235 Cal. Rptr. 292 (1987) ...

Page

— vii—

Ezekiel v. Jones Motor Co., Inc.

374 Mass. 382, 372 N.E.2d 1281 (1978

Gonzalez v. Prestress Engineering Corp.

115 Ill. 2d 1, 503 N.E.2d 308 (1986),

cert. denied, 55 U.S.L.W. 3870

(Jume 26, 1987) ...cccccccccccccesssreeesseeceeessereeeeseees

Henthorn v. Western Maryland Railroad Co.

226 Md. 499, 174 A.2d 175 (1961) .......

Kloch v. Ratcliffe

221 Neb. 241, 375 N.W.2d 916 (1985)

Minkin v. Levander

186 Cal. App. 3d 64,

230 Cal. Rptr. 592 (1986) .....ccccceceeeeeeeeees

Sturdivant v. Seaboard Service System, Ltd.

459 A.2d 1058 (D.C. 1983) ......cccereeseeeeees

Surrency v. Harbison

489 So. 2d 1097 (Ala. 1986) .....ccccceeeeees

Arbitration Decisions

AMF Inc.

69 Lab. Arb. (BNA) 987 (1977)

(Kleeb, Arb.) .ccccccccccsscsscccessssesecesssssceeeeereceseees

New York City Health & Hospitals Corp.

76 Lab. Arb. (BNA) 387 (1981)

(Simms, Arb.) oorcccccccccccererseeeeeceeeeseesessceeseeeeeens

Page

5

eee eeee —

— Vili—

Page

Vulcan Asphalt Refining Co.

78 Lab. Arb. (BNA)

PEE COPED COPWICMy PMU cocccccnisccsivsscsssrasramiuiccns 2

Statutes

Labor Management Relations Act § 203(d),

Be Seas FE iether ee eninsekccb :

Labor Management Relations Act § 301,

Pe Pes Re Girlie pia sditccabiadorsucsarconen passim

Other Authorities

F. Elkouri & E. Elkouri, How Arbitration Works

Fo Ot Oe FE is ae 15

Proceedings of the 1986 Southern California

Labor Law Symposium, reprinted in

FR 0 EW OMNER sotvniiastontiacenccnecee se \ehiviinctnnns o T7

BRIEF OF AMICI

INTEREST OF THE AMICI

Amici respectfully refer the Court to the description of

their interest presented in the motion for leave to file brief,

to which this brief is attached.

REASONS FOR GRANTING THE WRIT

This case presents a question that has hopelessly divided

the courts of appeals and that this Court reserved last Term

in Caterpillar Inc. v. Williams, 55 U.S.L.W. 4804, 4807 n.13

(June 9, 1987). The question is whether a worker covered by

a collective bargaining agreement may sue in tort for the

normal fare of alleged workplace wrongs, or whether the

labor contract’s grievance-and-arbitration procedure pro-

vides an exclusive remedy.

Amici believe that the Court implicitly resolved this issue,

in favor of arbitration, in Allis-Chalmers Corp. v. Lueck, 471

U.S. 202 (1985). The disarray in the courts of appeals since

then, however, demonstrates that this is an issue on which

further guidance is needed.

I

FACTS AND SUMMARY OF POSITION

A. Facts.!

Although the facts are described in some detail in the

petition, a brief summary helps underscore why review is

needed. Contrary to the Ninth Circuit’s view, the present

| The facts are drawn from the Ninth Circuit’s decision, 817 F.2d 536

(9th Cir. 1987).

oe, ea

dispute is not well suited for a tort jury; rather, it should be

“grist in the mills of the [labor] arbitrators.” United

Steelworkers v. Warrior & Gulf Navigation Co., 363 US.

574, 584 (1960).?

Petitioner Pacific Gas & Electric Company (PG&E)

believed that it had a drug-trafficking problem among its

employees. The company began to investigate, and an eye-

witness reported that respondent Tellez had bought cocaine

on company premises. In reliance on this information, the

company suspended Tellez for ten days, and reported the

suspension and the surrounding circumstances in a

memorandum to eleven company managers.

Tellez, aggrieved by the suspension, responded exactly as

his labor contract instructed: he filed a grievance. After a

multistep grievance procedure, the matter was heard in

binding arbitration. Notwithstanding the company’s eviden-

ce, the panel upheid Tellez’ claim. As a remedy, it ordered

three things: (1) full back pay; (2) interest; and

(3) expunction from company records of the suspension

memorandum.

Not content with winning, Tellez then sued, complaining

about his suspension and its effects under a variety of

contract and tort theories. The district court dismissed the

suit, but the Ninth Circuit reversed. The present petition for

certiorari followed.

? Arbitrations over drug use or drug distribution are too numerous to

recount. E.g., Vulcan Asphalt Refining Co., 78 Lab. Arb. (BNA) 1311

(1982) (Welch, Arb.) (reinstating grievant discharged for off-duty drug

sales); New York City Health & Hospitals Corp., 76 Lab. Arb. (BNA)

387 (1981) (Simons, Arb.) (sustaining discharge for drug distribution);

AMF Inc., 69 Lab. Arb. (BNA) 987 (1977) (Kleeb, Arb.) (reducing to a

suspension a discharge for drug distribution).

ca

B. Summary of Position.

The Court should grant certiorari for two reasons. First,

the Court needs to resolve a hopeless conflict in the circuits

on the questions presented. The plight of the present amici

helps illustrate the dilemma employers face. The members

of amicus CELC do business in the Ninth Circuit, and thus

must follow the Ninth Circuit’s decision. By contrast, the

members of amicus TELC, from the Fifth Circuit, are

bound by Strachan v. Union Oil Co., 768 F.2d 703 (Sth Cir.

1985), which (as shown below) holds precisely the opposite.

Indeed, many members of amici operate extensively in both

(and other) circuits, and thus are trying — somewhat

schizophrenically — to operate under inconsistent rules.

Review is necessary to achieve clarity and uniformity in the

law, which are particularly desirable given Congress’

objective of developing a uniform federal law of labor

contracts. Allis-Chalmers, 471 U.S. at 211.

Second, the Court should review — and reverse — the

Ninth Circuit’s decision because it subordinates grievance

arbitration to tort jury trials. This is precisely backward.

Congress itself identified arbitration as “the desirable

method for settlement of grievance disputes arising over the

application or interpretation of an existing collective-

bargaining agreement.’ Labor Management Relations Act

§ 203(d), 29 U.S.C. § 173(d). And this Court for more than

25 years has held that grievance arbitration is an

indispensable part of ‘‘a system of industrial sel/-

government.” United Steelworkers v. Warrior & Gulf

Navigation Co. 363 U.S. at 580 (emphasis added). The

Ninth Circuit has jarred these well-settled principles by

substituting the tort jury for the labor arbitrator.? Amici

3 This Court has not previously considered the questions presented

here. Linn v. United Plant Guard Workers, 383 U.S. 53, 61 (1966), held

(Footnote continued.)

ae ee

respectfully suggest that this Court grant certiorari and

reemphasize the primacy of arbitration in resolving

workplace disputes.4

that, under some exceptional circumstances, defamation claims were not

preempted by sections 7 and 8 of the National Labor Relations Act

(“NLRA”). Farmer v. Carpenters, 430 U.S. 290, 301-05 (1977), held

that, under similarly exceptional circumstances, emotional distress

actions could survive preemption under sections 7 and 8. Those decisions

do not apply here. Both cases were brought by individuals against labor

unions for extreme and outrageous conduct. Neither one was a suit, like

the present one, in which an employee covered by a collective bargaining

agreement sought to sue an employer over conduct already redressed in

the grievance procedure. Thus, both Linn and Farmer involve only

NLRA preemption — the doctrine of San Diego Building Trades

Council v. Garmon, 359 U.S. 236 (1959). The present case, by contrast,

involves the more far-reaching preemptive effect of section 301. Allis-

Chalmers, 471 U.S. at 213-14 n.9 (‘“Garmon preemption [only] involves

protecting the primary jurisdiction of the NLRB”; section 301 reaches

farther because it flatly prohibits states from “‘provid{ing] a rule of

decision where Congress has mandated that federal law should

govern’’). Thus, the Ninth Circuit correctly recognized that Linn and

Farmer are inapposite here. 817 F.2d at 538 n.2.

* This case presents an issue very different from Caterpillar and four

preemption cases in which the Court denied certiorari last Term:

Varnum v. Nu-Car Carriers, Inc., 804 F.2d 638 (11th Cir. 1986), cert.

denied, 55 U.S.L.W. 3775 (May 18, 1987); Andersen v. Ford Motor Co.,

803 F.2d 953 (8th Cir. 1986), cert. denied, 55 U.S.L.W. 3583 (June 22,

1987); Malia v. RCA Corp., 794 F.2d 909 (3d Cir. 1986), cert. denied, 55

U.S.L.W. 3837 (June 15, 1987); Gonzalez v. Prestress Engineering

Corp., 115 Ill. 2d 1, 503 N.E.2d 308 (1986), cert. denied, 55 U.S.L.W.

3870 (June 26, 1987). In Caterpillar, the Court held that suits alleging

breach of some preemployment contracts could not be removed to

federal court. The Court did not, however, “intimate [a] view on the

merits of ... any of the preemption arguments” made in that case. 55

U.S.L.W. at 4807 & n.13. In all but one of last Term’s cases, the issue

was the enforceability of commitments made to someone to induce them

to join (Caterpillar, Andersen and Varnum) or leave (Malia) the

bargaining unit. See Belknap, Inc. v. Hale, 463 U.S. 491 (1983) (same).

The other case, Gonzalez, involved a discharge allegedly in retaliation

(Footnote continued.)

II

REVIEW IS NECESSARY TO

RESOLVE A HOPELESS CONFLICT

IN THE CIRCUITS AND STATE

SUPREME COURTS

The Court should grant certiorari because the Ninth

Circuit’s decision is totally inconsistent with the decisions in

other circuits and at least one state supreme court.

A. This Court In Allis-Chalmers Emphasized

The Primacy Of Arbitration Over Tort Jury

Trials.

The starting point for analysis unquestionably is this

Court’s decision in Allis-Chalmers. In that case, an

employee subject to a collective bargaining agreement sued

his employer in tort, alleging “intentional |, con-

temptuoug Jj, and repeated| ]” wrongdoing. 471 U'S. at 206.

The Wisconsin Supreme Court rejected the employer's

preemption argument, relying essentially on the same

rationale adopted by the Ninth Circuit in this case. The

Wisconsin court asserted that the employee’s suit did not

arise under section 301 because “‘[u]nder Wisconsin law, the

tort .. . is independent of [the] contract [claim]. Jd. at 207.

This Court unanimously reversed. It held that the

employee’s state-law tort suit was preempted because “any

attempt to assess liability here inevitably will involve

for filing a worker’s compensation claim. See 55 U.S.L.W. at 3870

(White, J., dissenting from denial of certiorari). None of those cases

presented the question at issue here: whether a party covered by a labor

contract can, by styling his complaint in tort, litigate garden-variety

workplace disputes before both an arbitrator and a jury.

ont

contract interpretation.” Jd. at 218. The court observed

that, “{ilf the policies that animate § 301 are to be given

their proper range . . . the pre-emptive effect of § 301 must

extend beyond suits alleging contract violations.” Jd. at 210.

The contrary result “would cause arbitration to lose most of

its effectiveness as well as eviscerate a central tenet of

federal labor-contract law under § 301, that it is the

arbitrator, not the court, who has the responsibility to

interpret the labor contract in the first instance.” Id. at 220

(emphasis added; citation omitted).

In light of these concerns, Allis-Chalmers set forth the

test for section 301 preemption: A state-law claim is

preempted whenever it “is inextricably intertwined with

consideration of the terms of the labor contract,” id. at 213,

because “‘any attempt to assess liability ... inevitably will

involve contract interpretation,” id. at 218.

B. The Lower Courts Now Are In Hopeless

Disarray.

Despite the Court’s unanimous decision in Allis-

Chalmers, the lower courts have gone in many directions. A

clear conflict exists on both the defamation and emotional-

distress questions presented in this case. Further

clarification is needed.

1. There is a clear conflict on the

defamation issue.

Strachan v. Union Oil Co., 768 F.2d 703 (Sth Cir. 1985), is

flatly inconsistent with the Ninth Circuit’s decision here. In

Strachan, two bargaining-unit employees were suspected of

using illegal drugs; both were suspended and subjected to

medical tests. Word of the company’s suspicions spread

through the plant. When investigation failed to substantiate

ae

the company’s suspicions, the employees were reinstated

with full back pay. Id. at 704, 706. They sued under a

variety of tort theories, including defamation. The district

court dismissed the suit on preemption grounds, id. at 704,

and the court of appeals affirmed.

Focusing specifically on the defamation claim, the Fifth

Circuit emphasized that management in the collective

bargaining context of necessity must have the latitude, free

from fear of tort litigation, to investigate and punish

suspected misconduct.> That latitude of course is not

without limits, but an employee’s recourse must be through

the grievance procedure, not in a tort jury trial. Jd. at 705.

Similarly, in DeTomaso v. Pan American World Airways,

Inc. 43 Cal. 3d 517, 235 Cal. Rptr. 292 (1987), the

California Supreme Court held preempted very similar

defamation claims.© There, DeTomaso, a bargaining-unit

employee, came under suspicion for theft. The airline

investigated and ultimately confronted DeTomaso with its

suspicions. In the course of the investigation, the allegations

were repeated to certain third parties. Id. at 530-31.

DeTomaso ultimately was terminated for “fraud, dishon-

esty and abuse of company policy.” Jd. at 523. DeTomaso

grieved under the collective bargaining agreement and

obtained a favorable settlement, including reinstatement,

5 The court of appeals explained:

To hold the company guilty of defamation for making such

inquiries, even though they became known in the plant,

would simply mean that the company could never undertake

to investigate a possible disciplinary situation in routine and

proper ways....

768 F.2d at 706.

6 Pan Am, an airline, of course is covered by the Railway Labor Act

rather than the LMRA. The California Supreme Court appeared to

recognize that the same general preemption principles apply. Id. at 528

(citing Allis-Chalmers).

pa Wee

back pay and expunction of the allegations from company

files. Id.

Meanwhile, however, DeTomaso had sued in state court

under a variety of tort theories, including defamation and

infliction of emotional distress. A jury awarded $565,000 in

damages. Id. at 524.’ On appeal, the California Supreme

Court held the action preempted:

The parties to[a collective bargaining] agreement

must be allowed to perform their duties without

judicial interference in all but the most outrageous

of cases.... For the jury or a court to second

guess whether the required investigation was

“reasonable” under the circumstances here would

undermine the exclusiveness of those procedures.

Id. at 530 (emphasis added).

Strachan, DeTomaso and several district court cases® are

flatly contrary to the Ninth Circuit’s decision here.?

’ The trial court ordered a remittitur to $207,000, or in the alternative

a new trial on damages. /d. at 524.

8 E.g., Scott v. General Motors Corp., 645 F. Supp. 914, 916 (E.D. Mo.

1986) (dismissing defamation claim because “[t]he preclusive effect of

§ 301... extends beyond suits alleging contract violations; it also affects

State law tort claims”); Gregory v. Simon Brothers, Inc., 640 F. Supp.

1252, 1256 (N.D. Ind. 1986) (preemption found because “‘the allegations

of defamation are inextricably bound” to the labor contract); Green v.

Hughes Aircraft Co. 630 F. Supp. 423, 427 (S.D. Cal. 1985) (theft

allegations; “countenance of the instant [defamation] claim would

impinge upon the primary federal labor policy favoring the expeditious

resolution of labor disputes by private grievance/arbitration”).

9 This Court should not regard the Ninth Circuit’s decision as an

aberration that can be ignored. The Court of Appeals for the Seventh

Circuit very recently relied on the Ninth Circuit’s decision here. Keehr v.

Consolidated Freightways, Inc., 825 F.2d 133 (7th Cir. 1987) (privacy

claim is not preempted).

canis

2. There also is a clear conflict on the

emotional-distress issue.

The Ninth Circuit’s decision also conflicts with other

circuit decisions on the emotional-distress issue. The present

panel (Pregerson, Choy and Goodwin, JJ.) concluded that

the tort survived because it was based on “rights and duties

independent of the employment relationship,” and that “to

decide the claim a court need not refer to the labor

agreement.” 817 F.2d at 539.

Many cases hold to the contrary. For example, in Olguin

y. Inspiration Consolidated Copper Co., 740 F.2d 1468 (9th

Cir. 1984), the court (Wisdom, Wallace and Anderson, JJ.)

declared numerous torts preempted, including infliction of

emotional distress. In that case, a union welder alleged that

his former employer “engaged in outrageous and unprivi-

leged conduct with the intent of harassing him and causing

him emotional distress.” Id. at 1475. The court noted that

the alleged wrongful acts all stemmed from disputes

concerning employment or work conditions, most of which

disputes tracked grievances that had or co:..d have been

processed under the labor contract. Jd. at 1476. His tort

claims, therefore, were preempted; his “exclusive remedies

lay under the grievance procedures of the collective

bargaining agreement and in_ federal remedies for

retaliatory discharge.” Jd.

The Court of Appeals for the Tenth Circuit held

essentially the same thing in Viestenz v. Fleming

Companies, Inc., 681 F.2d 699 (10th Cir.), cert. denied, 459

U.S. 972 (1982). There, an employee sued for wrongful

discharge and infliction of emotional distress. The district

court allowed the latter claim to proceed, but the court of

appeals reversed. It held:

If the pleading of emotional injury permitted

aggrieved employees to avoid the impact of

|

[federal law], the congressional purpose of

providing a comprehensive federal scheme for the

settlement of employer-employee disputes

without resort to the courts, would be thwarted.

Id. at 704 n.4, quoting Magnuson y. Burlington Northern,

Inc., 576 F.2d 1367, 1369 (9th Cir.), cert. denied, 439 U:S.

930 (1978).!0

Several other circuit!' and many district-court!? cases

‘0 Viestenz, a pre-Allis-Chalmers case, probably confused its analysis

somewhat by relying in part on cases applying the Garmon preemption

doctrine. See, e.g., 681 F.2d at 702-03. But the result under section 301

preemption analysis follows a fortiori. Allis-Chalmers, 471 US. at 213-

14 n.9 (Garmon requires a balancing test; section 301, by contrast,

preempts absolutely claims that fall within its reach). See note 3 supra.

'' E.g., Truex v. Garrett Freightlines, Inc., 784 F.2d 1347, 1353 (9th

Cir. 1985) (emotional-distress claim preempted; “argument that the

remedies available to [plaintiffs] through arbitration (reinstatement and

back pay) would not compensate them for their emotional distress is . . .

meritless”); Carter v. Smith Food King, 765 F.2d 916, 921 (9th Cir.

1985) (emotional-distress claim preempted because it “‘arose out of the

same acts and conduct which formed the basis of [plaintiff's] section

301/breach of duty claims”); Beers v. Southern Pacific Transportation

Co. 703 F.2d 425, 429 (%h Cir. 1983) (claims are preempted; ‘“‘the

critical inquiry is whether the controversy (the harassments) was

identical to or different from” the wrongful acts alleged in arbitration).

'2 E.g., United Auto Workers v. Park-Ohio Industries, Inc., No. C

85-1761 (N.D Ohio May 1, 1987) (emotional distress claims are

preempted); Weidner v. General Battery Corp., No. 86-3555 (E.D. Pa.

April 9, 1987) (emotional distress claim is preempted even though

plaintiffs “have already pursued their contractual remedies and now

seek further relief”; even though one plaintiff ‘tis not seeking relief for

contractual violations, but rather for his physical injuries”; and even

though plaintiff ‘now seeks additional relief which the arbitrator is

unable to provide”); Mann v. Georgia-Pacific Corp. 651 F. Supp. 580,

582 (E.D. Ark. 1986) (emotional-distress claim is preempted because

plaintiff’s claim is “dependent upon the terms of the collective

bargaining agreement”).

=,

hold similarly. There is a clear conflict that should be

resolved.!3

C. In Light Of Caterpillar, There Is A

Particular Need For This Court To Grant

Review.

In Caterpillar, the Court held that, whatever the merits

of preemption as a defense, many putative state-law claims

normally were not subject to removal. 55 U.S.L.W. at 4807

& n.13.'4 The burden of the preemption inquiry, therefore,

'\3 The Ninth Circuit purported to distinguish O/guin on the ground

that the collective bargaining agreement in the present case was “‘silent

on work conditions, and vague on disciplinary formalities. It neither

requires nor regulates suspension letters.” 817 F.2d at 539. This is a

distinction without a difference. The Ninth Circuit, before finding

preemption, would seem to require a contract clause that says, “The

company shall have the right to disseminate among members of

management the results of disciplinary investigations.” Of course, no

collective bargaining agreement contains such detail. See U nited

Steelworkers v. Warrior & Gulf Navigation Co. 363 US. at 579

(emphasizing the arbitrator's broad latitude, and holding that “[oJne

cannot reduce all the rules governing a community like an industrial

plant to fifteen or even fifty pages”).

\4 In the present case, Tellez sued in state court, alleging breach of a

contractual covenant of good faith and fair dealing, infliction of

emotional distress, and defamation; PG&E then removed the case to

federal court. The posture of this case differs from Caterpillar in several

respects. Unlike Caterpillar, this case was removed largely in reliance on

the covenant claim, which is implied in the employment contract — the

collective bargaining agreement. Thus, the case at bottom is a suit arising

under section 301. (Indeed, in the Ninth Circuit, Tellez conceded that

the case was properly removed. 817 F.2d at 537.) Caterpillar, by

contrast, involved claims that expressly were not based on the collective

bargaining agreement. If, however, the Court were to believe that the

federal court in this case lacked removal jurisdiction, it should grant the

petition, vacate the Ninth Circuit's decision, and remand the case for

reconsideration in light of Caterpillar.

— ,

increasingly will fall to the state courts. See id. at 4807. That

being so, there is even more urgency in granting review

here. The federal courts, which presumably are the most

attuned to questions of federal law, themselves are in

hopeless conflict on the preemption question. As the bulk of

the litigation moves to state courts, confusion is certain to

proliferate unless this Court grants certiorari.

III

THE COURT SHOULD GRANT

CERTIORARI TO REEMPHASIZE

THE PRIMACY OF ARBITRATION IN

RESOLVING WORKPLACE DISPUTES

A. Arbitration Is The Method Of Choice For

Resolving Day-To-Day Workplace Disputes.

Arbitration must displace tort jury trials where, as here,

the allegedly wrongful conduct arises directly out of the

investigation of suspected misconduct or poor performance,

or the processing of discipline or grievances f lowing from

such an investigation.'> For collective bargaining to work,

employers must have reasonable latitude to act. Federal law

must provide a measure of breathing space for employers to

administer collective bargaining agreements — and, within

reasonable bounds, even to make mistakes in doing so —

without being haled before tort juries bent on dispensing]

[their] own brand of industrial justice.” United Steelworkers

v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960).

'S Amici do not, of course, suggest that federal law preempts every

defamation of, or infliction of emotional distress upon, a bargaining-unit

employee. The Court need resolve only the narrow issue presented by the

routine factual scenario here. Certainly there may be cases in which an

employer or supervisor so far exceeds the course and scope of

employment as to sever the nexus to the collective bargaining agreement.

poe | he

Tort litigation is not well suited to the workplace. The

California Supreme Court noted very recently that

employer-employee conflicts routinely arise out of

“demotions, promotions, criticism of work practices, and

frictions in negotiations as to grievances”; these are “a

normal part of the employment relationship.” Cole v. Fair

Oaks Fire Protection Dist., 43 Cal. 3d 148, 160, 233 Cal.

Rptr. 308 (1987).'© Federal labor law cannot abide a

situation in which every discipline or discharge arbitration

can be recast as a State-law tort, with the outcome

dependent upon diverse juries’ varying assessments of

reasonableness, privilege and the like.!? As the Fifth Circuit

16 As this Court has observed, “The potential for undue interference

with federal regulation would be intolerable if state tort recoveries could

be based on the type of robust language and clash of strong personalitites

that may be commonplace in various labor contexts.” Farmer vy.

Carpenters, 430 US. at 305-06.

'7 The case for preemption perhaps would be less compelling if state

courts had a coherent and consistent law of privilege. But the privilege

cases are all over the map. Some states recognize an absolute privilege

for statements made in at least some grievance proceedings. E.g.,

Surrency v. Harbison, 489 So. 2d 1097 (Ala. 1986); Kloch v. Ratcliffe,

221 Neb. 241, 375 N.W.2d 916 (1985); Sturdivant v. Seaboard Service

System, Ltd., 459 A.2d 1058 (D.C. 1983). Other states apply only a

qualified privilege. E.g., Ezekiel v. Jones Motor Co., Inc., 374 Mass. 382,

372 N.E.2d 1281 (1978); Henthorn v. Western Maryland Railroad Co.,

226 Md. 499, 174 A.2d 175 (1961). Several cases, although not finding

preemption, seem to apply a federal common law of privilege to state

tort claims. E.g., Hasten v. Phillips Petroleum Co., 640 F.2d 274 (10th

Cir. 1981); General Motors Corp. v. Mendicki, 367 F.2d 66 (10th Cir.

1966); Barnes v. Avis Rent A Car System, Inc., 466 F. Supp. 907 (D.D.C.

1979). And some courts, like the Ninth Circuit in the present case,

muddle the distinction between privilege and preemption. 817 F.2d at

538 n.3 (citing the law of privilege in an effort to distinguish a

preemption precedent cited by PG&E).

Moreover, privilege is not a satisfactory substitute for preemption for

at least three additional reasons. First, some of the privilege cases turn

on whether the defamatory statement was made in a formal grievance

(Footnote continued.)

"oe

has held, a plaintiff should not be able to create

major state court claims out of matters which are

all part of ... grievance procedures] ending in

binding arbitration. To hold otherwise in this case

would subject thousands of grievance procedures

involving disciplinary investigations and disciplin-

ary actions ... to iawsuits asserting state court

claims... . [Without preemption,] the critically

important aspect of collective bargaining which is

involved in the establishment of the grievance

procedure... would be destroyed.

Strachan vy. Union Oil Co., 768 F.2d at 705 (emphasis

added).

This case well illustrates why tort jury trials should not

be injected into the collective bargaining system. In support

of respondent’s claims, he alleges as ‘“‘wrongful acts” only

that (1) the PG&E security department investigated on-

the-job drug use by interviewing several employees

(Complaint 11 6-9); (2) the results of the investigation were

shared within management (id. 1 24); and (3) respondent

was suspended for ten days as a result (id. 11 10-11). The

first two allegations simply cannot be actionable if

employers are to have any leeway to investigate suspected

employee misconduct; the third allegation was fully

redressed in the grievance procedure. Everything alleged is

either a routine incident of life in the workplace or

something susceptible to resolution in arbitration. If this

meeting. The doctrine thus offers incomplete protection to managers

investigating misconduct and processing grievances. Second, and in any

event, the privilege defense often cannot be raised on the face of a

complaint. Only preemption disposes of suits effectively at the threshold.

Third, the privilege issue in most cases is tried to a jury. Even if privilege

law were consistent — which it is not — the vicissitudes of the jury-trial

process are incompatible with federai labor policy.

an | ae

presents a State-law jury question, as the Ninth Circuit held,

then state law can have no place here.!®

This Court in Allis-Chalmers warned the lower courts to

reject crafty pleadings that “restatel ] as .. . tort claim[s]”

the ‘“‘whole range of disputes traditionally resolved through

arbitration.” 471 U.S. a‘ 219. Yet, under the lower-court

panel’s view of preemp.ion, it is hard to conceive of an

arbitration that could not be recast as a tort by interlarding

the complaint with boilerplate allegations of malice, spite,

suffering and distress.

This is not a “labor vs. management” dispute. Labor and

management certainly have their differences, but the scope

of section 301 preemption generally is not one of them.

Labor and management — and individual employees —

share a common interest in the fast, inexpensive and fair

procedure that arbitration offers.'!? But tort trials in many

'8 It would be anomalous to deny management leeway to conduct

thorough investigations and deliberations in disciplinary cases.

Collective bargaining agreements typically impose ‘“‘just cause”

limitations on discipline and discharge. It is presumed that management

will not impose discipline in the absence of a thorough factfinding in

advance. E.g., F. Elkouri & E. Elkouri, How Arbitration Works 673 (4th

ed. 1985) (‘‘the failure of management to make a reasonable inquiry or

investigation before assessing punishment [often is] a factor (sometimes

the sole factor) in the arbitrator’s refusal to sustain the discharge or

discipline’’) (citing numerous cases). Thus, the Ninth Circuit’s holding

places management between a rock and a hard place. Employers must

carefully investigate and deliberate to win in arbitration, but they risk

tort liability for doing so.

'9 The Court often has praised arbitration for its speed and efficacy.

E.g., John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 558 (1964)

(‘‘the prospect of a speedy arbitrated settlement of the dispute” and the

elimination of the “increased costs” of litigation, fulfill “the aims of

national labor policy”); Bailey v. Bicknell Minerals, Inc., 819 F.2d 690,

691 (7th Cir. 1987) (the “arbitration clause in a collective bargaining

agreement is supposed to ensure speedy resolution of disputes”; the court

(Footnote continued.)

a rereeiile

as te

California state courts take place five years after the filing

of a complaint. See generally Minkin v. Levander, 186 Cal.

App. 3d 64, 73, 230 Cal. Rptr. 592 (1986) (noting “the law

explosion and the resulting backlog of cases in the [state]

courts’’). Allowing workplace disputes to fester for years

before resolution is incompatible with sound collective

bargaining.” The grievance-and-arbitration process simply

cannot be subordinated to tort jury trials.

bemoans the ‘‘depressingly large number of recent cases” brought by

persons to circumvent arbitration).

20 Indeed, employers will have very little incentive to enter into

collective bargaining agreements and submit to grievance arbitration if

they still must defend themselves in court as a result of activities

reasonably related to discipline and grievance processing. One of

California’s leading union lawyers made the point eloquently iast year:

Once individuals may, in the collective bargaining context,

bring wrongful termination cases and call them outrageous

conduct, call them intentional infliction of emotional

distress, the result is you’ve said to the employer and the

union, ‘‘Why have arbitration?”

DeTomaso is the perfect example. He got a full remedy in

a grievance procedure, a reinstatement with backpay, so he

sued only for emotional distress and for defamation . . . [He

won] almost $200,000 in damages, . . . through a lawsuit. Jt

renders the grievance procedure a nullity and an

employer’s going to say to the union, ‘‘Why should I agree

to it?”

Proceedings of the 1986 Southern California Labor Law Symposium

(remarks of David Rosenfeld), reprinted in 9 I.R.LJ. 1, 24 (1987)

(emphasis added).

we,

B. The Ninth Circuit’s Opinion Reflects Con-

fusion About The Nature Of Arbitration And

The Judicial Role In Labor Contract

Interpretation.

The Ninth Circuit purported to accept the general

principles set forth above, but held that tort suits such as

this one involve issues entirely separate from those that

could be raised and remedied in the grievance-and-

arbitration procedure. 817 F.2d at 839. The court of appeals

was wrong in two respects. First, arbitrators can and do

consider allegations precisely like those at issue here, and

they can provide a remedy. Second, and more fundamental-

ly, by prejudging the likely outcome of such a claim in

arbitration, the court of appeals violated this Court’s oft-

repeated command to let arbitrators, not judges, interpret

labor contracts.

1. Arbitrators can and do hear and resolve

claims like those brought by respondent.

The court of appeals erred in stating that arbitrators

cannot resolve disputes, or consider remedies, similar to

those at issue here.*! The specific arbitration clause in this

case contains a broad delegation of authority.2* It also

2! See note 2 supra. In addition, as union attorney Rosenfeld put it:

[D]on’t forget that when it comes to that arbitration, we have

the right to ask [arbitrators] not only for backpay and

reinstatement but for damages for infliction of emotional

distress and for punitive damages. It’s not a usual remedy,

but there’s nothing [absolute] about it.

9 1.R.LJ. at 25 (emphasis added).

22 The contract provides:

[M]utual resolution of disputes through a collectively

bargained grievance process is the hallmark of competent

(Footnote continued.)

pee, an

explicitly empowers the arbitrator to resolve even the

threshold question of “‘whether a matter is a proper subject

for the grievance procedure.” Art. 102.2. Thus, in

concluding as a matter of law that an arbitrator could not

consider certain claims, the court of appeals plainly erred.”

2. The court of appeals exceeded its

jurisdiction by purporting to interpret

the contract in place of the arbitrator.

The court of appeals not only evaluated incorrectly what

claims an arbitrator could consider; the court’s primary

error was undertaking that inquiry at all. Just last year, the

Court reminded lower courts that they “have no business

weighing the merits of the grievance, ... or determining

whether there is particular language in the written

industrial self-government. Therefore, apart from those

matters that the parties have specifically excluded [from

arbitration], all disagreements shall be resolved within the

scope of the grievance procedure.

Art. 102.1 (emphasis added).

23 The whole point of collective bargaining is that employers and

unions can establish whatever kind of dispute-resolution system — and

whatever remedies — they desire. That is why the court of appeals was

wrong even assuming, arguendo, that Tellez could not obtain certain

remedies under the collective bargaining agreement. As this Court has

recognized, the possible existence of differing remedies under federal

and state law is precisely why the preemption doctrine exists. See Pilot

Life Insurance Co. v. Dedeaux, 481 U.S. —, 555 U.S.L.W. 4471, 4474

(April 7, 1987) (‘the powerful pre-emptive force of § 301 of LMRA

displace{s] all state actions ... even when the state action purported to

authorize a remedy unavailable under the federal provision’); San Diego

Building Trades Council v. Garmon, 359 U.S. at 24647 (‘‘[olur

concern is with delimiting areas of conduct that must be free from state

regulation if national labor policy is to be left unhampered. . . . Even the

States’ salutary effort to redress private wrongs or grant compensation

for past harm” may reach too far into a protected sphere).

—_:

instrument which will support the claim. The agreement is to

submit all grievances to arbitration, not merely those which

the court will deem meritorious.” AT&T Technologies, Inc.

v. Communications Workers, 475 U.S. 643, 54 U.S.L.W.

4339, 4341 (April 7, 1986) (emphasis added), quoting

United Steelworkers v. American Manufacturing Co., 363

U.S. 564, 568 (1960).

The court of appeals thus was fundamentally wrong. It

correctly acknowledged that a tort claim will be preempted

if ‘** ‘evaluation of the tort claim is inextricably intertwined

with consideration of the terms of the labor contract.’ ” 817

F.2d at 537, quoting Allis-Chalmers, 471 U.S. at 213.

However, the court of appeals then did what it

acknowledged it should not do: it considered the terms of

the labor contract and concluded that respondent’s claims

were not cognizable under it.“* What the court failed to

recognize is that, by finding it necessary to perform that

inquiry, it usurped the arbitrator’s role and decided for

itself what the contract provided and what the parties

contemplated. The court of appeals’ opinion thus inadver-

tently makes the case for preemption. As this Court held in

Allis-Chalmers, preemption exists where, as here,

the [lower] court based [its analysis] not solely on

its ... understanding of the state tort, but also on

dscunieielous about the scope of the contract

provision which it had no authority to make ..

The assumption that the labor contract creates no

implied rights is not one that [the courts] may

make.

24 The court of appeals reasoned that ‘‘[t]he agreement simply does

not govern” the tort claims; “‘its grievance mechanism is not equipped to

redress [them]”; under the contract, “the grievance committee [had] no

authority to decide whether PG&E had acted outrageously”; and “‘it

could provide no remedy for such behavior.” 817 F.2d at 538-39.

=

Id. at 214-15 (emphasis added).”°

IV

CONCLUSION

The Court should grant the petition to resolve the

conflict in the circuits and to reaffirm that arbitration, not

tort litigation, is the method for resolving disputes involving

employees covered by collective bargaining agreements.

In the alternative, if the Court were to believe that the

lower federal courts lacked jurisdiction, the Court at a

minimum should grant the petition, vacate the judgment

below, and remand to the Ninth Circuit for reconsideration

in light of Caterpillar. See note 14 supra.

DATED: September 11, 1987

Respectfully submitted.

PAUL W. CANE, JR.

Counsel of Record

PAUL, HASTINGS,

JANOFSKY & WALKER

Attorneys for Amici Curiae

25 Cf. Hasten v. Phillips Petroleum Co., 640 F.2d at 279 (libel action

not cognizable because it “‘clearly call{s] for adjudication of the merits of

the allegations of dishonesty which were the core issue in the grievance

proceeding”’).