Amicus Curiae Brief — CBS Inc. v. Berda

4

fg No. 89-589 _

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

CBS INC.,

Petitioner,

Vv.

MARTIN W. BERDA and LINDA BERDA,

Respondents.

On Petition For A Writ Of Certiorari To The United

States Court Of Appeals For The Third Circuit

MOTION FOR LEAVE TO FILE BRIEF

AMICUS CURIAE AND BRIEF AMICUS CURIAE

OF GENERAL MOTORS CORPORATION

IN SUPPORT OF THE PETITIONER

) Davip M. Davis James D. HouzHaver

Mark R. Fora Counsel of Record

General Motors Corporation STEPHEN M. Suapiro

: Office of General Counsel KennetH S. GELLER

3031 West Grand Boulevard Mayer, Brown & Platt

Detroit, Michigan 48202 190 South LaSalle Street

Fr (313) 556-5000 Chicago, Illinois 60603

(312) 782-0600

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

7

ie ies

i

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

No. 89-589

CBS INC.,

Petitioner,

Vv.

MARTIN W. BERDA and LINDA BERDA,

Respondents.

On Petition For A Writ Of Certiorari To The United

States Court Of Appeals For The Third Circuit

MOTION FOR LEAVE TO FILE

BRIEF AMICUS CURIAE

OF GENERAL MOTORS CORPORATION

IN SUPPORT OF THE PETITIONER

Pursuant to Rule 36.2 of the Rules of this Court, General

Motors Corporation (‘“‘“GM’’) respectfully moves for leave

to file the attached brief amicus curiae in support of the

petitioner. Counsel for petitioner has consented to the fil-

ing of this brief but counsel for respondents has withheld

consent.

GM’s interest in this case arises from the fact that it has

recently sought this Court’s review in Wells v. General

Motors Corp., 881 F.2d 166 (5th Cir. 1989), petition for

cert. filed, No. 89-____ (Dec. 27, 1989). In Wells, the court

of appeals held, inter alia, that Section 301 of the Labor

a ee ee ™~

ii

Management Relations Act did not pre-empt a state law

fraud and misrepresentation action related to “an extrane-

ous promise” allegedly made to employees who were cov-

ered by a collective bargaining agreement. The alleged

“promise” concerned the eligibility of the employees for

future employment if they elected to leave their job pur-

suant to a negotiated Voluntary Termination of Employ-

ment Plan.

The petitioner in this case raises a closely related ques-

tion: whether Section 301 pre-empts state law claims re-

lated to alleged pre-employment promises made to an indi-

vidual who subsequently becomes a member of a bargain-

ing unit covered by a collective bargaining agreement. Al-

though resolution of that question would not necessarily

resolve the Section 301 issue in Wells, it may have an

impact on the Wells issue. GM seeks leave to file this

brief to demonstrate how this case relates to the Fifth

Circuit’s Wells decision and other decisions involving

promises made to employees who were covered by collec-

tive bargaining agreements at the time the promises al-

legedly were made.

Respectfully submitted,

Davip M. Davis James D. HOLZHAUER

Mark R. FLora Counsel of Record

General Motors Corporation STEPHEN M. Sapiro

Office of General Counsel KENNETH S. GELLER

3031 West Grand Boulevard Mayer, Brown & Platt

Detroit, Michigan 48202 190 South LaSalle Street

(313) 556-5000 Chicago, illinois 60603

(312) 782-0600

Attorneys for Amicus

Curiae General Motors

Corporation

December 1989

Pe ee > Sy te, nT

ill

TABLE OF CONTENTS

PAGE

INTEREST OF THE AMICUS CURIAE ..... 1

INTRODUCTION AND SUMMARY

RI occ t cece cece cc cccecs

Nee sacs ces cp evaded es

SN cee atcsacesvssccess 10

iv

TABLE OF AUTHORITIES

CASES: PAGE

Allis-Chalmers Corp. v. Lweck, 471 U.S. 202 (1985). 4,9

Anderson v. Ford Motor Company, 803 F.2d 953

(1986), cert. denied, 483 U.S. 1011 (1987)... 4,5

Bale v. General Telephone Co., 795 F.2d 775 (9th

Ci. Te sodecsasoucuneneveseu eee eeeunns 5, 6

Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) . 8

Chmiel v. Beverly Wilshire Hotel Co., 873 F.2d

Be SR sD oo vce evens sesdncnceess 6

Darden v. United States Steel Corp., 830 F.2d 1116

CRUE Ge Se on ceecesndéacstevansceimaeen 7

DeLapp v. Continental Can Co., 868 F.2d 1073 (9th

Lae, BOE shamed dcnuusenentasscecaueueeane 6

International Longshoremen’s Ass’n v. Davis, 476

te ee FO PPT re te 9

Mason v. Continental Group, Inc., 763 F.2d 1219

(11th Cir. 1985), cert. denied, 474 U.S. 1087

Be ers eke AS 5, Co Fah 7

Redmond v. Dresser Indus., 734 F.2d 633 (11th

Wee EOD cin ccavancnecdce nea aeeeeee 7

Varnum v. Nu-Car Carriers, Inc., 804 F.2d 638

(11th Cir. 1986), cert denied, 481 U.S. 1049

COOTED so dnc sce ckucnssoveedsasaaeeelaee 7

Wells v. General Motors Corp., 881 F.2d 166 (5th

COR DED occa dencciccccccnssadsaeseee 1, 3, 5,6

Young v. Anthony’s Fish Grottos, Inc., 830 F.2d

CRS Gee GW. TES) cans ccsvvszescndennssies 6

STATUTE:

Section 301 of the Labor Management Relations

Act, 3 USC. $168 ...ccccasstccuusbucen passim

~

IN THE

Supreme Court of the United States

OcTOBER TERM, 1989

No. 89-589

CBS INC.,

Petitioner,

v.

MARTIN W. BERDA and LINDA BERDA,

Respondents.

On Petition For A Writ Of Certiorari To The United

States Court Of Appeals For The Third Circuit

BRIEF AMICUS CURIAE OF

GENERAL MOTORS CORPORATION IN

SUPPORT OF THE PETITIONER

General Motors Corporation (““GM”’) respectfully submits

this brief as amicus curiae in support of the petition for

a writ of certiorari.

INTEREST OF THE AMICUS CURIAE

As stated in the motion for leave to file this brief, GM’s

interest in this case arises from the fact that it has recent-

ly sought this Court’s review in Wells v. General Motors

Corp., 881 F.2d 166 (5th Cir. 1989), petition for cert. filed,

No. 89-____ (Dec. 27, 1989). In Wells, the court of appeals

=

held, inter alia, that Section 301 did not pre-empt a state

law fraud and misrepresentation action related to “an ex-

traneous promise” allegedly made to employees who were

covered by a collective bargaining agreement. The alleged

“promise’’ concerned the eligibility of the employees for

future employment if they elected to leave their job pur-

suant to a negotiated Voluntary Termination of Employ-

ment Plan.

The petitioner in this case raises a closely related ques-

tion: whether Section 301 pre-empts state law claims re-

lated to alleged pre-employment promises made to an indi-

vidual who subsequently becomes a member of a bargain-

ing unit covered by a collective bargaining agreement. Al-

though resolution of that question would not necessarily

resolve the Section 301 issue in Wells, it may have an

impact on the Wells issue. GM seeks leave to file this

brief to demonstrate how this case relates to the Fifth

Circuit’s Wells decision and other decisions involving

promises made to employees who were covered by collec-

tive bargaining agreements at the time the promises al-

legedly were made.

INTRODUCTION AND

SUMMARY OF ARGUMENT

Section 301 of the Labor Management Relations Act,

29 U.S.C. § 185, creates federal jurisdiction over “(s]uits

for violation of contracts between an employer and a labor

organization * * *.” For the past 30 years, this Court has

consistently held that disputes between employers and em-

ployees relating to the terms and conditions of employ-

ment set forth in collective bargaining agreements must

be governed by a uniform body of federal law. This case

represents one of several recent attempts by employees

ee 5.

Be) EE a ee Pee

- =

to circumvent that scheme of uniform federal law by alleg-

ing that their employers entered into (and breached) indi-

vidual employment contracts separate and apart from the

collective agreements that otherwise governed their em-

ployment. Such attempts generally have taken either the

form seen in this case, where the employee alleges a pre-

employment promise, or the form seen in Wells v. General

Motors Corp., 881 F.2d 166 (5th Cir. 1989), petition for

cert. pending, No. 89-____, where the employees claimed

that extra-contractual promises were made to them while

they were employees covered by the union contract.

Several courts of appeals have held that state law ac-

tions relating to individual contracts brought by employees

covered by collective bargaining agreements are pre-empted

by Section 301. Other courts of appeals have reached the

contrary conclusion. Review by this Court is necessary

to resolve the conflict and to protect the realm of federal

law and the primary role of arbitration in resolving dis-

' putes over labor contracts.

ARGUMENT

The courts of appeals are hopelessly divided on the issue

of whether Section 301 of the Labor Management Relations

Act, 29 U.S.C. § 185, pre-empts state tort and contract

claims based on alleged extra-contractual promises relating

to the terms and conditions of employment of workers

represented by unions. The Fifth and Eighth Circuits

agree with the Third Circuit in this case that such claims

are not pre-empted. The Ninth and Eleventh Circuits have

reached the opposite conclusion. Review by this Court is

necessary to resolve the conflict on this important and

frequently recurring issue of federal law.

—

In this case, respondent Martin Berda, a former CBS

employee, alleged that the company told him before he

was hired that “he would be guaranteed employment with

CBS for the reasonably foreseeable future.”” Pet. App.

A-3. When he was laid off, Berda filed suit in state court,

claiming that CBS had breached an oral contract and that

it had committed fraud and negligent misrepresentation

under state tort law. The Third Circuit, which character-

ized the case as involving a “circuit-splitting question” (id.

at A-2), held that Berda’s tort claims were not pre-empted

by Section 301 because “‘Berda was not required to refer

to the collective bargaining agreement in order to state

his tort claim.” Jd. at A-17. In the court’s view, the fact

“that there was a provision of the collective bargaining

agreement that also related to layoffs [is a fact] of no con-

sequence, because Berda need not refer to the provision

in the collective bargaining agreement in order to make

out his claim.” Jbid.

The Eighth Circuit reached the same conclusion in Ander-

son v. Ford Motor Company, 803 F.2d 953 (1986), cert.

denied, 483 U.S. 1011 (1987), another case involving an

alleged pre-employment promise. The plaintiffs were

former Ford employees who claimed that when they were

hired they were assured that they would not be bumped

by laid-off employees from other plants around the coun-

try. When they were bumped, they sued, claiming that

Ford’s representations to them had been fraudulent and

negligent. The court of appeals held that the tort claims

were not pre-empted because ‘{uJnlike the tort claim for

bad faith handling of an insurance claim considered in

[Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985)] a

claim of fraud does not derive from nor depend upon an

underlying contract. Under Minnesota law, proof of fraud

does not depend on the existence of any contractual rela-

~

tionship, nor do the standards for judging fraudulent mis-

conduct derive from any contractually-established expec-

tations of the parties.” 803 F.2d at 957. The court acknow!-

edged that the Ninth Circuit had reached the opposite

conclusion on similar facts,! but held that “‘we do not

agree with [the Ninth Circuit] that adjudication of these

state law claims requires any significant reference to the

terms of the collective bargaining agreement.” /d. at 959.

The case directly of interest to GM involves not pre-

employment promises, but rather promises that allegedly

were made to individuals while they were employees cov-

ered by a collective bargaining agreement. In Wells v.

General Motors Corp., 881 F.2d 166 (5th Cir. 1989), the

plaintiffs had left their employment at GM during a wide-

spread reduction-in-force pursuant to a Voluntary Termi-

nation of Employment (‘““VTEP”’) agreement negotiated

between the company and the union. The VTEP provided

each of the employees with between $10,000 and $22,000

in special severance benefits. A few years later, when GM

began hiring new workers at the employees’ former plant,

they found that they were ineligible for employment be-

cause they had accepted the VTEP benefits. They filed

suit, claiming that GM had fraudulently or negligently

assured them that they would be eligible for reemploy-

ment in the future.

The Fifth Circuit held that the employees’ claims were

not pre-empted by § 301 because they were not “ ‘substan-

tially dependent upon analysis of the terms’ of the col-

lective bargaining agreement” and because, in the court’s

view, the employees were not claiming that GM fraudu-

lently misrepresented the terms of the VTEP, but that

1 Bale v. General Telephone Co., 795 F.2d 775 (9th Cir. 1986).

=

it “fraudulently induced individual employees to opt for

the VTEP by making an extraneous promise concerning

their future employment eligibility.” The court acknowl-

edged that plaintiffs’ claims would nevertheless be pre-

empted if the agreement governed the disputed issue, but

held that “{ajfter careful review of the VTEP, we find

no provision that reasonably might be construed to govern

the issue of future employment eligibility, nor are there

‘vague and ambiguous’ references to eligibility that might

be construed in GM’s favor.” 881 F.2d at 174.

The Ninth Circuit, on the other hand, has held that

claims relating to pre-employment promises are pre-empted

by Section 301. For example, in Young v. Anthony’s Fish

Grottos, Inc., 830 F.2d 993 (1987), an employee (Young)

claimed that when she was hired by her employer in 1985

she was assured that she could be discharged only for just

cause even though under the collective bargaining agree-

ment between the union and her employer she would be

classified as a probationary employee subject to discharge

at the company’s discretion. When Young was fired with-

out apparent cause, she sued, claiming fraud and misrepre-

sentation. The Ninth Circuit held that her claims were

pre-empted by Section 301. “Because any ‘independent

agreement of employment could be effective only as part

of the collective bargaining agreement,’ the CBA controls

and the contract claim is preempted.” 830 F.2d at 997.

The court acknowledged that its decision conflicted with

the Eighth Circuit’s Anderson decision, but held that it

was bound by its previous decision in Bale v. General Tele-

phone Co., supra. See also Chmiel v. Beverly Wilshire Hotel

Co., 873 F.2d 1283, 1285-1286 (9th Cir. 1989); DeLapp v.

Continental Can Co., 868 F.2d 1073, 1074-1076 (9th Cir.

1989) (involving a promise allegedly made to an individual

whe was a member of the bargaining unit at the time).

= =

The Eleventh Circuit’s approach to the issue of extra-

contractual promises focuses on whether the alleged prom-

ise was made when the employee was a member of the

bargaining unit. If the state law suit alleges a pre-

employment promise (as in this case), the action is not

pre-empted by Section 301. Varnum v. Nu-Car Carriers,

Inc., 804 F.2d 638, 640 (11th Cir. 1986), cert. denied, 481

U.S. 1049 (1987). But if the promise was made to indi-

viduals who were bargaining unit employees at the time

(as in Wells), the state law claims are pre-empted. Darden

v. United States Steel Corp., 830 F.2d 1116, 1119-1120

(11th Cir. 1987); Mason v. Continental Group, Inc., 763

F.2d 1219 (11th Cir. 1985), cert. denied, 474 U.S. 1087

(1986); Redmond v. Dresser Indus., 734 F.2d 633 (11th

Cir. 1984). The Eleventh Circuit would thus agree with

the Eighth Circuit’s decision in Anderson and the Third

Circuit’s decision in this case (and would thus disagree

with the Ninth Circuit in Young and Bale), but it would

disagree with the Fifth Circuit in Wells because the plain-

tiffs in that case “were clearly employees within the

meaning of the collective bargaining agreement when the

alleged misrepresentations, which constitute the crux of

their complaints, were made to them.” Darden, 830 F.2d

at 1119.

It is essential that this Court resolve the conflict among

the circuits on an important and frequently recurring

question of federal law. Disagreements between employers

and employees are commonplace, and it would be the rare

employee who could not package his complaint as an “‘in-

dependent” state law cause of action by alleging ‘“extrane-

ous promises” relating to—if not directly governed by—the

terms of a collective bargaining agreement. As a result,

state law claims such as these will continue to proliferate

until this Court clarifies the governing principles. Nothing

~

could be more destructive of the goals Congress sought

to achieve in enacting Section 301 than a rule facilitating

attempts by individual employees to make end runs around

the terms of collectively bargained agreements and around

contractual dispute resolution mechanisms.

Accordingly, GM respectfully urges this Court to clarify

the pre-emptive scope of Section 301 by granting either

the petition in this case or the petition in Wells. In this

regard, there are three respects in which Wells may be

the more appropriate vehicle for this Court’s review.

First, Wells involves extra-contractual promises alleged-

ly made to employees covered by a collective bargaining

agreement, while this case involves pre-employment prom-

ises. Whatever the status of state law claims in the latter

context, in light of Caterpillar Inc. v. Williams, 482 U.S.

3°€ (1987),2 the lower courts are in stark disagreement

about the legitimacy of state law suits alleging that sepa-

rate promises were made to members of the bargaining

unit subject to the labor contract. Compare Wells with

Darden and DeLapp.

Second, Wells involves a claim that the employer essen-

tially misrepresented the terms of an agreement being

negotiated with the union representing its employees,

while this case involves an allegation that the employer

2 In Caterpillar, this Court held that state law claims for breach

of individual employment contracts were not “com sng

empted” by Section 301 and thus were not removab

court. Aa 1. thie cane, the tndiriaash eontenaie anenaa aa

before the employees became members of the unit and

thus before they were covered by any collective rd

ment. In Wells, by contrast (as well as in the Eleventh

decision in Darden and the Ninth Circuit’s decision in DeLapp)

to eenuee ule oddest ts Go er

of the unit subject to the labor contract.

ba va

made promises regarding the employee’s job security that

were separate from and not dependent upon the terms

of the collective bargaining agreement. Whatever the

legality of the latter promises under Section 301, it is

crystal clear that the state law claim in Wells “is ex-

tricably intertwined with consideration of the terms of the

labor contract” (Lueck, 471 U.S. at 213).

Third, Wells presents two additional important issues

of federal law that have divided the courts of appeals:

whether state law claims that allege conduct ‘arguably

prohibited” by Section 8 of the National Labor Relations

Act, 29 U.S.C. § 158, continue to be pre-empted after this

Court’s decision in International Longshoremen’s Ass'n

v. Davis, 476 U.S. 380 (1986); and whether Section 514(a)

of the Employee Retirement Income Security Act, 29

U.S.C. § 1144(a), pre-empts state law claims relating to

severance benefit programs initiated to deal with a single

set of job terminations. Granting the petition in Wells

would permit the Court to resolve all three issues in one

case.

Whichever petition the Court grants, the Section 301

preemption issues presented by this case and Wells are

of vital importance to employers, employees and unions

throughout the country. The conflict among the circuits

should not be permitted to remain unresolved.

the that the contention had not been

% The Third Circuit declined to resolve the NLRA pre-emption

this case on

passed upon by the district court. Pet. App. A-20.

==

CONCLUSION

The petition for a writ of certiorari should be granted.

In the alternative, the petition should be held pending

review of General Motors Corp. v. Wells, No. 89-__.

Respectfully submitted.

Davip M. Davis James D. HoLzHAUER

Mark R. FLora Counsel of Record

General Motors Corporation SrePHEN M. SHapiro

Office of General Counsel KenneETH S. GELLER

3031 West Grand Boulevard Mayer, Brown & Platt

Detroit, Michigan 48202 190 South LaSalle Street

(313) 556-5000 Chicago, Illinois 60603

(312) 782-0600

December 1989