# Petition for Writ of Certiorari — Automobile Club of Michigan v. Bullock > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_0732%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1990 - **Citation:** 493 U.S. 1072 ## Text oe ~ G 9 - 9 08 pec 6 No. oa ; In the Supreme Couwt of the United States OCTOBER TERM, 1989 AUTOMOBILE CLUB OF MICHIGAN, a/k/a AAA, and AUTO CLUB INSURANCE ASSOCIATION, PETITIONERS V. WILLIAM J. BULLOCK, RESPONDENT PETITION FOR A WRIT OF CERTIORARI TO THE SUPREME COURT OF MICHIGAN JOHN CORBETT O’MEARA Counsel of Record THEODORE R. OPPERWALI Dickinson, Wright, Moon, Van Dusen & Freeman 800 First National Building Detroit, Michigan 48226 (313) 223-3500 BOWNE OF DETROIT 610 W. CONGRESS - DETROIT, MICHIGAN 48226 - (313) 964-1330 i QUESTIONS PRESENTED Respondent Bullock claims that when he was hired by petitioner AAA in 1968, he was orally promised that he would be paid sales commissions and would be discharged only if caught stealing. In 1978 a union was certified by the NLRB as the exclusive bargaining representative of AAA’s sales employees, including Bullock. AAA and the union collectively bargained to a bona fide impasse, whereupon AAA lawfully unilaterally imple- mented its final offer including a unit compensation system and minimum production standards. Bullock was later discharged under these minimum production standards. He sued in Michigan state court claiming breach of the alleged oral contract made when he was hired. The Michigan Supreme Court held that his state-law contract claims were not preempted by the National Labor Relations Act (“NLRA”). The questions presented are: 1. Whether the NLRA preempts, under the Garmon doc- trine, an employee’s state-law employment contract claims that are directly contrary to terms and conditions of employment lawfully implemented by the employer following an impasse in collective bargaining with the employee’s exclusive bargaining representative, for the reason that the state-law claims concern conduct arguably subject to the Act. 2. Whether the NLRA preempts, under the Machinists doctrine, these state-law employment contract claims because they undermine an economic self-help remedy that Congress intended to be unregulated and controlled only by the free play of economic forces. is PARTIES TO THE PROCEEDING AND RULE 28.1 STATEMENT All parties to the proceedings below subject to this petition are set forth in the caption. The only parent company, subsidiary (other than wholly owned subsidiaries), or affiliate of the petitioners is Auto Club Leasing Company. TABLE OF CONTENTS Page | V ES os cava y vies es sieve wesseees ONE 2 CONSTITUTIONAL AND STATUTORY PROVI- a 2 sya cne seve vcevecscceces 2 a 3 2. Beoen © Leweutt in State Court.................. 6 3. The Michigan Court of Appeals’ Opinion .......... 8 4. The Michigan Supreme Court’s Opinion ........... ) REASONS FOR GRANTING THE PETITION ..... 11 I. The Michigan Supreme Court Has Decided An Impor- tant Federal Question In A Way That Cannot Be Reconciled With This Court’s Decisions And Threat- ens To Disrupt Federal Labor Policy .............. 14 A. Bullock’s state-law claims are preempted under Garmon because they concern activity arguably I Gh vaca vcvccveccccwsecs 14 B. Bullock’s state-law claims are preempted under Machinists because they undermine an economic self-help remedy that Congress intended to be un- regulated and controlled only by the free play of ne 22 II. The Michigan Supreme Court’s Decision Conflicts With Decisions Of Several Federal Courts Of Appeals. 26 EEE 30 APPENDICES A. Michigan.Supreme Court Opinion................. la B. Order Denying Rehearing.................-....-. 56a ccc nce c cece esse eee eees 57a D. Michigan Court of Appeals Opinion............... 58a E. Wayne County Circuit Court Order ............... Tla F. Constitutional and Statutory Provisions Involved..... 73a iv TABLE OF CONTENTS — (Continued) Page Complaint and Demand for Trial fo eee bh Rradtey 75a First Amended Complaint and Demand for Trial . by Jury ro CU Ssevesewtnweset oe teetmamstdakd clted | Un Second Amended Complaint and Demand for Trial by Jury Vv TABLE OF AUTHORITIES CASES: Page American Ship Building Co. v. NLRB, 380 U.S. 300 A ee ae enna 6 Obes os 4 RR 8S 19, 23 Automobile Club of Michigan, 237 NLRB 379 (1978), enforced, 631 F.2d 82 (6th Cir. 1980) ............ 4 Automobile Club of Michigan, 267 NLRB 1206 ae 6, 19 Automobile Club of Michigan, Case Nos. 7-CA-15209, ee ein ceccervervece ces e's 5 Bankey y. Storer Broadcasting Co., 432 Mich. 438, 433 en 12 Belknap, Inc. v. Hale, 463 U.S. 491 eee ek adn use te ees 04 2,10, 20, 24, 27, 29 Bi-Rite Foods, Inc., 147 NLRB 59 (1964)........... 19 Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) .... 13, 19 Construction Laborers v. Curry, 371 U.S. 542 Cais ae eek ava wiaseeebaenesss 2 Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 red a cabee ee aavetev dase nss 2 Derrico v. Sheehan Emergency Hospital, 844 F.2d 22 eal came s ae Saw Cee ke wwe ve 28 Emhart Industries, 297 NLRB No. 29 (1989) ....... 19 Emporium Capwell Co. v. Community Org., 420 U.S. i eel ee neat ceneeececdeeesss 18, 20, 27 Farmer v. Carpenters, 430 U.S. 290 (1977).......... 21 Farrell vy. Automobile Club of Michigan, 155 Mich. App. 378, 399 N.W.2d 531 (1986) ............... 13 Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987) 22 Garner v. Teamsters, 346 U.S. 485 (1953) .......... 15 Golden State Transit Corp. v. Los Angeles, 475 U.S. Rec ace ecescvcccecccececs 20, 23, 24, 25 vi TABLE OF AUTHORITIES — (Continued) Page Guerincy v. Automobile Club of Michigan, Wayne County Circuit Court No. 84-402714-CZ.......... 13 H.K. Porter Co. v. NLRB, 397 U.S. 99 (1970) ....... 18 J.I. Case Co. v. NLRB, 321 U.S. 332 CIQGED ok ccncuidanes ves bsaeekeeeeeee 10, 25, 26 Kortas and Keener v. Automobile Club of Michigan, Wayne County Circuit Court No. 83-334618-CZ ... 13 Laborers Health & Welfare Trust Fund v. Advanced Lightweight Concrete Co., US. , 108 S. Ce. GOP CIS xk cncdsscnnccnceeerete«nes 18 LaPorte Transit Co., 286 NLRB No. 10 (1987), enforced, F.2d (7th Cir. Nov. 1, 1989) .. 19 Longshoremen v. Davis, 476 U.S. 380 (1985) ........ 14 Machinists v. Wisconsin Employment Relations Com- nelaaion, 437 U.S. C05 TEP Oe «kas be Maw cerca dacee passim Maushund v. Earl C. Smith, Inc., 795 F.2d 589 (6th Ci. S9GD oon cess vv tesccteeneeeeeeee 27 Medo Photo Supply Corp. v. NLRB, 321 U.S. 678 (1966) ....n sc ecccccdavesseveneeeeeeen 20 Metropolitan Life Insurance Co. v. Massachusetts, 471 oe ee ere 22, 23, 25 Motor Coach Employees v. Lockridge, 403 U.S. 274 i) re ee ee ae 16, 20, 21, 29 National Metalcrafters, Division of Keystone Consoli- dated Industries v. McNeil, 784 F.2d 817 (7th Cir. IDOE) . en cvcaeekvews es suena ee rRIEEeG es 9, 26 NLRB v. Allis-Chalmers Mfg. Co., 388 U.S. 175 (1967)... ccsvccccsessccedesebneteneeeeeen 17, 27 NLRB v. Insurance Agents’ International Union, 361 US. 477 (1960)... cc0c0'svevcesen ts cane eeeenre 22 vii TABLE OF AUTHORITIES — (Continued) Page NLRB v. Katz, 369 U.S. 736 (1962)................ 19, 24 Operating Engineers v. Jones, 460 U.S. 669 OSE NIG CER ee os 16, 17, 19, 21, 29 Pacific Intercom Co., 255 NLRB 28 (1981) ......... 20 Parker v. Connors Steel Co., 855 F.2d 1510 (11th Cir. 1988), cert. denied, 109 S.Ct. 2066 (1989) ........ 29 Powell vy. National Football League, F.2d ; 132 LRRM 2866 (8th Cir. Nov. 1, 1989) ......... 19 Roberts v. Automobile Club of Michigan, 138 Mich. App. 488, 360 N.W.2d 224 (1984), leave to appeal denied, 424 Mich. 867 (1986), cert. denied, 479 i riers way cue e ei sais. x San Diego Building Trades Council vy. Garmon, 359 U.S. ee eee ind ee hee ar passim Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180 SECU N EM UoaGe usu a dea seed sandcscss sees 10, 17 Serrano v. Jones & Laughlin Steel Co., 790 F.2d 1279 ee i i woop vd 0s 9, 28 Skladzien vy. Automobile Club of Michigan, Wayne County Circuit Court No. 84-420005-CK ......... 13 Teamsters Union v. Morton, 377 U.S. 252 (1964) .... 22 Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 eae. cn unos 0 p¥ 0 ane ye bes 9, 13, 27 Wells v. General Motors Corp., 881 F.2d 166 (Sth Cir. Eee Na cae Nensbowcesvascdsesees 29 Western Newspaper Publishing Co., 269 NLRB 355 ER ers se iispessserecccsceces 19 Wolff v. Automobile Club of Michigan, Wayne County Circuit Court No. 83-308498-CK ................ Vili TABLE OF AUTHORITIES — (Continued) Page MISCELLANEOUS: National Labor Relations Act, 29 U.S.C. §151 POE Eee Pe er ee TTT Sere eee e Ty passim Shepard, Heylman & Duston, Without Just Cause GE SUE ecdckeuccaccamebeeicte neice 13 | Iu the Supreme Court of the United States OCTOBER TERM, 1989 No. AUTOMOBILE CLUB OF MICHIGAN, a/k/a AAA, and AUTO CLUB INSURANCE ASSOCIATION, PETITIONERS Vv. WILLIAM J. BULLOCK, RESPONDENT PETITION FOR A WRIT OF CERTIORARI TO THE SUPREME COURT OF MICHIGAN Automobile Club of Michigan, a/k/a AAA, and Auto Club Insurance Association petition for a writ of certiorari to review the judgment of the Supreme Court of Michigan. OPINIONS BELOW The opinion of the Michigan Supreme Court (App. A, infra, la-55a) is reported at 432 Mich. 472, 444 N.W.2d 114. The Michigan Supreme Court’s order denying AAA’s motion for rehearing (App. B, infra, 56a) is unreported. The Michigan Supreme Court’s “Editor's Note” amending a portion of its opinion (App. C, infra, 57a) is unreported. The opinion of the Michigan Court of Appeals (App. D, infra, 58a-70a) is reported at 146 Mich. App. 711, 381 N.W.2d 793. The order of the Wayne County Circuit Court (App. E, infra, 71a-72a) is unreported. 2 JURISDICTION The judgment of the Michigan Supreme Court was entered on June 6, 1989, and AAA’s petition for rehearing was denied on September 8, 1989 (App. B, infra, 56a). The jurisdiction of this Court is invoked under 28 U.S.C. §1257.! CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The constitutional and statutory provisions involved, set forth at App. F, infra, 73a-74a, are: Supremacy Clause, United States Constitution, Article VI, Clause 2; Nationa! Labor Relations Act, Sections 7, 8(a), 8(d), 9(a), and 10(a), 29 U.S.C. §§157, 158(a), 158(d), 159(a), 160(a). STATEMENT Respondent William J. Bullock is a former sales representa- tive of petitioner Automobile Club of Michigan (“AAA”) who was discharged from his job because he failed to satisfy minimum production standards AAA had lawfully implemented following a bona fide impasse in collective bargaining with Bullock’s union. It is not disputed by Bullock that he failed to satisfy these produc- tion standards, or that they were imposed following a bargaining impasse. Instead, Bullock claims in this state court action that his employment with AAA was governed by an individual oral employment contract made when he was hired by AAA ten years before his union was certified. According to Bullock, his individ- 1 The judgment of the Michigan Supreme Court is “final” for purposes of 28 U.S.C. §1257, even though the Michigan Supreme Court remanded the case for trial, because it finally disposed of the federal preemption issue, reversal here would terminate the state claim, and to permit the state claim to go forward in state court without resolving the preemption issue “would involve a serious risk of eroding the federal statutory policy” of “ ‘requiring the subject matter of respondents’ cause to be heard by the . . . Board, not by the state courts.’” Belknap, Inc. v. Hale, 463 U.S. 491, 497-98 n. 5 (1983), quoting Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 483 (1975); Construction Laborers v. Curry, 371 U.S. 542, 550 (1963). Sy a le i lg SS i tae RS at 3 ual contract provided that he would be discharged only if caught stealing. Bullock contends that this alleged oral contract is en- forceable by a state court jury despite the National Labor Rela- tions Board’s intervening certification of Bullock’s union and despite AAA’s lawful implementation of minimum production standards and disciplinary procedures following an impasse in collective bargaining with Bullock’s union. Bullock also contends that his individual contract provided for radically different com- pensation terms than those implemented by AAA following the impasse in bargaining. Bullock thus seeks to have a state court jury enforce an alleged individual oral employment contract that is directly at odds with terms and conditions of employment produced by the collective bargaining process. Because Bullock’s state-law claims concern conduct that is arguably protected or prohibited by the National Labor Relations Act (“NLRA” or “Act”), and because his claims concern conduct that Congress intended be left unregulated for the com- batants in labor disputes, it must be held preempted by the NLRA. Permitting Bullock’s state-law claims to proceed would both intrude upon the jurisdiction of the National Labor Rela- tions Board (“NLRB” or “Board’’) and contravene established federal labor policies governing economic self-help remedies. Indeed, Bullock’s state-law claims — and similar claims being asserted in state courts by countless union-represented employees — would nullify crucial elements of the federal scheme of labor- management relations, creating uncertainty and unpredictability in this important field. 1. Factual Background. Respondent Bullock was hired by AAA in 1968, at a time when AAA’s sales representatives were not represented by a union (App., infra, 20a). In his state court complaint filed after he was discharged in 1982, Bullock asserted (3) that the following “promises” were made when he “entered the employ” of AAA 14 years earlier (App., infra, 4a-Sa): (a) That he would have a lifetime job as long as he did not steal; 4 (b) That he would work as a commission salesman for Defendant and enjoy the benefits of a seven (7%) percent commission for sales which had been in effect for many years; (c) That if he worked hard and built up his “book of business,” he would be able to earn large sums of money; (d) That if he worked hard and built up his “book of business,” he would enjoy his later working years with Defendant by realizing commissions from the “book of business,” which “book of business” is the accumulated memberships and policies which a commission salesman builds up over the years. Bullock further alleged in his complaint (4) that he there- after “worked very hard and built up his ‘book of business’ in reliance upon the promises of Defendant and in order to enable him to enjoy the benefits of a large salary due to his individual efforts in developing his business” (App., infra, Sa). On February 7, 1978, following an election conducted pursu- ant to §9 of the NLRA, the NLRB certified the Michigan AAA Sales Association as the exclusive collective bargaining represen- tative for AAA’s sales representatives in a Detroit-area bargaining unit (App., infra, 20a). AAA thereafter challenged the propriety of the NLRB’s certification, contending that only a state-wide bargaining unit was appropriate. This challenge was ultimately rejected. See Automobile Club of Michigan, 237 NLRB 379 (1978), enforced, 631 F.2d 82 (6th Cir. 1980). In the meantime, on July 1, 1978, after the union’s certifica- tion but before the bargaining unit question was resolved, AAA eliminated commissions as the basis for compensating sales repre- sentatives, including Bullock, and instead established a “unit compensation” system. The union filed an unfair labor practice charge with the NLRB, asserting that this change in the compen- sation system constituted failure to bargain in good faith violative of §8(a)(1) and §8(a)(5) of the NLRA. After a hearing, an administrative law judge of the NLRB found that the company’s 5 unilateral change in the compensation system did not “constitute the initiating of a new plan without consultation or discussion with the Union.” Automobile Club of Michigan, Case Nos. 7- CA-15209, 7-CA-15400, ALJ Decision at 12 (1979).2 The judge accordingly recommended “that the allegations of the complaint with regard thereto be dismissed.” Jd. The Board affirmed. After the bargaining unit question was resolved in 1980, collective bargaining commenced between AAA and the union toward a first labor contract. However, despite numerous bargain- ing sessions, AAA and the union failed to reach agreement because the union firmly resisted a fundamental bargaining de- mand of the company: that the contract contain minimum pro- duction standards for sales representatives (App., infra; 20a). In 1981, after an extended period of bargaining, AAA presented to the union a final “last best” offer containing both its longstanding proposal for minimum production standards (id.) and a continua- tion of the unit compensation system that had been in effect since 1978. The minimum production standards included a disciplinary procedure whereby sales representatives who failed to meet pre- scribed production standards would receive, in progressive se- quence, an oral warning, a written warning, probation, and ultimately discharge (App., infra, 21a). On August 5, 1981, the company’s final offer was rejected at a general meeting of the union’s membership. It is undisputed that, at this juncture, AAA and the union were at a bona fide impasse in their collective bargaining (App., infra, 20a). Accord- ingly, AAA was free to unilaterally implement its final offer including the minimum production standards, disciplinary proce- dure, and unit compensation system. Effective September 1, 1981, AAA did so (id.). Though the union and its members could have gone on strike, they chose not to, and instead continued to work — but now under the terms of the company’s final offer which had been implemented. * A copy of the unpublished ALJ Decision has been lodged with the Clerk of the Court. 6 Though negotiations continued, the union filed another un- fair labor practice charge with the NLRB, asserting that AAA had unilaterally implemented new working conditions in reprisal for the sales representatives’ support for the union in violation of §8(a)(1); the union did not assert a violation of the duty to bargain in good faith under §8(a) (5) and §8(d). After a hearing before an administrative law judge, this charge too was dismissed, and the Board affirmed. See Automobile Club of Michigan, 267 NLRB 1206 (1983). Because Bullock failed to meet the minimum production standards contained in the implemented final offer under which he continued to work, he was progressively disciplined in accor- dance with the disciplinary procedure and was ultimately dis- charged in February 1982. There is no dispute that Bullock did fail to satisfy the standards and that the company did comply with its disciplinary procedure. Bullock was one of 75 sales representa- tives (out of a total of 570) discharged from their jobs over several months in accordance with the procedure because they failed to meet the production standards (App., infra, 18a n.7). In October 1982, having failed to achieve a collective bar- gaining agreement with AAA, the union was decertified through another NLRB election (App., infra, 20a). It is undisputed that Bullock and his co-workers were discharged while the union was still certified as their exclusive bargaining representative. 2. Bullock's Lawsuit in State Court. In July 1982 Bullock filed a one-count complaint, with jury demand, in the Circuit Court for Wayne County, Michigan, asserting (5) that AAA had breached an express or implied contract with him by “chang- ing its policies as follows” (App. G, infra, 76a-77a): (a) Eliminating commissions as a basis of compensa- tion for sales persons; (b) Establishing a “unit compensation” program whereby the commission salesmen would only get a certain amount of money per membership or policy rather than a percentage commission as had been promised to the com- 7 mission salesmen when they entered the employ of Defendant; (c) Establishing non-competitive rates for its product; (d) Imposing unreasonable quotas upon the commis- sion salesmen which, taken together with the non-competi- tive rates for Defendant’s policies, made it impossible for the commission salesmen to achieve their quotas; and, (e) Coercing Plaintiff and other persons similarly situ- ated out of their employment thereby breaching the implied contract between Plaintiff and Defendant. Bullock’s state-law action thus asserted that his personal terms of employment were directly contrary to those implemented by AAA following the impasse in bargaining with Bullock’s union.3 AAA moved in state court to dismiss Bullock’s claims on NLRA preemption grounds.‘ After extensive briefing and argu- ment, the trial court denied AAA’s motion but certified the question for immediate appeal because it involved “controlling questions of law as to which there is substantial ground for 3 Most of the 75 sales representatives who had been discharged with Bullock for failing to meet the production standards filed virtually identical lawsuits in the Michigan Circuit Courts. Many of these suits were stayed pending a ruling on the NLRA preemption issue. * AAA had removed Bullock’s suit to U.S. District Court on NLRA preemption grounds. See San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959); Machinists v. Wisconsin Employment Relations Commission, 427 U.S. 132 (1976). Anticipating this Court’s later decision in Caterpillar Inc. v. Williams, 482 U.S. 386, 397-398 (1987), the U.S. District Court granted Bullock’s motion to remand. After his suit was remanded, Bullock filed a first amended complaint (App. H, infra, 79a-83a) in which he deleted his allegation in §5(d) that AAA had changed its — by imposing quotas, though he left intact his discharge claim challenging the standard for termination; he also added claims for unjust enrichment, conversion, age discrimination, and negligent evaluation (App., infra, 18a-19a n.7, 24a nIN)-A second amendment to the complaint (App. I, infra, 84a-90a) later reinstated an allegation in 97(c) regarding the imposition of quotas, added a claim for promissory estoppel, and dropped the claim for negligent evaluation. 8 difference of opinion” and immediate appeal “may materially advance the ultimate termination of the litigation” (App. E, infra, 7la-72a). 3. The Michigan Court of Appeals’ Opinion. The intermedi- ate appeals court summarily rejected the company’s NLRA preemption arguments (App., infra, 69a-70a). In that court’s view, the Garmon and Machinists preemption doctrines could not apply simply because no collective bargaining agreement had ever been consummated between AAA and the union. It was of no import that the terms of employment at issue had been unilater- ally implemented following an impasse in collective bargaining with a union — an economic self-help weapon expressly sanc- tioned by federal law. As the court saw it, the parties had merely negotiated for a time and gone their separate ways (id. at 69a): Reduced to its basic meaning, collective bargaining is no more than negotiating. It only brings about contract rights, it does not consist of them. As in a one-on-one agreement where there is no meeting of the minds, collective bargaining which does not bear an agreement is no more than a process without a result. As such, bargaining to impasse on the formation of a new agreement creates nothing that could supersede preexisting contract rights. Since no collective bargaining agreement was ever reached in this case, [Bullock’s] preexisting contract rights are still in effect. Redress for any alleged breach of those rights is properly brought in state courts.5 5 The appeals court also noted (id. at 70a) its agreement with the NLRA preemption analysis in that court’s earlier decision in Roberts v. Automobile Club of Michigan, 138 Mich. App. 488, 360 N.W.2d 224 (1984), leave to appeal denied, 424 Mich. 867 (1986), cert. denied, 479 U.S. 889 (1986) (Justices Brennan and Marshall dissenting from the denial). The Roberts case was decided only by Michigan’s intermediate appellate court, and predated all of the federal decisions, discussed infra, demonstrating a conflict between the Michi- gan court and numerous federal courts of appeals. The grounds justifying a grant of certiorari in Bullock have substantially changed since the denial of certiorari in Roberts. 9 4. The Michigan Supreme Court's Opinion. Michigan's highest court rejected the company’s NLRA preemption argu- ments for essentially the same reason — the absence of a consummated contract between AAA and the union.® In the court’s view, Bullock’s state-law claims, which were predicated on alleged oral promises that pre-dated the company’s unilateral implementation of unit compensation and minimum production standards, were “essentially an ordinary contract action, routinely heard in state court” because no collective agreement had ever been reached (App., infra, 27a-28a). The court noted that its far- reaching employment contract decision in Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980), “made no exception for unionized employees” (App., infra, 28a n.22).7 The court rejected AAA’s argument that its decision conflicted with National Metalcrafters, Division of Key- stone Consolidated Industries v. McNeil, 784 F.2d 817 (7th Cir. 1986); and Serrano v. Jones & Laughlin Steel Co., 790 F.2d 1279 (6th Cir. 1986), erroneously concluding that these cases involved only §301 preemption (App., infra, 21a-22a n.9). With regard to Garmon preemption, the Michigan court concluded that “the substance of Bullock’s state law claims significantly differ[s] from any claims he could have presented to the NLRB” because the NLRB is only “concerned with the process of bargaining” and would only “decide whether an im- passe in bargaining had occurred”; accordingly, the court rea- ® Justice Levin’s separate opinion was the opinion of the court on the NLRA preemption question (App., infra, 14a-28a) and was joined by each of the other Michigan Supreme Court Justices (App., infra, 7a-8a, 39a). 7 In finding Bullock’s lawsuit “essentially an ordinary contract action,” the Michigan Supreme Court’s original opinion posited that Bullock’s union “was decertified before Bullock was discharged” (App., infra, 28a). This was of course not true and may have influenced the court’s reasoning. The court issued an “Editor’s Note” amending this portion of the opinion (App., infra, 57a) at the time it denied AAA’s motion for rehearing. No question is presented here whether the NLRA would preempt an employee’s state-law contract claim based on pre-certification promises, where he is discharged after decertification. Bullock was unquestionably in the bargaining unit and exclusively represented by the union when he was discharged. 10 soned, “Bullock’s state law claims could not have been presented to the NLRB” nor could the NLRB “have provided a remedy for his state law claims” (App., infra, 25a-26a). In the Michigan court’s view, because Bullock could not have obtained relief from the NLRB on his state-law claim (i.e., the NLRB would have rejected it), to allow that claim to proceed in state court would “pose[] no risk of interference with the jurisdiction of the NLRB?” (id.), citing Belknap, Inc. v. Hale, 463 U.S. 491 (1983), and Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180 (1978). The court thus focused not on whether the state-law claim concerned conduct governed by the NLRA, but on whether the NLRB would itself adjudicate and remediate the state-law claim. The Michigan court also rejected the company’s Machinists preemption argument that an employer’s right to impose a final “last best” offer following an impasse in bargaining is an eco- nomic self-help remedy for labor disputants that is controlled only by the free play of economic forces and must remain free of state regulation (App., infra, 26a). The court disposed of Machinists preemption by citing a portion of Belknap v. Hale, supra, that addressed only Garmon preemption. The court then stated (App., infra, 27a): The selection of a union representative did not instantly extinguish Bullock’s state law claims or contract rights. Employees would hesitate to cast their lot with a union if they were deemed to have forgiven their common-law con- tract and other claims when a collective bargaining agent was certified without regard to whether a collective bargaining agreement is entered into. Relying on dictum in this Court’s opinion in J.J. Case Co. v. NLRB, 321 U.S. 332, 336-337 (1944), the Michigan court reasoned that because negotiations between AAA and the union had become deadlocked and no labor agreement had been con- summated, enforcement of pre-existing state-law contract rights would not “frustrate any policy of the federal labor laws” (App., infra, 28a). 11 The Michigan Supreme Court accordingly rejected both Garmon and Machinists preemption and determined that the Michigan courts had jurisdiction of the subject matter of Bul- lock’s state-law contract claims predicated on individual terms of employment directly contrary to the unilaterally implemented unit compensation system and production standards. AAA moved for rehearing on the NLRA preemption ques- tion, pointing out that the court’s decision clashed with numerous federal court of appeals decisions, misconstrued the role and jurisdiction of the NLRB, overlooked important decisions of this Court, and applied incorrect standards for both Garmon and Machinists preemption. The Michigan Supreme Court denied the motion without comment (App., infra, 57a). REASONS FOR GRANTING THE PETITION Since 1935 when the NLRA was enacted, this Court has repeatedly grappled with preemption issues relating to state-law actions that might intrude on the federal scheme of labor- management relations created and governed by the Act. In recent decades there have evolved in this Court’s decisions two distinct doctrines of NLRA preemption. First, Garmon preemption pre- cludes state-law claims that regulate conduct that is actually or arguably subject to §7 or §8 of the NLRA. San Diego Building Trades Council v. Garmon, 357 U.S. 236, 245 (1959). Second, Machinists preemption precludes state-law claims or regulation affecting the self-help remedies of labor disputants that Congress intended to be left unregulated and controlled only by the free play of economic forces. Machinists v. Wisconsin Employment Relations Commission, 427 U.S. 132, 147 (1976). Bullock’s state-law claims directly implicate both of these NLRA preemption doctrines. AAA’s actions in unilaterally im- plementing new terms of employment following an impasse in bargaining fell squarely within the purview of the NLRA, and Bullock’s claims could have been (and in some respects were) presented as unfair labor practice charges to the NLRB. To 12 permit Bullock to prosecute his state-law claims seeking to enforce terms of employment radically different than those collec- tively bargained with his union, would force AAA to commit an unfair labor practice by granting more favorable terms to individ- ual employees and bypassing the collective bargaining process. Garmon preemption therefore applies. In addition, Bullock’s state-law claims, if allowed to proceed, would effectively deprive his employer of its right under the NLRA to implement a final offer following an impasse in bargaining — a crucial self-help weapon — thereby altering the balance of economic forces. Machinists preemption also applies. The Michigan Supreme Court’s decision permits countless unionized employees to shield themselves from /awfu/ unilateral changes in employment terms following an impasse by spurning the NLRA’s structure for collective bargaining and the NLRB’s jurisdiction over this field. AAA fully complied with the collective bargaining process established by the NLRB. But by allowing state courts to enforce terms of employment wholly inconsistent with those mandated by federal law, the Michigan court has effectively rewritten and nullified the federal scheme.’ Any cir- cumstance involving a hiatus in a collective bargaining agreement is vulnerable to such state-law challenges. Nor can an employer know what contrary terms will be asserted by employees for adjudication by a local jury. Congress did not intend that state court juries would, in such situations, determine the terms and conditions of employment for union-represented employees. Pre- dictability and uniformity in labor relations — the cornerstones of federal labor law and policy — are thus eroded and employers 8 In Bankey v. Storer Broadcasting Co., 432 Mich. 438, 433 N.W.2d 112 (1989), a companion case to Bullock, the Michigan Supreme Court addressed an employer’s ability (through reasonable notice uniformly given to affected employees) to unilaterally alter contractual terms of employment for non-union employees. The court in Bullock extended these state-law principles to union- ized employees, as the court expressly acknowledged (App., infra, 28a n.22). By thus applying state-law contract principles to unionized employees governed by federal law, the Michigan court nullified the federal scheme for unilaterally altering terms of employment following an impasse in collective bargaining with an employee’s union. 13 (allegedly subject to both federal and state employment laws) are left in a conundrum of irreconcilable obligations.® The NLRA preemption issues presented in this case are recurring ones. They were identified, but not decided, by this Court in Caterpillar Inc. v. Williams, 482 U.S. 386, 397-398 (1987). The Court there noted that, while Garmon and Machin- ists preemption defenses under the NLRA would not create removal jurisdiction, individual employment contract claims brought by union-represented employees in state court “might be pre-empted by the NLRA.” /d. at 398 n.12. As state-law individ- ual contract suits by union-represented employees like Bullock proliferate, guidance is needed from this Court for employers and employees to determine the extent to which such claims are precluded by the NLRA, and to resolve the recurring and concrete dilemma created by the decision below.!° Finally, the decision below is not only out of step with this Court’s Garmon and Machinists decisions and their progeny, but it is in direct conflict with decisions by the Second, Sixth, Seventh, and Eleventh Circuits. The Fifth Circuit has deepened the conflict by rejecting NLRA preemption in a related circum- stance. These conflicts have created uncertainty in a field that * Of the scores of virtually identical lawsuits brought by Bullock and his co- workers in Michigan state courts, five have been tried. In Guerincy v. Automo- bile Club of Michigan, Wayne County Circuit Court No. 84-402714-CZ, the employee's claim was tried to the court rather than a jury, and the judge entered a “no cause” judgment in AAA's favor. Four cases tried to state court juries have produced verdicts: Skladzien v. Automobile Club of Michigan, Wayne County Circuit Court No. 84-420005-CK ($1,100,587); Wolff v. Automobile Club of Michigan, Wayne County Circuit Court No. 83-308498-CK ($300,000, remitted to $220,000); Kortas and Keener v. Automobile Club of Michigan, Wayne County Circuit Court No. 83-334618-CZ ($622,254 and $592,302 respectively); Farrell v. Automobile Club of Michigan, 155 Mich. App. 378, 399 N.W.2d 531 ($150,000). 10 While the Michigan Supreme Court's 1980 decision in Toussaint v. Blue Cross & Blue Shield of Michigan, supra, was one of the earliest and most sweeping, court decisions in at least 36 States have now recognized express and implied contract exceptions to the employment-at-will doctrine. Shepard, Heylman & Duston, Without Just Cause 8-9 (BNA 1989). 14 should bear predictability and national uniformity. Review by this Court is plainly warranted. Inasmuch as the claims at issue clearly implicate federal labor policy under the NLRA and the jurisdiction of the NLRB, were there to be any doubt the Court may wish to request the views of the Solicitor General. I. The Michigan Supreme Court Has Decided An Impor- tant Federal Question In A Way That Cannot Be Recon- ciled With This Court’s Decisions And Threatens To Disrupt Federal Labor Policy. A. Bullock’s state-law claims are preempted under Gar- mon because they concern activity arguably subject to the NLRA. There is no dispute in this case that (1) AAA bargained to impasse with Bullock’s union and thereafter lawfully imple- mented its final offer including the minimum production stan- dards and unit compensation system; (2) Bullock (and his co- workers) thereafter continued to work under the new terms and was disciplined and discharged in accordance with the production standards and disciplinary procedure; (3) Bullock’s union filed charges with the NLRB challenging certain of AAA’s actions, and the NLRB dismissed each of the union’s charges; and (4) Bullock’s state court lawsuit seeks to have a jury adjudicate terms of an alleged individual oral employment contract that are directly contrary to those implemented following the impasse in bargaining. In these circumstances, the Garmon preemption doctrine mandates that federal labor law and policy supersede Bullock’s state cause of action. The decision below cannot be reconciled with the rulings of this Court or the principles of federal labor policy reflected in those rulings. As this Court most recently stated in Longshoremen v. Davis, 476 U.S. 380 (1985): Subject to exception only in limited circumstances, “[w]hen an activity is arguably subject to §7 or §8 of the Act * * *, a aS Rani A am 15 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.” Id. at 381, quoting Garmon, supra, 359 U.S. at 245. Citing its early opinion in Garner v. Teamsters, 346 U.S. 485, 490-491 (1953), the Court in Longshoremen repeated “what has come to be the accepted basis for the broadly pre-emptive scope of the NLRA” (476 US. at 389): “Congress did not merely lay down a substantive rule of law to be enforced by any tribunal competent to apply law generally to the parties. It went on to confine primary interpretation and application of its rules to a specific and specially constituted tribunal and prescribed a particular procedure for investigation, complaint and notice, and hear- ing and decision, including judicial relief pending a final administrative order. Congress evidently considered that cen- tralized administration of specially designed procedures was necessary to obtain uniform application of its substantive rules and to avoid these diversities and conflicts likely to result from a variety of local procedures and attitudes toward labor controversies... . A multiplicity of tribunals and a diversity of procedures are quite as apt to produce incompati- ble or conflicting adjudications as are different rules of substantive law.” (Emphasis added.) The Court in Longshoremen went on to emphasize the “now well-established scope of [Garmon] pre-emption” (id.): that in light of the statute’s “complex and interrelated federal scheme of law, remedy, and administration,” Garmon, 359 U.S. at 243, “due regard for the federal enactment requires that state jurisdiction must yield” (id. at 244) in circumstances where “the activities sought to be regulated by a State are clearly or may fairly be assumed to be within the purview of §7 or §8.” Even in ambigu- ous situations, this Court admonished, “courts are not primary tribunals to adjudicate such issues. It is essential to the adminis- tration of the Act that these determinations be left in the first 16 instance to the National Labor Relations Board.” 476 U.S. at 389-390, quoting Garmon, 359 U.S. at 244-245. The force of NLRA preemption is so powerful that, “[i]f there is pre-emption under Garmon, then state jurisdiction is extinguished.” 476 U.S. at 391 (footnote omitted). The Garmon preemption doctrine has frequently been in- voked to bar common law claims, however styled, brought by employees in state courts. For example, in Motor Coach Employ- ees v. Lockridge, 403 U.S. 274 (1971), a union member brought a state court contract action against his union after being dis- charged pursuant to a union security clause in a labor contract. This Court held that Lockridge’s state-law claim involved con- duct within the purview of §7 and §8 of the Act, and explicitly rejected the reasoning of the Idaho Supreme Court — identical to the Michigan Supreme Court’s reasoning here — that the theory or label of the state lawsuit made a difference: Assuredly the proposition that Lockridge’s complaint was not subject to the exclusive jurisdiction of the NLRB be- cause it charged a breach of contract rather than an unfair labor practice is not tenable. Pre-emption * * * is designed to shield the system from conflicting regulation of conduct. /t is the conduct being regulated, not the formal description of governing legal standards, that is the proper focus of concern. Id. at 292 (emphasis added). More recently the Court held in Operating Engineers v. Jones, 460 U.S. 669 (1983), that a state-law claim of interference with an employment contract brought by an employee/union member was preempted under Garmon because, once again, it involved conduct arguably protected or prohibited by the Act. This was so even though the state-law claim was not identical to that which could have been presented to the NLRB. The Court rejected Jones’ “identicality of controversies” argument — which was fully relied on by the court below — for two reasons that apply here. First, adjudicating the employee’s state-law claim would require the state court to decide federal labor law issues in the first instance, issues which “should be resolved by the Board”; 17 second, the claims overlapped on a “crucial element” of federal law rendering “the federal and state claims * * * the same in a fundamental respect.” 460 U.S. at 682. As a result, “[t]}he risk of interference with the Board’s jurisdiction [was] obvious and substantial.” Jd. at 683.1! Contrary to these decisions of this Court, the Michigan Supreme Court characterized Bullock’s lawsuit as “essentially an ordinary contract action, routinely heard in state court” (App., infra, 27a). The Michigan court not only applied the notion of “identicality” in an improper and mechanistic way, see Operating Engineers v. Jones, supra; it disregarded the “arguably protected” branch of Garmon preemption; and it wholly failed to understand the scope of §7 and §8 of the NLRA and the role and jurisdiction of the NLRB. Most fundamentally, the court ignored the fact that, under §9(a) of the Act, once Bullock and his co-workers voted for union representation, the union became “the exclusive representative[ } of all the employees in such unit for the purposes of Collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment * * *.” As this Court stated in NLRB v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 180 (1967): National labor policy has been built on the premise that by pooling their economic strength and acting through a labor 11 Compare Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180, 197 (1978), upon which the Michigan Supreme Court rested its decision. Sears involved an employer’s trespass action against union picketing where the union declined to file an unfair labor practice charge with the NLRB, and the employer was unable to do so. The Court stated that the “critical inquiry” for the “arguably prohibited” branch of Garmon preemption is whether “the controversy presented to the state court is identical to*** or different from * * * that which could have been, but was not, presented to the Labor Board.” 436 U.S. at 197. The state court issue in Sears was the location of the picketing whereas the NLRA issues were “completely unrelated to the simple question whether a trespass had occurred.” /d. at 198. The Court in Operating Engineers v. Jones, supra, appears to have eased the “identicality of controver- sies” standard in the context of an employee claim more closely resembling that here. In any event, this “identicality” standard is not applicable to the “arguably protected” branch of Garmon preemption, upon which AAA also relies. 18 organization freely chosen by the majority, the employees of an appropriate unit have the most effective means of bar- gaining for improvements in wages, hours, and working conditions. The policy therefore extinguishes the individual employee's power to order his own relations with his em- ployer and creates a power vested in the chosen representa- tive to act in the interests of all employees. * * * Thus only the union may contract the employee's terms and conditions of employment * * *. The employee may disagree with many of the union decisions but is bound by them. (Emphasis added. ) See also Emporium Capwell Co. v. Community Org., 420 U.S. 50, 62-64 (1975) (separate bargaining by individual employees is antithetical to the Act’s principle of exclusive representation and is therefore unprotected). The core of Bullock’s state-law claims (and those of his 75 discharged co-workers) is that AAA wrongfully applied to him the unit compensation system and minimum production standards implemented following the impasse in collective bargaining with Bullock’s union — inasmuch as he had allegedly been orally promised 14 years earlier that he would be paid on a commission basis and discharged only if caught stealing. Bullock thus con- tends that he had an individual oral employment contract provid- ing totally different terms than those flowing from the collective bargaining process. Bullock’s state-law claims could surely have been presented to the NLRB as an unlawful unilateral change by AAA that was “arguably prohibited” by §8(a)(5) and §8(d) of the NLRA, though the NLRB would likely have rejected his claims (as the Michigan court surmised) on the ground that AAA’s action was in fact sanctioned or “protected” by the Act. This is so because the right of an employer to implement a final offer following an impasse in collective bargaining with a union, and thereby lawfully alter prior terms of employment for unit employees, is established beyond any question. See, e.g., Laborers Health & Welfare Trust Fund v. Advanced Lightweight Concrete Co, _US.__, 108 S. Ct. 830, 833 n.5 (1988); HK. Porter 19 Co. v. NLRB, 397 U.S. 99, 108-109 (1970); American Ship Building Co. v. NLRB, 380 U.S. 300, 316 (1965); NLRB v. Katz, 369 U.S. 736, 745 (1962); Powell v. National Football League, ___F.2d__, 132 LRRM 2866, 2872 (8th Cir. Nov. 1, 1989); Western Newspaper Publishing Co., 269 NLRB 335 (1984); Bi- Rite Foods, Inc., 147 NLRB 59 (1964). Having exercised that right, it would be plainly violative of §8(a)(5) and §8(d) for an employer to apply to Bullock any terms other than those con- tained in the unilaterally implemented final offer. See Emhart Industries, 297 NLRB No. 29 (1989). If AAA could not have voluntarily acceded to Bullock’s claim under federal law, a fortiori AAA cannot be compelled to do so by Bullock’s state court action. Bullock and his union were free to file an unfair labor practice charge with the NLRB contesting AAA’s unilateral implementation of the terms of its final offer; if a violation were found, the NLRB would be empowered to order re-establishment of the prior terms (the very relief Bullock seeks in his suit). LaPorte Transit Co., 286 NLRB No. 10 (19 __ ), enforced, ___ F.2d __ (7th Cir. Nov. 1, 1989). Indeed, the union did file an NLRB charge here, though it charged AAA only with reprisals under §8(a)(1) and not a failure to bargain in good faith under §8(a) (5) or §8(d). The NLRB dismissed the charge for lack of merit. See Automobile Club of Michigan, 267 NLRB 1206 (1983). AAA’s action was thus presumptively “protected” by the NLRA. But, even if it were not, it would have been “arguably prohibited” and still subject to Garmon preemption. See Operat- ing Engineers v. Jones, supra, 460 U.S. at 681-684. The Board’s jurisdiction is implicated on a second ground. Bullock’s state-law claim posits that his employer had individually contracted with him for terms of employment directly contrary to those produced by collective bargaining with Bullock’s exclusive representative under §9(a) of the Act. As the Court noted in Caterpillar Inc. v. Williams, 482 U.S. 386, 398 n.12 (1987), “it is an unfair labor practice ‘for the employer to disregard the bar- gaining representative by negotiating with individual employees, 20 whether a majority or a minority, with respect to wages, hours, and working conditions,’”’ quoting Medo Photo Supply Corp. v. NLRB, 321 U.S. 678, 684 (1944). The Medo decision affirmed “the essential principle” under the Act that “[b]argaining carried on by the employer directly with the employees * * * who have not revoked their designation of a bargaining agent, would be subversive of the mode of collective bargaining which the statute has ordained * * *.” Jd. See also Emporium Capwell Co., supra; Pacific Intercom Co., 255 NLRB 28 (1981) (individual agree- ments with employees establishing wage rate different than col- lectively bargained rate “bypassed” union and violated §8(a) (5)). In short, Bullock’s state-law claims ineluctably concern con- duct arguably protected or prohibited by the Act. Indeed, his claims seek to achieve a result that would be violative of the Act. He was at all relevant times exclusively represented by the union which bargained on his behalf. He had access to the Board’s remedies.!2 AAA’s unilateral implementation of new employment terms was protected, or it could have been challenged as prohib- ited. While the Michigan court was likely correct that the NLRB would have rejected Bullock’s claims as meritless, and therefore “would not have provided a remedy for his state-law claims” (App., infra, 25a-26a), this Court has consistently rejected such a test for Garmon preemption. See, e.g., Motor Coach Employees v. Lockridge, supra, 403 U.S. at 292. Indeed, the test for Garmon preemption utilized by the Michigan court — whether an NLRB charge is “identical” and would “provide[ ] a remedy for his state- law claims” — would render Garmon preemption inapplicable in virtually every case, despite this Court’s repeated pronouncements to the contrary. The proper test is whether the state-law claim 12 Bullock was clearly not an “innocent third party” outside the bargaining relationship and without a Board remedy, as were the non-union strike replace- ments in Belknap, Inc. v. Hale, 463 U.S. 491, 510-511 (1983) — a case inappropriately relied upon by the Michigan court below. See also Golden State Transit Corp. v. Los Angeles, 475 U.S. 608, 617 n.7 (1986). 21 seeks to regulate conduct within the purview of the Act. That test is plainly satisfied. The decision below foments all of the evils Garmon preemp- tion was designed to avoid. It not only causes a “potential conflict of rules of law, of remedy, and of administration,” 359 U.S. at 242, but it produces a direct confrontation between the federal scheme of labor relations and collective bargaining (which per- mits AAA’s labor practices here) and a state-law contract theory (which purports to condemn those practices as violative of alleged oral “promises”). It is the Board’s function to review the propri- ety of collective bargaining practices. “To leave the States free to regulate conduct so plainly within the central aim of federal regulation involves too great a danger of conflict between power asserted by Congress and requirements imposed by state law.” /d. at 244. As the Court stated in Farmer v. Carpenters, 430 US. 290, 300 n.9 (1977), “Board approval of various * * * practices would be meaningless if state courts could declare those proce- dures violative of [a plaintiff's] contractual rights * * *.” For the Act’s objectives of uniformity and predictability in labor-manage- ment relations to be achieved, administration of matters governed by the Act must be left to the Board because to do otherwise “would create potential frustration of national purposes.” Gar- mon, 359 U.S. at 244-245. This is especially so where state-law claims like Bullock’s are triable to local juries which have no competence in the “complex and interrelated federal scheme of law, remedy, and administration” under the NLRA. /d. at 243. Bullock’s state-law contract claims should accordingly be held preempted under the Garmon doctrine.!* 13 The Court recognized in Garmon, 359 U.S. at 243-244, that states retain the power to regulate “where the activity regulated was a merely peripheral concern” of the Act or “where the regulated conduct touched interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction; we could not infer that Congress had deprived the States of the power to act” (footnote omitted). The Michigan Supreme Court did not rest its holding of non-preemption on either of these exceptions, nor would either apply. Compare Motor Coach Employees v. Lockridge, supra; Operating Engi- 22 B. Bullock’s state-law claims are preempted under Ma- chinists because they undermine an economic self-help remedy that Congress intended to be unregulated and controlled only by the free play of economic forces. A second branch of NLRA preemption, often called Ma- chinists preemption, was developed in Teamsters Union v. Mor- ton, 377 U.S. 252 (1964), and Machinists v. Wisconsin Employment Relations Commission, 427 U.S. 132 (1976). This branch precludes state efforts to regulate conduct that, while neither arguably protected nor prohibited by the Act, nevertheless implicates the federal scheme of labor relations embodied in the Act. It “protects against state interference with policies impli- cated by the structure of the Act, by pre-empting state law and state causes of action concerning conduct that Congress intended to be unregulated.” Metropolitan Life Insurance Co. v. Massachu- setts, 471 U.S. 724, 749 (1985). See also Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 19-20 (1987). In essence, Machinists preemption inquires whether ““Congress occupied this field and closed it to state regulation.” Machinists, 427 U.S. at 146, quoting Morton, 377 US. at 258. Central to Machinists preemption is the principle that “[i]n selecting which forms of economic pressure should be prohib- ited... , Congress struck the ‘balance... between the uncon- trolled power of management and labor to further their respective interests.’ ” Jd. In establishing this balance of conflicting interests, Congress left unregulated certain self-help weapons that were to be controlled solely by “the free play of economic forces.” Machinists, 427 U.S. at 146-147. Moreover, for a state to regulate self-help weapons intended to be left for the “ ‘free play of contending economic forces, . . . is not merely [to fill] a gap [by] outlaw[ing] what federal law fails to outlaw; it is denying one party to an economic contest a weapon that Congress meant him to have available.’ Jd. at 150 (citation omitted). In NLRB v. neers v. Jones, supra. Indeed, the statutory interests involved in this case go straight to the heart of the Act. 23 Insurance Agents’ International Union, 361 U.S. 477, 489 (1960), the Court stated: The presence of economic weapons in reserve, and their actual exercise on occasion by the parties, is part and parcel of the system that the Wagner and Taft-Hartley Acts have recognized. * * * [T]he two factors — necessity for good- faith bargaining between parties, and the availability of economic pressure devices to each to make the other incline to agree on one’s terms — exist side by side. In defining federal labor policy under the NLRA, “Congress determined both how much the conduct of unions and employers should be regulated, and how much it should be left unregulated.” Metropolitan Life Insurance Co., supra, 471 U.S. at 751. The balance thus struck prohibits a state from depriving a party to a labor dispute of an economic self-help weapon Congress granted to it. Recently, in Golden State Transit Corp. v. Los Angeles, 475 U.S. 608 (1986) — a critical case not addressed by the court below — this Court applied Machinists preemption principles in holding that the City of Los Angeles had impermissibly “thwarted” the collective bargaining process by imposing a condi- tion (that the employer resolve a labor dispute by a specified date) on the granting of a taxi franchise renewal. /d. at 615. By imposing this condition, the City had improperly denied the employer “the exercise of economic self-help” which the em- ployer was “entirely justified in using * * * to withstand the strike in an attempt to obtain bargaining concessions from the union.” Id. The economic right of an employer under the NLRA unilat- erally to implement a final offer following an impasse in collec- tive bargaining with a union has long been recognized by this Court and the NLRB. See pages 18-19, supra. The ability to “institute unilaterally [new] working conditions” is an important employer “economic weapon” necessary “to counterbalance the employees’ power of strike.” American Ship Building Co. v. 24 NLRB, 380 U.S. 300, 316 (1965). It is undisputed that AAA exercised this federally protected weapon when, following an impasse in bargaining with Bullock’s union, it implemented the terms of its final offer. Once implemented, these terms became the established and binding terms for bargaining unit employees, including Bullock, until altered through further bargaining or following another impasse. NLRB v. Katz, supra. By permitting bargaining unit employees to maintain state court actions grounded on individual employment contracts con- taining contrary terms, the Michigan court has emasculated an employer’s ability to utilize this weapon in the first instance. As in Golden State Transit, 475 U.S. at 615, allowing such claims “thwart[s] * * * the exercise of economic self-help.” The mere threat of expensive and time-consuming state lawsuits challenging the terms under which each individual employee works following unilateral implementation of a final offer would so chill an employer’s ability to utilize this weapon that it would exercise it only at its peril. The present situation aptly illustrates this peril: Eight years after unilaterally altering terms following the impasse in bargaining, AAA continues to defend scores of state court lawsuits in which local juries will, under the decision below, determine for each individual plaintiff whether AAA effectively implemented new terms of employment on September 1, 1981. Under the Michigan court’s holding, state court juries will be the after-the-fact regulators of an employer’s exercise of a federally sanctioned economic self-help right. That is the Board’s responsi- bility. Juries will have the power to nullify that right altogether by imposing contrary terms of employment allegedly arising from ora! promises. That flies in the face of the Machinists doctrine. The Michigan court simplistically reasoned that “Bul- lock’s action is essentially an ordinary contract action, routinely heard in state court” (App., infra, 27a). The court added that its holding in “Toussaint made no exception for unionized employ- ees” (App., infra, 28a n.22). The court then purported to balance federal and state interests, improperly utilizing a portion of this Court’s Belknap opinion that addressed only Garmon preemption. 25 Machinists preemption entails no such balancing of state and federal interests. Metropolitan Life Insurance Co., supra, 471 U.S. at 749 n.27; see also Golden State Transit, supra, 475 U.S. at 618 n.8. The Michigan court’s holding was not just mistaken. It threatens to disrupt federal labor law and policy governing eco- nomic self-help weapons. In concluding that Bullock’s (and his co-workers’) individual state-law contract claims would not be extinguished until a collective bargaining agreement was actually consummated (which never occurred as the union was later decertified), the Michigan court relied on dictum contained in this Court’s opinion in J.J. Case Co. v. NLRB, 321 U.S. 332, 336-337 (1944) (App., infra, 27a-28).14 The actual holding in J.J. Case concerned an 14 This Court stated in dictum in J./. Case: Care has been taken in the opinions of the Court to reserve a field for the individual contract, even in industries covered by the National Labor Relations Act, not merely as an act or evidence of hiring, but also in the sense of a completely individually bargained contract setting out the terms of employment, because there are circumstances in which it may legally be used, in fact, in which there is no alternative. Without limiting the possibilities, instances such as the following will occur: Men may continue work after a collective agreement expires and, despite negotiation in good faith, the negotiation may be deadlocked or delayed; in the interim express or implied individual agreements may be held to govern. 321 U.S. at 336- 337 (emphasis added). The Michigan court failed to note, however, that this dictum concluded with the following statement by this Court: As the employer in these circumstances may be under no legal obligation to bargain collectively, he may be free to enter into individual contracts. /d. at 337 (footnote omitted) (emphasis added). While it may have been less clear in 1944 under the original version of the NLRA (which did not include §8(d)’s definition of the duty to bargain in in good faith) whscher an employer would legally “be free to enter into individua! contracts” in those circumstances, it certainly has been clear since the Taft- Hartley Act’s addition of §8(d) in 1947 that an employer would violate §8(a)(5) by bargaining individually with employees in such circumstances. See cases cited at pages 19-20, supra. As the reference to “a completely individually bargained contract setting out the terms of employment” also suggests, the Court in J.J. Case did not have in mind the type of contractual oral “promises” alleged here which have been made enforceable by state courts only in the last decade. See note 10, supra. 26 entirely different issue than the enforceability of individual con- tracts by union-represented employees: Individual contracts, no matter what the circumstances that justify their execution or what their terms, may not be availed of to defeat or delay the procedures prescribed by the National Labor Relations Act looking to collective bargain- ing, nor to exclude the contracting employee from a duly ascertained bargaining unit; nor may they be used to forestall bargaining or to limit or condition the terms of the collective agreement. 321 U.S. at 337. Thus, J.J Case’s holding actually supports an opposite proposition than that for which the court below cited it. In relying on dictum, the Michigan court not only discarded the holding of that case, but contravened fundamental federal labor principles by generating wholesale state regulation of the collective bargaining process. Under the Michigan court’s deci- sion, most employers’ pre-agreement bargaining options would be foreclosed because exercising them could produce a multiplicity of state-law claims by individual employees. This certainly was not the result contemplated by Congress nor intended by J.J. Case. II. The Michigan Supreme Court’s Decision Conflicts With Decisions Of Several Federal Courts Of Appeals. A conflict exists on the NLRA preemption issue between the Michigan Supreme Court’s decision below and decisions of the Second, Sixth, Seventh, and Eleventh Circuits. The Michigan court either disregarded these decisions, or mischaracterized “AAA’s reliance” on them as “misplaced” because they only “involve §301 preemption” (App., infra, 21a-22a n.9). Each of the following decisions holds that state-law claims arising in comparable factual contexts are preempted under Garmon or Machinists. In a case virtually identical to the instant case, National Metalcrafters, Division of Keystone Consolidated Industries v. 27 McNeil, 784 F.2d 817 (7th Cir. 1986), an employee and a state official clainied that the company had violated an Illinois wage payment statute by making vacation payments under a formula unilaterally implemented following an impasse in bargaining with the union — rather than under the pre-impasse formula. /d. at 823. In a carefully reasoned opinion by Judge Posner, the Seventh Circuit held the plaintiffs’ state-law claims preempted under Garmon. Id. at 826-828. After thoroughly analyzing §8 of the NLRA, the court concluded that the company’s right unilaterally to implement its final offer following impasse was “protected” by the Act, and that if the company had failed to bargain in good faith to impasse, its conduct would have been “prohibited” by the NLRA. In either event the plaintiffs’ state-law claim was pre- empted. /d. at 827. In essence, the state-law claim simply created a new and conflicting layer of remedies for matters governed by the NLRA. /d. at 828. Thus, National Metalcrafters is directly inconsistent with the Michigan court’s holding here. In Maushund v. Earl C. Smith, Inc., 795 F.2d 589 (6th Cir. 1986), a bargaining unit employee who had not yet achieved seniority coverage under the collective bargaining agreement (by virtue of his “casual” status) alleged a “cause for discharge” individual employment contract under Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980) — precisely the same theory Bullock advances here. The Sixth Circuit held Maushund’s state law claim preempted by the NLRA: [I]t is beyond question that Maushund must look to federal labor law for any relief and that his sole remedy, if any, lies not in state law but in the terms of the collective bargaining agreement. NLRB vy. Allis-Chalmers Mfg. * * *. The collec- tive bargaining process prohibits Maushund from engaging in separate negotiations with the company and precludes any actions to enforce such an agreement. See Emporium Cap- well v. Western Add. Comm. Org. * * *. Maushund’s reliance upon Belknap v. Hale * * * is misplaced. While Belknap held that an employer’s obligations under a collective bargaining 28 agreement did not insulate it from a state’s “normal rules of law” governing its relationships with third parties, Maushund here clearly was not such a third party. 795 F.2d at 590-591. This holding too is in direct conflict with that of the Michigan court. The Second Circuit’s decision in Derrico v. Sheehan Emer- gency Hospital, 844 F.2d 22 (2d Cir. 1988), is also in direct conflict. A bargaining unit employee was discharged during the hiatus between an expired collective bargaining agreement and a newly bargained one. He predicated a state-law wrongful dis- charge claim on an alleged implied “cause for discharge” contract — the same type of claim asserted by Bullock here. The Second Circuit found this claim “inconsistent with the NLRA’s struc- ture” and therefore preempted under Machinists. Id. at 29. First, the court concluded that permitting the claim would artificially limit the bargaining parties’ “economic weapons” which are “an integral part of the balance the NLRA strikes between labor and management.” /d. The court held: Exposure to liability at state law for breach of contract under the circumstances of this case would significantly alter the labor-management relationship * * *. Jd. Second, the employee’s state-law theory “would significantly affect the collective bargaining process that lies at the heart of the NLRA.” Jd. “The potential for disrupting collective bargaining,” the court reasoned, “is thus especially serious in this case and compels the conclusion that the state-law claim is preempted by the NLRA.” Jd. The approach to this NLRA preemption issue in Serrano v. Jones & Laughlin Steel Co., 790 F.2d 1279 (6th Cir. 1986), is also in conflict with that of the Michigan court below. A group of unionized employees alleged that their employer had committed state-law fraud, misrepresentation, and breach of contractual duties by making express or implied promises to employees regarding its decision to keep a plant open. The employees’ union had collectively bargained a concession agreement in anticipation 29 of the plant staying open. The court held that the employees’ state-law claims arising from their termination were preempted by the NLRA under Garmon, Motor Coach Employees v. Lockridge, and Operating Engineers v. Jones. The gravamen of their state- law theories “implicated” the duty to bargain under §8(a) (5) and §8(d) of the NLRA, and the alleged conduct would arguably have involved a violation of §8. Moreover, “[f]ailure of an employer to bargain in good faith about terms and conditions of employment is not peripheral to the concerns of federal labor law; rather, it strikes at the heart of one of the basic concerns of that law.” Id. at 1287. The Sixth Circuit also distinguished Belknap v. Hale as involving two separate groups of employees who had entirely different controversies with their employer: (1) union- represented strikers who were engaged in collective bargaining governed strictly by the NLRA; and (2) non-union replacements “innocent third parties” — who were not involved in the collective bargaining process and whose remedies rested solely on state law. Jd. at 1287-1288. Finally, in Parker v. Connors Steel Co., 855 F.2d 1510, 1515S- 1518 (11th Cir. 1988), cert. denied, 109 S.Ct. 2066 (1989), the Eleventh Circuit adopted the Sixth Circuit’s reasoning in Serrano in holding that virtually identical state-law claims were pre- empted by the NLRA.!5 These conflicts in the application of the NLRA preemption doctrines create uncertainty in a field that, by virtue of the preemptive force of the NLRA, should bear predictability and national uniformity. AAA urges the Court to resolve the conflict, clarify whether the NLRA preempts union-represented employ- ees’ state-law individual contract claims in the circumstances presented here, and bring certainty to this important area affect- ing labor-management relations. 18 The Fifth Circuit in Wells v. General Motors Corp., 881 F.2d 166, 169- 172 (Sth Cir. 1989), rejected the company’s argument that employees’ state-law claims, arising in circumstances not unlike those in Serrano and Parker, were preempted by the NLRA. Wells thus demonstrates conflict within the Circuits on this NLRA preemption issue. 30 CONCLUSION For the reasons stated, the petition for a writ of certiorari should be granted. December 1989 Respectfully submitted, JOHN CORBETT O’MEARA Counsel of Record THEODORE R. OPPERWALL Dickinson, Wright, Moon, Van Dusen & Freeman 800 First National Building Detroit, Michigan 48226 (313) 223-3500 APPENDICES la Appendix A MICHIGAN SUPREME COURT 472 432 Micu 472 [June BULLOCK v AUTOMOBILE CLUB OF MICHIGAN Docket No. 78027. Argued March 5, 1987 (Calendar No. 19). Decided June 6, 1969. William J. Bullock brought an action in the Wayne Circuit Court against the Automobile Club of Michigan, challenging his termination as a commission sales representative after fourteen years with aaa and changes in his compensation. The plaintiff asserted an oral contract of employment on the basis of state- ments made to him when he entered aaa’s employ, and claimed that the contract was breached by aaa when it changed its method of compensating commission sales represen- tatives, adopted new production standards and disciplinary procedures, and subsequently terminated him as a sales repre sentative for failing to meet the new standards. The court, Michael_L. Stacey, J. denied aaa’s motion for accelerated or summary judgment, finding that the plaintiff had stated claims on which relief could be granted and that his claims were not preémpted by federal law. The Court of Appeals, Hoop, PJ., and Bronson and R. L. Tanvonen, JJ., affirmed in an opinion per curiam (Docket No. 71773). Aaa appeals. In an opinion by Justice Boyuz, joined by Justices Bricxiey, CavANAGH, and Agcugr, the Supreme Court held: The plaintiff's claim is not preémpted by the National Labor Relations Act. On the basis of the record, the defendant is not entitled to judgment as a matter of law. The plaintiff pled an action for breach of a verbal contract of employment alleged to have arisen at the commencement of his employment. To the extent that plaintiff relies on policy manu- als as the basis for his claim, In re Certified Question, 432 Mich 438 (1989), provides the guidelines for resolution on remand as to whether unilateral change in the policy manuals would be effective. However, defendant’s assertion of a change in policy manuals does not, on this record, establish that there is no genuine issue of material fact as to whether the plaintiff had an enforceable contract containing a limitation on discharge. Justice Levin, writing separately, stated: The plaintiffs state law claims are not preémpted by the National Labor Relations Act. The denial of the defendant’s 2a Appendix A 1989] BuLiock v AAA 473 production ment contract is one of fact; it cannot be decided on a i for summary disposition, but must be decided by the trier of meee end om are provided by In re Certified Question, 432 Mich 438 (1989). The defendant’s motion for summary judgment should have been granted, however. It is not reasonable to construe the alleged oral assurances by the employer as an enforceable agreement to discharge only for cause. Subjective expectancies of continued employment do not constitute a termination-for- cause contract, and the plaintiff's claim should fail as a matter of law. Caution should be exercised in judging the viability of a breach of contract action based solely on alleged ora! represen- tations recalled years after hiring. What is needed is a modi- cum of realism and common sense. “Lifetime” employment contracts are extraordinary and must be expressed in clear and unequivocal terms. In this case, the allegations are insufficient as a matter of law to provide a basis for a contract of employ- ment that was not terminable at will. 146 Mich App 711; 381 NW2d 793 (1985) affirmed. John W. Mason, Mary Taylor Zick, and Theo- dore S. Andris, P.C. (by Thomas H. Bannigan), for the plaintiff. Fox & Grove (by Kalvin M. Grove, Steven L. Gillman, and Allison C. Blakley) and Finkel, Whitefield & Selik (by Robert J. Finkel) for the defendants. The Fishman Group (by Steven J. Fishman and 3a Appendix A 474 482 Micn 472 [June OPINION OF THE CouRT Malcolm D. Brown) for Michigan State Chamber of Commerce. Butzel, Long, Gust, Klein & Van Zile, P.C. (by William M. Saxton and David B. Calzone), for Greater Detroit Chamber of Commerce. BoyYLe, J. I This is an interlocutory appeal by the defendant from the trial court’s denial of its motion for summary judgment pursuant to GCR 1963, 117.2(3),' alleging that there is no genuine issue of material fact and that aaa is therefore entitled to judgment as a matter of law.’ The motion was filed before defendant’s answer and before any mean- ingful discovery. A motion for summary judgment filed before interrogatories and depositions are taken tests whether a cause of action has been stated, but a motion, filed after depositions and interrogatories, generally tests whether the opposing party’s ap- propriate data raises a genuine issue as to any material fact. The function of a court in disposing of a motion for summary judgment is not to decide issues of fact, but to ascertain whether or not there is an issue of fact to be tried, resolving all 1 Now MCR 2.116(CX10). 2 While aaa’s trial court motion was brought on alternate ground of GCR 1963, 117.2(1), failure to state a claim upon which relief may be granted and GCR 1963, 117.2(3), it does not now that Bullock’s amended complaint is technically deficient, Le. that it fails on its face to state a claim for a breach of contract. The defendant's brief does touch upon an issue of indefiniteness which be characterized as an attack upon the sufficiency of the but this issue was raised in neither the trial court nor in Court of a resolution of this matter is therefore limited to the GCR 117 question. 4a Appendix A 1989] BuLLock v AAA 475 OF THE doubts as to the existence of a genuine issue of fact against a moving party. The fact allegations vits of must be considered to be true. Inferences must be viewed in the light most favorable to the opposing the motion. [7 Callaghan’s Michigan Pleading & Practice (2d ed), § 43.12, p 30.] The timing of the defendant’s motion, coupled with the failure of the defendants to specifically identify the issue as to which it believes there is no genuine issue of material fact,’ places this case in an awkward posture for appellate review. Also, the trial court’s analysis and that of the Court of Appeals focused on the employment-manual excep- tion to employment at will and the question as to whether and under what circumstances an em- ployer may alter policy manuals. However, turn- ing first to the pleadings,‘ I find the following, common allegations: 3. That when Plaintiff entered the employ of Defendant he entered the employ of Defendant based upon [sic] the following promises: a) That he would have a lifetime job as long as he did not steal; b) that he would work as a commission sales- man for Defendant and enjoy the benefits of a seven (7%) percent commission for sales which had been in effect for many years; c) that if he worked hard and built up his “book of business,” he would be able to earn large sums of money; d) that if he worked hard and built up his “book of business,” he could enjoy his later working years with Defendant by realizing commissions 3 MCR 2.116(GX4) now requires a specific identification of the alleg- edly undisputed issue. Sa Appendix A 476 432 Micu 472 [June Ornaon oF THE Court from the “book of business,” which “book of busi- ness” is the accumulated memberships and policies which a commission salesman builds up over the years. 4. That for many years, Defendant worked very hard and built up his “book of business” in reli- ance upon the promises of Defendant and in order to enable him to enjoy the benefits of a large salary due to his individual efforts in developing his business. In addition to these common allegations, count 1 of the first amended complaint asserts a breach of contract upon the basis of the following actions of AAA: a) Eliminating commissions as a basis of com- pensation for sales persons; b) establishing a “unit compensation” program whereby the commission salesmen would only get a certain amount of money per membership or policy rather than a percentage commission as had been promised to the commission salesmen when they entered the employ of Defendant; c) establishing non-competitive rates for its product; d) coercing Plaintiff and other similarly situated out of their employment thereby breaching the express and implied contract between Plaintiff and Defendant. Finally, paragraph 7 of the first amended com- plaint alleges that these actions violated plaintiff's 6a Appendix A 1989} BuLLock v AAA 477 Opinion or THe Court job in which he was told he would be able to earn large commissions.” In support of its motion, AAA submitted two affidavits. The affidavit of Gerald Trocchio asserts facts relevant only to the issue of NLRA preémp- tion. On the other hand, the affidavit of Frederick A. Cruise, Vice President for Corporate Opera- tions, states a number of facts relevant to the state law issues of this appeal. This affidavit essentially admits that plaintiff was discharged for failure to meet minimum production quotas imposed by AAA after reaching impasse in its negotiations with plaintiffs union. Of greatest significance, however, are paragraphs 6 and 7 of the affidavit of Mr. 6. The Company has continuously reviewed and revised its employment policies. For example, ex- amination of the Company’s Sales Rules Manual reveals that the entire manual was revised on July 1, 1972, and that particular sections were again revised on November 1, 1973 and July 1, 1975. Def. Exh. a. Similarly, memorandum issued by the Company in 1971 and 1978 pertaining to minimum production requirements reveals that in 1971 sales personnel were required to sell a minimum of thirty memberships per month and in 1978 sales personnel were required to sell a minimum of twenty memberships. Def. Exh. s. Likewise, exami- nation of the Company’s “Employee Complaint Review Policy” reveals that it was revised in November, 1979, and again in April, 1981. Def. c. 7. Defendant’s Exhibits a, B, and c to Defen- 5 We are in this instance ing a ion of dis- gains peccureneeeas tints «Sats 7a Appendix A 478 432 Micu 472 [June OPINION oF THE CouRT dants’ Memorandum of Law in Support of Defen- dants’ Motion to Dismiss are true and correct copies of documents maintained by Defendants in the ordinary course of its business. After reviewing the pleadings and affidavits, the trial court denied defendant’s motion for summary judgment. Bullock submitted his own affidavit in the Court of Appeals, stating in part: 7. The Company never reserved the right to unilaterally change Company rules regarding grounds for demotion and/or discharge. I was clearly told by the Company at the time I was hired and many times thereafter that nobody gets fired unless they steal. 8. The Sales Rules Manual distributed to com- mission sales representatives, to the extent they contained any language regarding termination of direct promise and custom and practice that no one would get fired unless they stole. The defendant’s motion to strike this affidavit was denied by the Court of Appeals on February 2, 1985. The defendant has not renewed its motion in this Court. - The Court of Appeals affirmed the trial court’s denial of the defendant’s motion for summary judgment.® We agree with part u of Justice Levin’s opinion, $ Bullock vy Automobile Club of Michigan, 146 Mich App 711; 381 NW2d 793 (1985). 8a Appendix A 1989} BuLLock v AAA 479 OPINION oF THE CouRT concluding that plaintiffs claim is not’ preémpted by the National Labor Relations Act, 29 USC 151 et seq. Proper resolution of the state law issues raised by the defendant requires further analysis. Ill Without identifying the nature or elements of Bullock’s claim, AAA argues in support of its gen- eral assertion that no genuine issue of material fact precluded the trial court from granting its summary judgment motion. What at first blush might be oversight is undoubtedly due to a desire to preserve a position when an answer is filed, both as to the formation of the contract pled by Bullock and the existence of such a contract at the time of Bullock’s discharge. The defendant’s efforts to preserve these questions are sound strategy, but the pleadings and affidavits currently before us present undisputed oral promises made to Bullock at the time he entered defendant’s employ. These must be deemed true.’ The defendant argues that a right to amend employment policies is fully consistent with the presumption of employment at will. We agree. This observation, however, is most pertinent to the plaintiff having pled in part that defendant’s ac- tions violated his reasonable expectations based on “policy statements” of the defendant, the origin and precise nature of which have not yet been identified. Bullock has also pled that the defen- dant’s actions breached an express oral promise. melding of contract theory and mate , the prior opinions of this have done to clarify the relationship between these two theories. 9a Appendix A 480 432 Micu 472 [June Opinion oF THE Court While the policy manual legitimate expectations analysis of Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579; 292 NW2d 880 (1980), may have in practice obecured that portion of the opinion dealing with a contract arising from an express agreement, oral or written, it is clear that the Toussaint majority held both that a provision of an employment contract providing that an em- ployee shall not be discharged except for cause is legally enforceable and that the contract may be established in alternative ways. According to Tous- saint, formation may be “either by express agree- ment, oral or written, or as a result of an employ- ee’s legitimate expectations grounded in an em- ployer’s policy statements.” Id, p 598 (emphasis added). The majority in Toussaint carefully pointed out that the enforceability of personnel policies did not turn on whether negotiations had taken place, the parties’ minds had not met on the subject, the employee knew nothing of the particulars, or that the employer could change the policies unilater- ally. Policy manuals in this situation were enforce- able not as express promises, in quasi contract, or because of promissory estoppel, but because the Court under its common-law authority recognized the enforceability of “‘a situation ‘instinct with an obligation,’ ” id., p 613, an obligation distinct from and independent of contract analysis. In Toussaint and Ebling, the Court held that there was sufficient evidence of an express agree- ment to justify submission to a jury. Toussaint, supra, p 598. While the Court in Toussaint also held that there was sufficient evidence of Tous- saint’s legitimate expectations grounded in the policy manual to submit to the jury, id, p 599, apart from the employment manual upon which Toussaint’s legitimate expectations were based, 10a Appendix A 1989] BuLiock v AAA 481 Opnnion or THE Court four members of the Court found that testimony as to the promises of Allen R. Schaedel, the defen- dant’s treasurer, created a jury-submissible issue as to whether there was a discharge-for-cause contract. In Ebling, the corporate vice president, Richard Manoogian, promised that, if anything detrimental came up between Ebling and his immediate super- visor regarding Ebling’s performance, Manoogian would personally review Ebling’s performance and give him a chance to “correct things.” The plaintiff testified that Manoogian further promised Ebling that, if he was doing the job, he would not be discharged. Id., p 626 (separate opinion of Ryan, J.). All members of the Court, Chief Justice Coxr- MAN, and Justices KAVANAUGH, WILLIAMS, Moopy, Levin, Ryan, and FirzGgRa.p, agreed that this testimony created a jury- submissible issue as to whether plaintiffs employment was not termina- ble at will but only for cause. Id., pp 633-644. To paraphrase the language in Toussaint, id., p 611, and illustrate the distinction between the alternative theories of “enforceability” there rec- ognized, suppose that a policy manual providing for employment at will was extant at the time an employee was hired. Could it be said that such a manual, as a matter of law, precluded the enforce- ability of a later written contract providing “in so many words” that the employee could not be discharged except for cause? We think not. Like wise, it cannot be said that where an express agreement is alleged preceding an employment manual, the alleged promise is, as a matter of law, unenforceable.* *I note, but decline to address, the defendant’s argument that an oral contract of Pon Gee ee 182; MSA t to g lla Appendix A 482 . 432 Micu 472 [June OPINION OF THE CoURT In In re Certified Question we have today said that the obligation recognized by the policy man- ual leg of Toussaint does not preclude employers from amending employment manuals. In re Certi- fied Question does not, however, do more than establish that discharge-for-cause policy provisions may be modified on the basis of “reasonable notice of the change... uniformly given to affected employees,” issues which the defendant’s affidavit understandably does not address. It does not estab- lish that amendments to employment manuals must be construed to be modifications of a distinct, express, or implied-in-fact contract. As the plead- ings and affidavits stand, Bullock alleges an oral contract for hire in which the employer limited his right to terminate, not employment at will. ~ Jt is true, as the defendant contends, that indefi- nite hirings have been considered to be terminable at will. 9 Williston, Contracts, § 1017, p 131. How- ever, as recognized by both the Toussaint majority and dissent, this rule, properly conceived, has never been more than one of construction.’ Tous- saint, supra, pp 597, 650. Bullock has alleged an oral contract of employment containing a dis- charge-for-cause provision and the defendant’s aff- davits do not rebut that allegation. This allegation sets forth a claim under the holding in Toussaint that the express promise of the employer apart from the employment manual may create a jury- submissible issue. The extent of plaintiffs reliance on policy manu- als and the effect of the manuals submitted by the proper! before this Court. Whether the should reconsider ulate the statute of frauds is a matter not properly before the Court. ®In this both Toussaint and Lynas v Maxwell Farms, 279 Mich 684, 687; 273 NW 315 (1987), depart from the rule under which employment at will is treated as a substantive limitation on the enforcement of contracts (post, pp 517-518, Gamrrm, J.). 12a Appendix A 1989] BuLLock v AAA 483 Orinton oF THs Court defendant cannot be resolved on this record. These matters may be raised on remand in light of In re Certified Question. However, as to plaintiff's alle gation of an oral promise, plaintiff's pleadings, which must be deemed true, allege a breach of discharge-for-cause employment under Toussaint. The — manuals submitted by the defen- dant, to extent that they do not constitute unilateral modification of the policy basis of plain- tiffs claim, must be seen on this record as an offer to modify the discharge-for-cause provision of Bul- lock’s alleged express contract and do not-entitle the defendant to summary disposition. The determination of the effect of these manuals on Bullock’s allegations must await further discov- ery and perhaps trial. We do not, at this point, It also should be noted there are factors in the complaint which may bring it within the distinguishing features hoiding of ing v t Facts similar to these fueled body of case law extending the duty of good faith to discharges em t- at- will contracts. See, e.g., Fortune v Nat’] Cash Co, 373 Mess 96; 364 NE2d 1261 (1 Maddaloni v Western Bus Lines, Inc, 386 Mass 877; 488 NE2d 361 (1962); Cook v Alexander & Alexander, 4 Conn 246; 488 A2d 1296 (1965); K mart Corp v Ponsock, 732 P2d 1365 , 1987), v Interactive Data Corp, 47 Cal 3d 654; 264 Cal Rptr 211; 765 P2d 373 (1968). l3a Appendix A 484 432 Micu 472 [June Court iN OF THE do not know at this point whether the alleged promise of “a lifetime job as long as he did not steal” was either intended by the defendant or understood by Bullock in the literal sense which disturbs the dissent." In sum, to the extent that plaintiff relies on policy manuals as the basis for his claim, In re Certified Question provides the guidelines for reso- lution on remand as to whether unilateral change in the policy manuals ‘vould be effective. However, defendant’s assertion of a change in policy manu- als does not, on this record, establish that there is no genuine issue of material fact as to whether the plaintiff had an enforceable contract containing a limitation on discharge. The defendant is not enti- tled to judgment as a matter of law. Although not all courts have recognized exceptions or limita- doctrine. [Summers, Labor law as the century turns: a changing l4a Appendix A 1989] Bu.iock v AAA 485 Ornnon sy Lavin, J. IV CONCLUSION Bullock has pled an action for a breach of an oral contract of employment alleged to have arisen at the commencement of his employment. The defendant’s affidavits in regard to its policy manu- als do not entitle the defendant to judgment under GCR 1963, 117.23). We affirm the decisions of the trial court and the Court of Appeals denying the defendant’s mo- tion for summary judgment and remand the case to the trial court for further proceedings consis- tent with this opinion and In re Certified Ques- tion." We do not retain jurisdiction. BRICKLEY, CAVANAGH, and ARCHER, JJ., con- curred with Boy.e, J. Levin, J. William J. Bullock claims that the Automobile Club of Michigan breached an oral contract of employment when it discharged him for failing to achieve production standards set forth in a revision of its sales rules manual. AAA asserts that it had the right to revise minimum production standards, although the right to do so was not expressly reserved in the manual, and that, in all events, Bullock’s claim is preémpted by the National Labor Relations Act. The instent case was argued together with In re Certified Question, 432 Mich 438; NW2d — (1989), also decided today. In In re Certified Ques- tion, this Court holds that an employer may, with- out an express reservation of the right to do so, 18 We recognize the limited nature of this response to an invitation bo ake Se Dare Sees erpeeny matmestion of the oval promise recognised in Toussaint. If we are to exercise that authority 15a Appendix A 486 432 Micu 472 [June Ornaion sy Levin, J. unilaterally change a discharge-for-cause written policy statement to a terminable-at-will policy. In In re Certified Question, there was no dispute concerning the terms of the employment contract. The stated question posited that the terms of the employee manual had become terms of the em- ployment contract. The dispute was whether the employer could unilaterally change a policy stated in the employee’s manual that had become a term of the employment contract. Here, the central question is what were the terms of the employ- ment contract, specifically, whether the provisions of the sales rules manual concerning minimum production standards were terms of the employ- ment contract, as claimed by Aaa, or whether, as claimed by Bullock, the provisions of the sales rules manual were inconsistent with an orally agreed upon employment contract and not terms of the contract. A majority of the Court agrees with the circuit judge and the Court of Appeals' that the question what were the terms of the employment contract should not have been decided on the motion for summary disposition. The question should be de- cided by the trier of fact following a trial at which employer and employee witnesses testify. We all agree with the circuit judge and the Court of Appeals that Bullock’s claim is not preémpted by the National Labor Relations Act. The National Labor Relations Act does not address the state law claims set forth in Bullock’s com- plaint. Bullock’s claims do not concern conduct Congress intended to leave unregulated by state law. Although a union was certified, no collection bargaining agreement was entered into between 1 Bullock v Auto Club of Michigan, 146 Mich App 711; 381 NW2d 793 (1985). l6a Appendix A 1989} BuLLock v AAA 487 Opinion sy Levin, J. AAA and the union. The state law claims of the members of the union were not instantly extin- guished when the union was certified, before nego- tiations for a collective bargaining agreement be- gan and without regard to whether a collective agreement was entered into. Aaa terminated Bullock’s employment as a com- mission sales representative after employing him in that capacity for nearly fourteen years. Bullock remained at aaa working as a salaried sales em- ployee, a member advisor. Bullock commenced this action alleging that the termination of his employ- ment a8 a commission sales representative and changes in his compensation breached his oral contract of employment. Bullock based his claim of an oral employment contract on statements assert- edly made to him when he was employed as a sales representative with aaa in May, 1968. Ac- cording ts Bullock, he was told that (1) he. would have a lifetime job with aaa as long as he did not steal; (2) he could work as a commission sales representative for AAA and continue to receive a seven percent commission for insurance sales; and (3) if he worked hard and built up his “book of business,” he would enjoy his later working years by realizing substantial commissions from that “book of business.” In 1978, aaa changed its method of compensa- tion for commission sales representatives, substi- tuting a “unit compensation plan” for the straight seven percent commission system. In September, 1981, AAa adopted production standards and a disciplinary procedure to be followed when sales representatives failed to meet the new standards. In February, 1982, Bullock was terminated as a 17a Appendix A 488 432 Micu 472 [June Opmni0n By Levin, J. commission sales representative after failing to meet AAA production standards.’ Bullock contends that the production standards were not imposed to increase productivity, but were part of a scheme to “eliminate senior and older commission sales representatives from the staff’ because the standards did not take “into consideration the fact that the senior commission salesmen had to spend disproportionate amounts of their time in servicing existing accounts, rather than seeking out new business.” Bullock asserts that Aaa decided to eliminate senior commission salesmen and replace them with “younger, lower paid salaried personnel.” In addition to pleading a claim for breach of contract, Bullock also claimed that Aaa is liable for unjust enrichment,’ conver- sion,‘ age discrimination,’ and negligent evalua- tion.* Aaa did not answer Bullock’s complaint. AAA 2In the termination letter, aaa offered Bullock a salaried position as a “member advisor.” 3 Bullock claims that in taking back his “book of business” when he was terminated as a sales representative, AAA was unjustly enriched. 4 Bullock claims he had a property right in his “book of business” and that property right was taken from him as a result of wrongful acts of AAA. eae ea ee by contract. See also Lichnovaky v Ziebart Int'l, did Micke 228" 228; ou NW2d 732 (1982). Bullock claims a property interest in the renewals arising as a result of contract. § Bullock alleges that the production standards were designed to displace senior and older commission salespersons. mtiwtioM 18a Appendix A 1989] BuLLock v AAA 489 Ornaion sy Levin, J. moved for accelerated judgment, claiming that Bullock’s cause of action was preémpted by federal labor law and, therefore, a state court lacked jurisdiction to hear the matter.’ Aaa alternatively 7Aaa’s motion for accelerated judgment, or in the alternative summary judgment, sought judgment in its favor pursuant to GCR 1963, 116 and 117, on the grounds that “first, the Court lacks jurisdiction of the subject matter; second, Plaintiff has failed to state a claim upon which relief can be granted; and, third, there is no genuine issue as to any material fact and that Defendants are entitled to judgment as a matter of law... .” The memorandum of law in support of the motion contained the following headings: A. The Com t Must Be Dismissed In Accordance With Principles Of Preémption. 1. Plaintiff's Toussaint Claim Is Preém Because It Seeks so EY Te SE SE Senane Under Federal w a. States Are Precluded From Interfering With The Policy Of Free Collective Bargaining Established By Federal Law. Oe eee fee se ae & end Fah Unilateral Change Cannot Be Infringed By A State Cause Of c. A Law Of General - Is Nonetheless Preémpted If Tits Application Would Federal Scheme. © Paces Sealed Chaken to Ades Poehensed Bacsece bk Seeks To Regulate Conduct Exclusively Within The Unfair B. The Complaint Must Be Dismissed Because The Supreme Court Of Michigan Never Intended Toussaint To Apply In A Union Context. C. The Complaint Must Be Dismissed Because Toussaint Protects An Employer’s Right To Make A Unilateral D. The Complaint Must Be Dismissed Because The Company Never Breached Plaintiff's Alleged Rights Under Toussaint. Sees described the process, the ine of contained in aaa’s final offer other, referred to the tation of the final offer, stated that of the company’s 570 sales includ- ing Bullock, to meet the new minimum er ee eens ee renane an eateries employee advisors which affidavit further 19a Appendix A 490 432 Micu 472 [June Opnvion sy Levin, J. moved for summary judgment, claiming that Bul- lock had failed to state a claim on which relief could be granted and that Aaa was entitled to judgment because (1) Toussaint v Blue Cross & Blue Shield, 408 Mich 579; 292 NW2d 880 (1980), is not applicable to unionized employees, (2) Tous- saint provided that employers may make unilat- eral policy changes, and (3) under the common-law requirements of Toussaint, aaa did not breach any of Bullock’s contract rights. The basis of decision proposed in the dissenting opinion was not stated in AAA’s motion or supporting brief. The circuit judge found that Bullock’s claims were not preémpted by federal law and denied AAa’s motion for accelerated judgment. He also rejected the arguments made in support of AAa’s motion for summary judgment. The Court of Ap- peals Affirmed.* Aaa raises the following questions in this Court: 1. May an employer revise its personnel prac- tices, including required standards of job perfor- mance, notwithstanding that some employees might not have been aware that the policies previ- ously in effect were subject to revision? 2. Do the undisputed facts demonstrate, as a matter of law, that Bullock knew or should have following n 26. A copy of the sales rules manual as revised July 1, 1972, was also attached. ately after the amended complaint filed, but the order denying was the motion was not entered for almost two months. * Bullock v Automobile Club of Michigan, 146 Mich 711; 381 NW2d 793 (1985). “- 20a Appendix A 1989] Buttock v AAA 491 Ornnion sy Levin, J. known that Aaa’s personnel policies were subject to revision? 3. May employees—on whose behalf a union has negotiated wages, hours and working conditions— invoke pre-union, individual contract rights to supersede the lawful results of the negotiations? A majority of the Court affirms the Court of Appeals and the circuit court denials of Aaa’s motion for accelerated and summary judgment. I We first address the question whether the circuit court lacked jurisdiction of the subject matter because Bullock’s state-law claims were preémpted by the NLRA. A When Bullock was hired in 1968, Aaa’s sales employees were not represented by a union. On February 7, 1978, the Michigan AAA Sales Associ- ation was certified as the exclusive bargaining representative for AAaA’s commission sales repre- sentatives. Although Aaa and the union met nu- merous times to negotiate & collective bargaining agreement, they failed to reach an agreement because the union would not accede to Aaa’s de- mand that the agreement contain minimum pro- duction standards. Aaa’s final offer included a proposal for minimum production standards. On August 5, 1981, the union rejected this final offer at a general meeting of its membership, thus creating an impasse in the bargaining. After fur- ther attempts to negotiate a collective bargaining agreement failed, the union was decertified in October, 1982. Aaa implemented the proposed production stan- 2la Appendix A 492 432 Micu 472 [June OPINION BY dards on September 1, 1981. Accompanying the production standards was a disciplinary procedure providing that a sales representative who did not meet a production standard during any month would receive an oral warning. If the representa- tive failed to meet the standards for four succes- sive months, he would receive a written warning, probation, and would ultimately be subject to de- motion or termination. Aaa contends that Bullock’s termination was lawful because he was discharged for failing to meet AAA’s production standards after aaa fol- lowed the steps outlined in its disciplinary proce- dure. Aaa and the amicus curiae, Michigan State Chamber of Commerce, argue that Bullock’s claim is preémpted for two reasons: (1) aaa’s right to impose production standards is within the exclu- sive jurisdiction of the National Labor Relations Board, and (2) Bullock’s state law claims disrupt the collective bargaining process by attempting to deprive AAA of an economic weapon of self-help, namely, the right to implement a final offer after an impasse. Bullock responds that state courts retain juris- diction of state- law claims where the parties have not entered into a collective bargaining agreement and where the litigation does not concern federal interests, but rather discrete state interests. The United States Supreme Court has developed two doctrines for determining whether a state claim is preémpted by the NiRA.’ One doctrine, set * Golden State Transit Corp v Los 475 US 608, 613; 106 S Ct 1396; 89 L Ed 2d 616 (1986); Life Ins Co v Massachu- setts, 471 US 724; 105 S Ct 2380; 85 L Ed 2d 728 (1985). Another line of federal preémption, preémption under § 301(a) of 22a Appendix A 1989] BuLLock v AAA 493 Opmion sy Levin, J. forth in San Diego Building Trades Council v Garmon, 359 US 236, 245; 79 S Ct 773; 3 L Ed 2d 775 (1959), established that state regulations and causes of action are preémpted when they concern an activity that is actually or arguably protected or prohibited by the NLRA. The state claim may survive, however, if the conduct at issue “is of only peripheral concern to the federal law or touches interests so deeply rooted in local feeling and responsibility ....”” The court balances the state’s interest in regulating or promoting a rem- edy for the conduct against the intrusion in the NLRB’s jurisdiction and the risk that the state’s determination will be inconsistent with provisions of the NLRA. The second preémption doctrine originated in Machinists v Wisconsin Employment Relations Comm, 427 US 132; 96 S Ct 2548; 49 L Ed 2d 396 (1976), and was “designed, at least initially, to govern pre-emption questions that arose concern- ing activity that was neither arguably protected from employer interference by 8§7 and &aX1) of the NLRA, nor arguably prohibited as an unfair labor practice by § 8(b) of that Act.”" Machinists preémption prohibits state regulation and state law claims involving conduct that Congress in- tended to remain unregulated, namely, the use of the Labor Management Relations Act of 1947, 61 Stat 156, 29 USC 185(a), is not pertinent because the in tion of a collective agreement is not involved. v Ne Div of \ Chef, 486 US —, —; 108 S Ct 1877 1880-1881; 100 L Ed 2d 410 McNeil 764 Bad 617 (CA 1, 1000) cod Ben Oe of ughlin Steel Co, 790 F2d 1279 (CA 6, 1986), is misplaced as both cases involve § 301 preémption. %” Belknap, Inc v Hale, 46{. US 491, 498; 103 S Ct 3172; 77 L Ed 2d 798 (1983); San Diego Building Trades Council v Garmon, 350 US 236, 243-244; 79 S Ct 773; 3 L Ed 2d 775 (1968). 11 Metropolitan Life Ins Co v Massachusetts, n 9 supra, p 749. 23a Appendix A 494 432 Micu 472 [June Ornvion sy Levin, J. economic weapons of self-help by labor and man- agement.” Aaa and the amicus curiae, mscc, argue that Bullock’s action is preémpted under both the Gar- mon and Machinists branches of NLRA preémption doctrine. Cc We first examine Bullock’s state law claims in light of the Garmon doctrine of preémption. Gar- mon provides: When an activity is arguably subject 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.) Section 8(aX5) states that it is an unfair labor practice for an employer “to refuse to bargain collectively with the representatives of his employees ... .”“ Section 8(d) defines the duty “to bargain collectively” as the duty to “meet ... and confer in good faith with respect to wages, hours, and other terms and conditions of employment ... .”” Although an employer’s uni- lateral change in the conditions of employment then under negotiation is a violation of § &(aX5), an employer is generally permitted to make such changes following an impasse in negotiations.” Aaa and mscc assert that implementation of 13 Id. 18 Garmon, supra, p 245. 14 29 USC 158(aX5). 6 29 USC 158d). ce an SS ee ee ee ee 24a Appendix A 1989} Bu.iock v AAA 495 Opnvion sy Levin, J. production standards after an impasse is at least arguably protected by § 8. Bullock contends, how- ever, that state law claims are not within the scope of §7 or $8. According to Bullock, the instant action does not require that this Court consider AAA’s imposition of new standards of production;” rather, the action concerns oral state- ments made to Bullock that allegedly gave rise to a contract of employment. The United States Supreme Court declared in Sears, Roebuck & Co v Carpenters, 436 US 180, 197; 98 S Ct 1745; 56 L Ed 2d 209 (1978), that preémption analysis should focus on whether the state court controversy is identical with or differ- ent from that which could have been presented to the NLRB: The critical inquiry, therefore, is not whether the State is enforcing a law relating specifically to labor relations cr one of general application but whether the controversy presented to the state court is identical to...or _ different from ... that which could have been, but was not, presented to the Labor Board. For it is only in the former situation that a state court’s exercise of jurisdiction necessarily involves a risk of interfer- ence with the unfair labor practice jurisdiction of the Board which the arguably prohibited branch of the Garmon doctrine was designed to avoid. [Em- phasis added. } In Belknap, Inc v Hale, 463 US 491; 103 S Ct 3172; 77 L Ed 2d 798 (1983), the United States Supreme Court ruled that employees hired to re- place striking workers could pursue causes of ac- tion for misrepresentation and breach of contract 25a Appendix A 496 432 Micu 472 [June Ormnton sy Levin, J. in state court.” The Court found preémption to be inappropriate because, among other reasons, an action before the NLRB could not address or in any way remedy the wrongs suffered by the plaintiffs. Following the Belknap and Sears analyses, we conclude that the substance of Bullock’s state law claims significantly differ from any claims he could have presented to the NLRB. The state law claims require a determination of what were the terms of Bullock’s employment contract and whether cer- tain actions by AAA” breached that contract. The NLRB, on the other hand, is concerned with the process of bargaining. The board would decide whether an impasse in bargaining had occurred before AAa’s implementation of the production standards contained in its last offer at the bargain- ing table. The NLRB would not look at any particu- lar provision of an employment contract in evalu- ating the question whether an impasse had oc- curred.” Bullock’s state law claims could not have been presented to the NLR3 because the NLRB would not and could not determine Bullock’s state law claims. The NLRB would not have provided a rem- 18In recent years, Garmon has been applied flexibly, “ ially eee eee adem Wien in capeeten of te conduct at issue and the State’s interest is one that does not threaten i with the federal regulatory scheme.” Farmer v Carpenters, 430 US 290, 302; 97 S Ct 1056; 61 L Ed 2d 338 (1977). The ac 26a Appendix A 1989] BuLLock v AAA 497 Opinion By Levin, J. edy for his state law claims and, therefore, would not have provided a remedy for his discharge from AAA. Bullock’s state law claims and any claim he could bring before the NLRB are not identical but rather separate and discrete. Allowing Bullock to proceed on his state law claims poses no risk of interference with the jurisdiction of the NLRB. D Aaa and MSCC also contend that Bullock’s claims are preémpted under the Machinists rationale because maintenance of a state law action would thwart the effective implementation of the NLRA. They argue that an employer’s right to impose its final offer when the parties fail to reach a collec- tive bargaining agreement is one of the employer’s most powerful economic self-help weapons. They contend that Bullock’s action threatens to inter- fere with the collective bargaining process in a way Congress did not intend. Machinists preémption becomes relevant where the action lies outside the reach of Garmon. It “protects against state interference with policies implicated by the structure of the [NLRA] itself, by pre-empting state law and state causes of action concerning conduct that Congress intended to be unregulated.” Metropolitan Life Ins Co v Massa- chusetts, 471 US 724, 749; 105 S Ct 2380; 85 L Ed 2d 728 (1985). Under the Machinists doctrine, Whether self-help economic activities are 2m- pote by employer or union, the crucial inquiry per 8 nen a is the same: whether “the le: state authority to curtail or pe prohibit scl self-help would frustrate effective implementation of the Act’s processes.’’!) 31 Machinists, supra, pp 147-148. 27a Appendix A 498 432 Micu 472 [June Opinion By Levin, J. Bullock’s action is essentially an ordinary con- tract action, routinely heard in state court. The United States Supreme Court observed in Belknap: The interests of the Board and the NLRA, on the one hand, and the interest of the State in provid- ing a remedy to its citizens for breach of contract, on the other, are “discrete” concerns .. . . We see no basis for holding that permitting the contract cause of action will conflict with the rights of either the strikers or the employer or would frus- Hi any policy of the federal labor laws. [Id., p 512. The mscc maintains that once a union is certi- fied, the terms and conditions of employment are covered exclusively by federal labor law, not state law. Because Bullock was discharged for failure to meet the production standards, the Mscc reasons that the circumstances surrounding the implemen- tation of those standards is central to Bullock’s state law claims and necessitates a finding of preémption. We disagree. The selection of a union representative did not instantly extinguish Bullock’s state law claims or contract rights. Employees would hesitate to cast their lot with a union if they were deemed to have forgiven their common-law contract and other claims when a collective bargaining agent was certified without regard to whether a collective bargaining agreement is entered into. The United States Supreme Court, in J I Case Co v NLRB, 321 US 332, 336-337; 64 S Ct 576; 88 L Ed 762 (1944), said: Care has been taken in the opinions of the Court 28a Appendix A 1989] BuLLock v AAA 499 Orpaon sy Lavin, J. to reserve a field for the individual contract, even in industries covered by the National Labor Rela- tions Act, not merely as an act or evidence of viduaiy but also in the sense of a completely indi- tg contract setting out terms of enalageian, because there are circumstances in pene tage, ea ly Bae in fact, in which there is no alternative. Without limiting the possi- bilities, instances such as the following will occur: Men may continue work after a collective agree- ment expires and, despite negotiation in good faith, the negotiation may be deadlocked or de- layed; in the interim express or implied individual agreements may be held to govern. [Emphasis added.] When a collective-bargaining agreement expires and the parties are unable to agree on the terms of a new agreement, an employer may implement its final offer after impasse. In the instant case, however, no collective bargaining agreement was ever agreed upon and the union was decertified before Bullock was discharged.“ Where no agree- ment is reached, enforcement pursuant to state law of preéxisting state law contract rights and other state law claims does not “frustrate any policy of the federal labor laws.” Belknap, supra, p 512. In sum, we conclude that state court jurisdiction of Bullock’s state law claims is not preémpted under the Garmon branch or the Machinists branch of federal preémption doctrine. The circuit court has jurisdiction of the subject matter. ~ mm Aaa claims that it is entitled to summary judg- ee fee pie Oat eagles vite hove bow . ee ae © estes. Bee Lingle, quegiian te for unionized employees. ns 29a Appendix A 500 432 Micn 472 [June Optnton BY Levin, J. ment because Bullock failed to state a claim on which relief can be granted and there is no genu- ine issue of material fact. A A motion for summary judgment for failure to state a claim “seeks to test the genuineness of a claim by challenging the legal adequacy of the pleadings.”"* The standard in evaluating such a motion “is whether plaintiffs claim, on the plead- ings, is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recovery.”™ In assessing the motion, the trial court “does not act as a factfinder, nor does the court attempt to probe the parties’ ability to prove their allegations.” The court thus “accepts as true all well-pleaded facts.’”™ Toussaint held enforceabie contractual rights grounded in an employee’s legitimate expectations generated by an employer’s statements of policy.” %3 Abel v Eli Lilly & Co, 418 Mich 311, 323; 343 NW2d 164 (1984), cert den 469 US 833 (1984). ™ Id., p 323 % Id., p 324 38 Id. "Contrary to the argument of amicus curiae, the scope of Tous saint is not limited to or-cause contracts. While Toussaint phrased in broad terms; the court said that “em statements of policy, such as the Blue Cross Supervisory Man and Guidelines, can give rise to contractual rights in ” Id, pp 614 Any policy statement, then, give rise to a contractual obliga- tion under Toussaint. A policy statement in a manual or in a casual conversation with a superior does not, however, automatically rise to the level of a contract. Only those statements that create legitimate expectations in a reasonable employee are actionable. See n 31. 30a Appendix A 1989] Bu.iock v AAA 501 Opmion By Levin, J. Before a court can address the question of an employee’s legitimate expectations arising from such statements of policy, the trier of fact must determine which employer statements, oral and written, were a part of the contract of employ- ment. Because this involves a factual inquiry in the instant case, the circuit judge properly denied summary judgment. We are bound to accept all well-pleaded facts as true when reviewing the ruling on aaa’s motion for summary judgment. The oral employment con- tract, as described by Bullock, supports a claim for breach of contract. Bullock alleged that his oral contract of employment provided that Aaa would terminate him only if he were caught stealing and that he would be compensated on a seven percent commission plan based on his “book of business.” Bullock’s pleadings presented questions of fact whether aaa breached the alleged contractual pro- visions. Bullock has sufficiently stated a claim on which relief could be granted. Nor did the oral statements made to Bullock at the time of hiring necessarily lack the definiteness required to form a binding contract as a matter of law. Oral statements may be as binding as written statements. Aaa filed an affidavit in support of its motion for summary judgment, asserting that it had continu- ously reviewed and revised its employment poli- cies. The affidavit stated that the sales [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_0732%3A1. Public record. Not legal advice.