Petition for Writ of Certiorari — General Motors Corp. v. Wells
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FILED
89-1067 DEC 27 1999
JOSEPH F. SPANIOL, JR.
= — SEER
ED
N
IN THE —
Supreme Court of the United States
OCTOBER TERM, 1989
GENERAL MOTORS CORPORATION,
Petitioner,
VS.
MARY R. WELLS, ET AL.,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
PAUL O. MIELER, III JAMES D. HOLZHAUER
W. THOMAS SILER, JR. Counsel of Record
Phelps, Dunbar, Marks STEPHEN M. SHAPIRO
Claverie & Sims KENNETH 8S. GELLER
Suite 1400 THOMAS C. BERG
Mirror Lake Plaza Mayer, Brown & Platt
2829 Lakeland Drive 190 South LaSalle Street
Jackson, Mississippi 39296 Chicago, Illinois 60603
(601) 939-3895 (312) 782-0600
DAVID M. DAVIS
MARK R. FLORA
General Motors Corporation
3031 West Grand Boulevard
Detroit, Michigan 48202
(313) 556-5000
Midwest Law Printing Co., Chicago 60611, (312) 321-0220
q a. p47
i
QUESTIONS PRESENTED
Respondents, former employees of General Motors Cor-
poration (““GM’’), elected to leave their employment dur-
ing an industry-wide slowdown in 1983. Under the terms
of a Voluntary Termination of Employment Plan (““VTEP’’)
negotiated between GM and respondents’ union, each of
the respondents received special severance payments of
between $10,000 and $22,000. In 1986 GM’s workforce
began to expand again, but respondents were ineligible
to obtain new positions with the company because they
had accepted the VTEP benefits. They sued GM, claim-
ing that at meetings heid in 1983 to explain the VTEP
to employees, GM assured them that they could be re-
hired if new jobs were created. The court of appeals held
that respondents’ state law fraud and misrepresentation
claims were not pre-empted by federal law. The questions
presented are:
Whether respondents’ claims that GM misrepresented
that they would be eligible for future employment even
though they had accepted severance benefits under the
negotiated VTEP agreement are pre-empted by:
(a) the National Labor Relations Act, because they al-
lege conduct on the part of GM that arguably violates Sec-
tion 8 of the Act;
(b) Section 301 of the Labor Management Relations
Act, because they are substantially dependent upon the
terms of a collective bargaining agreement between GM
and respondents’ union; or
(c) the Employee Retirement Income Security Act, be-
cause they relate to the terms of an employee benefit
plan.
il
PARTIES TO THE PROCEEDING
AND RULE 29.1 STATEMENT
In addition to the parties named in the caption, the
following persons were appellees in the court of appeals
and are respondents in this Court:
Mamie L. Marshall
Patricia Ann Lewis
Johnny Lee Thompson
Connie Prentiss
Lavern Turner
Lee E. Mack
Rosie Lee Smith
Lillie Bullie
Emma Hall
Loretta Anderson
Mildred Cecilia Grigsby
Mao Lee
Katie Mae Warren
Mary Fields Ward
Direthia Maberry
Shirley S. Jones
Lenda Hamilton Burns
Billy Dewain Ferguson
Brenda Sue Ezell
Estella Dunson
Mary L. Taylor
Elaine W. Davis
Doris S. Brown
Sarah Buggs
Lois Marie Barnett
Herman Williams
Hugh Dorsey Thompson (Robinson)
Thomas Leon Ward
Shirley P. Taylor
Verilillian Kay Grant
Sandra Beard Murphy
A listing of petitioner's subsidiaries (other than wholly-
owned subsidiaries) and affiliates is set forth in the Ap-
pendix. App., ifra, 52a.
iil
TABLE OF CONTENTS
QUESTIONS PRESENTED ...................
PARTIES TO THE PROCEEDING —
AND RULE 29.1 STATEMENT ............
TABLE OF AUTHORITIES .................
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STATUTORY PROVISIONS INVOLVED
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REASONS FOR GRANTING THE PETITION:
I. The Court Of Appeals’ Decision That Re-
spondents’ Claims Were Not Pre-empted
Under The Garmon Doctrine Conflicts
With The Decisions Of This Court And
Other Courts Of Appeals ..............
A. The Court Of Appeals Has Misinter-
preted This Court’s Davis Decision To
Effectively Abolish The ‘Arguably Pro-
hibited” Branch Of Garmon .......
B. The Court Of Appeals Improperly And
Incorrectly Decided That Future Eligi-
bility For Employment Is Not A Man-
datory Subject Of Bargaining ......
Il. The Court Of Appeals’ Decision That Re-
spondents’ Claims Were Not Pre-empted
By Section 301 Of The LMRA Conflicts
With Decisions Of Other Courts Of Appeals
ee eee ee — 1
10
12
iv
And With This Court’s Repeated Admoni-
tion That Disputes Relating To The Terms
Of Collective Bargaining Agreements Must
Be Resolved Solely Under Federal Law ..
A. The Court Of Appeals Erred In De-
ciding That Respondents’ Claims Were
Not Pre-empted By Section 301
B. The Cireuits Are In Conflict Over
Whether Extra-Contractual Promises
Made To Bargaining Unit Employees
Can Be Enforced Under State Law ..
III. The Court Of Appeals’ Decision That GM’s
Severance Pay Pian Was Not An Employee
Benefit Plan Within The Meaning Of
ERISA Conflicts With Decisions Of Other
Courts And Is Contrary To The Policies
Underlying The Statute ...............
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TABLE OF AUTHORITIES
CASES: PAGE
Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504
fee (os ao oa annus cane sone aan 25
Allis-Chalmers Corp. v. Lweck, 471 U.S. 202 (1985) .
‘ds Seek Gece alee we ee Sean 7, 16, 17, 20
Anderson v. Ford Motor Co., 803 F.2d 953 (8th
Cir. 1986), cert. denied, 483 U.S. 1011 (1987) .. 21, 23
Babcock & Wilcox Co. v. Illinois Human Rights
Comm’n, 545 N.E.2d 799 (Ill. App. 1989) .. 27
Bale v. General Telephone Co., 795 F.2d 775 (9th
C.D ics one cy ree ge eee ie a 22, 23
Berda v. CBS Inc., 881 F.2d 20 (8d Cir. 1989), peti-
tion for cert. pending, No. 89-589 ......... 21, 23
Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir.),
cert denied, 474 U.S. 865 (1985) ........... 28
Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) . 23
Chmiel v. Beverly Wilshire Hotel Co., 873 F.2d
eo Bo Re | Be pesre en 22
Darden v. United States Steel Corp., 830 F.2d 1116
(oath GR. Be kn i siecictri eee 23
DeLapp v. Continental Can Co., 868 F.2d 1073 (9th
Ca. TOD isc widen ccastbesdeeeeeeee 22, 23
Fibreboard Corp. v. NLRB, 379 U.S. 203 (1964).. —-:18
First Nat’l Maintenance Corp. v. NLRB, 452 U.S.
GOD CRORE ac oc accsescessseedenkse oe 14
Ford Motor Co. v. NLRB, 441 U.S. 488 (1979) .. 6, 18, 15
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1
(RUE. cues cbusschcuseucunes pees 7, 25, 27, 28
vi
Franchise Tax Board v. Construction Laborers
Vacation Trust, 463 U.S. 1 (1988) ......... 16
International Longshoremen’s Ass’n v. Davis, 476
aes WEEE cA saci uenccuxeuvekeserrns passim
Kocman v. Safeguard Business Systems, Civ. A.
No. 88-5127 (E.D. Pa. June 28, 1989) ...... 27
Kolentus v. Avco Corp., 798 F.2d 949 (7th Cir.
1986), cert. denied, 479 U.S. 1032 (1987) ... 11
Lingle v. Norge Div. of Magic Chef, Inc., 108 S.
pene COE ix Kc is a5 ka cue ceeaeven 9, 11, 18-20
Local 174, Teamsters v. Lucas Flour Co., 369 U.S.
Oe SUNN Wadiees sind OR eee 16
Mason v. Continental Group, Inc., 763 F.2d 1219
(11th Cir. 1985), cert. denied, 474 U.S. 1087
PE 8a 04405 0x ds chunds caeneen eee 23
Master Slack Corp., 230 N.L.R.B. 1054 (1977), en-
forced, 618 F.2d 6 (6th Cir. 1980) ......... 13
Muenchow v. Parker Pen Co., 615 F. Supp. 1405
Pa WO MONEE. ciucks cevuneaweerennueele 27
Overby v. Chevron USA, Inc., 884 F.2d 470 (9th
We UE. ch 3 hcdck uc can beeen rae ee eter 12
Pane v. RCA Corp., 868 F.2d 631 (3d Cir. 1989) . 27
Parker v. Connors Steel Co., 855 F.2d 1510 (11th
Cir. 1988), cert. denied, 109 S. Ct. 2066 (1989) . 11
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) . 25
Redmond v. Dresser Indus., 734 F.2d 633 (11th
Sey EE 50k csc ak cece uk oan peneel saan 23
San Diego Building Trades Council v. Garmon,
oe ee errr ree passim
Vil
Scott v. Gulf Oil Corp., 754 F.2d 1499 (9th Cir.
ho cand bathe aka ek ea eee 27
Sly v. P.R. Mallory & Co., 712 F.2d 1209 (7th Cir.
EY vewessaawead oeewes ke aa ve ee See 28
Textile Workers Union v. Lincoln Mills, 353 U.S.
ee I a ic ck Xo ihc eae eka Ri ee \ 15
United States Gypsum Co., 94 N.L.R.B. 112 (1951),
amended, 97 N.L.R.B. 889 (1951), modified, 206
F.2d 410 (5th Cir. 1953), cert. denied, 347 U.S.
EE 3s obs CCA a Cee eae ee Se 13
Varnum v. Nu-Car Carners, Inc., 804 F.2d 638
(11th Cir. 1986), cert. denied, 481 U.S. 1049
CED cucihoevedcaxcediss eeuebecetcnnlees 22, 23
Young v. Anthony’s Fish Grottos, Inc., 830 F.2d
fg Bt ree eee ere rare 22, 23
STATUTES:
Section &(aX5) of the National Labor Relations Act,
, ie ka fl ere 1, 5, 6, 10, 11
Section 301 of the Labor Management Relations Act,
Bit of i eer rr rrr rr yr 1, 7, 15-24
Section 514(a) of the Employee Retirement Income
Security Act, 29 U.S.C. § 1144(a) .......... 1, 24
SD WE. GORMANMD 6 new ene cudeccnvuicecees 25
on
General Motors Corporation petitions for a writ of cer-
tiorari to review the judgment of the United States Court
of Appeals for the Fifth Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals (App., infra, 1a-20a)
is reported at 881 F.2d 166. The opinion of the district court
(App., infra, 25a-40a) is reported at 721 F. Supp. 107.
JURISDICTION
The court of appeals entered its judgment on August
24, 1989 (App.,-%nfra, 21a), and denied GM’s petition
for rehearing on September 28, 1989 (App., infra, 23a).
The jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).
STATUTORY PROVISIONS INVOLVED
Section &(aX5) of the National Labor Relations Act, 29
U.S.C. § 158(aX5), Section 301(a) of the Labor Management
Relations Act, 29 U.S.C. § 185{a), and Section 514(a) of
the Employee Retirement Income Security Act, 29 U.S.C.
§ 1144(a), are set forth at App., infra, 5la.
STATEMENT
Respondents Mary R. Wells, et al., are former GM em-
ployees who voluntarily left their jobs during a wide-
spread reduction-in-force. Pursuant to a Voluntary Termina-
tion of Employment Plan (“VTEP’’) negotiated between
GM and respondents’ union, respondents each received be-
tween $10,000 and $22,000 in special severance benefits.
They now claim that GM assured them at the time that
if they accepted VTEP benefits they would nevertheless
iii
be eligible for reemployment on a preferential basis or
at least on the same basis as other applicants. GM asserts
to the contrary that it informed the employees that VTEP
beneficiaries would not be eligible for reemployment with
the company.
Even though respondents’ allegations, if true, would
mean that GM arguably violated the National Labor Rela-
tions Act, even though the parties’ dispute clearly relates
to the terms of an agreement between an employer and
a labor organization governed by the Labor Management
Relations Act, and even though the dispute involves em-
ployee benefits regulated by the Employee Retirement
Income Security Act, the court of appeals held that re-
spondents’ state law claims were not pre-empted by fed-
eral law. This ruling is plainly wrong and conflicts with
numerous decisions of this Court and other courts of ap-
peals on frequently recurring questions of federal pre-
emption. Further review is essential to preserve the juris-
diction of the National Labor Relations Board, to protect
the collective bargaining process, and to prevent piecemeal
state regulation of employee benefit plans.
1. Respondents were employed in CM’s Packard Elec-
tric Division plant in Clinton, Mississippi. As a result of
a general slowdown in the automobile industry in the
early 1980s, GM found it necessary to lay off several hun-
dred Packard Electric employees at Clinton and thousands
elsewhere. The prospect for reemployment of many of
those on layoff appeared dim. App., infra, la-2a, 26a-27a.
The employees at Clinton are represented for purposes
of collective bargaining by Local No. 698 of the Inter-
national Union of Electrical, Radio & Machine Workers,
AFL-CIO. Responding to a demand from a group of laid-
off Clinton workers, the union requested that GM consider
a Voluntary Termination of Employment Plan (“VTEP’’)
for Clinton. A VTEP allows employees to “‘cash in’”’ their
seniority rights and to terminate their employment rather
willis
than remain on layoff status with its inherent uncertainty.
On December 17, 1982, after a period of negotiations, the
company and the union entered into a VTEP Agreement.
App., infra, 2a, 27a, 41a-43a. It is undisputed that the
question of whether employees who accepted VTEP bene-
fits would be eligible for reemployment with GM was dis-
cussed during the negotiations. Jd. at 3a.}
The VTEP Agreement provided that any ‘employee
covered by the Collective Bargaining Agreement with
Plant Seniority * * * will be eligible to apply for a ter-
mination allowance under this VTEP.” App., infra, 41a.
Benefits would be paid to only 450 employees, “subject
to Management’s approval consistent with business con-
ditions.’”’ [bid. In the event that more than 450 employees
applied for VTEP benefits, beneficiaries would be selected
on the basis of seniority. Jbid. GM was authorized to limit
or delay processing of applications “based on [its] capabil-
ity to operate the business and train employees” and re-
tained the discretion to further limit, delay or deny ap-
plications from skilled trades employees. Jbid. The amount
of severance benefits an employee was entitled to receive
ranged from $10,000 to $22,000, depending on years of
seniority and on whether the employee elected to receive
the benefit in a lump sum or over 24 monthly install-
ments. Id. at 42a. The amount of the VTEP benefit would
be reduced by the amount of any excess supplemental un-
employment benefit (““SUB”) or other benefit received by
the employee. Jbid. Any disputes regarding the amount
of VTEP benefits or eligibility for those benefits could
1 According to the court of appeals, GM claimed “that the parties
raised the issue of ‘rehire rights’ in bargaining over the VTEP
and that GM officials specifically told union representatives that
employees opting for VTEP would not be eligible for rehire. [Re-
spondents] and their union claim[ed] that the representatives asked
about future eligibility and were told that would be ‘no problem’ ”.
App., infra, 3a.
a o
be appealed under the procedures established by the SUB
Plan. Id. at 43a.
An employee who applied for and received a VTEP
benefit would be terminated as an employee and would
lose his rights as an employee. App., infra, 42a. The
VTEP Agreement did not expressly address the question
of whether such an employee would be eligible for re-
employment by GM, but the provision relating to repay-
ment of benefits appeared to acknowledge that possibil-
ity (id. at 48a):
If a former employee is again employed by the
Division after he has received a VTEP, no repayment
(except with respect to an overpayment) of the VTEP
shall be required or allowed; and no seniority previ-
ously cancelled shall be reinstated.
The agreement also provided that if a former employee
received a larger VTEP benefit than he was entitled to
and did not otherwise return the overpayment, it “‘shall
be recoverable from any monies receivable from the Com-
pany should the former employe be rehired.” [bid.
Following execution of the VTEP Agreement, manage-
ment and union officials met with the Clinton employees
(including those on layoff) to explain the plan’s terms.
App., infra, 2a, 27a-28a. According to respondents’ al-
legations—which GM vigorously disputes (see id. at 3a)—
GM managers at those meetings told employees that
should they accept VTEP benefits, they would neverthe-
less be eligible for future employment either on a prefer-
ential basis or on the same terms as other applicants. Jd.
at 3a, 27a-28a, 46a.
2. In 1985, GM began hiring new employees at its Clin-
ton plant. The company declined to consider applications
from former employees who had accepted VTEP benefits.
Respondents did not file a grievance under the collective
bargaining agreement or challenge GM’s position pursuant
=
to the appeal provisions set out in the VTEP Agreement.
App., infra, 2a. Instead, they each filed a virtually iden-
tical diversity complaint in the United States District
Court for the Southern District of Mississippi. A copy of
the complaint of the lead plaintiff, Mary R. Wells, is set
forth in the Appendix. Jd. at 44a-50a. Respondent Wells
claimed that GM “falsely and fraudulently, and with intent
to deceive plaintiff, represented to plaintiff * * * that if
competitive conditions improved and [GM] later began hir-
ing employees * * * that those employees who had ac-
cepted VTEP benefits (VTEP employees) would be given
preference over other applications for employment; and
that VTEP employees would be eligible for employment
at defendant’s other locations on the same basis as other
applicants.” Id. at 46a. In the alternative, respondents
claimed that the same misrepresentations by GM were
negligent. Jd. at 48a. GM moved for summary judgment
on the grounds that the state law suits were pre-empted
by the National Labor Relations Act, the Labor Manage-
ment Relations Act, and the Employee Retirement In-
come Security Act. The district court denied GM’s motion.
Id. at 40a.
Finding that the pre-emption issues presented “‘control-
ling questions of law as to which there is substantial
ground for difference of opinion,” the district court cer-
tified its order for interlocutory appeal pursuant to 28
U.S.C. § 1292(b). App., infra, 2a.
3. The court of appeals affirmed. The court rejected
GM’s contention that respondents’ claims fell within the
exclusive jurisdiction of the National Labor Relations
Board and were therefore pre-empted under the Garmon
doctrine. GM argued that respondents’ claims, if true,
would show that GM violated Section 8(aX5) by failing to
bargain with the union over future employment eligibility.
The court disagreed, holding that eligibility for future em-
ployment is not a mandatory subject of bargaining. In the
caidas
court’s view, “evaluation and consideration of individual
applicants for employment lies ‘at the very core of en-
trepreneurial control.’ The Supreme Court has held that
these types of managerial decisions are not mandatory
subjects of bargaining. Ford Motor Co. v. NLRB, 441 U.S.
488, 498 (1979).” Therefore, any failure or refusal on GM’s
part to bargain with the union over that issue did not
violate Section 8(aX5) of the NLRA. App., infra, 5a-7a.
The court of appeals also rejected GM’s argument that
respondents’ claims amounted to a charge that GM bar-
gained directly with the employees and circumvented the
union in arguable violation of Section 8(aX5). App., infra,
7a-10a. Relying on this Court’s decision in /nternational
Longshoremen’s Ass’n v. Davis, 476 U.S. 380 (1986), the
court below held that a state law claim is no longer pre-
empted under Garmon if the party asserting pre-emption
contends that its own conduct is “arguably prohibited”
by the Act (App., infra, 8a, 9a; emphasis in original):
(T]he implication of GM’s argument is that if its con-
duct indeed was wrong, it is the Board that should
declare it so. We hold, however, that Davis defeats
GM’s attempt to invoke the NLRB’s exclusive juris-
diction in this fashion.
* * * KX *
By its own cast, GM’s argument concerning its “cir-
cumvention” of union representatives goes only to
show that its conduct was arguably prohibited by the
Board; hence, its claim could not reasonably be up-
held by the Board.
The court of appeals held that the same analysis ap-
plied to GM’s contention that “its failure to raise the issue
of future employment eligibility amouritted to a form of
deception at the bargaining table and thus, a failure to
bargain in good faith.” App. infra, 9a n.7. Because GM’s
claim was that its own conduct was “arguably prohibited”
by the Act, the court below held that it was not a claim
a
that could be “upheld” by the Board and thus did not
pre-empt respondents’ state law claims. [bid.
Turning to GM’s argument under Section 301 of the
LMRA, the court of appeals held that respondents’ claims
were not pre-empted because they were not “ ‘suwbstan-
tially dependent upon analysis of the terms’ of the col-
lective bargaining agreement”’ and because, in the court’s
view, respondents were not claiming that GM fraudulently
misrepresented the terms of the VTEP, but that it “fraud-
ulently induced individual employees to opt for the VTEP
by making an extraneous promise concerning their future
employment eligibility.” App., infra, 14a (quoting Allis-
Chalmers Corp. v. Lueck, 471 U.S. 202 (1985)). The court
acknowledged that respondents’ claims would nevertheless
be preempted if the agreement governed the disputed
issue, but it heid that “{a}fter careful review of the VTEP,
we find no provision that reasonably might be construed
to govern the issue of future employment eligibility, nor
are there ‘vague and ambiguous’ references to eligibility
that might be construed in GM’s favor.” Id. at 16a.
Finally, the court of appeals held that respondents’ claims
were not pre-empted by ERISA because the VTEP does
not constitute an “employee benefit plan” within the
meaning of that statute. Relying on Fort Halifax Pack-
ing Co. v. Coyne, 482 U.S. 1 (1987), the court held that
the VTEP was not a plan because it did not require “‘an
ongoing administrative program to meet the employer’s
obligation.” App., infra, 19a. “The [VTEP] plan was not
ongoing, nor was there any need for continuing adminis-
tration of the payment program (though employees could
elect a two-year installment payment option).” Jd. at 20a.
Judge Reavley concurred in the judgment on the ground
that “GM does not demonstrate any relationship between
the VTEP and its decision not to rehire the plaintiffs.”
App., infra, 20a.
sain:
REASONS FOR GRANTING THE PETITION
When Congress passed the National Labor Relations
Act, the Labor Management Relations Act and the Em-
ployee Retirement Income Security Act, it constructed
comprehensive federal regulatory schemes that this Court
has repeatedly protected from undue interference in the
form of private lawsuits under state law. The court of
appeals’ decision circumvents those federal regulatory
schemes and permits state law resolution of claims that
concern (a) the obligation of a company to bargain with
a union, (b) the consequences that flow from a collectively-
bargained labor agreement, and (c) the operation of an
employee benefit plan. In doing-se,the-court_below_ has
disregarded the decisions of this Court, has created or
exacerbated conflicts with other courts of appeals on im-
portant and frequently recurring federal issues, and has
established a precedent that will impair the achievement
of important federal objectives. It is essential that this
Court grant the petition to resolve the conflicts and to
further define and preserve the proper scope of federal
regulation.
I. The Court Of Appeals’ Decision That Respondents’
Claims Were Not Pre-empted Under The Garmon
Doctrine Conflicts With The Decisions Of This
Court And Other Courts Of Appeals.
In order to preserve the exclusive jurisdiction of the
National Labor Relations Board over claims relating to
conduct regulated by the National Labor Relations Act,
this Court held in San Diego Building Trades Council
v. Garmon, 359 U.S. 236, 244-245 (1959), that state regula-
tion of conduct arguably within the realm of the Board
is pre-empted by the Act:
When it is clear or may fairly be assumed that the
activities which a State purports to regulate are pro-
tected by §7 of the National Labor Relations Act,
sail
or constitute an unfair labor practice under § 8, due
regard for the federal enactment requires that state
jurisdiction must yield.
* * * * X
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 Na-
tional Labor Relations Board if the danger of state
interference with national policy is to be averted.
As the Court only recently emphasized in Longshoremen
v. Davis, 476 U.S. at 389-390, even in ambiguous cases
in which it is not “clear whether the particular activity
regulated by the States [is] governed by §7 or §8 * * *
‘courts are not primary tribunals to adjudicate such issues.
It is essential to the administration of the Act that these
determinations be left in the first instance to the * * *
Board.’ ”’ See also Lingle v. Norge Div. of Magic Chef,
Inc., 108 S. Ct. 1877, 1883 n.8 (1988).
The court of appeals’ ruling runs roughshod over the
Garmon pre-emption doctrine. To begin with, it incorrect-
ly reads this Court’s decision in Davis as abolishing the
“arguably prohibited’”’ branch of Garmon by providing
that a party asserting pre-emption must assert a claim
that the Board could decide in its favor. In addition, the
court below improperly took it upon itself to decide an
issue that is “at the heart of the Board’s function’’: whether
the eligibility of existing employees for future employment
is a mandatory subject of bargaining. Both aspects of the
court of appeals’ Garmon analysis require this Court’s
review.?
2 Because the Garmon pre-emption aspects of the court of ap-
peals’ decision implicate the jurisdiction of the National Labor
Relations Board and the scope of the federal enactment, the Court
may wish to request the views of the Solicitor General before it
decides whether to grant this petition.
a
A. The Court Of Appeals Has Misinterpreted This
Court’s Davis Decision To Effectively Abolish The
**Arguably Prohibited’? Branch Of Garmon.
In support of its assertion that respondents’ claims were
pre-empted under Garmon, GM argued that those allega-
tions, if true, amounted to claims that the company had
circumvented the union and bargained directly with em-
ployees (by offering them an “inducement” it had not of-
fered at the bargaining table) and that it had deceived
the union and thus failed to bargain in good faith. The
court of appeals acknowledged that circumventing the
union would violate Section 8(aX(5) of the Act, but it held
that under Davis state regulation of conduct arguably
prohibited by the NLRA is no longer pre-empted (App.,
infra, 9a; emphasis in original):
By its own cast, GM’s argument concerning its “cir-
cumvention” of union representatives goes only to
show that its conduct was arguably prohibited by the
Board; hence, its claims could not reasonably be
upheld by the Board.
The court below read Davis in a startling and un-
precedented way: as eliminating the ‘arguably prohibited”
branch of Garmon by concluding that a party’s assertion
that its own conduct (as alleged by its opponent) arguably
violated the Act is not sufficient to require pre-emption
because it is not a claim that could “reasonably be upheld
by the Board.” Ibid.
The court of appeals’ interpretation of Davis is plainly
incorrect. Contrary to the broad reading given it by the
court below, Davis merely defined the term “arguably.”’
The Court held that, to sustain its burden of showing that
a claim involves conduct that is “arguably” prohibited or
protected by the NLRA, “a party asserting pre-emption
must advance an interpretation of the Act that is not
plainly contrary to its language and that has not been
‘authoritatively rejected’ by the courts or the Board.” 476
=o
U.S. at 395. The party must show “that the Board rea-
sonably could uphold a claim based on such an interpreta-
tion.” Ibid. In other words, Davis requires the party
asserting Garmon pre-emption to do more than articulate
a farfetched theory under which there would be a remote
possibility that the Board would find its eonduct pro-
hibited or protected.
The erroneous construction of Davis adopted by the
court of appeals would have widespread and unfortunate
consequences not even remotely contemplated by this
Court. By abolishing the “‘arguably prohibited” branch of
Garmon, it would open the door to wholesale state regula-
tion of conduct that Congress intended to be regulated
only through the NLRB. In fact, the court of appeals’
reformulation of Garmon would not be met even in cases
where the conduct alleged was actually (rather than
arguably) prohibited by the Act. This Court’s subsequent
reiteration of the ‘‘arguably prohibited” branch in Lingle,
108 S. Ct. at 1883 n.8, makes clear that it does not inter-
pret Davis as the Fifth Circuit did.
Moreover, the court of appeals’ interpretation directly
conflicts with the decisions of several other courts of ap-
peals that have recently applied the “arguably prohibited”
branch of the Garmon doctrine to pre-empt claims similar
to those of respondents. In Parker v. Connors Steel Co.,
855 F.2d 1510 (11th Cir. 1988), cert. denied, 109 S. Ct.
2066 (1989), for example, several laid-off employees sued
their employer claiming that the company had fraudulently
represented that it would keep a plant open in return for
certain concessions from the union. The Eleventh Circuit
upheld the company’s argument that the employees’ claims
were pre-empted because the alleged conduct was arguably
prohibited by Section 8(aX5). 855 F.2d at 1515-1518. Simi-
larly, in Kolentus v. Avco Corp., 798 F.2d 949, 960-962 (7th
Cir. 1986), cert. denied, 479 U.S. 1032 (1987), the Seventh
Circuit agreed with an employer that nearly identical state
we
law fraud claims were pre-empted, reasoning that “{a]
state law claim presumptively is preempted where the un-
lawful activity charged actually or arguably constitutes
an unfair labor practice under the NLRA.” See also Overby
v. Chevron USA, Inc., 884 F.2d 470 (9th Cir. 1989) (citing
Davis and remanding to the district court to determine
whether plaintiffs’ claims involved conduct that was argu-
ably prohibited by the Act). —
This Court should grant review to resolve the conflict
among the circuits on this basic and frequently recurring
labor law issue.
B. The Court Of Appeals Improperly And Incorrectly
Decided That Future Eligibility For Employment Is
Not A Mandatory Subject Of Bargaining.
In addition to contending that respondents’ allegations
amounted to a claim that it cireumvented and deceived
the union and thus failed to bargain in good faith, GM
argued below that the issue of future employment eligibil-
ity is a term and condition of employment and thus a
mandatory subject of bargaining. Respondents’ alleyations
therefore amounted to a claim, plainly pre-empted by the
NLRA, that GM unilaterally modified a mandatory subject
without bargaining with the union. The court of appeals
rejected GM’s pre-emption argument on the basis of its
own determination that the eligibility of present em-
ployees for future employment is not a mandatory sub-
ject of bargaining. App., infra, 6a-7a.
The court of appeals’ approach once again blatantly dis-
regards the Garmon framework. The court below should
not have decided independently whether future employ-
ment eligibility is a term and condition of employment;
instead, it should have asked whether GM’s contention
that it is a mandatory subject of bargaining was “an in-
terpretation of the Act that is not plainly contrary to
oe
its language and that has not been ‘authoritatively re-
jected’ by the courts or the Board.” Davis, 476 U.S. at
395. As this Court has noted, “{clonstruing and applying
the duty to bargain and the language of § 8&(d), ‘other
terms and conditions of employment,’ are tasks lying at
the heart of the Board’s function.”” Ford Motor Co. v.
NLRB, 441 U.S. 488, 497 (1979).
The court of appeals cited two cases in support of its
holding, but neither amounts to an authoritative rejection
of GM’s assertion that future eligibility is a mandatory
subject of bargaining. In Ford Motor Co. v. NLRB, this
Court upheld the Board’s determination that the price of
food in an in-plant cafeteria is a mandatory subject of
bargaining and is not ‘among those ‘managerial deci-
sions, which lie at the core of entrepreneurial control.’ ”’
441 U.S. at 498. The court below did not explain how that
statement warranted the conclusion that eligibility for
future employment does “lie at the core of entrepreneurial
control.”’ The court of appeals also cited Justice Stewart’s
concurring opinion in Fibreboard Corp. v. NLRB, 379 U.S.
203, 222 (1984); that decision upheld a Board ruling that
the contracting out of bargaining union work under cer-
tain conditions is a mandatory subject of bargaining.
Again, it is not at all clear how that supports the court
of appeals’ ruling.
In actuality, the Board and the courts have consistent-
ly supported GM’s position that future employment eligi-
bility is a mandatory subject of bargaining. The Board
has long held that the rights of laid off employees to be
recalled (and the terms and method of recall) are manda-
tory subjects of bargaining. Master Slack Corp., 230
NLRB 1054, 1055 (1977), enforced, 618 F.2d 6 (6th Cir.
1980). United States Gypsum Co., 94 NLRB 112, 114-115
(1951), modified in other respects, 206 F.2d 410 (5th Cir.
1953), cert. denied, 347 U.S. 912 (1954). The label applied
to the employee’s separation—‘“‘termination” rather than
ntiinn
“layoff’—cannot be determinative of bargaining rights.
Furthermore, this Court has held that although an em-
ployer need not bargain over its decision to close part
of its business, it must bargain over the effects of such
a decision on the terminated employees. First Nat’l Main-
tenance Corp. v. NLRB, 452 U.S. 666, 677 n.15 (1981).
Among those effects are the “job security” rights of the
employees being terminated (id. at 681), which include
their rights to transfer or to bid on jobs that might open
up with the company at a later time or at other locations.
The court of appeals did not explain why an employer
should be required to bargain over the job security rights
of terminated employees following a plant closure or lay-
off, but not over whether its employees have any right
to future employment after they have been “voluntarily
terminated”’ in lieu of a layoff.
The court of appeals’ resolution of this issue—reached
without benefit of the Board’s expertise—will have dramatic
practical consequences well beyond the context of this
case. It means that unions representing employees who
are about to be terminated as part of a reduction in force
have no right to bargain over the eligibility of those em-
ployees for reemployment. Although it is unquestionable
that unions have the right to bargain over the reinstate-
ment rights of laid off employees, once the layoff is char-
acterized as a termination, under the court of appeals’
view, unions (and the employees they represent) lose all
bargaining rights. And this is so even though the union
seeks to bargain before the employees are terminated pur-
suant to a voluntary termination agreement. It may in-
deed be the case that evaluation of completely new appli-
cants for employment “lies at the very core of entre-
preneurial control,’’ but that does not mean that existing
employees have no right to bargain over their future re-
employment.
=<_
The court of appeals’ conclusion is fundamentally at odds
with the important federal policy favoring resolution of
disputes through peaceful bargaining. It is also plainly con-
trary to the ways in which the Board and the courts have
handled other questions involving layoffs and plant clos-
ings. But even if that were not the case, the Fifth Cir-
cuit’s determination was not one for a court to make in
the first instance. Deciding whether future employment——————
eligibility of existing employees is a mandatory subject
of bargaining is a “task{ ] lying at the heart of the Board’s
function.”” Ford Motor Co., 441 U.S. at 497. The court
of appeals accordingly should have held that respondents’
state law claims were pre-empted and should have left
this important question for the Board to resolve in the
first instance.
II. The Court Of Appeals’ Decision That Respondents’
Claims Were Not Pre-empted By Section 301 Of
The LMRA Conflicts With Decisions Of Other
Courts Of Appeals And With This Court’s Repeated
Admonition That Disputes Relating To The Terms
Of Collective Bargaining Agreements Must Be Re-
solved Solely Under Federal Law.
Section 301 of the Labor Management Relations Act,
29 U.S.C. § 185, creates federal jurisdiction over “‘[s]uits
for violation of contracts between an employer and a iabor
organization representing employees in an industry affect-
ing commerce * * *.” In Textile Workers Union v. Lincoln
Mills of Alabama, 353 U.S. 448 (1957), this Court held
3 In a footnote, the court of appeals stated that GM’s duty to
bargain over future eligibility ‘did not arise in the absence of * * *
a demand [for bargaining.]” App., infra, 7a n.6. But as the court
acknowledged, the union did raise the issue of employment eligibil-
ity at the bargaining table and supposedly was “told that would
be ‘no problem.’ ” App., infra, 3a. It thus can hardly be main-
tained that the union did not seek to bargain on the issue.
—16—
that Section 301 is not merely a jurisdictional statute;
rather it “expresses a federal policy that federal courts
should enforce [collective bargaining] agreements’ and
that “the substantive law to apply in suits under § 301(a)
is federal law, which the courts must fashion from the
policy of our national labor laws.” Jd. at 455, 456. Thus,
in defining rights and responsibilities in the labor context,
“{flederal interpretation of the federal law will govern,
not state law.” Id. at 457.
The Court elaborated on this rule in Local 174, Team-
sters v. Lucas Flour Co., 369 U.S. 95, 103 (1962), which
held that ‘(t]he dimensions of § 301 require the conclu-
sion that substantive principles of federal labor law must
be paramount in the area covered by the statute.’’ Dis-
putes about the meaning of a collective bargaining agree-
ment cannot be left to state law because “the subject mat-
ter of §301(a) ‘is peculiarly one that calls for uniform
law.’’”’ Ibid. As the Court explained, “(t]he possibility that
individual contract terms might have different meanings
under state and federal law would inevitably exert a dis-
ruptive influence upon both the negotiation and adminis-
tration of collective agreements.” Jbid. “{I]n enacting
§ 301,” therefore, “Congress intended doctrines of federal
labor law uniformly to prevail over inconsistent local
rules.”’ Lucas Flour, 369 U.S. at 104. Indeed, the “pre-
emptive force of § 301 is so powerful as to displace en-
tirely any state cause of action’”’ that contends, explicitly
or implicitly, than an employer breached its obligations
under a labor contract. Franchise Tax Board v. Construc-
tion Laborers Vacation Trust, 463 U.S. 1, 23 (1983) (em-
phasis added).
This Court recently had occasion to apply these prin-
ciples in Allis-Chalmers Corp. v. Lueck, 471 U.S. 202
(1985). In Lueck, an employee subject to a collective bar-
gaining agreement brought a state law tort suit contend-
ing that his employer “intentionally, contemptuously, and
= =
repeatedly failed” to make disability insurance payments
under a union-negotiated disability plan. Jd. at 206. The
Wisconsin Supreme Court rejected the employer's argu-
ment that federal law pre-empted the employee’s state
law cause of action, holding that the employee’s suit did
not arise under Section 301 of the LMRA because ‘‘{uJn-
der Wisconsin law, the tort of bad faith is distinguishable
from a bad-faith breach-of-contract”’ and “is independent
of that contract.”’ Jd. at 207. In the court’s view, “‘viola-
tion of the labor contract was ‘irrelevant to the issue of
whether the defendants exercised bad faith in the manner
in which they handled Lueck’s claim.’ ” Ibid.
This Court unanimously reversed. The Court observed
that “‘ilf the policies that animate § 301 are to be given
their proper range, * * * the pre-emptive effect of § 301
must extend beyond suits alleging contract violations.” 471
U.S. at 210. As the Court explained (id. at 211):
[Qjuestions relating to what the parties to a labor
agreement agreed, and what legal consequences were
intended to flow from breaches of that agreement,
must be resolved by reference to uniform federal law,
whether such questions arise in the context of a suit
for breach of contract or in a suit alleging liability
in tort.
If state law were permitted to determine the conse-
quences flowing from particular contract terms, “(t]he par-
ties would be uncertain as to what they were binding
themselves to” when they entered into the labor contract.
Ibid. Such a result would make it “more difficult to reach
agreement, and disputes as to the nature of the agree-
ment would proliferate.” bid.
In light of these concerns, the Court in Lueck announced
the governing test for pre-emption under Section 301: a
state law claim is pre-empted whenever it “is inextricably
intertwined with consideration of the terms of the labor
contract” (471 U.S. at 213), such that “any attempt to
"a
assess liability * * * inevitably will involve contract in-
terpretation.”” /d. at 218. In other words, whenever
“resolution of a state-law claim is substantially dependent
upon analysis of the terms of an agreement made between
the parties in a labor contract, that claim must either be
treated as a § 301 claim or dismissed as pre-empted by
federal labor-contract law.” Jd. at 220 (citation omitted).
Applying that test, this Court rejected the Wisconsin
Supreme Court’s conclusion that the state law tort claim
could be resolved without interpreting the collective bar-
gaining agreement. The state court’s assertion that the
labor contract was irrelevant to the tort claim was “based
*** not solely on its unassailable understanding of the
state tort, but also on assumptions about the scope of the
contract provision which it had no authority to make un-
der state law.”” The Wisconsin court “evidently assumed
that the only obligations the parties assumed by contract
are those expressly recited in the agreement.” But “(t]he
assumption that the labor contract creates no implied
rights is not one that state law may make.” 471 U.S. at
214-215.
Moreover, the language of the collective bargaining
agreement and the nature of the employee’s tort claim
made the Wisconsin court’s assumption that there were no
implied rights “highly suspect.’’ The bad-faith handling
claim “‘intrinsically relates to the nature and existence of
the contract.” 471 U.S. at 216. Clearly, “(t]he duties imposed
and rights established through the state tort * * * derive
from the rights and obligations established by the con-
tract.”’ Jd. at 217. In these circumstances, the employee’s
claims ‘‘must be evaluated by federal contract law.” [bid.
The Court reiterated these same concerns in Lingle v.
Norge Div. of Magic Chef, Inc., 108 S. Ct. 1877 (1988).
In that case, an employee alleged that she had been dis-
charged in retaliation for filing a workers’ compensation
claim. The Court held that the state law claim contesting
her discharge was not pre-empted by Section 301 even
though the employee was covered by a collective bargain-
ing agreement that required “just cause’’ for discharge.
The fact that the plaintiff may have had a “remedy [under
the labor contract] for conduct that coincidentally violates
state law does not make the existence or the contours of
the state law violation dependent upon the terms of the
(labor] contract.” Jd. at 1885 (emphasis added).
The Court emphasized that its holding in Lingle should
not be interpreted to allow state law to determine ques-
tions relating to the terms of collective bargaining agree-
ments. ““Today’s decision should make clear that interpre-
tation of collective-bargaining agreements remains firmly
in the arbitral realm; judges can determine questions of
state law involving labor-management relations only if such
questions do not require construing collective-bargaining
agreements.” 108 S. Ct. at 1884.
A. The Court Of Appeals Erred In Deciding That Re-
spondents’ Claims Were Not Pre-empted By Section
301.
The court of appeals’ conclusion that respondents’ state
law fraud and misrepresentation claims were not pre-
empted by Section 301 cannot be reconciled with this
Court’s decisions. To begin with, it is beyond dispute that
respondents’ claims owe their existence to the VTEP
Agreement. They allege that GM falsely represented that
“employees who had accepted VTEP benefits * * * would
be given preference over other applications for employ-
ment” and that they “would be eligible for employment
at [GM’s] other locations on the same basis as other appli-
cants.”” App., infra, 46a. No matter how respondents (or
the court of appeals) may choose to characterize these
claims, at bottom they allege that as part of the VTEP
settlement (which is governed by the VTEP Agreement),
—~20—
GM promised that respondents would be eligible for future
employment, either on a preferential basis or on the same
terms as other applicants. Thus, the very “‘existence [as
well as] the contours of the state law violation [are] depen-
dent upon the terms of the [VTEP] contract” (Lingle, 108
S. Ct. at 1885); respondents’ state law claim “‘intrinsical-
ly relates to the nature and existence of the contract.”
Lueck, 471 U.S. at 216. Lueck and Lingle thus require
a finding of pre-emption.
Furthermore, the Fifth Circuit’s finding of no pre-emption
must also rest on the questionable assumption that the
VTEP Agreement created no implied rights regarding
future employment eligibility. Even though the VTEP
Agreement alluded to the possibility of reemployment in
its provisions relating to overpayment and repayment of
benefits, and even though the parties negotiated over the
“rehire rights” of VTEP beneficiaries, the court below
“evidently assumed that the only obligations the parties
assumed by contract are those expressly recited in the
agreement.”’ Lueck, 471 U.S. at 214. But in this case, as
in Lueck, “(t]he assumption that the labor contract creates
no implied rights is not one that state law may make.”
Id. at 215. Indeed, in light of several specific terms of
the VTEP Agreement, the court of appeals’ assumption
of no implied rights related to reemployment is, as in
Lueck, “highly suspect.” Ibid.
B. The Circuits Are In Conflict Over Whether Extra-
Contractual Promises Made To Bargaining Unit
Employees Can Be Enforced Under State Law.
The court of appeals held that respondents’ fraud and
misrepresentation claims were not pre-empted by Section
301 because they related to “‘an extraneous promise con-
cerning their future employment eligibility” rather than
the terms of the VTEP Agreement. As discussed above,
that characterization of respondents’ claims is “highly
oii.
suspect” and rests on assumptions about implied contrac-
tual rights that state law is not permitted to make. But
even if the court of appeals’ characterizations were cor-
rect, this case would still warrant further review.
The courts of appeals are hopelessly divided on the fre-
quently recurring issue of whether Section 301 pre-empts
state law fraud and misrepresentation claims based on al-
leged “extraneous” promises relating to the terms and
conditions of employment of workers covered by collec-
tive bargaining agreements. The Third and Eighth Cir-
cuits agree with the Fifth Circuit that such claims are
not pre-empted. In Berda v. CBS Inc., 881 F.2d 20 (3d
Cir. 1989), petition for cert. pending, No. 89-589, a former
CBS employee alleged that the company had told him be-
fore he was hired that “he would be guaranteed employ-
ment with CBS for the reasonably foreseeable future.”
881 F.2d at 21. When he was laid off, the employee filed
suit in state court, claiming that CBS had breached an
oral contract and that it had committed fraud and negli-
gent misrepresentation under state tort law. The Third
Circuit, which characterized the case as involving a “‘cir-
cuit-splitting question” (881 F.2d at 20), held that the
employee’s tort claims were not pre-empted by Section
301 because ‘“‘Berda was not required to refer to the col-
lective bargaining agreement in order to state his tort
claim.” Id. at 27.
The Eighth Circuit reached the same conclusion in Ander-
son v. Ford Motor Company, 803 F.2d 953 (1986), cert.
denied, 483 U.S. 1011 (1987). The plaintiffs were former
Ford employees who alleged that Ford assured them
when they were hired that they would not be bumped
by laid-off employees from other plants around the coun-
try. After the employees were bumped, they brought suit,
contending that Ford’s representations were fraudulent
or negligent. The Eighth Circuit held that the tort claims
were not pre-empted. The Court acknowledged that the
=_ =
Ninth Circuit had reached the opposite conclusion on simi-
lar facts (Bale v. General Telephone Co., 795 F.2d 775
(9th Cir. 1986)), but held that ‘“‘we do not agree with [the
Ninth Circuit] that adjudication of these state law claims
requires any significant reference to the terms of the col-
lective bargaining agreement.” 803 F.2d at 959.
The Ninth and Eleventh Circuits, on the other hand,
have held that such claims are pre-empted by Section 301.
In Young v. Anthony’s Fish Grottos, Inc., 830 F.2d 993
(9th Cir. 1987), an employee claimed that the company
assured her when she was hired that she could be dis-
charged only for just cause, even though under the col-
lective bargaining agreement she would be classified as
a probationary employee subject to discharge at the com-
pany’s discretion. When the employee was fired without
apparent cause, she brought suit, alleging fraud and mis-
representation. The Ninth Circuit held that her claims
were pre-empted by Section 301. ‘Because any ‘indepen-
dent agreement of employment * * * could be effective
only as part of the collective bargaining agreement,’ the
CBA controls and the contract claim is preempted.” 830
F.2d at 997. See also Chmiel v. Beverly Wilshire Hotel
Co., 873 F.2d 1283, 1285-1286 (9th Cir. 1989) (employee’s
claim that he was promised that he would not be dis-
charged without cause during probationary period pre-
empted by Section 301); DeLapp v. Continental Can Co.,
868 F.2d 1073, 1074-1076 (9th Cir. 1989) (employee’s claim
that employer promised him while he was a member of
the bargaining unit that if he remained on the job for
three extra months he would be eligible for early pen-
sion pre-empted by Section 301).
The Eleventh Circuit’s approach to the issue of “‘extrane-
ous promises’’ focuses on whether the promise was made
when the employee was a member of the bargaining unit.
If the state law suit alleges a pre-employment promise,
the action is not pre-empted by Section 301. Varnum v.
Nu-Car Carriers, Inc., 804 F.2d 638, 640 (11th Cir. 1986),
cert. denied, 481 U.S. 1049 (1987). But if the promise was
made to employees who were members of the bargaining
unit, the state law claims are pre-empted. Darden v.
United States Steel Corp., 830 F.2d 1116, 1119-1120 (11th
Cir. 1987); Mason v. Continental Group, Inc., 763 F.2d
1219 (11th Cir. 1985), cert. denied, 474 U.S. 1087 (1986);
Redmond v. Dresser Indus., 734 F.2d 633 (11th Cir. 1984).
The Eleventh Circuit would thus agree with the Third
and Eighth Circuit decisions in Berda and Anderson and
with the Ninth Circuit in DeLapp (and would disagree
with the Ninth Circuit in Young and Bale), but it would
disagree with the Fifth Circuit in this case because re-
spondents “‘were clearly employees within the meaning
of the collective bargaining agreement when the alleged
misrepresentations, which constitute the crux of their com-
plaints, were made to them.” Darden, 830 F.2d at 1119.
Berda, Anderson, Young and Varnum present facts
analogous in some respects to those of Caterpillar Inc.
v. Williams, 482 U.S. 386 (1987). In Caterpillar, this
Court held that state law claims for breach of individual
employment contracts were not ‘completely pre-empted”
by Section 301 and thus were not removable to federal
court. The individual contracts were allegedly made before
the employees became members of the bargaining unit
and thus before they were covered by any collective bar-
gaining agreement. In this case, by contrast, as well as
in the Eleventh Circuit’s decision in Darden and the Ninth
Circuit’s decision in DeLapp, the alleged promises were
made while respondents were members of the bargaining
unit subject to the labor contract. Unlike Caterpillar,
therefore, this case, Darden and DeLapp do “address the
relationship between the individual [alleged promise] and
the collective agreement.” Caterpillar, 482 U.S. at 395.
Whatever the status of pre-hire individual contracts after
Caterpillar, a difficult issue—and a clear conflict—still
exists as to the pre-emption of state law claims relating
to individual promises allegedly made while the employees
were members of the bargaining unit.
It is essential that this Court resolve the conflict. Dis-
putes between employers and employees are common-
place, and it would be the rare employee who could not
package his complaint as an “independent” state law cause
of action by alleging ‘‘extraneous promises’”’ relating to—if
not directly governed by—the terms of a collective bar-
gaining agreement. As a result, state law claims will con-
tinue to proliferate until this Court clarifies the govern-
ing principles. Nothing could be more destructive of the
goals Congress sought to achieve in enacting Section 301
than a rule facilitating attempts by individual employees
to make end runs around the terms of collectively bar-
gained agreements and around contractual dispute resolu-
tion mechanisms. Unfortunately, the Fifth Circuit’s deci-
sion in this case—by disregarding the pre-emptive effect
of Section 301—offers a blueprint for evasion of the con-
gressional scheme.
III. The Court Of Appeals’ Decision That GM’s Sever-
ance Pay Plan Was Not An Employee Benefit
Plan Within The Meaning Of ERISA Conflicts
With Decisions Of Other Courts And Is Contrary
To The Policies Underlying The Statute.
In Section 514(a) of ERISA, 29 U.S.C. § 1144(a), Con-
gress established the broad pre-emptive effect of federal
regulation of employee benefit programs:
Except as provided in subsection (b) of this section
{listing exceptions not relevant to this case], the pro-
visions of this subchapter and subchapter III of this
chapter shall supersede any and all State laws insofar
as they may now or hereafter relate to any employee
benefit plan described in section 1003(a) of this title
and not exempt under section 1003(b) of this title.
—95—
The pre-emptive force of ERISA is thus “deliberately ex-
pansive” and designed to make regulation of employee
benefit plans “ ‘exclusively a federal concern.’ ”’ Pilot Life
Ins. Co. v. Dedeaux, 481 U.S. 41, 46 (1987) (quoting Alessi
v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)).
It is beyond dispute that the VTEP benefits are ‘‘em-
ployee benefits’ within the meaning of ERISA.* Never-
theless, the court of appeals concluded that the VTEP was
not an “employee benefit plan’ governed by ERISA.
Relying on this Court’s decision in Fort Halifax Pack-
ing Co. v. Coyne, 482 U.S. 1 (1987), the court below held
that “t]he [VTEP] plan was not ongoing, nor was there
any need for continuing administration of the payment
program (though employees could elect a two-year install-
ment payment option).’”’ App., infra, 20a. The court of ap-
peals’ rationale cannot survive careful scrutiny and would
have substantial adverse consequences well beyond the
context of this case.
In Coyne, the Court held that a Maine statute requir-
ing employers to make severance payments in designated
amounts in the event of a plant closing “neither estab-
lishes, nor requires an employer to maintain, an employee
benefit plan.’’ 482 U.S. at 12 (emphasis in original). The
Court described an ERISA “plan” as involving “an ongo-
ing administrative program to meet the employer’s obliga-
tion” (id. at 11) and held that while ‘“{slome severance
benefits by their nature necessitate’”’ such an administra-
tive program, the Maine law’s “requirement of a one-time,
lump-sum payment triggered by a single event” was not
(and did not require) such a program. Id. at 18.
This limited holding, involving a statutory lump-sum
benefit requirement, does not support the court of appeals’
4 See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 7 (1987);
29 U.S.C. § 1002(1XB).
==
conclusion that GM’s very different VTEP program was
not an employee benefit plan. The Fifth Circuit’s analysis,
which would apply to all severance benefit programs
enacted to accommodate a particular event, ignores the
nature of the VTEP program and the fundamental differ-
ences between the VTEP and the Maine plant closing law.
To begin with, the VTEP was not a state-imposed benefit,
but a benefit plan negotiated between an employer and
a union representing its employees. Moreover, as the
VTEP Agreement plainly indicates, the GM program
clearly contemplated an administrative scheme. Not all
employees could elect VTEP benefits; the program was
limited to 450 employees who had to apply for the bene-
fits. Management retained discretion in selecting among
the applicants and in the timing of the termination, with
seniority governing between equal employees. The benefit
amount also depended on seniority, and employees could
elect between a lump-sum payment and a larger benefit
to be paid out over two years. The VTEP Agreement es-
tablished a procedure for resolving disputes and for col-
lecting overpayments and gave employees the option to
return the benefit within 14 days and to resume employ-
ment. The VTEP program thus required and included an
administrative scheme. It is precisely the kind of employee
benefit plan regularly governed by ERISA.
The court of appeals’ decision not only means that ERISA
does not pre-empt state law actions relating to severance
plans like the VTEP; it also means that the entire, care-
fully constructed regulatory framework of ERISA is in-
applicable to such plans. The reporting and disclosure re-
quirements, the fiduciary responsibility provisions, the
detailed statutory mechanism for administration and en-
forcement—all of these provisions do not apply to VTEP
and similar severance benefit plans. Accordingly, the court
of appeals’ decision would strip countless employees of im-
_27—
portant statutory protections thought to have been in
place since 1974.
In light of the language of the statute and Congress’s
clear intent to provide broad protection to employees, it
is hardly surprising that the other courts of appeals to
consider the issue have held that plans similar to the
VTEP are employee benefit plans covered by ERISA.
The only other court of appeals to decide the issue since
Coyne is the Third Circuit. In Pane v. RCA Corp., 868
F.2d 631 (1989), the court held that a severance benefit
program was an employee benefit plan under ERISA and
that a state law suit relating to that program was there-
fore pre-empted. The RCA plan was similar to GM’s VTEP:
it applied to a limited number of employees, involved con-
siderable management discretion, and was instituted by
the company (not the state) to deal with a single antici-
pated set of job terminations. Jd. at 633.
On these similar facts, the Third Circuit—expressly ap-
plying Coyne—held that RCA’s employee benefit plan “‘re-
quired an administrative scheme” and was subject to
ERISA. 868 F.2d at 635. The court thus reached a result
directly contrary to that of the Fifth Circuit in this case.5
Prior to this Court’s decision in Coyne, several other
courts of appeals had also held that similar severance
benefit programs were covered by ERISA. Scott v. Gulf
Oil Corp., 754 F.2d 1499, 1503-1504 (9th Cir. 1985) (prom-
ise of severance pay in connection with sale of refinery);
5 At least two other courts subsequent to Coyne have held that
similar severance benefit plans are covered by ERISA. See Kocman
v. Safeguard Business Systems, Civ. A. No. 88-5127 (E.D. Pa. June
28, 1989); Babcock & Wilcox Co. v. Illinois Human Rights Comm'n,
545 N.E.2d 799 (Ill. App. Ct. 1989). One court reached the same
conclusion before Coyne on facts nearly identical to those of this
case. Muenchow v. Parker Pen Co., 615 F. Supp. 1405, 1416-1419
(W.D. Wis. 1985).
22
Blau v. Del Monte Corp., 748 F.2d 1348, 1352 (9th Cir.
1985) (separation allowance program triggered by reorgan-
ization, consolidation, or elimination of operations); Sly v.
P.R. Mallory & Co., 712 F.2d 1209, 1211 (7th Cir. 1983)
(severance policy adopted in anticipation of large-scale
layoffs).
This Court should grant review to clarify the scope of
its Coyne decision, to resolve the conflict among the cir-
cuits on a significant issue of federal law, and, most im-
portantly, to make clear that severance benefit plans, even
if they are instituted in anticipation of a single set of job
terminations, are subject to ERISA regulation. The court
of appeals’ decision would have far-reaching consequences
beyond the pre-emption context and would leave employees,
employers, and benefit plan administrators in an intoler-
able state of uncertainty as to whether severance benefit
programs must comply with ERISA.
—29—
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted.
PAUL O. MILLER, III JAMES D. HOLZHAUER
W. THOMAS SILER, JR. Counsel of Record
Phelps, Dunbar, Marks STEPHEN M. SHAPIRO
Claverie & Sims KENNETH S. GELLER
Suite 1400 THOMAS C. BERG
Mirror Lake Plaza Mayer, Brown & Platt
2829 Lakeland Drive 190 South LaSalle Street
Jackson, Mississippi 39296 Chicago, Illinois 60603
(601) 939-3895 (312) 782-0600
DAVID M. DAVIS
MARK R. FLORA
General Motors Corporation
3031 West Grand Boulevard
Detroit, Michigan 48202
(313) 556-5000
December 1989
APPENDICES
—jla—
APPENDIX A
MARY R. WELLS, et al.,
Plaintiffs-Appellees,
v.
GENERAL MOTORS CORPORATION,
Defendant-Appellant.
No. 88-4665
United States Court of Appeals,
Fifth Circuit
August 24, 1989
Appeal from the United States District Court for the
Southern District of Mississippi.
Before REAVLEY, POLITZ, and SMITH, Circuit
Judges.
JERRY E. SMITH, Circuit Judge:
We review here another case involving alleged promises
made and broken in the highly-charged environment of
large-scale layoffs and shifts in the labor market.' The
thirty-two plaintiffs in this action are former employees
1 E.g., Cefalu vy. B.F. Goodrich Co., 871 F.2d 1290 (5th Cir. 1989)
(promise concerning availability of retirement benefits after em-
ployer’s sale of assets to another company); Degan v. Ford Motor
Co., 869 F.2d 889 (5th Cir. 1989) (promise concerning availability
of early retirement benefits for employee who, during plant clo-
sure, accepted severance pay); Bache v. American Tel. & Tel. Co.,
840 F.2d 283 (5th Cir.) (promise of job security following reor-
ganization and divestment of subsidiaries), cert. denied, _____ U.S.
___, 109 S. Ct. 219, 102 L.Ed.2d 210 (1988).
— PQ —
at the Packard Electric plant, a subsidiary of General
Motors Corporation (‘GM’), in Clinton, Mississippi. When
GM announced layoffs in 1983, it negotiated with the
union a separation agreement, according to which em-
ployees could opt for a severance payment in lieu of pre-
serving their seniority and rehire rights. At meetings to
explain the plan, a GM representative allegedly told the
employees that they could be rehired if new jobs were
created, although they would have to apply like everyone
else. Plaintiffs contended that when new positions opened
in 1985, management informed them they were ineligible
under the severance plan.
The plaintiffs sought redress in the district court, bas-
ing jurisdiction upon diversity, and positioning their claims
upon theories of state iaw fraud and misrepresentation.
GM moved for summary judgment on the ground that the
district court lacked subject matter jurisdiction since the
proper forum was the National Labor Relations Board
(“NLRB” or “‘Board’’). In the alternative, GM claimed
that plaintiffs’ state law claims were preempted by federal
law. The district court denied the motion and certified
the question for interlocutory appeal. We accepted the
case for review and now affirm, holding that the NLRB
has no jurisdiction and that state law governs the action.
I. Right To Be Considered For Rehire.
In 1982, demand for domestic automobiles began to
slump, resulting in planned layoffs at the Packard Elec-
tric plant (“the plant’). A committee comprised of both
union and management created the Voluntary Termination
of Employment Plan (the ““VTEP”’), offering severance
pay, either in lump-sum or two-year installment payments,
to those who agreed to resign. This much the parties
—ta—
agree upon; they differ with respect to GM’s position con-
cerning the future employment eligibility of those who
opted for the VTEP.
GM’s version of the facts contradicts that of the plain-
tiffs and their union in every important respect. GM con-
tends that the parties raised the issue of “rehire rights”
in bargaining over the VTEP and that GM officials spe-
cifically told union representatives that employees opting
for VTEP would not be eligible for rehire. Plaintiffs and
their union claim that the representatives asked about
future eligibility and were told that would be “no prob-
lem.”’ GM alleges that during collective bargaining over
the plan’s details, management negotiators told union
negotiators that employees who accepted plan benefits
would not be eligible for rehire. GM further contends that
when its officials presented the plan to the employees,
they told the employees that those accepting plan benefits
would be ineligible for rehire. Lastly, GM reads the VTEP
itself as ‘“‘vague’’ and ‘‘ambiguous” on the issue of
employee eligibility for rehire.
Plaintiffs would explain the differing factual accounts
aS a semantic miscue: GM’s references were to “rehire
rights,” a term of art as between the parties that denotes
those rights held by laid-off employees under the general
collective bargaining agreement. Such rehire rights would
include the rights of laid-off employees to be called back
in a certain priority, to have their seniority and benefits
reinstated, to work at a particular wage level, and so
forth. In contrast, plaintiffs assert that the issue of “future
employment eligibility’’ was independent of the discussion
of rehire rights, concerned only the potential for those
who opted for VTEP of ever being GM employees again,
and was not the subject of collective bargaining.
—4g—
Plaintiffs, who are thirty-two former GM employees who
opted for VTEP, brought independent actions in federal
district court, premising jurisdiction upon diversity and
alleging (1) that GM, when presenting the VTEP to em-
ployees, offered false inducements to employees to opt for
the VTEP, in the form of promises concerning future em-
ployment eligibility; (2) that GM knew these inducements
and representations were false; (3) that plaintiffs relied
upon these representations in accepting the plan; and (4)
that plaintiffs were injured as a result of this reliance.
II. Subject Matter Jurisdiction: Is This a Case for
the NLRB?
Congress vested exclusive jurisdiction in the NLRB
over conduct that is ‘arguably protected or arguably pro-
hibited” by Sections 7 and 8 of the NLRA. See Interna-
tional Longshoremen’s Ass’n v. Davis, 476 U.S. 380, 394,
106 S. Ct. 1904, 1914, 90 L.Ed.2d 389 (1986).2 These sec-
tions protect the right of the employees to engage in col-
lective bargaining and prohibit both management and
labor from engaging in the enumerated unfair labor prac-
tices. 29 U.S.C. §§ 157, 158. GM bears the burden of show-
ing that the challenged conduct is arguably protected or
prohibited by the NLRA. See Davis, 476 U.S. at 395, 106
S. Ct. at 1914. It presents three arguments designed to
meet this burden and invoke NLRB jurisdiction. We deal
with each argument in turn, reviewing them as did the
district court; that is, after examining the record de novo
we resolve all reasonable doubts and draw all reasonable
inferences in favor of the non-movant, and then determine
2 Citing San Diego Bldg. Trades Council v. Garmon, 359 U.S.
236, 244, 79 S. Ct. 773, 779, 3 L.Ed.2d 775 (1959).
—— he —
whether the movant is entitled to judgment as a matter
of law. Schuster v. Martin, 861 F.2d 1369, 1371 (5th Cir.
1988).
A. Mandatory Subjects Of Bargaining.
First, GM contends that future employment eligibility
is a mandatory subject of bargaining under 29 U.S.C.
§ 158(d); hence, plaintiffs’ claims about GM’s representa-
tions necessarily implicate GM’s good faith in bargaining,
or in failing to bargain,? over the future-employment issue.
GM also asserts that its conduct was arguably prohibited
or protected by the NLRA because Section 8(aX5) requires
employers to bargain with union representatives before
modifying policies that affect mandatory subjects of bar-
gaining. See Armour & Co., 280 NLRB 824, 826 (1986).4
3 Included within GM’s good-faith bargaining obligation is the
duty to provide adequate infermation about the subject at issue
so that the negotiation process can function properly. See NLRB
v. Truitt Mfg. Co., 351 U.S. 149, 152, 76 S. Ct. 753, 755, 100 L.Ed.
1027 (1956) (“‘Good-faith bargaining necessarily requires that claims
made by either bargainer should be honest claims.’’); Serrano v.
Jones & Laughlin Steel Co., 790 F.2d 1279, 1286-87 (6th Cir. 1986).
Thus, to the extent, if any, that GM “hid the ball” in the VTEP
negotiations by keeping silent about its intentions concerning em-
ployee eligibility for rehire, it would not have bargained in good
faith.
4 In Armour the Board held that the employer’s decision whether
to allocate severance pay and vacation pay to weeks following the
employee’s termination date—which would result in making the em-
ployee ineligible for unemployment compensation in Wisconsin dur-
ing that period—was a mandatory subject of bargaining. Contrary
to GM’s recitation of the holding in Armour, the Board did not de-
clare that “‘the power to allocate * * * rested exclusiveiy within the
authority of the employer in the sense that it was a traditional
management prerogative.”’ Instead, the Board’s point was that, vis-
a-vis the state, the employer’s authority to allocate vacation and sev-
(Footnote continued on following page)
a
The district court assumed arguendo that the VTEP
was a mandatory subject of bargaining, such that GM had
a duty to bargain with union representatives over the
VTEP.> But the court concluded that the issue of future
eligibility for rehire was not, in itself, a mandatory sub-
ject of bargaining so as to require GM to engage in bar-
gaining over that issue as well: “‘The fact that the mat-
ter at issue here, eligibility for future employment, in
retrospect could have been and perhaps should have been
included within [the VTEP] does not render that topic a
fortiori a mandatory subject of bargaining.”’
We agree. As plaintiffs observe, the company’s evalua-
tion and consideration of individual applicants for employ-
ment lies “fat the very core of entrepreneurial control.”
The Supreme Court has held that these types of mana-
gerial decisions are not mandatory subjects of bargain-
ing. See Ford Motor Co. v. NLRB, 441 U.S. 488, 498,
99 S. Ct. 1842, 1849, 60 L.Ed.2d 420 (1979) (quoting Fibre-
board Paper Prods. Corp. v. NLRB, 379 U.S. 203, 222,
85 S. Ct. 398, 409, 13 L.Ed.2d 233 (1964) (Stewart, J., con-
4 continued
erance pay on unemployment compensation forms gave it mean-
ingful authority over the payment of unemployment compensation
and hence, the ability to debase or enhance the worth of severance
and vacation pay. The Board therefore did not imply that this
authority was an exclusive management prerogative, vis-a-vis the
workers; by holding that the employees were entitled to have their
say in that decision, the Board concluded that it was not an exclu-
sive prerogative.
5 The court supported this assumption with citations to labor
cases involving disputes over the status of similar subjects of bar-
gaining such as pension plans and severance pay. See Allied 7
& Alkali Workers vy. Pittsburgh Plate Glass Co., 404 U.S. 157
92 S. Ct. 383, 30 L.Ed.2d 341 (1971); Armour. We make no pol
ment on the correctness of this assumption, as the issue is not
before us: Here, the union and management indeed collectively
bargained over the VTEP.
|
curring)). An empioyer’s failure or refusal to bargain over
a non-mandatory subject does not violate Section 8(aX5).®
See NLRB v. Wooster Div. of Borg-Warner Corp., 356
U.S. 342, 349, 78 S. Ct. 718, 722, 2 L.Ed.2d 823 (1958).
Thus, the fact that future eligibility for rehire might,
in the context of the VTEP, have an economic value for
those workers who accepted the plan, or that GM raised
the issue during collective bargaining (a claim which plain-
tiffs contest), does not transmogrify a management prerog-
ative into a mandatory subject of bargaining. The status
of the issue of future eligibility does not change by vir-
tue of its relation to, or even its purported inclusion in,
a union-management agreement concerning other manda-
tory subjects of bargaining. See Wooster, id. As plaintiffs
note, to hold otherwise would provide both management
and labor with a “bootstrap” with which to make any
bargaining subject a mandatory one.
B. Bargaining Directly With Employees.
Section 8(aX5) of the NLRA requires employers to bar-
gain in good faith with employee representatives. We have
read that section to preclude employers from circumvent-
ing those representatives by bargaining directly with em-
6 Moreover, if, as GM contends, future employment eligibility
were a mandatory subject of bargaining by virtue of its value in
the context of the VTEP, then the duty to bargain over that sepa-
rate subject was not triggered unless and until there was a clear
and unequivocal demand for bargaining by the union. See NLRB
v. Katz, 369 U.S. 736, 748, 82 S. Ct. 1107, 1111, 8 L.Ed.2d 230
(1962) (‘A refusal to negotiate in fact as to any subject that is
within § &(d), and about which the union seeks to negotiate, violates
§ &(aX5)” (emphasis added)). Hence, even if we accepted GM’s argu-
ment that future eligibility itself was a mandatory subject of bar-
gaining, GM’s duty did not arise in the absence of such a demand.
—8a—
ployees. See Standard Fittings Co. v. NLRB, 845 F.2d
1311, 1317 (5th Cir. 1988). GM asserts that in making its
representations to the group of employees who attended
the VTEP meetings, it engaged in conduct “arguably pro-
hibited”’ by the NLRA. Thus, GM maintains that the NLRB
is the appropriate forum to hear even the claims of those
whose conduct the Act arguably prohibits; in even more
basic terms, the implication of GM’s argument is that if
its conduct indeed was wrong, it is the Board that should
declare it so. We hold, however, that Davis defeats GM’s
attempt to invoke the NLRB’s exclusive jurisdiction in
this fashion.
In Davis, the Court gave the following construction to
the phrase “arguably protected or prohibited”’:
If the word ‘arguably’ is to mean anything, it must
mean that the party claiming pre-emption is required
to demonstrate that his case is one that the Board
could legally decide in his favor. That is, a party
asserting pre-emption must advance an interpretation
of the Act that is not plainly contrary to its language
and that has not been ‘authoritatively rejected’ by
the courts or the Board. The party must then put
forth enough evidence to enable the court to find that
the Board reasonably could uphold a claim based on
such an interpretation.
476 U.S. at 395, 106 S. Ct. at 1914 (citations omitted).
GM contends throughout its brief that its positions on the
status of future employment eligibility as a bargaining
subject and on the propriety (or impropriety) of its rep-
resentations to the employees were not ones which the
Board or courts have rejected authoritatively. But that
contention, even if accepted, does not bring us to a resolu-
tion, for as the Court explains in the passage quoted
above, the party attempting to invoke the Board’s juris-
diction must then demonstrate that the Board could rea-
=
sonably uphold that party’s claim. The reason for this re-
quirement is simple and instructive here: The exclusivity
of the Board’s administrative province, made necessary
by the need for uniform treatment in labor disputes, may
not serve as a shelter for those whose claims have no
realistic chance of acceptance and no import for national
labor policy. Cf Gray v. Local 714, Int’l Union of Op-
erating Eng’rs, 778 F.2d 1087, 1090 (5th Cir. 1985) (em-
ployee’s claim for fraudulent inducement not preempted
by NLRA because alleged conduct was of only “peripheral
concern” regarding federal law).
By its own cast, GM’s argument concerning its “circum-
vention” of union representatives goes only to show that
its conduct was arguably prohibited by the Board; hence,
its claim could not reasonably be upheld by the Board.’
Nor does GM convincingly demonstrate the import of its
claim for national labor policy: As plaintiffs observe, the
challenged conduct here was not an attempt on the part
of GM to interfere with the collective bargaining process
or to diminish the union’s representative role; instead, it
was a post-bargaining effort to induce individual employ-
ees to accept VTEP benefits. While not dispositive,® it
7 The same flaw is found in a similar argument made by GM,
that is, that its failure to raise the issue of future employment
eligibility amounted to a form of deception at the bargaining table
and thus, a failure to bargain in good faith.
8 GM correctly observes that an employer that makes unilateral
decisions concerning mandatory subjects of bargaining violates
§ 8(aX5) regardless of whether the employer makes those decisions
during collective bargaining or attempts to implement them after
the collective bargaining agreement has been ratified. E.g., Stan-
dard Fittings, 845 F.2d at 1315; Huck Mfg. Co.. v. NLRB, 693
F.2d 1176, 1186 (5th Cir. 1982); N L Industries, Inc. v. NLRB,
536 F.2d 786, 789-90 (8th Cir. 1976). Thus, had future employment
(Footnote continued aa following page)
—10a—
is relevant that the parties had completed collective bar-
gaining over the VTEP; GM’s alleged inducements had
no direct bearing upon the collective bargaining process
in that they were not offered in order to obtain ratifica-
tion of an agreement.® For better or worse, the bargain-
ing process had served its function, and the union repre-
sentatives had fulfilled their role. It was then left to the
individual employees to choose whether they would opt
for the plan, and it is upon that choice that GM’s alleged
inducements operated.
C. Sweet Promises.
Finally, GM would have us hold that its representations
at the VTEP meetings were protected expression under
Section &(c) of the NLRA, which provides,
The expressing of any views, argument, or opinion, or
the dissemination thereof, whether in written, printed,
graphic, or visual form, shall not constitute or be evi-
dence of an unfair labor practice . . . if such expres-
8 continued
eligibility been a mandatory subject of bargaining included in the
agreement, GM’s attempt to make a unilateral change after ratifi-
cation would have been a breach of its duty to bargain in good
faith. Here, however, future eligibility was not a mandatory sub-
ject, nor is it GM’s conduct in the collective bargaining process
that is at issue; instead, it is the alleged inducement offered to
the individual employees that is the source of plaintiffs’ claims.
As a result, adjudication of these claims under the rubric of state
law presents little danger of subjecting the employer to conflict-
ing substantive rules. See Local 926, Int’l Union of Operating
Eng’rs v. Jones, 460 U.S. 669, 676, 103 S. Ct. 1453, 1458, 75
L.Ed.2d 368 (1983).
8 Cf. Serrano, (employer allegedly made promises to keep coke
plant open if steelworkers would accept and ratify concessions in
addendum to collective bargaining agreement); Parker v. Conners
Steel Co., 855 F.2d 1510 (11th Cir. 1988) (same), cert. denied,
U.S. __, 109 S. Ct. 2066, 104 L.Ed.2d 631 (1989).
—lla—
sion contains no threat of reprisal or force or prom-
ise of benefit.
29 U.S.C. § 1580). Here, GM’s contention is that its repre-
sentations at the meetings amounted only to a statement
of fact about the VTEP: Employees who opted for the
plan were not eligible for rehire.
We cannot accept this characterization of the facts in
the current procedural posture of the case. As we explain
below, we find no provision in the VTEP that reasonably
might be construed as governing the dispute over future
eligibility. Making all reasonable inferences in favor of
plaintiffs, we must conclude that GM’s representations
went beyond a recitation of what was contained in the
VTEP. Hence, we can only construe GM’s statements as
a promise of benefit over and above what the VTEP of-
fered. As such, GM’s statements were not protected ex-
pression under Section 158£(c).
III. Preemption.
Holding as we do that the district court, and not the
NLRB, had subject matter jurisdiction, we address GM’s
alternative claim that federal, rather than Mississippi, law
governs this case.!° GM premises its preemption claims
10 Plaintiffs’ claims of fraudulent inducement are premised upon
Mississippi common law. See Berkline Corp. v. Bank of Miss., 453
So.2d 699, 702 (Miss. 1984), in which the Mississippi Supreme Court
observed, “As all know . . ., running deep in our law is the no-
tion that a person must respond where his statements or conduct
reasonably induce another to rely to his detriment.” The elements
of a state law cause of action for fraud are set forth in Martin
v. Winfield, 455 So.2d 762, 764 (Miss. 1984), as follows:
(1) a representation, (2) its falsity, (3) its materiality, (4) the
speaker’s knowledge of its falsity or ignorance of its truth,
(Footnote continued on following page)
—12a—
upon both Section 301 of the LMRA and Section 514(a)
of the Employee Retirement Income Security Act of 1974
(ERISA), 29 U.S.C. § 1144(a). Though we agree with GM
that the preemptive scope of these statutes is broad,'!
we conclude that it is not so broad as to reach this case.
A. Preemption Under Section 301.'?
When resolution of a state law claim is substantially
dependent upon analysis of the terms of an agreement
made between parties to a labor contract, the claim must
be treated as a Section 301 claim. See Allis-Chalmers
Corp. v. Lueck, 471 U.S. 202, 220, 105 S. Ct. 1904, 1915,
10 continued
(5) his intent that it should be acted upon by the person and
in the manner reasonably contemplated, (6) the hearer’s ig-
norance of its falsity, (7) his reliance on its truth, (8) his right
to rely thereon, and (9) his consequent and proximate injury.
[Citations omitted.]
11 Under the Avco exception to the well-pleaded complaint rule,
state law claims that implicate § 301 must be recharacterized as
stating a federal cause of action. Avco Corp v. Aero Lodge No.
735, 390 U.S. 557, 560, 88 S. Ct. 1235, 1237, 20 L.Ed.2d 126 (1968);
Aaron vy. National Union Fire Ins. Co., 876 F.2d 1157, 1161-62
(5th Cir. 1989). The Supreme Court has held that the Avco prin-
ciple operates to “federalize” state law claims implicating ERISA
benefit plans as well. See Metropolitan Life Ins. Co. v. Taylor,
481 U.S. 58, 65, 107 S. Ct. 1542, 1547, 95 L.Ed.2d 55 (1987).
12 Section 301(a) provides,
Suits for violation of contracts between an employer and a
labor organization representing employees in an industry af-
fecting commerce as defined in this chapter, or between any
such labor organizations, may be brought in any district court
of the United States having jurisdiction of the parties... -
29 U.S.C. § 185d(a).
19a.
85 L.Ed.2d 206 (1985).!* But Section 301 is not implicated
unless resolution of the state claim requires interpreta-
tion of a collective bargaining agreement. Lingle v. Norge
Div. of Magic Chef, Inc., ___. U.S. , 108 S. Ct. 1877,
1883, 100 L.Ed.2d 410 (1988). The Court declared in Cater-
pillar Inc. v. Wilivams, 482 U.S. 386, 396, 107 S. Ct. 2425,
2431, 96 L.Ed.2d 318 (1987), that “a plaintiff covered by
a collective-bargaining agreement is permitted to assert
legal rights independent of that agreement, including
state-law contract rights, so long as the contract relied
upon is not a collective-bargaining agreement” (emphasis
in original).4 Here, the district court concluded that no
interpretation of the collective bargaining agreement or
of the VTEP would be required in order to resolve the
plaintiffs’ claims.
GM presents a forceful argument that resolution of
plaintiffs’ fraudulent misrepresentation claims requires in-
terpreting the terms of the collectively-bargained VTEP.
Its claim is that in order to determine whether GM falsely
represented the consequences of accepting the VTEP,
there must be an examination and interpretation of the
13 In Lueck, the Court carefully delimited the scope of its rul-
ing, writing that it did not hold “that every state-law suit assert-
ing a right that relates in some way to a provision in a collective-
bargaining agreement, or more generally to the parties to such
an agreement, necessarily is preempted by § 301.” 471 U.S. at 220,
105 S. Ct. at 1915. We conclude that the instant claims, premised
as they are upon independent state-created rights, present precise-
ly the type of case which the Court excised from its holding by
this language in Lueck.
14 In an analogous ERISA case involving another employee at
the Packard Electric plant, we recently held that the employee
could litigate his state-law contractual rights in state court and
that his claim was not preempted by ERISA. See Hartle v.
Packard Elec., 877 F.2d 354, 355-56 (5th Cir. 1989) (per curiam).
—l4a—
VTEP to determine what a truthful representation would
have been. In such a case, it argues, preemption occurs.
See Lingle.
However, GM’s position is flawed in two important re-
spects: First, it is not the case that Section 301 preemp-
tion occurs whenever a collectively-bargained agreement
becomes relevant to a dispute of this nature; rather, the
resolution of the particular dispute must be “substantially
dependent upon analysis of the terms’”’ of the collective
bargaining agreement. Lueck, 471 U.S. at 220, 105 S. Ct.
at 1915. Second, the argument rests upon an unsound
premise: namely, that the plaintiffs’ claim is that GM’s
representatives fraudulently misrepresented what was in
the contract. Instead, as plaintiffs observe, their claim was
that GM fraudulently induced individual employees to opt
for the VTEP by making an extraneous promise concern-
ing cheir future employment eligibility. They do not claim
that the promise had anything to do with the contents
of the VTEP.
Thus, plaintiffs urge that they are not relying upon any
contract at all, but only upon an inducement that was
separate and apart from the VTEP, was not covered by
it, and was never a subject of negotiation. It is GM that
claims, as a defense, that the contract contemplates, albeit
not expressly, the circumstances that eventually occurred
and therefore must be “‘interpreted”’ in order to resolve
these claims.
But that is not a defense to a fraudulent-inducement
claim in this context. The dispute is a highly fact-bound
one concerning what was said, or promised, at the meet-
ing. The defense to such a claim is not that “the VTEP
might be construed to say otherwise”; rather, it is that
‘“‘we made no such representation” or that ‘‘no such rep-
—l5a—
resentation could have been made given the VTEP’s pro-
visions.’ 15
We recognize, as have other circuits, that the existence
of an agreement nevertheless may invoke Section 301 pre-
emption where a court determines that the agreement
contains provisions that might reasonably be construed
as governing the disputed matter.1® The agreement might,
15 GM has given tacit recognition to the necessity of this defense
by asserting before us that, in fact, the statement of GM’s rep-
resentative was the exact opposite of what plaintiffs claim he said,
in other words, that he told employees that they would not be
eligible for rehire if they opted for the VTEP.
16 GM directs us to a number of cases, from other circuits, which
it considers similar in fact to the instant case. The distinguishing
characteristic of these cases, however, is that the subject agree-
ments contained provisions that reasonably could be construed to
govern the issue that had become the source of tension. See e.g.,
Darden v. United States Steel Corp., 830 F.2d 1116 (11th Cir. 1987)
(per curiam) (laid-off employees with rehire rights were ‘‘employ-
ees’”’ nonetheless and could not avoid obligation under collective
bargaining agreement to bring their grievance to arbitration); Bale
v. l Tel. Co., 795 F.2d 775 (9th Cir. 1986) (contract definition
of “temporary employee” governed dispute); Gibson v. AT & T
Technologies, Inc., 782 F.2d 686 (7th Cir.) (employees sought layoff
allowance provided for in agreement), cert. denied, 477 U.S. 905,
106 S. Ct. 3275, 91 L.Ed.2d 565 (1986); Mason v. Continental
Group, Inc., 763 F.2d 1219 (11th Cir. 1985) (employer’s closure of
plant and termination of employees was governed by arbitration
clause in agreement, especially where employees had two months
between announcement and closing to bring grievances), cert. de-
nied, 474 U.S. 1087, 106 S. Ct. 863, 88 L.Ed.2d © 2 (1986); Moore
v. General Motors Corp., 739 F.2d 311 (8th Cir. 1984) (contract
provision concerning transfer was source of, and governed, plain-
tiffs claim that employer required transfer without exercising due
care), cert. denied, 471 U.S. 1099, 105 S. Ct. 2320, 85 L.Ed.2d 839
(1985).
The same is also true of the Supreme Court precedents upon
which GM relies. See International Bhd. of Elec. Workers v.
Hechler, 481 U.S. 851, 107 S. Ct. 2161, 95 L.Ed.2d 791 (1987)
(employee’s claim that union violated implied duty of care express-
(Footnote continued on following page)
—16a—
for example, contain provisions that are contrary to the
representations made, or might reserve the particular
issue for further collective bargaining or preclude such
inducements on the part of employer representatives. Un-
der such circumstances, interpretation of the collective
bargaining agreement, in the sense of construction and
application of these provisions, would be required, and
federal law probably would govern.!7 But that is not the
case here. After careful review of the VTEP, we find no
provision that reasonably might be construed to govern
the issue of future employment eligibility, nor are there
“vague and ambiguous” references to eligibility that might
be construed in GM’s favor.
Therefore, we hold that where, as here, the employee/
plaintiffs’ state law claims are founded upon contractual
rights or common-law rights independent of those which
the collectively-bargained agreement creates, a defense
that relies upon the provisions of a collectively-bargained
agreement does not invoke federal preemption unless that
agreement contains provisions that govern, or reasonably
might be construed as governing, the circumstances at
hand.!® Contrary to GM’s assertions here, a court’s peru-
16 continued
ly premised upon collective bargaining agreements); Lueck, (em-
ployee’s complaint concerning bad faith handling of disability bene-
fits was substantially dependent upon analysis of contract and the
implied duties arising thereunder).
17 See supra note 15.
18 See Varnum vy. Nu-Car Carriers, Inc., 804 F.2d 638, 640-41
(11th Cir. 1986), cert. denied, 481 U.S. 1049, 107 S. Ct. 2181, 95
L.Ed.2d 838 (1987). There, the court refused to invoke the preemp-
tion doctrine in the context of an employee’s complaint that the
employer should not have made a representation concerning a
salary figure when, at the same time, it was drafting a change
in the seniority system/pay scale that would have resulted in a
(Footnote continued on following page)
—l7a—
sal of the agreement to determine whether such provi-
sions are contained within it does not constitute “‘inter-
pretation” of that agreement.
Because no governing provision can be found in the
VTEP,'® resolution of the plaintiffs’ claims is not inex-
tricably intertwined with the agreement in the sense de-
18 continued
lesser salary for the employee. The court concluded that the com-
plaint did not go to ‘‘a term of employment covered by the col-
lective bargaining agreement.”’ Similarly, in Anderson v. Ford
Motor Co., 803 F.2d 953, 957 (8th Cir. 1986), cert. denied, 483 U.S.
1011, 107 S. Ct. 3242, 97 L.Ed.2d 747 (1987), the court rejected
§ 301 preemption of the state-law fraud claims of a group of laid-
off employees whom Ford rehired and to whom Ford promised
security against being bumped by employees on the preferential
hiring list. The court held that ck did not mandate preemp-
tion, as the employees’ rights to gain redress for fraud were inde-
pendent of any contractually-established expectations of the parties.
19 GM argues in its reply brief that the contract’s provisions con-
cerning grievance procedures should govern the plaintiffs’ attempt
to resolve the dispute and that therefore, § 301 preemption is man-
dated. In the context of employees’ claims that rest upon indepen-
dent, state-created substantive rights, GM’s argument begs the
question. In Lingle, the Court recognized that although there are
strong policies encouraging arbitration, “differen. considerations
apply where the employee’s claim is based upon rights arising out
of a statute designed to provide minimum substantive guarantees
to individual workers.” 108 S. Ct. at 1884 (quoting Barrentine v.
Arkansas-Best Freight System, Inc., 450 U.S. 728, 737, 101 S. Ct.
1437, 1443, 67 L.Ed.2d 641 (1981)). Here, the state’s substantive
guarantees apply not just to workers, but to all individuals in their
contractual dealings. The difficulty with arbitration, and thus the
danger inherent in accepting GM’s argument, is that even if an
arbitrator were to conclude that some provision of the VTEP gov-
erned this dispute and dictated a resolution, “that conclusion might
or might not be consistent with a proper interpretation of state
law” and its substantive guarantees against fraud in the induce-
ment. Lingle, id. at 1885.
—18a—
scribed by the Lueck/Hechler/Lingle line of cases.2° Under
these narrow circumstances, the rationale supporting Sec-
tion 301 preemption, i.e., avoiding the danger of inconsis-
tent interpretations of collectively-bargained labor agree-
ments, is not at work. Mississippi has a deeply-rooted in-
terest in protecting its citizens from fraudulent conduct,
and unlike the federal scheme, provides remedies designed
to compensate the victims of fraud for economic harm
they may have suffered as a result of their reliance upon
false promises. See Moore, 739 F.2d at 317 (Fagg, J.,
dissenting); Berkline, 453 So.2d at 702. Accordingly, we
conclude that there is no federal preemption here.
20 Our holding does not require that a court conclude that the
collectively-bargained agreement is irrelevant to the dispute; such
an agreement might still be used by either party to support the
credibility of its claims as to the alleged inducements or represen-
tations made. Cf. Hartle v. Packard Elec., at 356, holding that
ERISA did not preempt an employee’s claim, based upon Mis-
Sissippi common law, that he had an employment contract with
Packard Electric that was not subject to the “at-will” doctrine.
The employee alleged that his participation in provisions of a Gen-
eral Motors pension plan created the employment contract. The
court observed that “(ujnlike other cases in which preemption has
been found to exist, Hartle’s case does not in any manner implicate
the federal regulation of employee benefit plans.”
We find that the same is true here with respect to federal reg-
ulation of the collective-bargaining process. The VTEP contains
provisions that govern unrelated aspects of the separation program
(e.g., overpayments, repayment) but might be viewed as not in-
consistent with future eligibility, though by no means could they
be read as creating or precluding such eligibility. At most, those
provisions will serve as evidence to support claims that the alleged
inducements were or were not made, or to negate claims that the
parties did not raise that issue in bargaining. The agreement thus
may remain “intertwined”’ with the plaintiffs’ state law claims; we
seek only to mark that point at which it becomes “inextricably
intertwined” with those claims.
—19a—
B. ERISA Preemption.?!
The resolution of GM’s ERISA preemption claim turns
on whether the VTEP constitutes an ‘‘employee benefit
plan” within the meaning of the statute. Relying principal-
ly upon the Supreme Court’s recent decision in Fort Hali-
fax Packing Co. v. Coyne, 482 U.S. 1, 107 S. Ct. 2211,
96 L.Ed.2d 1 (1987), we conclude that the VTEP is not
such a plan.??
In Fort Halifax, the Court held that ERISA did not
preempt a state statute requiring employers to provide
a one-time severance payment to employees in the event
of a plant closing. The Court based its decision upon sev-
eral factors: First, ERISA refers to employee benefit
plans, not employee benefits. Second, the goal of ERISA’s
preemption provision is to provide a single set of admin-
istrative practices for benefit plans in order to avoid a
patchwork scheme of regulation. However,
[t]his concern only arises . . . with respect to benefits
whose provision by nature requires an ongoing admin-
istrative program to meet the employer’s obligation.
It is for this reason that Congress preempted state
laws relating to plans, rather than simply to benefits.
Only a plan embodies a set of administrative prac-
tices vulnerable to the burden that would be imposed
by a patchwork scheme of regulation.
21 ERISA states that
[e]xcept as provided in subsection (b) of this section, the pro-
visions of this subchapter and subchapter III of this chapter
shall supersede any and all State laws insofar as they may
now or hereafter relate to any employee benefit plan described
in Section 1003(a) of this title and not exempt under Section
1003(b) of this title... .
29 U.S.C. § 1144(a).
22 See also Hartle, at 356, holding that ERISA preemption does
not occur where state law claims are ‘‘only peripherally connected
to the concerns addressed by ERISA.”’
—20a—
Id. at 11-12, 107 S. Ct. at 2217 (emphasis in original).
Because the Maine statute did not require employers to
maintain employee benefit plans, and because there was
no need to create an administrative scheme to make a
one-time lump payment, the Court held that the ERISA
pre-emption provision did not apply.
The operative facts in Fort Halifax are remarkably sim-
ilar to those in the instant case. GM established a pro-
cedure by which employees could elect to receive a one-
time lump payment if they ceased working at the plant.
The plan was not ongoing, nor was there any need for
continuing administration of the payment program (though
employees could elect a two-year installment payment op-
tion). The facts that GM made the payments pursuant to
a Voluntary Termination of Employment “Plan” and that
the employees received a benefit do not convert the plan
into an “employee benefit plan” for purposes of ERISA.
IV. Conclusion.
Holding as we do that the district court had subject
matter jurisdiction over the plaintiffs’ state-law fraudulent
inducement claim and that that claim is not preempted
by federal law, the district court’s denial of GM’s sum-
mary judgment motion is in all respects AFFIRMED.
This cause, here on interlocutory appeal, is REMANDED
to the district court for further proceedings consistent
herewith.
REAVLEY, Circuit Judge, specially concurring:
The plaintiffs complain only of GM’s representations to
persuade them individually to choose the severance pay-
ment. GM does not demonstrate any relationship between
the VTEP and its decision not to rehire the plaintiffs. |
concur in the judgment.
—2la—
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 88-4665
D. C. Docket No. CA-J-86-0337-L thru 0367
and J-86-381 (1)
MARY R. WELLS, ET AL.,
Plaintiffs-Appellees,
versus
GENERAL MOTORS CORPORATION,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Mississippi
Before REAVLEY, POLITZ, and SMITH, Circuit
Judges.
JUDGMENT
This cause came on to be heard on the record on ap-
peal and was argued by counsel.
ON CONSIDERATION WHEREOF, It is now here
ordered and adjudged by this Court that the judgment
of the District Court in this cause is affirmed, and the
cause is remanded to the District Court for further pro-
ceedings in accordance with the opinion of this Court.
—22a—
IT IS FURTHER ORDERED that defendant-appellant
pay to plaintiffs-appellees the costs on appeal, to be tax-
ed by the Clerk of this Court.
August 24, 1989
REAVLEY, Circuit Judge, specially concurring.
—23a—
APPENDIX C
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 88-4665
MARY R. WELLS, ET AL.,
Plaintiffs-Appellees,
versus
GENERAL MOTORS CORPORATION,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Mississippi
ON SUGGESTION FOR REHEARING EN BANC
(Opinion August 24, 5 Cir., 1989, ____ F.2d ___)
(SEPTEMBER 28, 1989)
Before REAVLEY, POLITZ and SMITH, Circuit Judges.
PER CURIAM:
(X) Treating the suggestion for rehearing en banc as
a petition for panel rehearing, it is ordered that the peti-
tion for panel rehearing is DENIED. No member of the
panel nor Judge in regular active service of this Court
having requested that the Court be polled on rehearing
en bane (Federal Rules of Appellate Procedure and Local
Rule 35), the suggestion for Rehearing En Banc is
DENIED.
—~24a—
( ) Treating the suggestion for rehearing en banc as
a petition for panel rehearing, the petition for panel re-
hearing is DENIED. The judges in regular active service
of this Court having been polled at the request of one
of said judges and a majority of said judges not having
voted in favor of it (Federal Rules of Appellate Procedure
and Local Rule 35), the suggestion for Rehearing En Banc
is DENIED.
APPENDIX D
MARY R. WELLS, et al., Plaintiffs,
v.
GENERAL MOTORS CORPORATION, Defendant.
Civ. A. Nos. J86-0337(L) to J86-0367(L)
and J86-0381(L).
United States District Court
S.D. Mississippi,
Jackson Division.
July 21, 1988.
MEMORANDUM OPINION AND ORDER
TOM S. LEE, District Judge.
This cause is before the court on the motion of defen-
dant General Motors Corporation (GM) to dismiss or, alter-
natively, for partial summary judgment. Plaintiffs timely
responded to the motion and the court has considered the
memoranda of authorities together with attachments sub-
mitted by the parties. The thirty-two plaintiffs in this
cause, all former employees of GM’s Packard Electric Di-
vision at its Clinton, Mississippi plant, brought this ac-
tion charging that GM induced them by fraudulent and/or
negligent misrepresentations to terminate their employ-
ment with GM.! Plaintiffs purport to seek remedies based
1 Each of the thirty-two plaintiffs filed a separate complaint in
May of 1986. Their cases were consolidated by orders of this court
dated January 16, i987 and February 6, 1987, respectively.
—2ta—
on alleged violations of state tort law by defendant. GM,
though, contends that plaintiffs’ claims are in fact collec-
tive bargaining disputes concerning employee benefits
which plaintiffs have attempted to characterize as state
law tort claims to avoid the consequences of federal labor
law. Defendant has therefore moved for summary judg-
ment alleging that plaintiffs’ state law claims are pre-
empted by Section &aX5) of the National Labor Relations
Act (NLRA), 29 U.S.C. § 158(aX5), by Section 301 of the
Labor Management Relations Act (LMRA), 29 U.S.C.
§ 185, and by Section 514(a) of the Employee Retirement
Income Security Act (ERISA), 29 U.S.C. § 1144(a). In
essence, what defendant seeks is a dismissal of this ac-
tion in favor of the jurisdiction of the National Labor
Relations Board (NLRB), but in the event the court deter-
mines that dismissal is not warranted, defendant requests
a determination that federal labor law, and not state tort
law, is applicable.
THE FACTS
Packard Electric is a division of GM which performs the
final assembly of wiring harnesses for use in GM automo-
biles. Packard’s divisional headquarters is located in War-
ren, Ohio. At all times relevant to this action, Packard
operated a number of plants in Warren, as well as three
plants in Clinton, Mississippi, and one in Brookhaven,
Mississippi. Packard employees are represented by the
International Union of Electrical, Radio and Machine
Workers, AFL-CIO (IUE), and each of the local plants,
including the one in Clinton, is represented by a local af-
filiate of IUE. Packard’s Clinton employees, and in par-
ticular these plaintiffs, were represented by Local 698.
In the early 1980s, the domestic automobile industry ex-
perienced a severe downturn. GM and Packard became
—2ia—
less competitive and as a consequence, between January
and March 1982, several hundred employees at the Clin-
ton plant, including plaintiffs, were laid off. Because GM
believed that prospects for improvement were bleak, in
early 1982, Packard Warren developed a “plan to com-
pete” for implementation in Warren. As part of this plan,
the Warren JOBS Committee? developed and instituted
an “incentive attrition” plan, known as the Voluntary Ter-
mination of Employment Plan (VTEP or the Plan), which
permitted employees to sell their seniority back to the
company and terminate their employment in exchange for
monetary payment.
After the VTEP was implemented in Warren, Ohio, the
Clinton JOBS Committee began to consider adoption of
a VTEP. After numerous meetings between the bargain-
ing committees of Local 698 and of GM management for
the purpose of negotiating the terms of a VTEP, the
bargaining committees sent a proposed VTEP Memoran-
dum of Understanding incorporating the terms agreed
upon to the Packard Clinton JOBS Committee for ap-
proval. In early November, the JOBS Committee recom-
mended that the proposed VTEP be offered to Packard
Clinton employees and on December 17, 1982, the mem-
bers of the bargaining team executed a final VTEP Memo-
randum of Understanding which set the terms of the Plan.
Management met with Packard Clinton employees, in-
cluding the laid-off employees, in early January 1983 to
present the Plan and answer employees’ questions. Ac-
cording to plaintiffs, it was represented to the employ-
ees that prospects for future work increase at Packard
were bleak and that, although by accepting VTEP employ-
The JOBS Committee was a joint union-management committee
designed to develop joint solutions to business problems.
a
—2a—
ees would be giving up their right to be rehired or re-
called, should work increase and new jobs materialize, ex-
employees would be eligible for future employment. Be-
cause the prospect of being recalled from their lay-off was
not very promising, each of the plaintiffs ultimately chose
to accept the VTEP option and received payments rang-
ing from $10,000 to $22,000, depending on their years of
seniority.
THE CLAIMS
Plaintiffs state that they understood that by accepting
the plan for termination, they were relinquishing all of
their seniority and losing all rights attendant to that se-
niority. They claim, however, that GM misrepresented to
them, either fraudulently or negligently, that while they
were giving up their rights of seniority, they would still
be eligible for future employment with the company just
as would any other applicant for employment with GM.
However, in 1985, when Packard for the first time since
plaintiffs’ acceptance of VTEP, began hiring new employ-
ees, it refused to consider plaintiffs for employment,
stating that any former employee who accepted the ter-
mination plan offered by GM was not eligible for employ-
ment with Packard. Plaintiffs assert that at no time had
they understood that their acceptance of the Plan ren-
dered them ineligible for re-employment with GM, and
that only when GM began hiring in 1985 did plaintiffs
learn of GM’s position that they were ineligible for em-
ployment. Plaintiffs claim that had they known at the time
the termination plan was offered to them, acceptance of
the Plan would render them ineligible for future employ-
ment at GM’s plants, they would not have agreed to ter-
mination and would have remained in the employ of defen-
dant.
—29a—
THE DEFENSES
GM has raised three separate preemption defenses. The
first is predicated upon Section 8(aX5) of the NLRA, 29
U.S.C. § 158, which grants exclusive jurisdiction to the
NLRB over any claim of unfair labor practices. The sec-
ond arises from Section 301 of the LMRA, 29 U.S.C.
§ 185, which has been held to preempt state law claims
where resolution of the claims requires the interpretation
of a collective bargaining agreement. The third is based
on ERISA, 29 U.S.C. § 1144, which preempts state law
as it relates to an employee benefit plan. Plaintiffs deny
that any of defendant’s preemption defenses are available
and claim that they are entitled to pursue their state law
remedies.
NLRA
The initial preemption defense raised by GM is that Sec-
tion &aX5) of the NLRA preempts the plaintiffs’ putative
state law claims. Unlike defendant’s other preemption
defense, this defense calls into question the court’s sub-
ject matter jurisdiction. That is, it raises the issue of
whether this court has subject matter jurisdiction or whether
the NLRB is vested with exclusive jurisdiction pursuant
to the NLRA. Under the NLRA, Congress created the
National Labor Relations Board and granted it the power
to “prevent any person from engaging in any unfair labor
practice .. . affecting commerce.” 29 U.S.C. § 160; see
also 29 U.S.C. §§ 153, 158 and 159. As interpreted, the
NLRB enjoys exclusive jurisdiction over any conduct that
is ‘arguably protected” or “arguably prohibited” by the
NLRA. San Diego Building Trades Council v. Garmon,
359 U.S. 236, 79 S. Ct. 773, 3 L.Ed.2d (1959). Defendant
GM, as the party claiming preemption, has the burden
to demonstrate that the conduct complained of by plain-
ee = ll
—30a—
tiffs is arguably protected or arguably prohibited. /d. As
the Supreme Court recently explained,
(ilf the word “arguably” is to mean anything, it must
mean that the party claiming preemption is required
to demonstrate that his case is one that the Board
could legally decide in his favor. That is, the party
asserting preemption must advance an interpretation
of the Act that is not plainly contrary to its language
and has not been “authoritatively rejected’”’ by the
courts or the Board. . . . The party must then put
forth enough evidence to enable the court to find that
the Board reasonably cannot try the claim based on
such an interpretation.
International Longshoremen v. Davis, 476 U.S. 380, 106
S. Ct. 1904, 90 L.Ed.2d 389 (1986).
GM contends that VTEP was a mandatory subject of
bargaining and as such, GM was required under federal
labor law to bargain with the union in good faith before
implementing the Plan. Included within its good faith
bargaining obligation is the duty to provide adequate in-
formation about the subject at issue so that the negotia-
tion process can function properly. See NLRB v. Truitt
Manufacturing Co., 351 U.S. 149, 76 S. Ct. 758, 100 L.Ed.
1027 (1956); Serrano v. Jones & Laughlin Steel Co., 790
F.2d 1279 (6th Cir. 1986). GM submits that during the
negotiating process over the VTEP, its negotiating team
clearly informed the union’s bargaining committee that
employees who accepted VTEP benefits would not be con-
sidered for rehire if GM’s financial picture ever improved.
Plaintiffs, however, argue that even if the issue of eligibil-
ity for rehire had been discussed during the course of
negotiations, the plaintiffs’ right to seek future employ-
ment with the company was never an issue in the bargain-
ing process and was neither discussed nor included in the
VTEP. According to plaintiffs, the conduct at issue in the
—3la—
case at bar was not the subject of bargaining, was not
a term of the VTEP, and was not part of the underlying
collective bargaining agreement; the conduct, they claim,
is GM’s having made fraudulent representations to indi-
vidual employees, wholly apart from any aspect of the col-
lective bargaining process, in an attempt to prevail upon
individual employees to apply for and accept the benefits
of VTEP.
GM reasons that if, as it contends, the VTEP was a
mandatory subject of bargaining, and if GM bargained
with the union in good faith, then the NLRB could legally
decide that GM met its NLRA obligations and that its
conduct was therefore protected. If, on the other hand,
it were determined that defendant did not negotiate over
VTEP in good faith, by failing to disclose its true inten-
tions regarding rehire rights or otherwise misleading the
union or GM employees, then GM’s actions could be held
to be in violation of the NLRA and plaintiffs could ob-
tain relief.
GM further points out that once VTEP was negotiated,
it was prohibited from by-passing the union and dealing
with the employees regarding rehire rights under VTEP.
Accordingly, defendant further reasons that if it made the
misrepresentations claimed by plaintiffs to have been
made, its conduct could be held to be arguably prohibited
since good faith bargaining regarding mandatory subjects
of bargaining
means the employer may not as to this subject deal
with its employees individually, or unilaterally, and
disregard their bargaining agent. And this of course
means that after the employer has bargained with
the Union about such benefits, and signeda....
contract ... , it may not thereafter deal with its
employees individually, or unilaterally, without the
approval of their bargaining agent.
—32a—
In re A.S. Abell Co., 230 N.L.R.B. 17 (1977), aff'd sub
nom, NLRB v. Baltimore News American Division, 590
F.2d 554, 556 (4th Cir. 1979).
The court accepts, at least for the sake of argument,
that VTEP was in fact a mandatory subject of bargain-
ing.2 Payment to employees for relinquishment of their
employment and rights attendant to that employment whose
employment is governed by a collective bargaining agree-
ment is in some respects similar to severance pay or pen-
sion benefits which have been held to be a mandatory sub-
ject of bargaining. See Allied Chemical & Alkali Workers
v. Pittsburgh Plate Glass Co., 404 U.S. 157, 92 S. Ct. 383,
30 L.Ed.2d 341 (1971); In re Armour and Co., 280 NLRB
96 (1986). In the case at bar, there is no dispute that there
was bargaining concerning the terms of the Plan. It does
not follow, however, that every conceivable matter which
might have been included within VTEP must be charac-
terized as a mandatory subject of bargaining. The fact
that the matter at issue here, eligibility for future employ-
ment, in retrospect could have been and perhaps should
have been included within such a termination plan does
not render that topic a fortiori a mandatory subject of
bargaining. In the court’s view, the right to eligibility for
future employment is not a subject which necessarily re-
quired union/management bargaining. Moreover, the al-
leged misrepresentations concerning plaintiffs’ future
eligibility for employment, according to plaintiffs’ allega-
tions, were not made to employees on an individual basis
in an attempt to bargain with employees individually.
Rather, they were made, if at all, to the group of em-
3 A “mandatory” subject of bargaining is any matter “with re-
spect to wages, hours, and other terms and conditions of employ-
ment.” 29 U.S.C. § 158(d).
—33a—
ployees inquiring concerning VTEP. According to plain-
tiffs’ allegations, the representatives were made simply
to induce individual employees to accept the payments
made available under the previously negotiated Plan. At
that time, the Plan itself had been formally adopted and
the alleged misrepresentations were not made during any
bargaining process.
In sum, the court is of the opinion that the defendant
has failed to sustain its burden to establish the applicabil-
ity of preemption under Section 8(aX5) of the NLRA. Ac-
cordingly, this court enjoys subject matter jurisdiction
over plaintiffs’ claims.
Section 301 of the LMRA
Although the court concludes that plaintiffs’ claims are
not preempted by the NLRA, there remains the more dif-
ficult issue of whether plaintiffs’ claims are preempted by
Section 301 of the LMRA. Section 301 provides a jurisdic-
tional basis in federal courts for
(s)uits for violation of contracts between an employer
and a labor organization representing employees in
an industry affecting commerce as defined in [the
LMRAj} or between any such labor organizations.
Section 301 was and is intended to govern disputes be-
tween parties to collective bargaining agreements. The
mere fact, however, that parties to a particular dispute
have a collective bargaining agreement does not mean that
their dispute will always fall within the coverage of Sec-
tion 301. Rather, the dispute must relate to the parties’
agreement.
In determining whether plaintiffs’ claims are preempted
by Section 301, the court’s inquiry is guided by the Su-
preme Court’s opinion in Allis-Chalmers v. Lueck, 471
—34a—
U.S. 202, 105 S. Ct. 1904, 85 L.Ed.2d 206 (1985), which
set forth a framework for analysis of Section 301 preemp-
tion issues. The Allis-Chalmers Court held that an em-
ploye’s tort suit alleging bad faith handling of an insurance
claim was preempted by Section 301 since the alleged
state law tort arose from an alleged violation of the terms
of a collective bargaining agreement and resolution of the
claim would thus have required interpretation of that
agreement. The actual source of the rights and obligations
which Lueck sought to enforce was not state law but
rather was the collective bargaining agreement, which pro-
vided both the basis for the benefits and the right to have
payment made in a timely manner.
The court observed that the preemptive effect of Sec-
tion 301 extends beyond suits alleging contract violations,
stating that
questions relating to what the parties to a labor
agreement agreed, and what legal consequences were
intended to flow from breaches of that agreement,
must be resolved by reference to uniform federal law,
whether such questions arise in the context of a suit
for breach of contract or in a suit alleging liability
in tort.
Id. at 211, 105 S. Ct. at 1911 (emphasis supplied). Rec-
ognizing that the preemptive scope of Section 301 does
not encompass state law rules which prescribe conduct
or establish rights and obligations independent of a labor
contract, the Court observed that
[not] .. . every state-law suit asserting a right that
relates in some way to a provision in a collective-
bargaining agreement, or more generally to the par-
ties to such an agreement, necessarily is pre-empted
by § 301. The full scope of the pre-emptive effect of
federal labor-contract law remains to be fleshed out
on a case-by-case basis. [But] when resolution of a
—35a—
state-law claim is substantially dependent upon anal-
ysis of the terms of an agreement made between the
parties in a labor contract, that claim must either
be treated as a § 301 claim . . . or dismissed as
preempted by federal-contract law.
Id. at 220, 105 S. Ct. at 1916 (citations omitted) (emphasis
supplied). Thus, plaintiffs’ claims are preempted if “evalua-
tion of their tort claim[s] is inextricably intertwined with
consideration of the terms of the labor contract. If the
state tort law purports to define the meaning of the con-
tract relationship, that law is preempted.” Jd. at 214, 105
S. Ct. at 1913. Consequently, plaintiffs can avoid preemp-
tion only if their claims can be said to be independent
of the collective bargaining agreement in the sense that
resolution of their claims does not substantially depend
upon interpretation or construction of the collective
bargaining agreement, for
if the resolution of a state-law claim depends upon
the meaning of a collective bargaining agreement, the
application of state law is pre-empted and federal
labor-law principles . . . must be employed to resolve
the dispute.
Lingle v. Norge Division of Magic Chef, Inc., 486 U.S.
399, ____, 108 S. Ct. 1877, 1881, 100 L.Ed.2d 410 (1988).
The cases in which Section 301 preemption issues have
been treated under the analysis provided in Allis-Chal-
mers have revealed little consistency and often appear
conflicting. For example, in Bale v. General Telephone Co.
of California, 795 F.2d 775 (9th Cir. 1986), former employ-
ees of General Telephone alleged that the defendant had
misrepresented to them at the time of hiring that they
would serve as temporary employees for six months after
which they would become regular employees. After six
months on the job, and as a result of union pressure,
SE
—36a—
plaintiffs were terminated because under the terms of
their collective bargaining agreement, a temporary em-
ployee’s term could not exceed six months. The court con-
cluded that plaintiffs’ state law tort claims of fraud and
negligent misrepresentation were preempted under Sec-
tion 301, reasoning that
[in] order to prove their fraud and negligent misrep-
resentation claims, [plaintiffs] would be required to
show that the terms of the collective bargaining
agreement differed significantly from the individual
employment contracts they believed they had made.
Resolution of their state tort claims is therefore
“substantially dependent upon analysis of the terms
of an agreement made between the parties in a labor
contract.”
Bale, 795 F.2d at 780 (quoting Allis-Chalmers, 471 U.S.
at 220, 105 S. Ct. at 1915). A contrary result was reached
in Anderson v. Ford Motor Co., 803 F.2d 953 (8th Cir.
1986), a case in which “bumped” employees of Ford al-
leged that at the time of hiring, Ford had assured them
they would not be “bumped” from their job by persons
on a preferential hiring list. Addressing plaintiffs’ claim
of fraudulent misrepresentation, the court concluded that
it was not preempted.
Fraud is a common law action deeply rooted in local
standards of individual and social responsibility. . . .
Unlike the tort claim for bad faith handling of an in-
surance claim considered in Lueck, a claim of fraud
does not derive from nor depend upon an underly-
ing contract. Under Minnesota law, proof of fraud
does not depend on the existence of any contractual
relationship, nor do the standards for judging fraud-
ulent misconduct derive from any contractually estab-
lished expectations of the parties.
Anderson, 803 F.2d 953.
Both plaintiffs and defendant acknowledge that the key
issue on this motion is whether resolution of plaintiffs’
I ni ane Jeseraeenntcceremnaee s e.cmscnnnsnens meme
—37a—
claims require an interpretation of the VTEP. The par-
ties, at the time pla.ntiffs accepted the VTEP, were cov-
ered by a master collective bargaining agreement and the
VTEP itself was a supplemental agreement which resulted
from bargaining between union and management. Plain-
tiffs assert, though, that their complaints relate not to
the agreement itself but to entirely separate conduct by
defendant in fraudulently inducing them to accept the
Plan. Thus, they claim that resolution of their claim is
not “substantially dependent” upon an analysis of the
terms of the agreement between the parties, but can be
resolved independently of the agreement.
Under the collective bargaining agreement in effect at
the time the VTEP was developed by the bargaining com-
mittees and later accepted by plaintiffs, laid-off employees
enjoyed rehire rights or recall rights for five to seven
years, depending on seniority. That is, GM was obligated
to rehire its laid-off employees, including plaintiffs, for a
period of at least five years if work became available.4
Under the VTEP, it was provided that
[aln employe [sic] who was issued and accepts a
VTEP payment shall cease to be an employ [sic] and
shall have seniority cancelled at any and all of the
Company’s plants and locations... .
The VTEP further cited that
lilf a former employe [sic] is again employed by the
Division after he has received a VTEP, no repayment
(except with respect to an overpayment) of the VTEP
shall be required or allowed; and no seniority pre-
viously cancelled shall be reinstated.
4 The length of time during which an individual employee was
entitled to recall was determined by reference to his seniority
Status.
niet
—38a—
According to plaintiffs, they understood that acceptance
of VTEP entailed termination of their ‘rehire’ rights
thereby making them ineligible for rehire or recall. But
they did not consider termination of their rehire rights
to render them ineligible for any future employment with
GM. Accordingly, plaintiffs assert that the fact that rehire
rights may have been discussed and may have been in-
cluded to some degree in the VTEP does not affect their
claims since future eligibility for employment was not a
matter bargained over and was not included within the
VTEP.
Defendant asserts that although there is some evidence
in the record that some form of rehire rights was dis-
cussed in bargaining over the VTEP, and while there is
some language in the VTEP itself which could be con-
strued as touching upon rehire rights, rehire rights were
not negotiated into the VTEP. Nevertheless, defendant
reasons that there must be a determination of whether
rehire rights in any form were negotiated into the VTEP,
and if so, whether the representations allegedly made to
employees were consistent with what was in the VTEP,
or whether the representations instead amounted to mis-
statements; this in turn implicates the VTEP itself and
requires that the court construe the terms of the Plan
to determine whether the representations, if made, were
correct or were misstatements.
It is noteworthy that neither side has taken the posi-
tion that eligibility for future employment was included
in the VTEP nor does it appear they could do so. Al-
though the term “rehire rights” has been bandied about
in connection with this motion, neither party has been able
to seriously contend that that phrase is synonymous with
future eligibility for employment. Thus, even if rehire
rights were discussed and included in a sense in the
VTEP, a matter which both parties deny, that would not
resolve this dispute. Hence, resolution of plaintiffs’ dispute
Ne
—39a—
is not inextricably intertwined with interpretation of the
meaning of the VTEP. Rather, it appears that the issues
raised by plaintiffs’ claims are
purely factual questions [which] [pertain] to the con-
duct of the employee and the conduct and motiva-
tion of the employer. Neither of [these] [requires] the
court to interpret any term of a collective-bargaining
agreement.
Lingle, 486 U.S. at ___, 108 S. Ct. at 1888. Moreover,
the right of the employees which was allegedly violated,
the right to be free from fraud, derives not from any
agreement between the parties but from state law. It is
a right which exists independently of and does not de-
pend upon the underlying contract. See Anderson, 803
F.2d at 957; see also Berkline Corp. v. Bank of Missis-
sippi, 453 So.2d 699, 702 (Miss. 1984) (award of damages
based on misrepresentation is notion running deep in our
law). The mere fact that this substantive right is advanced
in an employment context does not require preemption.
‘{T]here is nothing novel about recognizing that substan-
tive rights in a labor relations context can exist without
interpreting collective-bargaining agreements.” Lingle, 486
U.S. at , 108 S. Ct. at ___. In the case at bar, the
court, after careful consideration of the issue, finds that
no interpretation of the parties’ collective bargaining
agreement or VTEP is required. Hence, the court is of
the opinion that Section 301 preemption is inapplicable.
ERISA
The defendant’s preemption argument based on ERISA
is not persuasive. ERISA preemption, while concededly
broad, applies only to an employee benefit “‘plan.’’ 29
U.S.C. § 1144. Under ERISA, an employee benefit plan
is ‘any plan, fund, or program which was heretofore or
is hereafter established or maintained by an employer or
an employee organization’? and which provides certain ben-
—40a—
efits. 29 U.S.C. § 1002(1). In the case at bar, the fact that
the termination agreement between plaintiffs and the de-
fendant concerned an employee benefit and was termed
a ‘“‘plan” does not make it a benefit plan for purposes of
ERISA. See Fort Halifax Packing Company, Inc. v.
Coyne, 482 U.S. 1, 6, 107 S. Ct. 2221, 2215, 96 L.Ed.2d
1 (1987) (ERISA’s preemption provision does refer to state
laws relating to “employee benefits” but to those relating
to employee benefit “plans’’). In the Fort Halifar case,
the Supreme Court concluded that ERISA did not pre-
empt a state law providing a one-time severance benefit
to employees in the event of a plant closing.
ERISA preemption encompasses only those plans which
are “established or . . . maintained for the purpose of pro-
viding its participants or their beneficiaries” those benefits
listed under the Act. 29 U.S.C. § 1002(1). In the present
case, it is clear that the purpose of GM in instituting
\ TEP was not to provide its employees with benefits un-
der the Act but was instead to reduce its work force
necause of the poor conditions of the industry and of GM.
And, in the court’s view, the termination plan adopted
by GM was not such a plan as envisioned by ERISA.
Most of the payments to employees were made on a single
payment basis and were made solely for the purpose of
employee attrition. The court simply does not view the
VTEP as coming within the meaning of a “plan” for
ERISA purposes. This is consistent with the Supreme
Court’s decision in Fort Halifar.
In conclusion, the court is of the opinion that defendant's
motion for summary judgment is not we}! taken and should
be denied. Accordingly, this court has jurisdiction to enter-
tain this matter.
Accordingly, it is ordered that defendant's motion for
summary judgment is denied.
ORDERED.
—4la—
APPENDIX E
MEMORANDUM OF UNDERSTANDING
VOLUNTARY TERMINATION OF
EMPLOYMENT PLAN
VTEP
ELIGIBILITY
1. An employe covered by the Collective Bargaining
Agreement with Plant Seniority as of the date of the most
current period of implementation of this program will be
eligible to apply for a termination allowance under this
VTEP.
2. Skilled Trades employes may apply for a VTEP Ben-
efit, however, processing of application may be limited,
delayed or denied at Management’s discretion.
4. Applications for VTEP will be limited to 450 em-
ployes and are subject to Management’s approval consis-
tent with business conditions. Processing of applications
from employes may be limited and/or delayed based on
Management’s capability to operate the business and train
employes. Employes whose applications are delayed will
be notified of the delay and will be advised thirty (30)
days prior to the anticipated date of processing. VTEP
will be granted by seniority with preference given the
most senior applying.
APPLICATION PROCEDURE
1. An eligible employe may file an application for a
VTEP Benefit under this plan. Such application must be
filed within the time frame, to be announced after all ap-
provals are obtained.
2. VTEP benefits are payable based on the employes
years of seniority as of a date to be determined by the
Company. VTEP benefits may be payable in a lump sum
or in equal monthly installments as shown below:
YEARS OF
SENIORITY
DEFINED TOTAL
IN 2 AMOUNT
APPLICATION 24 MONTHLY INSTALLMENT
PROCEDURE LUMP SUM INSTALLMENTS PAYOUT
Less Than 5 $10,000.00 $458.33 $11,000.00
5 But Less Than 10 $15,000.00 $687.50 $16,500.00
10 But Less Than 15 $20,000.00 $916.67 $22 000.00
3. The amount of an employe’s VTEP payment, as de-
fined in 2 above, shall be reduced by any outstanding
overpayment to the SUB Plan and any other debts to the
Company or trustees of any Company benefit plan or pro-
gram including overpayments under the GIS Program.
The amount of the reduction of the VTEP payment be-
cause of SUB Plan overpayments or outstanding debts
to the Company or trustees of any Company plan or pro-
gram, shall be paid by Packard Electric Division to the
Company trustee of the SUB Plan Fund, or other Com
pany plan or program, as applicable.
4. An employe who is issued and accepts a VTEP pay-
ment shall cease to be an employe and shall have seniority
cancelled at any and all of the Company’s plants and loca-
tions as of the date determined by the Company under
the provisions of Paragraph 34(a) of the GM-IUE National
Agreement.
5. VTEP payments shall be paid by Packard Electric
Division.
6. If it is determined that any VTEP payment should
not have been paid or should have been paid in a lesser
i3a—
amount, written notice thereof shall be mailed to the for-
mer employe and the employe shall be obligated to return
the amount of the overpayment to the VTEP. Any re-
maining overpayment balance shall be recoverable from
any monies receivable from the Company should the
former employe be rehired.
REPAYMENT
1. If a former employe is again employed by the Divi-
sion after he has received a VTEP, no repayment (ex-
cept with respect to an overpayment) of the VTEP shall
be required or allowed; and no seniority previously can-
celled shall be reinstated.
GENERAL
1. Any complaint with respect to the payment or denial
of a VTEP payment may be appealed to local Manage-
ment utilizing procedures similar to the SUB Plan. All
appeals will be handled locally.
2. Any term used in the SUB Plan and used in this
Plan has the same meaning in this Plan as in the SUB
Plan.
3. In the event that an employe receives a VTEP
benefit and returns it within fourteen (14) calendar days
of the date of the original payment draft shall have se-
niority reinstated as though it haa not been broken.
INTERNATIONAL UNION OF ELECTRICAL,
RADIO AND MACHINE WORKERS,
LOCAL NO. 698, AFL-CIO-CLC
GENERAL MOTORS CORPORATION
PACKARD ELECTRIC DIVISION
—44a—
APPENDIX F
IN THE UNITED STATES DISTRICT COURT
FOR THE
SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
MARY R. WELLS, )
Plaintiff, ) CIVIL ACTION
) No. J&86-0337(L)
) TRIAL BY
GENERAL MOTORS JURY REQUESTED
CORPORATION,
Defendant. )
COMPLAINT
Comes now Mary R. Wells, by and through counsel of
record, and files this Complaint against General Motors
Corporation and would respectfully show unto the Court
the following, to-wit:
l.
Plaintiff is an adult resident citizen of Hinds County,
Mississippl.
ee
Defendant, General Motors Corporation, is a Delaware
corporation, having its principal place of business in a
state other then the State of Mississippi, licensed and
authorized to do business and doing business in Hinds
County, Mississippi, where it may be served with process
—45a—
on its agent for service of process, CT Corporation
System, whose address is 118 N. Congress St., Jackson,
Mississippi.
3.
There is complete diversity of citizenship between the
parties and the amount in controversy exceeds Ten Thou-
sand and No/100 Dollars ($10,000.00) exclusive of interest
and costs. .
4.
Plaintiff was employed on or about September 13, 1986,
by the defendant at its Packard Electric Division located
in Clinton, Mississippi. As a result of said employment,
plaintiff enjoyed certain employee rights, benefits and
privileges, including, but not limited to, seniority, all of
which were of value to plaintiff.
Prior to January 14, 1983, Plaintiff made application for
payment under the provisions of the defendant’s Volun-
tary Termination of Employment Plan (VTEP) whereby
she agreed, in consideration of receipt of a VTEP benefit
payment, to cease employment with the defendant and
to relinquish seniority at any and all Packard Electric and
General Motors’ plants as of the date terminated by the
company.
I. COUNT ONE
6.
Plaintiff realleges and adopts by reference all allegations
contained in paragraphs 1 through 5 above.
—46a—
t
In December 1982, and January 1983, in a series of
group meetings at defendant’s facility in Clinton, Missis-
sippi, defendant, through its authorized agents and em-
ployees who were acting within the course and scope of
their employment, falsely and fraudulently, and with in-
tent to deceive plaintiff, represented to plaintiff and other
active and inactive (laid off) employees that there was no
prospect in the foreseeable future of recalling the nu-
merous inactive employees at the Clinton plant, and, that
in fact, the Clinton plant was experiencing such severe
competitive disadvantages that it might be necessary to
shut down the plant permanently and terminate most if
not all of its active and inactive employes at the Clinton
facility; and, that defendant was offering Voluntary Ter-
mination of Employment Plan (VTEP) benefits to bargain-
ing unit employees with plant seniority whereby such
employees could apply for, on a seniority preference basis,
VTEP payments which ranged in amounts from $10,000.00
to $22,000.00; and, that any employee who applied for and
accepted VTEP payment would be selling their seniority
to the company at any and all of the defendant’s plants
and locations and would cease to be an employee at the
defendant’s Clinton, Mississippi, location and that if plain-
tiff or any other employee who accepted VTEP benefits
was later employed by the defendant then the seniority
previously cancelled would not be reinstated; and, that
if competitive conditions improved and the defendant later
began hiring employees and increasing its workforce at
the Clinton plant that those employees who had accepted
VTEP benefits (VTEP employees) would be given prefer-
ence over other applications for employment; and, that
VTEP employees would be eligible for employment at
defendant’s other locations on the same basis as other ap-
plicants.
—4fa—
3.
Plaintiff, relying upon the truth of defendant’s represen-
tations, and with every right to rely thereon, and believ-
ing that the representations were true, was fraudulently
induced to apply for, and was issued, and accepted VTEP
benefits on or about February 11, 1983.
9.
Defendant’s representations were false and fraudulent
in that the defendant knew or should have know that
there were no plans or intentions whatsoever to shut
down the Clinton plant and that in fact the defendant had
plans to restructure its employee workforce and hire ad-
ditional employees; and, that instead of giving preference
to VTEP employees the defendant would, and has, refused
to accept applications or employ plaintiff or any other
employee who accepted VTEP benefits; and, that defen-
dant would implement, and has implemented, a policy at
all of its locations nationwide which prohibits the re-
employment of plaintiff or any other employee who ac-
cepted VTEP benefits. :
10.
As a consequent and proximate result of the aforesaid
misrepresentations, plaintiff has been misled and de-
frauded, and has suffered damages in a sum far exceeding
$10,000.00, to be proved with specificity at a trial on the
merits of this cause.
II. COUNT TWO
i.
Plaintiff realleges and adopts by reference all allegations
contained in paragraphs 1 through 9 above.
EE
—48a—
12.
Defendant, in December 1982, and January 1983, in a
series of group meetings at defendant’s facility in Clin-
ton, Mississippi, and in response to employee questions,
and in written documents distributed to plaintiff and other
active and inactive employees, negligently misrepresented
and negligently omitted material and significant facts rele-
vant to the financial and economic situation at the Clin-
ton facility, the defendants’ plans to rehire new employees
and to restructure and increase its employee workforce,
and the effect upon plaintiff and other employees who ac-
cepted VTEP benefits with regard to preference for fu-
ture employment and eligibility for employment at defen-
dant’s other locations.
13.
In making the aforesaid negligent representations and
omitting other material and significant facts, the defen-
dant’s agents and employees, who were acting within the
course and scope of their employment, failed to exercise
that degree of diligence, good faith, fair dealing and ex
pertise that the plaintiff and other employees were rea-
sonably entitled to inspect [sic] from reasonably compe
tent officers, agents and employees of the defendant.
Plaintiff reasonably relied upon the defendant’s misrep-
resentations and omissions in applying for and accepting
VTEP benefits.
LD.
That as a direct and proximate result of such reason-
able reliance, plaintiff has suffered damages in a sum far
exceeding $10,000.00, to be proved with specificity at
trial on the merits of this cause
—49a—
Il]. PRAYER FOR RELIEF
WHEREFORE, PREMISES CONSIDERED, the plain-
tiff respectfully prays for judgment of this Court as
follows:
A. Under Count I: A judgment of this Court against
the defendant awarding the plaintiff compensatory dam-
ages, including but not limited to lost wages and benefits,
and all damages proximately resulting from lost wages
and benefits, along with pre-judgment and post-judgment
interest thereon, the sum of which is uncertain at this
time, but which the plaintiff believes to be far in excess
of $10,000.00. Plaintiff further requests punitive damages
for defendant’s fraudulent actions, all costs, fees and ex-
penses of this action, including reasonable attorney’s fees.
B. Under Count II: A judgment of this Court award-
ing to plaintiff compensatory damages, including but not
limited to, lost wages and benefits, and all damages pro-
ximately resulting from lost wages and benefits, along
with pre-judgment and postjudgment interest thereon, the
sum of which is uncertain at this time, but which the
plaintiff believes to be far in excess of $10,000.00. The
plaintiff further requests that the defendant be required
to pay punitive damages for its grossly negligent misrep-
resentation, and to pay all costs in this action, including
a reasonable attorney’s fee.
C. Such other and further relief to which the plaintiff
may be entitled in the premises.
—50a—
Respectfully submitted,
MARY R. WELLS
BY:
RICHARD C. ROBERTS III
814 North President Street
P.O. Box 55882
Jackson, MS 39216-1882
(601) 3538-9455
BY:
EDWARD J. CURRIE, JR.
STEEN, REYNOLDS,
DALEHITE & CURRIE
P.O. Box 900
Jackson, MS 39205-0900
(601) 969-7054
ATTORNEYS FOR PLAINTIFF
—5la—
APPENDIX G
STATUTORY PROVISIONS INVOLVED
1. Section 8(aX5) of the National Labor Relations Act,
29 U.S.C. § 158(aX5) provides:
§ 158. Unfair Labor Practices.
(a) Unfair Labor Practices by Employer.
It shall be an unfair labor practice for an employer:
* * *
(5) to refuse to bargain collectively with the repre-
sentatives of his employees, subject to the provisions
of Section 159(a) of this title.
2. Section 301(a) of the Labor Management Relations
Act, 29 U.S.C. § 185(a), provides:
§ 185. Suits by and Against Labor Organizations.
(a) Venue, Amount, and Citizenship.
Suits for violation of contracts between an employer
and a labor organization representing employees in
an industry affecting commerce as defined in this
chapter, or between any such labor organizations,
may be brought in any district court of the United
States having jurisdiction of the parties, without
respect to the amount in controversy or without re-
gard to the citizenship of the parties.
3. Section 514(a) of the Employee Retirement Income
Security Act, 29 U.S.C. § 1144(a), provides:
§ 1144. Other Laws.
(a) Supersedure; Effective Date.
Except as provided in subsection (b) of this section,
the provisions of this subchapter and subchapter III
of this chapter shall supersede any and all State laws
insofar as they may now or hereafter relate to any
employee benefit plan described in Section 1003(a) of
this title and not exempt under Section 1003(b) of this
title. This section shall take effect on January 1, 1975.
—52a—
APPENDIX H
The affiliates and non-wholly owned subsidiaries of peti.
tioner General Motors Corporation are:
Aralmex, S.A. de C.V. (Mexico);
Automotriz Gencor S.A. (Ecuador);
Autos y Maquinas del Ecuador S.A. (AYMESA)
(Ecuador);
Companis Nacional de Direcciones Automotrices,
S.A. de C.V. (Mexico);
Compresores Delfa, C.A. (Venezuela);
Convesco Vehicle Sales GmbH (West Germany);
Daewoo Motor Co., Ltd. (Korea);
DHB-Componentes Automotives S.A. (Brazil);
Fabrica Columbians de Automotores S.A.
(““Colomotores’’) (Columbia);
General Motors de Columbia S.A. (Columbia);
General Motors Egypt, S8.A.E. (Egypt);
General Motors Iran Limited (Iran);
General Motors Kenya Limited (Kenya);
GM Allison Japan Limited (Japan);
GM Fanuc Robotics Corp. (USA);
Industries Mecaniques Meghrebires, S.A. (Tunisia);
Industrija Delova Automobils, Kikinda (Yugoslavia);
Isuzu Motors Limited (Japan);
Isuzu Motors Overseas Distribution Corp. (Japan):
Kabelwerke Reinshagen GmbH (West Germany);
Kabelwerke Reinshagen Werk Berlin GmbH
(West Germany);
Kabelwerke Reinshagen Werk Neumarkt GmbH
(West Germany);
Moto Diesel Mexicana,.S.A. de C.V. (Mexico);
Motor Enterprises, Inc. (USA);
New United Motor Manufacturing, Inc. (USA);
Omnibus BB Transportes, S.A. (Ecuador);
Promotora de Partes Electronicos Automotrices
(Mexico);
P.T. Mesin Isuzu Indonesia (Indonesia);
Senalizacion y Accessorios del Automobil Yorka,
S.A. (Spain);
Suzuki Motor Co., Ltd. (Japan);
Unicables, S.A. (Spain).
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.