# Opposition Brief — Sun Carriers, Inc. v. Milne Employees Ass'n

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1992
- **Citation:** 506 U.S. 996

## Text

No. 92-65

!
i

In The

Suprenwe Court of the United Stites Se TSS GUERI

—o-
October Term, 1992

SUN CARRIERS, INC.; ALBERT L. LABINGER; DONALD
k. MAYORAS; MILNE TRUCK LINES; ELLIOTT
BURNSIDE; CHARLES N. PASS; THOMAS MORTON;
JAMES BRADFORD, ST. JOHNSBURY TRUCKING,
JONES TRUCK LINES; RIORDAN FREEMAN & SPOGLI;
RICHARD J. RIORDAN; BRADFORD M. FREEMAN,
RONALD P. SPOGLI,
Petitioners
VS.
MILNE EMPLOYEES ASSOCIATION, a non-profit Mutual
Benefit Corporation, or in the alternative STEVEN BISHOP.
CHARLES E. THARP, DEBRA BISHOP and ELLA THARP
as representatives of the class of afffected former employees o!
MILNE TRUCK LINES, INC., andi their spouses,
Respondents

On Petition for Writ of Certiorari ito the United States Court
of Appeals for the Ninth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

RICHARI) E. SCHWARTZ
Counsel of Record
JAMES E. PARROT
RICHARI)D SCHWARTZ &
ASSOCIATES, LTD.
Attorney's for Respondents
614 North 11th Street
300 Lucas Plaza
St. Lowis, Missouri 63101-1220
(314) 231-2110

255]

ulz ;
prgelat (800) 3 APPEAL * (800)) 5 APPEAL « (800) BRIEF 21

ervices, inc

i232

QUESTIONS PRESENTED FOR REVIEW

I. Should federal labor laws be interpreted to alter radically
the constitutional! balance enshrined in the concepts of federalism
by supplanting any and all state law regulation of matters
peripheral to the labor-management bargaining relationship —
such as laws providing causes of action for fraudulent
misrepresentations and concealments arising outside of any
collective bargaining?

IT. Can an employer Properly conduct a successful defense
before the NLRB against unfair labor practice charges and later
claim Garmon preemption against a state-law suit arising from the
same factual setting as that which gave rise to the NLRB
complaint?

ul

TABLE OF CONTENTS

Page
Questions. Presemted . c. 6. 6 5a ee eee
Tame Of COmemts oo. ck sk ii ine ee ee il
Fapee Of CHOON: oa 6k eee -
statement of ihe Cale... 325 ee l
Reasons for Denying the Writ... 0... .¢sc04045es0145555 4

I. The Ninth Circuit correctly applied the § 301
preemption analysis required by precedents of the
court in refusing to find preempted four of
respondents’ causes of action................... 4

Il. The decision below presents no issue of national
WRBOVIONOE. (hes tae ee eee 9

III. The Ninth Circuit’s,decision that respondents’ state-
law claims for fraudulent conduct including emotional
distress damages were not preempted under the
Garmon doctrine because those claims arose out of
conduct outside of collective bargaining is consistent
with the court’s jurisprudence and rulings of the other
CCUM. ook ace ce eae ea eee eee 12

A. The NLRB Specifically Rejected Unfair Labor
Practice Charges By The Representative Unions
Before The State-Law Complaint Was Filed.
Therefore The State Court May Exercise
Jurisdiction Over The Conduct Alleged In The
Complaint That Is Not Covered By Federal
RGN CE ok 6 ee ne Re 13

ae

ll

Contents
Page

B. These State-Law Claims Are Not Identical To
The Untair Labor Practice Charges Presented
To The NLRB. Hence Respondents’ State-Law
Claims Arising From Conduct Outside Collective
Bargaining Are Not Preempted By Garmon.. 15

om

~. The Ninth Circuit’s Decision In No Way
Contlicts With Cases Cited By Petitioners From
Other Circuits Since Those Cases Are Factually
Distinguishable From The Matters Sub Judice:
The Decision At Bar Is A Logically Sound
Application Of Garmon And Its Progeny.... 20

D. Petitioners Propose A Radical Restructuring Of
Federal Labor Law, Arguing That Nearly Every
State-Law Tort Claim Is Preempted Under
Garmon. They Would Upset The Delicate
Balance Between State Regulation Of
Traditionally Tortious Activities And Federal
Regulation Of Unfair Labor Practice. ...... 21

Conclusion ......... 0 a ee A a 23
TABLE OF CITATIONS

Cases Cited:

Belknap Inc. v. Hale, 463 U.S. 491 (1983) ..12, 14. 1S, 16, 18

Contents
Page

Caterpillar v. Williams, 482 U.S. 386, 107 S. Ct. 2425 (1987)

ORIN Sees aE a ae eae ee Eee nde 10
Dowd Box Co. v. Courtney, 368 U.S. 502 (1962) ...... a
Farmer v. Carpenters, 430 U.S. 290 (1977)............12, 15
First National Maintenance Corp. v. NLRB, 452 U.S. 666

4) ) Se LOPE TST EE TOOT ee Teer e rT ee 17
Foley v. Interactive Data Corp., 47 Cal. 3d 654 (1988)

nie hi ee a aon wae Ok ane a ee eee 8
Int’! Longshoreman’s Ass’n v. Davis, 476 U.S. 380 (1986)
LEN nee MEU eK ewe mean ea 18
J.1. Case Co. v. NLRB, 321 U.S. 332 (1944) ... 19
Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399 (1988)

PE AS AA EEN Ee 4, 5, 6, 7, 8, 9, 10, 12, 23
Linn v. United Plant Guard Workers, 383 U.S. 53 (1966)

Ried te wld PKS oe a bbe eae ate en a eerite 13, 15
MEA v. Sun Carriers, 714 F. Supp. 1028 (N.D. Cal. 1989)

ee ene re Oe re area 3. 8

Contents
Page

Metropolitan Life Ins. Co. v. Mass, 471 U.S. 724 (1985)
Ge 1 : 21, >”
Milne Employees Ass’n v. Sun Carriers, 960 F.2d 140] (9th
te | eee rn nmnR a oe Fe as ue F 14, 17
NLRB v. Pratt & Whitney Air Craft Div., 789 F.2d 12] (2d
ies OME oe sae ee cee ee he 18

NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342
(ROOME i ocnee se ke eo etna nies wid eh Cad 17

Parker v. Conners Steel Co., 855 F.2d 1510 (11th Cir. 1988),
cert. denied, 490 U.S. 1066...................... 20, 21

Republic Steel Corp. v. Maddox, 379 U.S. 650 (1965)

ee ee ral Goa, 3, FN 10
San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236
(2959) v4.45, i, J, & 02, 13, 4, US, 16, 17, 1&. 2.
Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180 (1978)
CAR ee Ree Te Nika am oie eee koae Cn ae eee Bb
Serrano v. Jones & Laughlin Steel Co., 790 F.2d 1279 (6th
es PN Sen rs ee ne ee 21
Teamsters v. Lucas Flour, 369 U.S. 95 (1962) .......... Oe

Contents

Page

Wells v. General Motors Corp., 881 F.2d 166 (Sth Cir. 1989),

ROOTS Kb eh KEEN G ODO bb OKO RO EO bYeS Ocak ene 16, 18
Statutes Cited:
Labor Management Relations Act:
i, Sa cody & 5, G, 7, 8, Oo WO, 2, 23
29 US.C.§ 185 20 3
29 U.S.C. § 185(a).. 2.0. 5
National Labor Relations Act:
ibe e ee aed va cer aks un elec eee dekeccnns 13
DO bods casiexawhac Gu aneonss .18, 21
| ee) 13
Rules Cited:
oo ae has RR TT ALR ES aaa ts abe 8
si Ne a |; a Ra 9

Other Authotities Cited:

Cal. Civ. Code §§ 1708, et Ey NP ee ear ee Ee 10

Vil

Contents

‘Cal. Civ. Code § 1709, et seq.

Cal. Civ. Code $§ 1708-1711

H. Rep. No. 245, 80th Cong., Ist Sess................

S. Rep. No. 105, 80th Cong., Ist Ses
ERA ee peeps Alte

Taft-Hartley Act .........

§. at 15-17 (1947) (Sen.

ws

l

STATEMENT OF THE CASE

Respondents present this Statement of the Case for the
purpose of correcting petitioners’ mischaracterization of their
case and the allegations appearing in their state-law complaint.

Respondents are Milne Employees Association (herein
“MEA” ) and, alternatively its officers and directors as proposed
class representatives. MEA was formed for the purpose of
conducting this litigation on behalf of its members, 614 former
employees of petitioner Milne Truck Lines, Inc. (“Milne” or
“Milne Truck” hereinafter) and 480 spouses of those employees
who assert claims for spousal injury or loss of consortium. Forty-
eight of the former employees were in managerial or other
nonunion positions not covered by a collective bargaining
agreement (“CBA” herein) (App. 2a-3a). MEA originally filed its
claims in the California Superior Court. Defendants removed the
case to federal court claiming complete immunity from suit under
federal labor law preemption (App. 4a).

This writ proceeding involves only the state-law tort claims of
the former union employees (and their spouses) of petitioner
Milne. The claims of the nonunion former employees of petitioner
Milne were severed by the district court, remanded to state court
(App. 4a) and there are proceeding.

Milne Truck is the only petitioner which signed or was
covered by any CBA with the unions representing members of
MEA. In the 50 years before 1980, Milne Truck was an
independent trucking company operating in the Western United
States (App. 3a). In 1980, petitioner Sun Carriers, Inc. (“Sun”)
acquired petitioner Milne in a leveraged buy-out, and Milne
became a subsidiary of petitioner Sun (App. 3a). On September 29,
1986 all of the stock of petitioner Sun was sold to the officers of
petitioner Sun and petitioners Riordan, Freeman, and Spogli. /d.

to

Respondents’ well-pleaded complaint alleges that after the
LBO and up until September 1987 all of the petitioners conspired
in a secret plan to liquidate the assets of Milne Truck in order to
assist Sun and the Riordan partnerships to pay down their massive
debt assumed in the buy-out of Sun. /d.

Respondents complain that all petitioners engaged in a
protracted campaign of deception and fraud to effectuate their
secret plan to liquidate Milne Truck. The complaint asserts that in
January 1987 Milne Truck began a massive reduction of its sales
force which was falsely announced as a “refocus” of sales
activities. /d@. Such reductions produced widespread rumors in the
trucking industry and throughout Milne Truck’s workforce of its
imminent closing. /d.

In response to those rumors, petitioners visited Milne Truck’s
various terminals in an effort to calm the workforce and to put such
rumors to rest. /d. In those meetings,petitioners made and
presented videotapes (shown to all members of MEA) promising
job security, asking the respondents not to seek other work, and
asking the respondents to have faith in the group controlling Sun
Carriers. /d.

On August |, 1987 Milne Truck announced the sale of its
Wyoming terminal. In response to increased apprehensions by it
employees, petitioners falsely claimed that sale was “only a
revamping” of operations and that Milne Truck would continue
there. On August 21, 1987 Milne Truck sold another terminal.
again representing that its operations would continue as normal but
“blended” with other Milne Truck terminals in Northern
Califorma. /d.

Finally petitioners revealed their hidden cards. In a letter
dated September 8, 1987 Petitioners demanded that the Teamsters

3

(which represented most MEA members) grant major concessions
on wages and benefits. /d. Petitioners required that those
concessions be agreed to within three days or all Milne Truck’s
operations would be closed. /d. On or about September 11, 1987,
Petitioners completed _ their conspiracy of fraud and
misrepresentation by closing down Milne Truck and liquidating its
assets. /d.

On September 8, 1988 respondent MEA and the alternative
representatives of the proposed class filed their complaint in the
Superior Court of the State of California. They asserted seven
state-law tort actions, including fraud by _ intentional
misrepresentation of facts, fraud by suppression of facts, negligent
misrepresentation of facts, and intentional infliction of emotional
distress; respondents also sought the equitable remedy of
imposition of constructive trust (App. 3a-4a).

The complaint specifically disclaimed any reliance on any
portion of any CBA. No CBA even addressed the eventuality of a
total plant closure. The suggestions of petitioners that the CBAs
“address the rights and duties attendant to plant closure” (Petition
at 3) or thata CBA might be so interpreted (id.) are without factual
foundation and contrary to the factual analysis engaged in by the
Ninth Circuit. See Milne Employees Ass'n v. Sun Carriers, 960
F.2d 1401, 1409-10 (9th Cir. 1991),

On removal, the district court held all claims by the union
employees preempted by § 301 of the Labor Management
Relations Act, (LMRA), 29 U.S.C. § 185. The district court denied
the § 301 preemption claim as to the non-union employees’ state-
law causes. The district court denied, as to all employees,
petiuoners’ claim that the Garmon doctrine preempted the state-
law causes. See MEA v. Sun Carriers, 714 F. Supp. 1028 (N.D. Cal.
1989).

4

The Ninth Circuit reversed the § 301 preemption rulings on
the union employees’ claims for fraud and intentional infliction of
emotional distress; it remanded these claims to the district court for
a determination whether remand to state court was required. Milne
Employees Ass'n v. Sun Carriers, 960 F.2d at 1418. The Circuit
upheld the district court's rulings in all other respects. /d.
Specifically, the appeals court found after additional requested
briefing that the claims for fraud and intentional infliction of
emotional distress arising out of the fraudulent conduct were not
preempted by the Garmon doctrine. Id. Contrary to petitioners’
contention (Petition at 7)respondents have abandoned on appeal
neither their spousal claims nor their request for imposition of a
constructive trust. Milne Employees Ass'n, 960 F.2d at 1405, n.3.
Rather, those purely derivative claims were not germane to the
appeal.

One particular distortion merits special mention. Petitioners
claim that Milne Truck’s Operations “lost several million dollars”
after their leveraged buy-out (Petition at 6). This is unsupported in
the record; petitioners first alleged such losses Only after
respondents filed their complaint. This concealment of heavy
losses — if indeed such occurred — lies at the heart of
respondents’ complaint (App. 3a).

REASONS FOR DENYING THE WRIT
I.

THE NINTH CIRCUIT CORRECTLY APPLIED THE
§ 301 PREEMPTION ANALYSIS REQUIRED BY
PRECEDENTS OF THE COURT IN REFUSING TO FIND
PREEMPTED FOUR OF RESPONDENTS’ CAUSES OF
ACTION.

The Court in Lingle v, Norge Div. of Magic Chef. Inc., 486 U.S.

5

399 (1988) enunciated a clear, bright-line test for resolution of
federal labor law defenses based upon alleged preemption under
§ 301 of the Labor Management Relations Act, 29 U.S.C. § 185(a).
“To determine whether a state law claim is completely preempted
under section 301, the relevant inquiry is whether resolution of the
claim requires interpretation of a collective bargaining
agreement.” See Milne Employees Ass'n, 960 F.2d at 1408. This
correctly reflects the test enunciated by this Court in Lingle, supra,
and is a faithful expression of the congressional intent in enacting
this statute. The legislative history of the Taft-Hartley Act leaves
unmistakable the inference that Congress never intended to
supplant all state regulation in the labor field done under the
exercise of the states’ police powers. See H.R. Rep. No. 245, 80th
Cong., Ist Sess. for the report of Congressman Hartley (“makes
labor organizations equally responsible with employers for
contract violations and provides for suit by either against the other.
..."). Accord S. Rep. No. 105, 80th Cong., Ist Sess. at 15-17
(1947) (Sen. Taft), cited in Dowd Box Co. v. Courtney, 368 U.S.
502, 511-13 (1962).

Beyond creating a federal jurisdictional vehicle for suing
unions in federal court for CBA breaches, the Court has identified
two other intents of the Congress in enacting § 301. The second
intent was to promote collective bargaining that ends with
agreements not to strike by authorizing federal courts to fashion a
body of federal law for enforcement of CBAs. See Textile Workers
v. Lincoln Mills, 353 U.S. 448, 451, 454-55 (1957). The third
congressional intent discerned in the jurisprudence of this Court
was to promote uniformity of interpretation and to avoid
unpredictability in the interpretation of phrases and clauses in
CBAs. Teamsters v. Lucas Flour, 369 U.S. 95, 102-04 (1962).
None of these legislative purposes is implicated or affected to the
slightest degree by allowing California and other states to regulate
frauds and deceits practiced by employers upon unionized
employees. Respondents recognize that other federal labor law
principles may preempt state law even though § 301 preemption is
not applicable. See Lingle, 486 U.S. at 408 and n.8. Petitioners

6

make no claim of Machinists preemption or of ERISA preemption.
Their contentions regarding Garmon preemption were the subject
of lengthy and careful analysis by the Ninth Circuit. Respondents
address same at III, infra.

While this Court in Allis-Chalmers Corp. v. Lueck, 471 U.S.
202 (1985), found preemption of a contract-based state-law tort
(bad faith handling of an insurance claim), the Court has been
careful in its jurisprudence to limit the scope of Lueck to that
necessary to promote the interests of “interpretative uniformity
and predictability”. /d. at210-11. Congress has never exercised its
authority to occupy the entire field of labor legislation. /d. at 208-
09. The Lueck Court carefully bore in mind that the courts are
cautioned not to extend the preemptive effect of 301 beyond suits
for breach of contract because any such extension would be
inconsistent with the congressional intent. /d. at 212. It is
instructive that the Court found preemption in Lueck, not because
it was a “bad-faith” tort, but rather because the right underlying
that remedy and the duty whose breach gave rise to the state-law
claim existed only by implication from the express terms of the
union contract. /d. at 213-218.

What the Ninth Circuit has done here was to follow the
dictates of Lueck and Lingle by engaging in a careful analysis of
each element of each of the four state-law causes of action which it
found not preempted. Milne Employees, 960 F.2d at 1407-10. The
Ninth Circuit concluded:

In sum, none of the elements of the fraud,
misrepresentation, or suppression claims
requires interpretation of the collective
bargaining agreements.

Id. at 1409. Contrary to the misconceived argument of petitioners
(Petition at 13) the duty to disclose which underlies Count II of

5

respondents’ complaint has its source entirely in California state
law, not in any of the CBAs between Milne Truck and its unions.
Milne Employees, 960 F.2d at 1408 (citing to California
jurisprudence). Respondents request that the Court note that the
Ninth Circuit found that 301 preempted their claims for intentional
infliction of emotional distress, except insofar as those claims were
based upon fraud and suppression of facts. /d. at 1412-13.

In performing the element-by-element analysis of
Respondents’ seven pleaded tort claims, the Ninth Circuit
exercised scrupulous care to preempt all claims for which any
element even arguably was not completely “independent” of the
CBAs. Lingle, 486 U.S. at 410, n. 10.

As a matter of fact, petitioners were given the benefit of every
doubt by the Ninth Circuit concerning whether any element of
respondents’ claims might not have been truly “independent”
within the meaning of Lingle. As in Lingle, each element of all of
the state-law tort actions held not preempted presented “purely
factual questions” which pertained to the conduct of the employee
and the conduct and motivation of the employer. None of the
elements of the California substantive law presented by these four
causes of action requires a court to interpret any term of aCBA.

Thus, the state-law remedy in this case is
“independent” of the collective-bargaining
agreement in the sense of “independent” that
matters for § 301 pre-emption purposes:
resolution of the state-law claim does not
require construing the collective-bargaining
agreement.

Lingle, 486 U.S. at 407.

Respondents note that the Court in Lingle held that

“parallelism” in state-law analysis did not render the state-law
dependent upon the CBA. Nevertheless the Ninth Circuit held that
all three of Respondents’ California tort claims which the Circuit
Court characterized as “contract-based” were preempted by § 301.
Milne Employees, 960 F.2d at 1410-12. Respondents would submit
that in these aspects the Ninth Circuit opinion gave undue
deference to its own precedents and to certain fragments of the
literal language of Lueck by finding preempted the claims for
interference with contractual relations, interference with
prospective economic advantage, intentional infliction of
emotional distress by the terminations, and breach of the implied
covenant of good faith and fair dealing. The Circuit Court likewise
did not give full application to the bright-line test of Lingle in
finding that respondents’ claims for intentional infliction of
emotional distress were preempted insofar as they were based
upon termination of the employment relationships. /d. at 1412-13.
Intellectually rigorous application of the Lingle test for preemption
would have required a contrary result as to these latter claims. But
they turn principally upon precise definitions of California state-
law elements. Since the decision of the California Supreme Court
in Foley v. Interactive Data Corp., 47 Cal. 3d 654 (1988), at least
one of these preempted causes of action has been rendered moot as
to MEA’s unionized members. Therefore the Ninth Circuit’s
decision presents no special and important reasons for granting the
Petition for Writ of Certiorari. Nothing has occurred in the Ninth
Circuit’s handling of this cause which calls for an exercise of this
Court’s power of supervision. See S.Ct. R. 10.1.

The questions of federal law about which petitioners purport
to raise good-faith questions have been fully settled by recent
decisions of the Court. Given what the Ninth Circuit referred to as
“the unique facts alleged in this case”, Milne Employees, 960 F.2d
at 1410, there is no reason for the Court to revisit its recent
decisions under § 301 of the LMRA.

9
IT.

THE DECISION BELOW PRESENTS NO ISSUE OF
NATIONALIMPORTANCE.

The Ninth Circuit decision here decides no question of federal
law which has not been already settled by this Court. The portions
of the decision below which petitioners cite as grounds for
issuance of a writ of certiorari do not conflict with any applicable
decision of this Court. Thus it is difficult to comprehend the true
intention underlying petitioners’ second argument. See S. Ct. R.
10.1(c). Respondents have no quarrel with the policies embodied
in such decisions as Lucas Flour, Lincoln Mills, or Dowd Box Co.
Respondents do, however, take strenuous exception to the actions
of petitioners in attempting to blur the distinction between the
older line of § 301 cases, which dealt with uniformity of
interpretation of CBAs and their enforcement, and the Court’s later
cases which guided the Ninth Circuit. Petitioners would blithely
disregard the clear policy of this Court expressed in such decisions
as Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987), Lueck and
Lingle that unionized employees are not to be deprived of their
independent state-law rights merely because they happen to work
under a CBA. In finding free from § 301 preemption certain of
respondents’ tort claims, the Ninth Circuit has done nothing of
national importance. To the contrary, it has demonstrated its
fidelity to the principle of § 301 preemption developed in Lucas
Flour, Lueck, and Lingle. State laws whose application might lead
to inconsistent results are preempted because of the necessity for
national uniform interpretation and application of federal labor
law principles. Lingle, 486 U.S. at 406.

Here the Ninth Circuit determined that all of the elements of
the tort claims on which it has permitted respondents to go forward
present purely factual questions relating to conduct and motivation
which require no interpretation of any term of aCBA. /d. at 407.

10

Petitioners imply that somehow the respondents’ claims could
have been the subject of grievance and arbitration. The record is
devoid of any substance for that claim. But, even if petitioners’
conduct toward respondents had been arbitrable, i.e., assuming
arguendo that some hypothetical clause of the CBAs might have
implicated the same analysis of the facts as would an inquiry under
petitioners’ fraud claims, the California tort claims would still be
“independent” for § 301 preemption purposes since they can be
resolved without interpreting any CBA. 7d. at 408-10. It is
doubtful at best whether a union could contract to waive its
members independent state-law rights when they are of such
fundamental importance as those embodied in Cal. Civ. Code
$§ 1708, et seq. It is abundantly clear that there is no evidence of
any such waiver in this case. Respondents note that the plaintiff in
Lingle enjoyed explicit rights under the CBA signed by her union
which closely paralleled her right under [Illinois tort law which this
Court found not to be preempted. 486 U.S. at 401, 407-10.

Petitioners’ repeated invocation of Republic Steel Corp. v.
Maddox, 379 U.S. 650 (1965) is somewhat mystifying in this
context. Republic Steel dealt with the application of state law to
collect severance pay provided for under a CBA. The Ninth Circuit
in applying the proper § 301 analysis to find these fraud claims not
preempted has done nothing to “sidestep” any CBA. Nor have
respondents. Petitioners’ claim here that a writ of certiorari should
issue implicitly rests on their studied avoidance of the truly
“independent” nature of the state-law rights which the Circuit
Court has ruled respondents may seek to vindicate in court.

Under the rulings of the Court it would appear that
respondents are entitled to a presumption against permitting § 301
to preempt the State of California’s police power regulations
expressed in §§ 1708-1711 of its Civil Code. See Cipollone v.
Liggett Group Inc., 112 S. Ct. 2608, 2617-18, 2620-21 (1992).
Petitioners can show no evidence at all, much less clear and

acm aa aa

11

unambiguous evidence that Congress intended the California
common-law damages actions at issue here to be preempted by
§ 301. Indeed, only by resort to the principles of implied
preemption have the prior decisions of the Court found a
congressional intent in § 301 to preempt this field even partially.
112 S. Ct. at 2625-26, 2629 (concurring opinion of Justice
Blackmun). While the precise contours of this presumption remain
to be defined precisely, and its existence subject to some debate, /d.
at 2632-34 (dissenting opinion of Justice Scalia), it would appear
beyond question that respondents are entitled to the benefit of such
a presumption in light of the specific language of § 301 which
completely lacks any express preemption language. Id. at 2624.

In their labors to contrive preemption where the precedents of
this Court permit none, Petitioners have lost sight of the
“interstitial” nature of federal labor law. See Metropolitan Life Ins.
Co. v. Mass, 471 U.S. 724, 756 (1985). The independent rights on
which respondents have sued have existed in California since
1872: there can be no reasonable doubt that the regulation of deceit
and fraudulent conduct is deeply rooted in local tradition. The
positions urged upon the Court by petitioners call to mind the
philosophy expressed by the Court regarding interpretation of
federal labor laws:

It would turn the policy that animated the
Wagner Act on its head to understand it to have
penalized workers who have chosen to joina
union by preventing them from benefiting
from state labor regulations imposing minimal
standards on nonunion employers.

[d. (emphasis supplied). It is apparent that petitioners’ true motive

12
in seeking the Writ of Certiorari is to persuade the Court to effect a
major re-working of federal labor law. Their contentions, in reality,
are aimed not at the Ninth Circuit opinion here, but rather at
numerous precedents of this Court and the Circuit Court’s
application of those cases, especially Lingle.

ITI.

.s THE NINTH CIRCUIT’S DECISION THAT
RESPONDENTS’ STATE-LAW CLAIMS FOR
FRAUDULENT CONDUCT INCLUDING EMOTIONAL
DISTRESS DAMAGES WERE NOT PREEMPTED UNDER
THE GARMON DOCTRINE BECAUSE THOSE CLAIMS
AROSE OUT OF CONDUCT OUTSIDE OF COLLECTIVE
BARGAINING IS CONSISTENT WITH THE COURT’S
JURISPRUDENCE AND RULINGS OF THE OTHER
CIRCUITS.

Both the district court and the Ninth Circuit, on original
appeal and after additional briefing, rejected the same arguments
repeated by petitioners to this Court on the question whether
respondents’ state-law claims are preempted under the doctrine of
San Diego Bldg Trades Council v. Garmon, 359 U.S. 236 (1959).

As a preliminary matter, respondents note that, although
petitioners assert the Ninth Circuit’s decision conflicts with
precedents of this Court, petitioners fail to point out even one
departure from the Court’s Garmon rulings. Indeed, the Ninth
Circuit’s decision rejecting Garmon preemption effortlessly flows
from the progeny of Garmon in this Court. See, for example,
Belknap Inc. v. Hale, 463 U.S. 491 (1983) (holding a state-law
fraud claim not preempted by Garmon); Farmer v. Carpenters, 430
U.S. 290 (1977) (rejecting Garmon preemption of a claim for
intentional infliction of emotional distress under California law);
Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180 (1978) (holding
Garmon did not preempt a state-law trespass claim against a

13

union); and Linn v. United Plant Guard Workers, 383 U.S. 53
(1966) (rejecting a claim of Garmon preemption against a state-
law defamation claim alleging false statements).

There is no conflict between the Circuits as to application of
the Garmon doctrine to state-law fraud. The cases endlessly cited
by Petitioners from various Circuits are clearly distinguishable on
their salient facts from the state-law claims asserted by
respondents. All respondents’ claims involve conduct occurring
outside of any collective bargaining. The Ninth Circuit and the
district court correctly rejected the “direct-bargaining” and other
inapposite cases cited by petitioners.

It is critical one remain cognizant that the Ninth Circuit’s
ruling here on Garmon preemption sets forth no new, bright-line
test or rule to be employed in every fraud case. Rather, the opinion
below is a proper application of this Court’s Garmon jurisprudence
to this unique factual scenario. This decision of the Ninth Circuit is
easily reconciled with Garmon rulings from the other Circuits.

A. The NLRB Specifically Rejected Unfair Labor Practice
Charges By The Representative Unions Before The State-Law
Complaint Was Filed. Therefore The State Court May Exercise
Jurisdiction Over The Conduct Alleged In The Complaint
That Is Not Covered By Federal Labor Laws.

Garmon gave clear guidelines to resolve a preemption defense
where the NLRB has heard charges and found no unfair labor
practice. The Court held that, if the Board finds the conduct
charged not to be prohibited by § 8(a) of the NLRA, 29 U.S.C. §§
157-158, then the states may exercise jurisdiction over the
employer's conduct. 359 U.S. 245-46. See also, id. at 253 (Justice
Harlan concurring) (“Henceforth the States must withhold access
to their courts until the [NLRB] has determined that such
unprotected conduct is not an unfair labor practice. ..”’) .

14

In Garmon the Court held the state-law claims preempted
because the NLRB had not adjudicated the status of the union’s
conduct to determine whether the picketing was a protected,
concerted activity. /d. at 246. Here, in contrast, the NLRB has
spoken and found no unfair labor practice.

In late September and October 1987, three unions
representing respondents filed separate unfair labor practice
charges with the Board alleging Milne Truck failed to bargain
(“bad faith” bargaining) about petitioners’ intent to close
Operations and about Milne Truck’s deadline proposal for wage
and benefit reductions.

After investigation the NLRB Regional Director rejected
allegations of unfair labor practices because of insufficient
evidence Milne Truck had repudiated its CBA or engaged in
unlawful direct bargaining with its employees. Put another way,
the Board has already found that petitioners “satisfied” their
“duty” under the federal labor laws “to bargain in good faith” about
the closure of its operations. See Milne Employees, 960 F.2d at
1415.

California therefore is not precluded from adjudicating
violations of Petitioners’ duties arising solely under its law, where
those duties do not present a controversy identical to that ruled by
the NLRB. Matters not identical to those ruled by the Labor Board
(and thus not “arguably” unfair labor practices) are subject to state-
law regulation. Belknap v. Hale, 463 U.S. at 510. California’s anti-
fraud statutory scheme, in existence long before the federal labor
laws, is a permissible regulation of fraudulent conduct occurring
outside any collective bargaining. See Cal. Civ. Code §§1708, er
seq.

15

B. These State-Law Claims Are Not Identical To The Unfair Labor
Practice Charges Presented To The NLRB. Hence Respondents’
State-Law Claims Arising From Conduct Qutside Collective
Bargaining Are Not Preempted By Garmon.

Garmon preemption exists to protect the primary jurisdiction
of the NLRB to determine in the first instance what conduct is
prohibited or protected by the NLRA. See Allis-Chalmers Corp. v.
Lueck, 471 U.S. at 213 n.9. Thus, The “critical inquiry in applying
the Garmon tules...is whether the controversy presented to the
state court is identical with that which could be presented to the
Board”. Belknap, Inc. v. Hale, 463 U.S. at 510 (emphasis added),
citing Sears, Roebuck, 436 U.S. at 197. If the controversy
presented to the state court is different from that which was
presented to the Board, the state-law claim is not preempted under
Garmon. Id.

There need be only subtle differences between the causes of
action presented to the state court and the charges before the NLRB
to avoid Garmon preemption. The Court in Sears, Roebuck noted:
“Although the arguable federal violation and the state tort arose in
the same factual setting, the respective controversies presented to
the state and federal forums would not have been the same”. 436
U.S. at 196-97 (emphasis added). Respondents direct the Court’s
attention to its careful delineations between the state-law claims
and unfair labor practice charges set forth in Sears Roebuck, 436
U.S. at 197-98, Farmer, 430 U.S. at 305, and Linn, 383 U.S. at 61-
63.

Here, the NLRB was presented with an entirely different
controversy for Garmon purposes than MEA alleged in iis state
complaint. The charges to the Board alleged unfair labor practices
in the refusal of Milne Truck to bargain about its decision to close
all its 33 terminals unless its proposal for immediate wage and
benefit concessions was accepted. In short, the issue before the

16

Board was whether Milne’s actions were indicative of an anti-
union animus.

By contrast, respondents’ complaint principally alleges
violations of California statutory law of general applicability
proscribing fraud and deceit. It directly implicates California
interests in protecting its citizens from fraud. The factual issue to
be decided in MEA’s state suit is whether petitioners made oral,
written and video misrepresentations of job security to quell the
rumors of imminent plant closing and to prevent a mass exodus of
employees (through false inducements or suppression) when
petitioners knew or had reason to know such were false. No
collective bargaining about the plant closing was underway when
petitioners’ wrongful conduct occurred. MEA’s suit does not
question whether the defendants should have collectively
bargained about their secret plan to close. The Ninth Circuit thus
properly found that Garmon does not preempt here because the
complaint raises issues not identical to the controversy the NLRB
decided. See Belknap, 463 U.S. 510 (fraud claim not preempted by
Garmon), Windfield v. Groen Div., 890 F.2d 764, 770 (Sth Cir.
1989) (fraud claim by a “union organizer” not preempted by
Garmon); and Wells v. General Motors Corp., 881 F.2d 166, 171
(Sth Cir. 1989), cert. denied, 495 U.S. 923 (fraud claims not arising
out of collective bargaining not preempted).

1. Petitioners Had No Duty Under Federal Labor Law
To Bargain About The Decision To Close Their Operations
So It Could Not Arguably Be An Unfair Labor Practice For
Them To Fail To Bargain About Their Secret Plan To Close
And Intentionally Deceive Respondents. But Such
Fraudulent Conduct May Violate State Duties Existing
Independently Of The Employer-Employee Relationship.

At 19-20 of their Petition, petitioners would now content they
arguably committed an unfair labor practice by failing to bargain
about their decisions to close Milne Truck and to conceal that
decision from the employees through fraudulent mis-

17

representations. That claim fails to create Garmon preemption for
two reasons.

First, the NLRB already rejected unfair labor practice charges
arising out of the closure and petitioners’ alleged failure to bargain
about that decision. Second, employers have no duty to
collectively bargain over a decision to close plant operations. First
National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981). Ipso
facto, an employer does not have a duty to bargain about having
misrepresented its decision to close down operations - e.g.,
promising employees their jobs are secure and the business will not
close. An employer’s failure or refusal to bargain over a non-
mandatory subject is not an unfair labor practice. NLRB v. Wooster
Div. of Borg-Warner Corp., 356 U.S. 342, 349 (1958). Thus, not
even arguably could petitioners have committed an unfair labor
practice by not bargaining about their misrepresentations of their
decision to close. Nor could they have done so by not bargaining
about their secret plan itself. It smacks of the crudest form of
sophistry for petitioners to attempt to hide behind the labor laws to
avoid claims for violations of independent state-law rights when
their reprehensible conduct flaunted all legal norms.

This is not to say petitioners’ conduct is immunized from
sanction. The Ninth Circuit cogently set forth the applicable
California statutory and common law proscribing petitioners’
pattern of intentional, deceitful acts. See Milne Employees, 960
F.2d at 1408, 1412. That state law imposes independent duties on
all persons generally.

2. Respondents’ State-Law Claims Do Not Implicate
Direct Bargaining” With Employees, Nor Do They Involve
Promises To Induce The Employees To Circumvent Their
Representative Unions. Rather, These Fraudulent
Misrepresentations Made To Dispel Rumors Of Closing
Had No Relationship To Collective Bargaining.

Petitioners claim at page 21 of the Petition that their

aca

18

misrepresentations to MEA members were unfair labor practices
as “direct bargaining” with the plaintiff class. But the law is clear
that not all employer communications to employees are
impermissible direct bargaining.§ 8(c) of the NLRA permits an
employer to communicate to employees “any views, argument, or
opinion” so long as the “expression contains no threat of reprisal or
force or promise of benefit”, such as forcing the employees to
reject the union as their representative or presenting them with a
Hobson's choice for an anti-union motive. NLRB v. Pratt &
Whitney Air Craft Div., 789 F.2d 121, 133 (2d Cir. 1986).

An unfair labor practice arises only when the employer's
communication “attempts to coerce the employees, or to portray
the employer rather than the union as the workers’ true
protector...”. /d. at 134. Thus, no “direct bargaining” occurs where
the employer “never directly said - nor even implied that the
workers would be better off without the union”. /d. at 135.

No provision of the NLRA was intended by Congress to
privilege an employer's voluntary misrepresentations to
employees of job security that are tortious under state law. See
Belknap, Inc. v. Hale, 463 U.S. at 512; Windfieid v. Groen Div., 890
F.2d at 770 (applying to aunion employee's fraud case the Belknap
holding that fraud claims are not preempted by Garmon).

Here respondents alleged no anti-union motive behind
petitioners’ intentional misrepresentations of future job security.
Petitioners have come forward with no evidence of their intent to
coerce the employees to abandon the unions as even part of their
reason for their intentional frauds. Petitioners thus failed in their
burden to prove a basis for Garmon preemption. See /nt’l
Longshoreman's Ass'n v. Davis, 476 U.S. 380, 395 (1986).

Most significantly, the NLRB already has rejected that same
claim and found Milne Truck did not engage in unlawful direct

19

bargaining (App. 25a-26a). Petitioners’ chameleon-like efforts to
contradict the Board’s finding in their favor and to foist their
switch as a shield against petitioners’ claims is disingenuous. The
doctrine of judicial estoppel prevents them from doing that.

Petitioners’ argument that any employer communication with
employees about future job security is impermissible direct
bargaining falls flat on its face. In J.J. Case Co, v. NLRB, 321 U.S.
332, 339-40 (1944) the Court held that employers may enter into
individual contracts of employment directly with employees
without committing an unfair labor practice so long as the
employer does not refuse to bargain with the representative union
because of the individual contracts. Accord Caterpillar v.
Williams, 482 U.S. at 395-96 (1987). Here, MEA made no
allegation and petitioners offered no proof that Milne Truck ever
refused to negotiate with the Teamsters or Machinists unions
representing respondents because of.or in conjunction with
petitioners’ fraudulent promises of secure employment.

With the inapposite case of Medo Photo Supply Corp. v.
NLRB, 321 U.S. 678 (1944), heavily relied on by petitioners, the
Ninth Circuit dealt easily. See 960 F.2d at 1417. In Medo Photo, the
employer directly bargained with the employees while at the same
time negotiating with their union intending to coerce the
employees into rejecting the union as their representative. 321 U.S.
at 684. Here, by contrast, no negotiations were underway when
petitioners made their misrepresentations, and the NLRB flatly
rejected the unions’ contention that they were ignored by finding
no duty of Milne Truck to bargain with them. Respondent MEA has
not aHeged, nor have petitioners proven that a motivation for the
misrepresentations was to coerce the employees into rejecting the
unions as their representatives. Petitioners allege that the Ninth
Circuit’s ruling will “permit piecemeal agreements with
employees”. See Petition at 23. That claim is disingenuous. This

20

case is not about separate, bargained-for agreements between
employees and their employer without the union for the purpose of
cutting the union out of negotiations. Rather, this conduct involves
lies made directly to employees to keep them working on their jobs
until petitioners could complete their scheme to loot Milne Truck’s
assets. There occurred no give-and-take between Milne and the
respondents without the unions to reach an “agreement” contrary
to the applicable labor contracts. —

C. The Ninth Circuit’s Decision In No Way Conflicts With Cases
Cited By Petitioners From Other Circuits Since Those Cases Are
Factually Distinguishable From The Matters Sub Judice; The
Decision At Bar Is A Logically Sound Application Of Garmon And
Its Progeny.

Petitioners principally rely on Parker v. Conners Steel Co.,
855 F.2d 1510 (11th Cir. 1988), cert. denied, 490 U.S. 1066. That
case was properly distinguished by the Ninth Circuit as not
controlling here. See 960 F.2d at 1415-16. In Parker, the former
employees alleged that the company and their union committed
fraud during negotiations regarding the employer’s decision to
close the plant. That fraud arose out of two employee concession
agreements and a third negotiating session between the company
and the union also seeking further wage and benefit concessions.
Id. at 1514. Additionally, the employees in Parker filed charges
with the NLRB alleging that the same conduct in their state-law
complaint constituted unfair labor practices. Id. at 1517.

The key facts here are diametrically opposite. MEA's
complaint alleges no fraud or misrepresentation arising out of any
collective bargaining or negotiating. There were never any labor
negotiations about the decision of Milne Truck to close all of its
operations (none were required). Unlike Parker, the NLRB here
reached the merits of the unions’ unfair labor practice charges and

found them baseless. For the same reasons, petitioners’ reliance
upon Serrano v. Jones & Laughiin Steel Co., 790 F.2d 1279 (6th
Cir. 1986) #s misplaced. That case, too, properly was found

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inapposite by the Ninth Circwit. See 900 F.2d at 1416.

The salient facts here are incongruent with those of Serrano or
Parker. Respondent MEA alleged that petitioners made
affirmative, fraudulent statements directly to the employees. These
frauds and misrepresentations occurred outside of any collective
bargaining. Therefore, defendants’ conduct could not constitute
unfair labor practices. As the Court noted in Garmon, every case
involving a question of Garmon preemption must be decided upon
its own facts. 359 U.S. at 241. The Ninth Circuit properly found the
unique facts here provided no basis for Garmon preemption.

D. Petitioners Propose A Radical Restructuring Of Federal Labor
Law, Arguing That Nearly Every State-Law Tort Claim Is
Preempted Under Garmon .They Would Upset The Delicate Balance
Between State Regulation Of Traditionally Tortious Activities
And Federal Regulation Of Unfair Labor Practices.

Petitioners spuriously accuse the Ninth Circuit of fashioning a
new test for Garmon preemption. In fact, it is Petitioners who
propose to fashion a radically new approach to Garmon
preemption, if this Court were to grant the writ. Petitioners’ novel
idea that employers cannot communicate with employees outside
of collective bargaining with the union is contrary to congressional
intent. See NLRA § 8(c). The corollary to petitioners’ proposal is
that all employer communications with employees except through
their unions are unfair labor practices. That broad departure has no °
basis in the labor laws.

In Metropolitan Life, 471 U.S. at 755 the Court found that
Congress had no intent to interfere with minimum state labor
standards which “affect union and nonunion employees equally,

6

oe

and neither encourage nor discourage the collective bargaining
processes. . .”. See also, id. at 757 (“the Court has recognized that
it ‘cannot declare preempted all local regulation that touches or
concerns in any way the complex interrelationships between
employees, employers, and unions; obviously, much of this is left
to the States”).

The California anti-fraud statute is such a minimum standard
of behavior that does not interfere with the collective bargaining
scheme. Indeed, the applicable statutes under which respondents
sue are titled under “Obligations Imposed By Law”, “Without
Contract. . .”. Cal. Civ. Cod > §§ 1708-1711. These California laws
have been in effect since 1872. If this Court now were to grant
certiorari and adopt petitioners’ proposed expansion of Garmon,
the states’ jurisdiction over matters traditionally re gulated would
be eliminated. That result would grossly distort the principles of
federalism underlying the labor laws.

23
CONCLUSION

No principle of law relating to federal preemption of state-law
claims under either § 301 of the LMRA or the Garmon doctrine
would be clarified by granting a writ of certiorari in this case. To
the contrary, granting certiorari here would provoke widespread
uncertainty, if not anxiety among the lower courts in their
application of the clear mandates of Lingle to claims of § 301
preemption. Petitioner’ claims of conflict among the Circuit
Courts of Appeal in application of Garmon preemption is specious.
Consideration of this case would add nothing of substance to this
Court’s jurisprudence. Denial of the Petition for Writ of Certiorari
is the only viable option before the Court, unless the Court should
wish to revisit all the basic principles of this field. Thus,
respondents respectfully request such denial.

Respectfully submitted,

RICHARD SCHWARTZ
Counsel of Record
JAMES E. PARROT
RICHARD SCHWARTZ &
ASSOCIATES, LTD.
Attorneys for Respondents
300 Lucas Plaza

614 North 1 1th Street

St. Louis, MO 63101-1230
(314) 231-2110

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_0947%3A2. Public record. Not legal advice.