Arizona Case Law

CHAVEZ v. COPPER STATE RUBBER OF ARIZONA, INC., 182 Ariz. 423 (App. 1995)

897 P.2d 725

Andy CHAVEZ and Isabel Chavez, husband and wife,

Plaintiffs-Appellants/Cross-Appellees, v. COPPER STATE RUBBER OF ARIZONA,

INC., an Arizona corporation; Joyce Grimes and John Doe Grimes, wife and

husband , Defendants-Appellees/Cross-Appellants.

No. 1 CA-CV 92-0437.

Court of Appeals of Arizona, Division 1, Department B.

February 14, 1995.

Review Denied June 29, 1995.

Appeal from the Superior Court, Maricopa County, Cause No.

91-10962, Marilyn A. Riddel, J.

Page 424

Francis> <G>. <Fanning>, Phoenix, for

plaintiffs-appellants/cross-appellees.

Snell & Wilmer by Robert J. Deeny, Thomas J. Kennedy, Daniel J.

McAuliffe, Phoenix, for defendants-appellees/cross-appellants.

OPINION

McGREGOR, Presiding Judge.

Appellant Andy Chavez (Chavez) brought claims against his

employer for breach of employment contract and for wrongful

discharge and a claim against the employer's general manager for

intentional interference with contract. The issue is whether

federal labor law preempts these state court claims. We conclude

the doctrine of preemption applies and deprives the state courts

of jurisdiction.

From 1978 until April 1990, Chavez worked for Copper State

Rubber of Arizona, Inc. (Copper State), serving in a supervisory

position for the last nine years. At the end

Page 426

of 1989, employees at Copper State voted to establish a union.

According to Chavez, Joyce Grimes, manager of Copper State when

Chavez's employment at Copper State ended, instructed Chavez to

treat non-union employees more favorably than union employees.

When Chavez refused, Grimes allegedly accused Chavez of being

disloyal to the company and supporting the union. Copper State

and Grimes (collectively, appellees) gave Chavez three options:

resign, be laid off with good references, or be terminated.

Chavez requested a fourth option of consulting an attorney, to

which appellees agreed. After his attorney's subsequent

discussions with Copper State and Grimes, Chavez returned to

work. When he returned, Grimes presented Chavez with a warning

report reprimanding him for betraying the company, stealing

letterhead stationery to assist an illegal act of another

employee, repeating confidential management information to

employees, and supporting the union. Chavez refused to sign the

reprimand; the parties dispute whether he then quit or was

terminated.

About the time that Chavez's employment with Copper State

ended, the union filed a complaint with the National Labor

Relations Board (NLRB) against Copper State for unfair labor

practices in connection with other events. The union did not

challenge Chavez's discharge in its complaint. Chavez's wife

stated in an affidavit that she had contacted two agents at the

NLRB, who told her that Chavez could not obtain relief from the

NLRB because he was a supervisor.

Chavez then filed this action in superior court, alleging

breach of contract, wrongful discharge, and intentional

interference with contract. In the allegations common to all

counts, Chavez alleged that "Grimes told [Chavez] that he should

discriminate and make life hard for those supporting the union,

but he should not criticize or discipline non-union employees for

improper performance of their jobs"; that "[Chavez] protested

this directive"; and that "Grimes falsely accused [Chavez] of

supporting the union and being disloyal to management." He

asserted that appellees breached his contract of employment by

terminating him without cause and wrongfully terminated him in

retaliation for refusing to coerce employees not to join the

union. He further alleged that Grimes wrongfully interfered with

his employment contract with Copper State.

Appellees moved for summary judgment, arguing that the National

Labor Relations Act, 29 U.S.C. § 158(a)(1), (a)(3) (the Act)

preempts Chavez's claims; that Chavez was an at-will employee;

that Copper State had cause to terminate Chavez; and that Chavez

quit his job, so Copper State did not terminate him at all. The

trial court denied the motion.

Copper State and Grimes moved for reconsideration, conceding

for the purposes of the motion that Chavez was a supervisor and

that Copper State discharged him for refusing to commit unfair

labor practices. Upon reconsideration, the trial court concluded

that the Act preempts Chavez's claims for wrongful discharge and

intentional interference with contract and entered judgment

pursuant to Rule 54(b), Ariz.R.Civ.P., for appellees on those

claims. Chavez brought this appeal.[fn1] The court limited

Chavez's breach of contract claim to grounds other than refusing

to engage in unfair labor practices. Copper State and Grimes

cross-appealed, arguing that the Act also preempts the breach of

contract claim.

We have jurisdiction pursuant to Arizona Revised Statutes

("A.R.S.") section 12-2101.B. See M & M Auto Storage Pool, Inc.

v. Chemical Waste Management, Inc., 164 Ariz. 139, 141,

791 P.2d 665, 667 (App. 1990).

II.

For the purposes of the motion, Copper State and Grimes

stipulated to the material facts as alleged by Chavez. We

therefore review the grant of summary judgment to determine

whether appellees are entitled to judgment as a matter of law.

Schroeder v.

Page 427

Hudgins, 142 Ariz. 395, 397, 690 P.2d 114, 116 (App. 1984).

III.

Congress passed the Act in an effort to achieve uniform and

effective enforcement of a national labor policy. Local 926,

Int'l Union of Operating Eng'rs v. Jones, 460 U.S. 669, 681, 103

S.Ct. 1453, 1461, 75 L.Ed.2d 368 (1983). The Supreme Court "has

often been asked to determine whether particular state causes of

action or regulations may coexist with the comprehensive amalgam

of substantive law and regulatory arrangements that Congress set

up in [the Act]. . . ." Id. at 675, 103 S.Ct. at 1458. If the

causes of action cannot coexist, the doctrine of preemption

applies.

The Court has "stated and restated" its approach to the

preemption issue. The first question is "whether the conduct that

the State seeks to regulate or to make the basis of liability is

actually or arguably protected or prohibited by [the Act]," id.

at 676, 103 S.Ct. at 1458:

When it is clear or may be fairly assumed that

the activities which a State purports to regulate are

protected by § 7 of the National Labor Relations Act,

or constitute an unfair labor practice under § 8, due

regard for the federal enactment requires that state

jurisdiction must yield. To leave the States free to

regulate conduct so plainly within the central aim of

federal regulation involves too great a danger of

conflict between power asserted by Congress and

requirements imposed by state law.

San Diego Building Trades Council, Millmen's Union, Local 2020

v. Garmon, 359 U.S. 236, 244, 79 S.Ct. 773, 779, 3 L.Ed.2d 775

(1959) (emphasis added).

If the conduct at issue is arguably protected or prohibited,

the NLRB, not the state court, determines whether the conduct

falls within the NLRB's jurisdiction:

At times it has not been clear whether the

particular activity regulated by the States was

governed by § 7 or § 8 or was, perhaps, outside both

these sections. But 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 National Labor

Relations Board. What is outside the scope of this

Court's authority cannot remain within a State's

power and state jurisdiction too must yield to the

exclusive primary competence of the Board.

. . . . .

When an activity is arguably subject to § 7 or § 8

of the Act, the States as well as the federal

courts must defer to the exclusive competence of the

National Labor Relations Board if the danger of

state interference with national policy is to be

averted.

Id. at 244-45, 79 S.Ct. at 779 (citations omitted) (emphasis

added).

Finally, we consider whether the activity regulated is "only a

peripheral concern of the Act" or touches interests "deeply

rooted in local feeling and responsibility. . . ." Jones, 460

U.S. at 676, 103 S.Ct. at 1459. If the balance of those interests

weighs in favor of the state interest, preemption does not apply.

IV.

We turn, then, to the initial inquiry whether Copper State's

conduct in discharging Chavez is conduct arguably prohibited by

the Act. In determining whether preemption applies, we look to

the nature of the conduct involved, rather than to the legal

theories advanced by Chavez. See Motor Coach Employees v.

Lockridge, 403 U.S. 274, 292, 91 S.Ct. 1909, 1920-21, 29 L.Ed.2d

473 (1971). If the challenged conduct is arguably prohibited by

the Act, due regard for the federal enactment requires us to

yield jurisdiction.

Chavez's status as a supervisor affects our inquiry concerning

whether the conduct involved is arguably regulated by the Act.

Because the Act excludes supervisors from its definition of

"employee," 29 U.S.C.A. § 152(3); Automobile Salesmen's Union

Local 1095 v. NLRB, 711 F.2d 383, 386 (D.C.

Page 428

1983), a supervisor's discharge usually is not of concern to the

NLRB. Nevertheless, courts have carved out three basic exceptions

to this rule. An employer's conduct toward a supervisor may

violate Section 8(a)(1) of the Act[fn2] (1) if the employer

disciplines a supervisor for testifying before the NLRB or during

the processing of an employee's grievance; (2) if the employer

disciplines a supervisor for refusing to commit an unfair labor

practice; or (3) if the employer discharges a supervisor who

hires his own crew as a pretext for terminating his pro-union

crew. Automobile Salesmen's, 711 F.2d at 386. (citations

omitted).

Chavez's claim that Copper State discharged him because he

refused to discriminate against union members falls squarely

within the second exception, which prohibits employers from

funnelling unfair labor practices through a supervisor. Gerry's

Cash Markets, Inc. v. NLRB, 602 F.2d 1021 (1st Cir. 1979)

illustrates this exception.[fn3] In that case, Gerry's

implemented a "no solicitation" rule that banned any solicitation

or non-business activity on company property. An assistant

manager, who had worked for Gerry's for four years, failed to

enforce the solicitation ban against two employees who discussed

union organizing activities while on duty. Gerry's demoted the

assistant manager as a result of this incident.

The NLRB found that the ban on solicitation was overly broad

and that Gerry's applied the ban disparately to union and

non-union matters. Notwithstanding the fact that, as a

supervisor, the assistant manager was excluded from the Act's

protection, the NLRB concluded that requiring the assistant

manager to enforce an invalid "no solicitation" rule constituted

an unfair labor practice. Therefore, the manager's subsequent

demotion also was an unfair labor practice. Although Gerry's

defended the demotion on the ground of purported deficiencies in

the assistant manager's performance, the court of appeals upheld

the NLRB's ruling that an "employer's enlistment of a supervisor

in its unfair labor practices as the price for retaining his job

unlawfully coerces the statutory employees in the exercise of

their Section 7 rights." 602 F.2d at 1023 (quoting the

administrative law judge).

This type of violation precisely describes Chavez's wrongful

discharge and intentional interference claims, which rely on his

allegation that appellees enlisted him to treat non-union workers

more favorably than union workers in exchange for retaining his

job. Such claims arguably fall under the protection of Section 8

of the Act and, therefore, are preempted unless they fall within

an exception to the preemption doctrine.

Many courts have addressed the Act's preemptive scope in cases

in which employees assert state causes of action in addition to,

or in lieu of, unfair labor practice claims before the NLRB. The

critical inquiry in these situations is whether the conduct at

issue in the state cause of action is identical to that which

could be presented to the NLRB. Sears, Roebuck & Co. v.

Carpenters, 436 U.S. 180, 197, 98 S.Ct. 1745, 1757-58, 56

L.Ed.2d 209 (1978).[fn4] "[I]f the conduct relied

Page 429

on to prove a crucial element in the state action is conduct that

is arguably covered by [the Act], then the state claim is

preempted." Lumber Prod. Indus. Workers v. West Coast Indus.

Rel. Ass'n, Inc., 775 F.2d 1042, 1049 (9th Cir. 1985).

Whether a court may exercise jurisdiction also depends on

whether the conduct that is the subject of the action is behavior

that is of only peripheral concern to the federal law or touches

interests deeply rooted in local feeling and responsibility.

Garmon, 359 U.S. at 243-44, 79 S.Ct. at 778-79. For example,

false and malicious statements made in the course of a labor

dispute, if injurious to reputation, may be actionable under

state law even though such statements themselves may be unfair

labor practices. See Linn v. United Plant Guard Workers,

383 U.S. 53, 63, 86 S.Ct. 657, 663, 15 L.Ed.2d 582 (1966). In

addition, the Act does not preempt a state action for intentional

infliction of emotional distress, even though a major part of the

cause of action arguably is an unfair labor practice. See Farmer

v. Carpenters, 430 U.S. 290, 302-03, 97 S.Ct. 1056, 1064-65, 51

L.Ed.2d 338 (1977). The Supreme Court has also held that the Act

does not preempt a state trespass action against picketing

because the action would concern only the location of the

picketing while the unfair labor practice would focus on the

object of the picketing. Sears, Roebuck, 436 U.S. at 198, 98

S.Ct. at 1758.

Applying those tests, we conclude the trial court correctly

applied the doctrine of preemption to Chavez's claims for

wrongful discharge and interference with contract. The gravamen

of each legal theory relied upon by Chavez is that appellees

discharged him because he refused to treat non-union employees

more favorably than union employees. As we concluded above, such

conduct by appellees arguably constitutes an unfair labor

practice that falls within the Act's prohibitions. See 29

U.S.C.A. §§ 157, 158(a)(1), (a)(3). Similar claims, whether

delineated breach of contract, wrongful discharge, or wrongful

interference with contract, have been consistently held

preempted.

We regard Operating Eng'rs v. Jones as particularly

instructive. In that case, the Supreme Court noted that Jones, a

supervisor, conceded that the Act preempted his state breach of

contract claim and held that the Act also preempted a claim that

the union tortiously interfered with his employment contract. 460

U.S. at 682, 103 S.Ct. at 1462.

Jones, a supervisor for Georgia Power Company, started working

for the company on June 12, 1978. By agreement, Jones took

vacation after his second day of work for one week. When he

returned on June 20, 1978, the company discharged him. Jones

believed that the union bargaining agent for the operating

engineers union had persuaded the company to discharge him

because of a decision Jones made years earlier to work for a

non-union employer. Jones filed an unfair labor practice charge

against the union with the Regional Director of the NLRB, who

responded that Jones's charge did not warrant further

proceedings.

Rather than appealing to the General Counsel of the NLRB, Jones

filed a complaint in state court alleging that the union had

tortiously interfered with his employment contract and that the

employer breached his contract of employment. The trial court

dismissed the action, concluding that the Act preempted the state

claims. The court of appeals reversed, holding that because the

state "had a deep and abiding interest in protecting its

citizens' contractual rights," and because the tort action was so

unrelated to the Act's concerns, permitting the action to go

forward would not interfere

Page 430

with the administration of the Act. Id. at 674-75, 103 S.Ct. at

1457-58. Furthermore, the court stated that the union's actions

were not even arguably within the ambit of sections 7 and 8, thus

eliminating the Act's preemption.

After the state supreme court denied review, the United States

Supreme Court granted certiorari and reversed the state court of

appeals. The Court concluded that Jones's complaint arguably fell

within the ambit of the Act. The Court reasoned that

a fundamental part of such a claim is that the Union

actually caused the discharge and hence was

responsible for the employer's breach of contract. Of

course, this same crucial element must be proved to

make out a [Section 8] case: the discharge must be

shown to be the result of Union influence.

Id. at 682, 103 S.Ct. at 1462. The Court concluded that the

risk the state action would interfere with the NLRB's

jurisdiction was obvious and substantial. In addition, Jones's

claim was of more than peripheral concern to the federal labor

policy, and the claim was not so deeply rooted in local law that

the state's interest in enforcing the law overrode the risk of

interfering with federal labor law. Id. at 683, 103 S.Ct. at

1462-63; see also, e.g., Iron Workers Union v. Perko,

373 U.S. 701, 83 S.Ct. 1429, 10 L.Ed.2d 646 (1963) (common law tort action

for interference with contract preempted because it focused on

conduct arguably within the reach of the Act); Lumber Prod.

Indus. Workers, 775 F.2d at 1049 (union action against

management consultants for tortious interference with contract

preempted by the Act).

Regardless of the label attached to his claims, Chavez cannot

establish wrongful discharge or improper interference with his

employment contract without showing the same crucial element as

would be essential to establishing an unfair labor practice: he

must show Copper State discharged him, or Grimes obtained his

discharge, because he refused to discriminate against union

members. That element is of more than peripheral concern to

federal labor law; it reflects and requires consideration of a

central focus of the Act. We therefore conclude the trial judge

did not err in granting judgment in appellees' favor on the

tortious discharge and wrongful interference claims.

In their cross-appeal, Copper State and Grimes argue that the

Act also preempts Chavez's breach of contract claim. We agree.

According to the complaint, Grimes attempted to funnel unfair

labor practices through Chavez, and Copper State discharged

Chavez for his refusal to favor non-union over union workers.

Because he could be terminated only for cause, Chavez asserts,

Copper State therefore breached his contract.[fn5] As we have

previously determined, these allegations arguably fall under

Section 8(a)(3) of the Act;[fn6] Chavez has simply couched this

claim in terms of breach of an employment contract.

However, application of the preemption doctrine does not depend

on the legal theories in which Chavez chooses to frame his claim.

Morris v. Chem-Lawn Corp., 541 F. Supp. 479, 482 (E.D.Mich.

1982); see Lockridge, 403 U.S. at 292, 91 S.Ct. at 1920, 1921.

In Morris, an employee claimed that the company discharged her

without good cause, thereby breaching her contract of employment.

Upon examination of the employee's deposition, the court

concluded that the employee's claim was based upon allegations

that her employer discharged her for supporting union activities.

The court held that the basis for the claim, regardless of the

theory under which the employee brought it,

Page 431

involved unfair labor practices. The Act, therefore, preempted

the state law claim.

Here, the material facts compel the same conclusion. Regardless

of the theory under which Chavez seeks to proceed, the basis for

his claim remains conduct that arguably constitutes an unfair

labor practice. The crucial elements of Chavez's state law claims

and the showing to establish an unfair labor practice are the

same in all fundamental respects. The issue that the NLRB could

have decided and the corresponding remedy were no different than

that which Chavez asks the state court to decide: whether Copper

State and Grimes engaged in unfair labor practices, and whether

Chavez himself was thus entitled to an appropriate remedy. We

believe that the holding of Jones instructs that, under such

circumstances, we must apply the doctrine of preemption.[fn7]

Chavez appears to argue that the state court should assert

jurisdiction because, if we conclude the NLRB arguably had

jurisdiction over his claim, we will deprive him of a remedy. We

cannot, however, assume jurisdiction on that basis.

First, whether the NLRB has jurisdiction over a claim is a

question for the NLRB, not a state court, to determine. Jones,

460 U.S. at 681, 103 S.Ct. at 1461. To hold otherwise would

require a state court to rule on the merits of the underlying

claims to determine the appropriate forum. See id. at 682, 103

S.Ct. at 1462. But see Sitek, 587 F. Supp. at 1384 (assessing

merits of case to demonstrate preemption of wrongful discharge

claim).

Moreover, Chavez did have a remedy; he could have filed a

complaint with the NLRB. See 29 C.F.R. § 101.2; NLRB v. Local

No. 42, Inter. Ass'n of Heat & Frost Insulators, 469 F.2d 163,

165 (3d Cir. 1972), cert. denied, 412 U.S. 940, 93 S.Ct. 2776,

37 L.Ed.2d 399 (1973). Courts have consistently interpreted the

Act to proscribe discharging a supervisor for refusing to commit

unfair labor practices. See Gerry's Cash Markets, 602 F.2d at

1023. The fact that Chavez chose to rely on his wife's report

that NLRB representatives indicated he could not obtain relief

provides no basis for us to assume jurisdiction. Statements such

as those described are not the equivalent of an NLRB

determination that it would decline jurisdiction. "The task of

making binding interpretations of the meaning of the Act is a

judicial function, vested in the Board Members with ultimate

power of review in the courts." West Texas Utils. Co., 85

N.L.R.B. 1396, 1399 (1949); see also Jones, 460 U.S. at 680,

103 S.Ct. at 1460-61 (Jones failed to exhaust administrative

remedies when he failed to appeal to the General Counsel after

the NLRB's Regional Director rejected his complaint).

Chavez and appellees have requested attorneys' fees incurred

from this appeal pursuant to A.R.S. section 12-341.01. We

exercise our discretion and decline to award attorneys' fees.

VI.

We find, as a matter of law, that the jurisdiction of the

National Labor Relations Board preempts the state court's

jurisdiction in this case. We therefore affirm the trial court's

grant of partial summary judgment in favor of appellees and

reverse the trial court's denial of summary judgment on the

remaining breach of contract claim. We remand to the trial court

with instructions to enter judgment for appellees.

Page 432

KLEINSCHMIDT, J., and CHRISTOPHER SKELLY, J. Pro Temp.,[fn*]

concur.

[fn1] The parties stipulated to stay the trial for the remaining

breach of contract claim pending resolution of this appeal.

[fn2] Section 8(a)(1) states that "[i]t shall be an unfair labor

practice for an employer [] to interfere with, restrain, or

coerce employees in the exercise of the rights guaranteed in

section 157 of this title[.]"

[fn3] Although Gerry's Cash Markets was a case of first

impression in the First Circuit, the court cited several other

court of appeals decisions that held that disciplining or

discharging a supervisor in similar circumstances may constitute

an unfair labor practice. 602 F.2d at 1023; see, e.g., Russell

Stover Candies, Inc. v. NLRB, 551 F.2d 204 (8th Cir. 1977);

NLRB v. Carter Lumber, Inc., 507 F.2d 1262 (6th Cir. 1974);

Oil City Brass Works v. NLRB, 357 F.2d 466 (5th Cir. 1966).

[fn4] See, e.g., Belknap, Inc. v. Hale, 463 U.S. 491, 103 S.Ct.

3172, 77 L.Ed.2d 798 (1983) (finding no preemption for

replacement workers' misrepresentation and breach of contract

claims because the controversies were different than that which

the NLRB would review; moreover, the NLRB could provide no

relief); Ring v. River Walk Manor, Inc., 596 F. Supp. 393 (Md.

1984) (finding no preemption where plaintiff did not raise any

unfair labor practice claims and admitted she could not prove

one); Sitek v. Forest City Enters. Inc., 587 F. Supp. 1381

(E.D.Mich. 1984) (reaching merits of case to demonstrate

preemption of wrongful discharge claim); Henry v.

Intercontinental Radio, Inc., 155 Cal.App.3d 707,

202 Cal.Rptr. 328 (Ct.App. 1984) (holding that Act preempted state court

actions alleging tortious breach of good faith and fair dealing,

violation of public policy, and violation of California Labor

Code); Carlson v. Hutzel Corp., 183 Mich. App. 508,

455 N.W.2d 335 (1990) (finding no preemption when allegations threatened

health, safety, and welfare of hospital patients and upholding

public policy of adjudicating contractual disputes within

jurisdiction); Betts v. University of Rochester, 123 A.D.2d 496,

507 N.Y.S.2d 566 (1986) (finding no preemption in state

breach of contract claim because action could be decided without

considering alleged unfair labor practice and precluding

plaintiff from offering evidence in that regard).

[fn5] Copper State disputes whether the personnel manual on which

Chavez relies applies to supervisors. Given our disposition of

this issue, we do not reach that question.

[fn6] Section 8(a)(3) states, in part, that "[i]t shall be an

unfair labor practice for an employer . . . by discrimination in

regard to hire or tenure of employment or any term or condition

of employment to encourage or discourage membership in any labor

organization[.]"

[fn7] The significant overlap in the facts central to the state

claims and the federal labor claim distinguishes this case from

Windfield v. Groen Div., Dover Corp., 890 F.2d 764 (5th Cir.

1989), on which Chavez relies. In Windfield, the court

concluded that the plaintiff's breach of contract claim involved

a "discrete, narrow inquiry into the relationship between him and

his former employer." Id. at 770. The same cannot be said here.

[fn*] The Honorable Christopher Skelly, Judge Pro Tempore was

authorized to participate in the disposition of this matter by

the Chief Justice of the Arizona Supreme Court pursuant to the

Arizona Constitution, article VI, section 3, and Arizona Revised

Statutes Annotated sections 12-145 to -147.