Unpublished Disposition, 930 F.2d 29 (9th Cir. 1990)

MEMORANDUM^*

Appellant union members appeal from a grant of summary judgment to appellees Local 206, International Brotherhood of Electrical Workers and its business agent, Dennis R. Theriault. Appellants joined their federal labor law claim, alleging breach of the duty of fair representation, with a state claim alleging actual or constructive fraud arising from the principal-agent relationship between the appellees and the union workers.

The district court granted a defense motion for summary judgment on the federal claim, determining that the claim was not timely filed under DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151 (1983), and that the intra-union grievance procedure in this case did not toll the statute of limitations. The district court also granted summary judgment on the pendent tort claim, ruling it was preempted by federal labor law because an evaluation of the claim would involve an interpretation of the collective bargaining agreement. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In March of 1984, the appellants' employer, Mountain States Telephone and Telegraph Company (Company), announced its intention to declare surplus and lay off the appellants' work group of Accounts Service Representatives and downgrade the position to Accounts Clerks. This would in effect eliminate approximately 46 existing jobs and create a job description, wages and benefits for the new position of Accounts Clerks.

On November 5, 1984, union Business Manager Dennis Theriault met with company representatives without the knowledge of the members of the union, the executive board, or the employee service representatives. Theriault signed a memorandum of understanding, which basically incorporated the job title of Accounts Clerks into the collective bargaining agreement and provided that the positions would be filled according to the seniority status of those persons who held the former positions of Service Representatives. Prior to the signing of the memorandum, the union workers had objected to the proposed change in the contract and allegedly were assured by the executive board that the union would fully support their objection to the proposed change.

On November 19, 1984, Michael Opar, a member of the executive board of Local Union 206, filed charges pursuant to intra-union procedures against Theriault. The charges claimed that Theriault violated the constitution of the union by failing to protect the jurisdiction of Local 206 when negotiating a job title not in the working agreement between the union and the company. The charges were based on the alleged removal of the union members' ability to grieve and arbitrate the new job title and the loss of wages to those affected by the title change. Opar requested Theriault be removed from the position of business manager.

Opar filed the charges as an individual member of the union, and not as an executive board member. He was not an Accounts Service Representative and is not a plaintiff or appellant in this action. The union's international vice president dismissed the charges filed by Opar on January 23, 1985. Opar did not appeal the dismissal.

Following the dismissal of the charges, Opar could not recall specifically discussing with any of the Accounts Service Representatives what action they could take to remedy their situation. (Opar Depo., p. 44, lines 3-11.) Opar had heard the Service Representatives were thinking of filing a lawsuit (Opar Depo, p. 45, lines 7-10), and added:

I knew from way back then how much time the suit had to be filed, and I just assumed it was never going to be filed so I felt fine. I said hey, you know, nothing is going to happen and the union doesn't have to worry about being sued; and when I heard it was filed, I couldn't believe it was filed because I didn't think anything was being gone [sic done] about it.

(Opar Depo., p. 47, lines 9-15.)

The union workers later filed this case on July 5, 1985, which was more than six months after the memorandum of understanding was signed by Theriault, but less than six months after the dismissal of the charges by the international vice president. The union workers have conceded that there was no breach of the collective bargaining agreement when Theriault signed the memorandum of understanding creating the new job title.

DISCUSSION

* A grant of summary judgment is reviewed de novo to determine, viewing the evidence in a light most favorable to the nonmoving party, if there are any genuine issues of material fact and whether the district court correctly applied the substantive law. Judie v. Hamilton, 872 F.2d 919, 920 (9th Cir. 1989).

II

The six month statute of limitations of Section 10(b) of the National Labor Relations Act applies to this claim of a breach of the duty of fair representation. DelCostello v. Int'l Brotherhood of Teamsters, 462 U.S. 151, 155; Peterson v. Kennedy, 771 F.2d 1244, 1251 (9th Cir. 1985), cert. denied, 475 U.S. 1122 (1986). The first issue is whether the grievance procedure instituted by Opar tolled the running of the six month statute of limitation. The union workers argue that under Galindo v. Stoody Co., 793 F.2d 1502 (9th Cir. 1986), their duty of fair representation claim did not accrue until the union workers learned of the results of Opar's grievance procedure.

In Galindo, this court held that a fair representation claim not based on how a grievance is presented to an arbitrator is tolled while good faith attempts are made to resolve that claim through grievance procedures. Id. at 1510. The reasoning behind the tolling rule is that " [a]n employee should not be penalized for seeking to resolve his dispute through the grievance process before filing a suit in federal court." Id. The Galindo court pointed out " [t]his rule, of course, assumes that grievance procedures could result in the relief sought by the employee." 793 F.2d at 1510 n. 5.

The district court correctly distinguished this case from Galindo:

Although the signing of the memorandum of understanding is the event around which the charge against Theriault is centered, the relief sought in the present case is in the nature of money damages for lost wages and benefits due to the changes in the job title, while the relief sought in the intra-union procedure was the removal of Theriault from the position of business manager for the local union. [District Court Decision, January 2, 1990, at 7.]

The grievance procedure here sought Theriault's removal because he allegedly did a poor job of representing the union workers. However, the procedure could not give the union workers any relief, monetary or otherwise, as to the Company or their jobs. Even had Theriault been removed as Opar requested, the workers would still have suffered the losses for which they now seek compensation.

Another distinguishing factor pointed out by the district court is that the union workers in this case were not named as parties and were not involved in the grievance procedure pursued by Opar. As Opar's deposition testimony demonstrates (supra, p. 4), Opar did not believe he was representing appellants when he filed charges against Theriault. The grievance of Opar was clearly separate and distinct from the claims of the union workers at issue here.

Galindo expressed a concern that non-judicial methods of settling these types of disputes be preserved. Id. at 1510; see also Acri v. International Association of Machinists, 781 F.2d 1393, 1396-97 n. 1 (9th Cir.), cert. denied, 479 U.S. 816 (1986) (if the district court finds that a pending arbitration decision may eliminate the need to litigate a duty of fair representation claim in a particular case, the district court can stay the court proceedings until the arbitrator renders a decision). Our decision today does not adversely impact this important policy, as the non-judicial method in this case was not capable of resolving the dispute.

There were no contractual remedies available to challenge the downgrade in this case. The appellants' cause of action accrued when they learned of the signing of the memorandum of understanding. At that point, the appellants could have successfully brought a cause of action. See Acri, 781 at 1396.

The appellants argue that if they had pursued their duty of fair representation claim before the union had resolved the charges filed against Theriault by Opar, their lawsuit would have been premature. We disagree. The appellants' contention is based on their claim that Opar's charges challenged Theriault's authority to sign the memorandum. The charges were not that Theriault lacked authority, but rather that he acted contrary to the best interests of the union members in signing the memorandum. Furthermore, in this case the union workers were not subject to the requirement of exhaustion of administrative remedies because an arbitrator could not grant a modification of the agreement sought in this type of a duty of fair representation action. See Williams v. Pacific Maritime Association, 617 F.2d 1321, 1328 (9th Cir. 1980), cert. denied, 449 U.S. 1101 (1981).

Even if the union workers were subject to the exhaustion requirement, the affected persons (not Opar) should exhaust their internal remedies and the remedy they seek should be available through internal procedures. The union workers in this case were injured monetarily. The workers themselves did not pursue any intra-union grievance procedures and were not actually represented by Opar. Opar's grievance cannot be construed as the appellants' good faith attempt to resolve their claims through grievance procedures.

III

In Count II of the complaint filed in the district court, the union workers alleged a breach of fiduciary duty which constituted actual or constructive fraud and that the defendants were guilty of oppression, fraud, or actual or presumed malice. The district court held that an evaluation of the collective bargaining agreement would be required in order to determine if the union workers were actually harmed by the action of the defendants, and that the state tort claim was therefore preempted by federal labor law, citing Edelman v. Western Airlines, Inc., 892 F.2d 839 (9th Cir. 1989); Evangelista v. Inlandboatmen's Union of the Pacific, 777 F.2d 1390 (9th Cir. 1985); and Schumacher v. Mountain States Tel. & Tel. Co., 630 F. Supp. 791 (D. Mont. 1986).

It is clear from a review of the record that the state-law claim in this case cannot be resolved without interpreting the collective bargaining agreement. If resolution of the state-law claim depends upon the meaning of the collective bargaining agreement, application of state law is preempted by federal labor-law principles. Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 405-06 (1988).

The union workers attempt to distinguish Edelman, Evangelista and Schumacher on the basis their case is not a "hybrid" case sounding in wrongful discharge, which would necessarily implicate construction of the collective bargaining agreement. However, it would be necessary for the court to determine whether the Company acted properly in eliminating the existing job description, the status of the union members as Account Service Representatives under the agreement, whether they would have had any standing as Account Clerks under the agreement, and whether the Company was required to give the Service Representatives priority in hiring as Account Clerks. All of these questions would have been intimately involved in a determination of whether the defendants had indeed breached a duty owed to the union workers by signing the memorandum of understanding which had the effect of specifically placing the new Account Clerk position under the agreement.

The union workers further attempt to avoid preemption by arguing that the public policy of Montana granting remedies for constructive fraud is a significant state interest which should not be preempted in this case, relying upon Garibaldi v. Lucky Food Stores, Inc., 726 F.2d 1367 (9th Cir. 1984), cert. denied, 471 U.S. 1099 (1985). The union workers argue that because this is a "non-hybrid" case involving an allegation against the union and not the employer under 28 U.S.C. § 158(b), the Garibaldi analysis applies rather than Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985) (state tort claim was precluded by Sec. 301 of the Labor Management Relations Act). Garibaldi must be read in light of Allis-Chalmers and Lingle. However, even if we focus solely on Garibaldi, we disagree with the appellants' application of Garibaldi.

In the Garibaldi case, Garibaldi had been fired after he refused to deliver spoiled milk and instead reported the matter to the local health department. Garibaldi unequivocally pled wrongful termination in violation of public policy. The Garibaldi court noted:

Garibaldi's "whistle blowing" to protect the health and safety of the citizens of California is exactly that type of conduct that the California Supreme Court protected in Tameny [27 Cal. 3d 167, 164 Cal. Rptr. 839, 610 P.2d 1330 (1980) ]. The Supreme Court's decision in Farmer [430 U.S. 290 (1977) (NLRA does not preempt action for intentional infliction of emotional distress based on allegations of threats, intimation and outrageous conduct) ] rested explicitly on the "State's interest in protecting the health and well-being of its citizens."

726 F.2d at 1374 (citations omitted).

The Garibaldi court also noted that the Supreme Court in the Farmer case had carefully limited its holding, requiring that the conduct alleged must have been outrageous and that if the tort occurs during the employment relationship it must be "a function of the particularly abusive manner in which the discrimination is accomplished or threatened rather than a function of the actual or threatened discrimination itself." Garibaldi, 726 F.2d at 1373, quoting Farmer, 430 U.S. at 305. In this case, the union members' complaint does not allege outrageous conduct, or that the public policy of Montana is implicated in the protection of these employees from constructive fraud. Cf. Shane v. Greyhound Lines, Inc., 868 F.2d 1057, 1062-63 (9th Cir. 1989) (affirming summary judgment in favor of the employer on employees' claim for wrongful discharge in violation of public policy in part because the employees did not specify the stated public policy in their pleadings).

The conduct alleged by the union workers here simply does not rise to the level of outrageousness contemplated by Farmer. More importantly, the appellants' state law claim would require interpretation of the collective bargaining agreement and is therefore preempted by federal labor law. Lingle, 486 U.S. 399.

AFFIRMED.