Unpublished Disposition, 900 F.2d 263 (9th Cir. 1989)

MEMORANDUM^* 

Appellant Lynelle Mackanic appeals from adverse ruling by the district court granting summary judgment on her seven tort and contract claims against her former employer Stecher Traung Schmidt Corporation ("STS"). For the reasons discussed below, we affirm in part and reverse in part and remand to the district court.

Mackanic was employed by STS as an apprentice in their stripping department from September 15, 1981 to February 25, 1982. At all times during her employment at STS, Mackanic was covered by a collective bargaining agreement between STS and her union, Graphic Arts International Union Local 280 ("Union"). The agreement governed the terms and conditions of Mackanic's employment at STS, including gender and race discrimination (section 5.5) and grievance-arbitration procedures (section 41). During this period, STS also had a published policy prohibiting sex discrimination in the workplace. This policy statement provided a grievance procedure for employee harassment claims.

Calvin Chin, an experienced employee who served as a "working foreman" for the stripping department, was initially assigned to train Mackanic. As a working foreman, Chin's duties included assigning work within the department and ensuring that assignments were completed on schedule. Mackanic alleges that Chin's sexually and racially offensive behavior so upset and distracted her that she was forced to quit her apprenticeship at STS. Mackanic's deposition testimony recounts numerous instances in which Chin touched her in an offensive manner, made sexually suggestive comments and jokes, and mocked her Native American heritage. Mackanic also contends that STS contributed to the hostile environment in the stripping department by allowing a poster of a bare-chested woman to remain in the darkroom and by disciplining her for tardiness in a discriminatory way.

Mackanic complained to STS management about Chin's actions on two occasions. She emphasizes that while she detailed the substantial nature of Chin's misconduct to STS in October 1981 and again in January 1982, STS management disregarded her allegations and failed to take appropriate disciplinary action against Chin. Mackanic resigned her apprenticeship with STS shortly after this second complaint. Mackanic has never filed a grievance with respect to Chin's or STS' conduct.¹ 

Seven months after leaving STS, Mackanic filed an EEOC/FEHA complaint with the California Fair Employment and Housing Administration ("FEHA") alleging sex and race discrimination. Mackanic also filed a civil complaint in state court against STS on January 14, 1983. In March 1984, after receiving a right-to-sue notice from FEHA, Mackanic filed an amended complaint naming both STS and the Estate of Chin as defendants. This amended complaint stated seven causes of action: (1) assault and battery; (2) intentional infliction of emotional distress; (3) negligence; (4) breach of contract/wrongful discharge; (5) breach of the covenant of good faith and fair dealing; (6) sexual harassment; and (7) racial discrimination.

In April 1984, STS removed the case to the district court based on the federal issues raised by Mackanic's contractual claims; the claims against Chin's Estate were returned to state court. The district court subsequently granted STS' motion for summary judgment, holding that (1) Sec. 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, preempted Mackanic's claims for breach of contract/wrongful discharge and for breach of the covenant of good faith and fair dealing, and that (2) Mackanic had failed to state causes of action with respect to her five remaining pendent state law claims. The district court subsequently denied Mackanic's motion for reconsideration and entered final judgment on September 14, 1987. Mackanic filed her notice of appeal to this court on December 1, 1987.

As an initial matter, STS challenges the jurisdiction of this court to entertain Mackanic's appeal. STS contends that Mackanic's allegedly defective service of some of her motion papers on counsel for STS rendered her notice of appeal untimely. Given the unusual facts underlying Mackanic's manner of service, we accept her notice of appeal as timely filed and thus may properly assert jurisdiction over this appeal. See Torres v. Oakland Scavenger Co., 108 S. Ct. 2405, 2408 (1988).

The district court's grant of summary judgment and its determination of federal as well as state law are subject to de novo review. Stallcop v. Kaiser Foundation Hospitals, 820 F.2d 1044, 1050 (9th Cir.), cert. denied, 108 S. Ct. 504 (1987). Viewing the evidence and the inferences arising therefrom in the light most favorable to Mackanic, see id. at 1050, we hold that while the court properly determined that Mackanic's contract-based claims were preempted by federal labor laws, it erred in dismissing her five remaining state statutory and common law causes of action.

The district court properly determined that Mackanic's claims for breach of contract and for breach of the covenant of good faith and fair dealing were preempted by Sec. 301 of the LMRA. Since resolution of these claims would require reference to, and interpretation of, the terms of the STS-Union collective-bargaining agreement--including section 5.5 (gender and race discrimination) and section 41 (grievance-arbitration procedure)--they fall within the preemptive scope of Sec. 301. See, e.g. Lingle v. Norge Div. of Magic Chef, Inc., 108 S. Ct. 1877, 1885 (1988) (state law causes of action preempted by Sec. 301 when relief requires interpretation of collective bargaining agreement); Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 220 (1985) (dismissing claim for implied covenant of good faith as preempted by Sec. 301 since resolution of claim was "substantially dependent" upon terms of collective bargaining agreement). This holding is, moreover, consistent with previous decisions of this circuit ruling that state law claims for breach of contract and for breach of the covenant of good faith and fair dealing fail to withstand Sec. 301 preemption analysis. See, e.g., Newberry v. Pacific Racing Ass'n, 854 F.2d 1142, 1147-48 (9th Cir. 1988) (dismissing claim for breach of the implied covenant of good faith and fair dealing claim as preempted by Sec. 301); Paige v. Henry J. Kaiser Co., 826 F.2d 857, 861 (9th Cir. 1987), cert. denied, 108 S. Ct. 2819 (1988) (same); Stallcop, 820 F.2d at 1048-49 (Sec. 301 preempts state law wrongful discharge claim); Carter v. Smith Food King, 765 F.2d 916, 921 (9th Cir. 1985) (Sec. 301 preempts state law constructive discharge claim). Thus, since these claims fall within the scope of Sec. 301, and Mackanic failed to make use of the grievance procedure established in the STS-Union collective-bargaining agreement, the district court properly dismissed Mackanic's contractual causes of action. See Allis-Chalmers, 471 U.S. at 221 (failure to exhaust contractual grievance mechanisms warrants dismissal of Sec. 301 claims).

With respect to Mackanic's five remaining state law causes of action, the district court properly exercised pendent jurisdiction. While this circuit formerly held that dismissal of all federal claims removes any basis for asserting federal subject matter jurisdiction over pendent state law claims in non-diversity cases, see Aragon v. Federated Dep't Stores, Inc., 750 F.2d 1447, 1557-58 (9th Cir.), cert. denied, 474 U.S. 902 (1986), the Supreme Court has recently emphasized that district courts enjoy the discretion to adjudicate state law claims under such circumstances. See Carnegie-Mellon Univ. v. Cohill, 108 S. Ct. 614 (1988); see also Mackey v. Pioneer Nat'l Bank, No. 87-3810, slip op. 857, 861-62 (9th Cir. January 31, 1989). Thus, the district court did not abuse its discretion by exercising pendent jurisdiction over Mackanic's remaining state law claims after dismissing her federal labor law claims.

The district court erred, however, in dismissing Mackanic's five remaining state statutory and common law claims for failure to raise genuine issues of material fact. Mackanic's affidavits that Chin racially and sexually harassed her with the acquiescence and authorization of STS raise factual disputes sufficient to withstand summary adjudication. Factual questions still remain concerning STS' liability for their own actions and those of Chin, and, moreover, Mackanic has presented triable issues of fact as to the elements of each of her remaining state law causes of action. See e.g., Hart v. National Mortgage & Land Co., 189 Cal. App. 3d 1420, 1426-27, 235 Cal. Rptr. 68, 71-72 (1987) (reversing summary judgment by trial court on negligence, assault and battery, and intentional infliction of emotional distress claims when plaintiff-employee raised factual questions whether harassing co-employees acted within the scope of their employment and whether the defendant-employer knowingly retained these employees); Alma W. v. Oakland Unified School Dist., 123 Cal. App. 3d 133, 138, 176 Cal. Rptr. 287, 289 (1981) ("arguable" facts suggesting employee acted within scope of employment presents triable issue of fact).

STS argues that the California Workers Compensation Act provides Mackanic's exclusive remedy for her claim of intentional infliction of emotional distress. See Cal.Lab. Code Sec. 3601. The exclusivity provisions do not apply to an emotional distress claim, however, where the injuries alleged "are of a nonphysical sort with physical harm being at most a makeweight." See Cole v. Fair Oaks Fire Protection Dist., 43 Cal. 3d 148, 156, 233 Cal. Rptr. 308, 312, 799 P.2d 743 (1987) (citing Renteria v. County of Orange, 82 Cal. App. 3d 833, 839, 147 Cal. Rptr. 447 (1978)). Mackanic essentially claims emotional harm arising from STS' alleged intentional tortious conduct--"humiliation, mental anguish, and emotional and physical distress." Whether or not these allegations also include "substantial physical injury," see id., is a question properly left to the trier of fact.

STS also contends that Mackanic's claims for assault and battery and emotional distress are barred by the applicable one-year statute of limitations. See Cal.Civ.Proc.Code Sec. 340. Mackanic filed her original complaint on January 14, 1983. There is some factual support for Mackanic's contention that Chin harassed her on January 15, 1982. Accordingly, Mackanic has raised an issue of material fact with respect to the accrual date of her claims sufficient to withstand summary judgment.

The judgment of the district court is therefore AFFIRMED as to Mackanic's federal claims for breach of contract/wrongful discharge and for breach of the covenant of good faith and fair dealing, and REVERSED and REMANDED as to her five remaining state law causes of action for disposition in light of this opinion.

AFFIRMED IN PART; REVERSED IN PART AND REMANDED.

BRUNETTI, Circuit Judge, Concurring in Part and Dissenting in Part.

I agree with the majority that the district court properly dismissed Mackanic's claims for breach of contract and breach of the covenant of good faith and fair dealing. However, I must dissent from the majority's holding that the district court erred in dismissing Mackanic's five remaining causes of action.

To survive a summary judgment motion, the nonmoving party must produce "significant probative evidence" to support the allegations in the complaint. R.T. Elec. Serv. v. Pac. Elec. Contractors, 809 F.2d 626, 630 (9th Cir. 1987). The nonmoving party may not avoid summary judgment by relying on the "mere allegations" in the pleadings. Id.

In order for STS to be liable for Chin's alleged race or sex discrimination, Mackanic must show either that Chin was a "supervisor, manager, or agent" of STS for purposes of California employment discrimination law and that the harassment occurred in the course of Chin's employment, or that STS knew of Chin's conduct and failed to take immediate and appropriate corrective action. 2 Cal.Admin.Code Secs. 7286.6(b) and 7287.6(b) (3). The opinion states, without detail, that Mackanic's affidavits raise sufficient factual disputes regarding these issues. I disagree.

In Mackanic's opposition papers, she fails to raise factual issues as to whether Chin was a "supervisor, manager, or agent" for purposes of California discrimination law. As her trainer, Chin could pass on information about her performance to management, but he had no power to fire or transfer her, and no other discretionary management power. See Miller v. Bank of America, 600 F.2d 211, 213 (9th Cir. 1979). Thus, Mackanic has not presented sufficient facts that tend to establish that Chin was a "supervisor, manager, or agent."

Mackanic also fails to raise factual issues as to whether Chin acted within the scope of his employment. Chin's alleged conduct was not "broadly incident" to the employer's work and Chin's alleged suggestive comments and personal advances were personally motivated. This is especially true after Chin was removed from his position as Mackanic's immediate trainer following Mackanic's first complaint.

Mackanic also fails to present any evidence that STS ratified Chin's conduct by knowing of Chin's alleged race or sex discrimination and failing to take appropriate action. With respect to her race discrimination claims, Mackanic never even alleges that she told her supervisor of Chin's alleged racial harassment. With respect to the alleged sex discrimination, Mackanic's supervisor, Sarao, reacted to Mackanic's first complaint of sexual discrimination by decreasing Mackanic's contact with Chin, giving her a new trainer and by monitoring the situation. In reaction to Mackanic's second complaint, which included allegations of physical harassment for the first time, Sarao immediately spoke to Chin and reported the incident to management. Mackanic admitted in her letter to Sarao just before she resigned that the offensive behavior had subsided as a result of Sarao's actions. Thus, Mackanic admitted that STS's actions effectively stopped the offensive conduct and that STS could not know of any continued harassment because there was none.

In order for STS to be liable for assault and battery or intentional infliction of emotional distress, Mackanic must allege facts which show either that Chin acted within the scope of his employment when he "assaulted" her or that STS authorized or ratified Chin's behavior by failing to take appropriate action. Cal.Civ.Code Sec. 2339 (West 1990); see also Alma W. v. Oakland Unified School Dist., 123 Cal. App. 3d 133, 138-39 (1981). Mackanic has not alleged any such facts and has not submitted any evidence tending to establish such facts. Furthermore, as a matter of law, Chin's behavior was not, "outrageous conduct" sufficient to satisfy the elements of intentional infliction of emotional distress.

In order for STS to be liable for negligent hiring or failure to fire Chin, Mackanic has to show that STS knew of Chin's behavior and failed to take reasonable remedial measures. See Underwriters Ins. Co. v. Purdie, 145 Cal. App. 3d 57, 69 (1983). Chin had been employed by STS for 20 years with a satisfactory performance. At the time of her first complaint, Mackanic had been with STS one month. Sarao acted on Mackanic's first complaint by reducing her contact with Chin, hoping the friction between the two employees would diminish. Upon Mackanic's second complaint, Sarao reported the incident to management immediately and confronted Chin. According to the letter by Mackanic to Sarao, the offensive behavior ceased. Surely, if that solution solved the problem, STS acted reasonably and was under no duty to fire Chin because of his behavior. As a matter of law, Mackanic cannot show that STS was negligent.

Mackanic's affidavits and addenda to her opposition to summary judgment motion fail to support the allegations in her complaints and all five of her remaining causes of action fail as a matter of law. Thus, the district court's grant of summary judgment to STS should be affirmed.