SCREEN EXTRAS GUILD INC v. SMITH (1989)

Following the denial of a motion for summary judgment we issued an alternative writ of mandate to consider whether an action against a union and its officials for wrongful discharge is preempted by federal law even if the wrongful acts are unrelated to a union election.  (Cf. Tyra v. Kearney (1984) 153 Cal.App.3d 921, 200 Cal.Rptr. 716.)   We have concluded there is no federal preemption under the facts of this case.

FACTS AND PROCEEDINGS BELOW

Plaintiff and real party in interest Barbara Smith was employed by the Screen Extras Guild (SEG) as a business representative from 1978 until she was fired in 1986.¹  She was considered a management employee.   She was not a member of the union.   Her job entailed handling questions, claims and grievances of SEG members relating to actions by their employers.   She had authority to settle claims and grant waivers of the union contract under certain circumstances.   She was not involved in negotiating contracts.

In her complaint Ms. Smith alleges she was fired after a SEG official made false charges against her at a board of directors' meeting.   Neither Ms. Smith nor SEG contend her firing had anything to do with a union election.

Ms. Smith seeks damages for breach of the covenant of good faith and fair dealing, intentional and negligent infliction of emotional distress and defamation.²

SEG moved for summary judgment on the sole ground Ms. Smith's claims are preempted by the Labor–Management Reporting and Disclosure Act (29 U.S.C., §§ 401 et seq.)   The trial court denied the motion and SEG petitioned us for a writ directing the court to grant the motion.

 We initially denied the petition.   The Supreme Court granted SEG's petition for review of our denial and transferred the matter to us with directions to issue an alternative writ.   The Supreme Court's actions do not ipso jure establish SEG is entitled to the relief sought;  only that this court must decide the issue presented.  (Charlton v. Superior Court (1979) 93 Cal.App.3d 858, 861, 156 Cal.Rptr. 107.)

DISCUSSION

 The Labor–Management Reporting and Disclosure Act of 1959 (29 U.S.C., §§ 401 et seq.) was the product of congressional concern with wide-spread abuses of power by union leaders and employers.  (Finnegan v. Leu (1982) 456 U.S. 431, 435, 102 S.Ct. 1867, 1870, 72 L.Ed.2d 239;  29 U.S.C., § 401 subds. (b), (c).)   An underlying purpose of the Act is to require fair and open dealings between a union and its members.   To this end, the Act prescribes reporting requirements of labor organizations, their officers and employees (29 U.S.C., §§ 431–441), rules for establishment and administration of trusteeships (§§ 461–483), procedures for conducting elections (§§ 481–483), and safeguards for the preservation of union funds (§§ 501–504).   The only portion of the Act even remotely connected to Ms. Smith's claims against SEG is Title I, (29 U.S.C., §§ 411–415) often referred to as the union members' “Bill of Rights.”  (See Steelworkers v. Sadlowski (1982) 457 U.S. 102, 109, 102 S.Ct. 2339, 2344, 72 L.Ed.2d, 707;  Finnegan v. Leu, supra, 456 U.S. at p. 435, 102 S.Ct. at p. 1870.)   The provisions of Title I are intended “to guarantee every [union] member equal voting rights, rights of free speech and assembly, and a right to sue.”  (Steelworkers v. Sadlowski, supra, 457 U.S. at p. 109, 102 S.Ct. at p. 2344.)   In other words, to ensure unions are “democratically governed and responsive to the will of their memberships.”  (Finnegan, supra, 456 U.S. at p. 436, 102 S.Ct. at p. 1870.)

SEG bases its preemption argument on the California Court of Appeal decision in Tyra v. Kearney, supra.   Tyra was the business agent for a local union.   She challenged Kearney in a race for the office of secretary/treasurer and lost.   Following the election Kearney fired Tyra who then sued Kearney and the union for wrongful discharge.   In holding the Act preempted Tyra's action the court relied on the United States Supreme Court opinion in Finnegan v. Leu, supra, which involved a very similar fact pattern.   Finnegan brought his action in federal court alleging his termination violated his rights under Title I of the Act to free speech and equal voting rights.   The Supreme Court held Finnegan had not been denied his rights under Title I because permitting a victorious candidate to appoint his own staff whose views are compatible with his own is consistent with the Act's “overriding objective” of “democratic union governance.”  (Finnegan, supra, 456 U.S. at p. 441, 102 S.Ct. at p. 1873.)   In Tyra, the court held allowing the loser in a union election to sue the winner for wrongful discharge would interfere with an “overriding objective” of the Act as identified in Finnegan and, therefore, Tyra's action was preempted.  (Tyra, supra, 153 Cal.App.3d at pp. 923, 926–927, 200 Cal.Rptr. 716;  and see San Diego Unions v. Garmon (1959) 359 U.S. 236, 243, 79 S.Ct. 773, 778, 3 L.Ed.2d 775.)

SEG contends that allowing Ms. Smith to pursue her state law claims for breach of an employment contract and related torts would impermissibly interfere with the ability of democratically elected union officials to respond to their mandate to govern thereby interfering with the effective administration of national labor policy.

The defect in this argument is obvious.   Union officials are not elected to breach contracts or commit torts and, if they do so, the fact they were “democratically elected” is beside the point.   This case has nothing to do with democracy, free speech or the longstanding practice of union patronage.  (Cf. Finnegan v. Leu, supra, 456 U.S. at pp. 441–442, 102 S.Ct. at pp. 1873–1874.)   This is a garden-variety “wrongful termination” case which just happens to be brought against a union and one of its officers instead of a corporation and one of its officers.  (See, e.g., Foley v. Interactive Data Corp., supra, 47 Cal.3d 654, 254 Cal.Rptr. 211, 765 P.2d 373;  Pugh v. See's Candies, Inc. (1981) 116 Cal.App.3d 311, 171 Cal.Rptr. 917.)

The right Ms. Smith seeks to protect is the right to be free from discharge as a business agent of SEG when that discharge is based on breach of her employment contract.   The right SEG seeks to enforce is the right to discharge an incompetent or dishonest employee, not the right of a newly elected president to select her own management “team.”  (Cf. Tyra v. Kearney, supra, 153 Cal.App.3d at p. 926, 200 Cal.Rptr. 716;  Finnegan v. Leu, supra, 456 U.S. at p. 441, 102 S.Ct. at p. 1873.)   There is no showing in the record Ms. Smith was “instrumental in evolving [the union's] administrative policies.”   (Finnegan, supra, 456 U.S. at pp. 442–443, 102 S.Ct. at pp. 1873–1874 [Blackmun, conc.].)  Ms. Smith had limited discretion to settle claims and waive certain provisions of the union contract with signatory employers.   But there is no showing she had anything to do with establishing union policy or that her firing had anything to do with her views on union policy.  (Id. at p. 441, 102 S.Ct. at p. 1873;  cf. Cehaich v. Intern. Union, U.A.W. (6th Cir.1983) 710 F.2d 234, 236, 239.)

It is important to distinguish between claims against a union that relate to the purposes of the Act and claims that are routine disputes between an employer and employee.   This distinction was recognized in Strauss v. International Brother of Teamsters, Etc. (E.D.Pa.1959) 179 F.Supp. 297, decided shortly after the Act took effect.   Strauss was a business agent for a union local.   He claimed he was wrongfully discharged from his position because he was an ex-felon.   He sought federal jurisdiction for his claim under section 102 of the Act, (29 U.S.C., § 412), which confers jurisdiction over claims by any person “whose rights secured by the provisions of [Title I] have been infringed by a violation of [Title I]․”  In rejecting federal jurisdiction over Strauss' claim, the court stated:

“The right which plaintiff now seeks to protect as against the defendant is the right to be free from discharge as business agent of a labor union, when that discharge is based solely upon the union's honest misinterpretation of a new Federal law.   The plaintiff was not elected to this position nor does it appear that the position necessarily required his being a member of the local union.   As between the parties to this suit, this is at best a contractual right or a right of ‘status.’

“In short, this Title deals with the union-member relationship and in no way supports jurisdiction of a suit involving the employer (union)-employee (business agent) relationship which is the essence of the present suit.   Such a case turns more properly on the common law of employment contracts, or employment ‘status' as a property right, matters which are outside the scope of Title I.”  (Id. at pp. 299–300, emphasis in original.)

In a similar case challenging plaintiff's dismissal as a union official the court observed, “Plaintiff can take advantage of the Union appeal procedure and can seek relief in a State Court from the action of the Executive Committee․  [A] State Court ․ would have jurisdiction to determine all of the issues.”  (Jackson v. The Martin Company (D.Md.1960) 180 F.Supp. 475, 481, 483.)

The most important distinction between Tyra and the case before us is that Ms. Smith's discharge had absolutely nothing to do with “democratic union governance”:  the controlling factor in Finnegan and Tyra.   Ms. Smith was not fired after a union election in which she found herself on the wrong side.   Instead she was fired for allegedly misusing her position and for insubordination.   Nothing in Finnegan suggests the Act was intended to shield the union's routine personnel actions from scrutiny under state contract and tort law.   To the contrary, Finnegan expressly left open “the question whether a different result might obtain in a case involving nonpolicymaking and nonconfidential employees.”  (456 U.S. at p. 441, fn. 11, 102 S.Ct. at p. 1873, fn. 11.)   And, in Sheet Metal Workers' Intern. Assn. v. Lynn, (1989) 488 U.S. 347, –––– – ––––, 109 S.Ct. 639, 643–645, 102 L.Ed.2d 700, the court emphasized Finnegan applied only to the situation of a newly elected official who must have the freedom to bring in a loyal staff.

“Indeed, the basis for the Finnegan holding was the recognition that the newly elected president's victory might be rendered meaningless if a disloyal staff were able to thwart the implementation of his programs.”

The Tyra court too based its preemption holding solely on the holding in Finnegan and not any generalized preemption theory derived from the Act.

“Finnegan found termination in this instance sanctioned under the Act;  a subsequent state claim would allow another forum to restrict the exercise of the right to terminate which Finnegan found ‘an integral part of ensuring a union administration's responsiveness to the mandate of the union election.’ ”  153 Cal.App.3d at p. 927, 200 Cal.Rptr. 716 (emphasis added;  citation omitted.)

In a footnote the court observed, “We note the paradox in denying a wrongful termination cause of action to Tyra yet allowing it for private sector employers․  However, we are compelled to follow the dictates of the Supreme Court.”  (Id. at p. 926, fn. 6, 200 Cal.Rptr. 716, citation omitted.)

As we have observed, the Finnegan opinion does not dictate federal preemption of wrongful termination claims by “nonpolicymaking and nonconfidential employees.”   Our view that Tyra and Finnegan are limited to their facts is confirmed by the Ninth Circuit's opinion in Bloom v. General Truck Drivers (9th Cir.1986) 783 F.2d 1356.   In Bloom a fired union business manager sued the union for violation of his rights under Title I of the Act as well as for wrongful discharge under California law.   In explaining why his wrongful discharge action was not preempted by the Act, the court reasoned:

“In the present case, Bloom alleges that he was fired, not for political reasons, or for no reason at all, but rather because he refused to illegally alter the minutes of a union meeting.   Not only is the state's interest in allowing the wrongful discharge action here strong, ․ but the federal interest is much lessened under these circumstances.   The kind of discharge alleged, retaliation for refusal to commit a crime and breach a trust, is not the kind sanctioned by the Act, or by the courts in Finnegan and Tyra.   Protecting such a discharge by preempting a state cause of action based on it does nothing to serve union democracy or the rights of union members;  it serves only to encourage and conceal such criminal acts and coercion by union leaders.

“In Tyra and Finnegan, the discharge of the employee was central to the concerns of federal labor policy, and a state cause of action would have interfered with the federal regulatory scheme․  The subject of the suit here is merely peripheral to the concerns of the Act, ․ and a state cause of action would not interfere with federal policy at all.”  (Id. at p. 1362 [citations and fn. omitted].)

Furthermore, nothing in the language of the Act itself suggests a broad preemptive intent on the part of Congress.   Instead, Congress included explicit language in the Act preserving state law remedies.   Section 103 (29 U.S.C., § 413) provides “Nothing contained in [Title I, the “Bill of rights”] shall limit the rights and remedies of any member of a labor organization under any State or Federal law or before any court or other tribunal․”  Section 603(a) (29 U.S.C., § 523, subd. (a) states:

“Except as explicitly provided to the contrary, nothing in this Act shall reduce or limit the responsibilities of any labor organization ․ under any other Federal law or under the laws of any State, and, except as explicitly provided to the contrary, nothing in this Act shall take away any right or bar any remedy to which members of a labor organization are entitled under such other Federal law or law of any State.”

In Bloom v. General Truck Drivers, supra, the court observed that while these provisions did not directly save Bloom's state cause of action for wrongful discharge, because they are addressed to union members not employees, they provide at least indirect support for an argument against federal preemption.  (783 F.2d at p. 1360, fn. 7.)

“The continued vitality of the California statutes in light of these savings clauses logically implies the continued vitality of the state's means of enforcing those statutes, including, as here, a cause of action for wrongful discharge for refusal to acquiesce or abet in the statutes' violation.”   (Id. at p. 1361.)

DISPOSITION

The alternative writ is discharged and the petition is denied.

FOOTNOTES

1.   There appears to be a material question of fact whether Ms. Smith was fired or whether she was refused re-employment after she voluntarily resigned.   For purposes of SEG's motion for summary judgment and this writ, both parties and the trial court assumed Ms. Smith was fired.   We will do likewise.

2.   The ramifications of Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 254 Cal.Rptr. 211, 765 P.2d 373 are not before us on this writ petition and we express no views thereon.

JOHNSON, Associate Justice.

LILLIE, P.J., and FRED WOODS, J., concur.