04 Aug UNITED STATES COURT OF APPEALS AFFIRMS FEDERAL LABOR POLICY FAVORING BROAD PREEMPTION OF STATE LAW CLAIMS
In the legal world, ignorance does not usually equal bliss. In fact, what you do not know oftentimes ends up hurting you. As a practical example, when an employer’s workforce unionizes, the employer must make sure it fully understands the terms of any resulting agreement with a union. If it fails to do so, the employer runs the risk of learning too late that collective bargaining agreements (“CBA’s”) with unions can significantly interfere with its operations, often in unexpected ways. This article examines a recent instance of an employer learning this lesson the hard way.
In Adamo Demolition Co. v. Int’l Union of Operating Eng’rs Local 150, 6th Cir., No. 20-1163, 7/2/21, plaintiff, Adamo Demolition, contacted the local labor union to provide workers for a demolition project at a Ford Motor Co. plant in Chicago. Importantly, this arrangement was dictated by the terms of the National Maintenance Agreement (“NMA”), a collective bargaining agreement (“CBA”) covering large industrial companies like Ford. The NMA provides the terms for hiring workers and, additionally, requires all disputes “arising out of work performed under [the NMA],” be resolved through a grievance and binding arbitration process. According to Adamo Demolition, it informed the union multiple times that its project was extremely time sensitive and that failure on the union’s part to deliver trained, qualified workers could cause significant monetary damages and/or create an unsafe work environment. Nevertheless, Adamo claimed the union sent unqualified workers and refused to verify or provide information on its workers’ qualifications. It further claimed the union workers damaged the plant and were sent by the union specifically to cause trouble for Adamo.
Adamo filed a lawsuit in Wayne County Circuit Court. It alleged the union made false and malicious statements about them to third parties, sent unqualified workers to the job, and caused damage to the plant. Its complaint pled multiple state tort theories, including tortious interference with a contract and/or business relationships and slander/defamation. After removing the case to federal court, the defendant union claimed plaintiff’s lawsuit was preempted by the federal Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185(a). The LMRA broadly preempts all state-law claims that require interpretation of a CBA or implicate rights created by a CBA. The preemption analysis emphasizes substance over form. As the Sixth Circuit Court of Appeals has explained, a reviewing court must look to “the essence” of a plaintiff’s claim to “determine whether the plaintiff is attempting to disguise what is essentially a contract claim as a tort.” Preempted claims are dismissed, typically to be either resolved or filed in arbitration thereafter.
In this instance, the Sixth Circuit court agreed with the union. “[P]lainly,” it said, Adamo’s interference claims required an interpretation of the NMA to determine the scope of the union’s responsibilities pertaining to the workers and the relationship between Adamo and the other parties. As for the defamation claims, the court said they were “inextricably intertwined with and depende[nt] upon” the NMA because it was impossible to determine whether any statements were actually false without evaluating the “rights and responsibilities of the parties created by the NMA.” Ultimately, because none of Adamo’s claims could be resolved without examining the bargaining agreement between the parties, its state law claims were each preempted by the LMRA and dismissed.
Adamo serves as a reminder of the impact workforce unionization can have on an employer. Oftentimes, ceding control to a union can lead to problems with labor/work supply and can obviate an employer’s access to the court system as a means to resolve disputes. For these reasons, employers should closely examine all the issues which could arise from unionization and consult with an expert. Otherwise, they run the risk of finding out too late just what hidden bite a union contract may have. Employers or attorneys in the Saginaw Bar Association should feel free to contact any of the attorneys at Masud Labor Law Group to handle any aspect of collective bargaining agreement negotiation or review.