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Gonzalez v. Prestress Engineering Corp.

OPINION FILED DECEMBER 19, 1986.

JOSE ISABEL GONZALEZ, APPELLEE,

v.

PRESTRESS ENGINEERING CORPORATION, APPELLANT. — JOHN REPYAK ET AL., APPELLEES,

v.

PRESTRESS ENGINEERING CORPORATION, APPELLANT.



Appeal from the Appellate Court for the Fourth District; heard in that court on appeal from the Circuit Court of Livingston County, the Hon. William T. Caisley, Judge, presiding.

CHIEF JUSTICE CLARK DELIVERED THE OPINION OF THE COURT:

In Midgett v. Sackett-Chicago, Inc. (1984), 105 Ill.2d 143, cert. denied (1985), 474 U.S. 909, 88 L.Ed.2d 243, 106 S.Ct. 278, cert. denied (1985), 472 U.S. 1032, 87 L.Ed.2d 642, 105 S.Ct. 3513, this court held that a tort action for retaliatory discharge for exercising rights under the Workers' Compensation Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.1 et seq.), established in Kelsay v. Motorola, Inc. (1978), 74 Ill.2d 172, as a remedy available to at-will employees, was equally available to unionized employees covered by a collective-bargaining agreement. We allowed leave to appeal in these consolidated cases to determine whether, in light of the subsequent Supreme Court decision in Allis-Chalmers Corp. v. Lueck (1985), 471 U.S. 202, 85 L.Ed.2d 206, 105 S.Ct. 1904, section 301 of the Labor Management Relations Act (section 301) (29 U.S.C. § 185(a) (1982)) preempts the independent State tort action recognized in Midgett, and whether failure to exhaust grievance procedures established in a collective-bargaining agreement bars the action.

The two cases consolidated in this appeal were first before this court, together with a third consolidated case, in Midgett v. Sackett-Chicago, Inc. (1984), 105 Ill.2d 143, cert. denied (1985), 474 U.S. 909, 88 L.Ed.2d 243, 106 S.Ct. 278, cert. denied (1985), 472 U.S. 1032, 87 L.Ed.2d 642, 105 S.Ct. 3513. We briefly review the facts and procedural history of both cases.

In August 1981, plaintiff Jose Gonzalez filed a workers' compensation claim with the Industrial Commission for an injury he suffered while employed by defendant, Prestress Engineering Corporation (Prestress). On August 23, 1982, an Industrial Commission arbitrator denied the claim, finding that Gonzalez' injury did not arise out of and in the course of his employment. Gonzalez was discharged on September 20, 1982. Plaintiff John Repyak also sustained injury while employed by Prestress, and in July 1981 was awarded $12,601 in benefits under the Workers' Compensation Act. Repyak was terminated on October 6, 1982.

As union members of Laborers' Local No. 996 of the North Central Illinois Laborers' District Council, Gonzalez and Repyak were covered by a collective-bargaining agreement between the local and Prestress. The agreement requires "just cause" for discharge and establishes a four-step grievance procedure culminating in final and binding arbitration if the local pursues the grievance to that extent. Neither Gonzalez nor Repyak filed grievances concerning their respective terminations. Instead, they filed separate complaints in the circuit court of Livingston County alleging that Prestress had discharged them in retaliation for their filing workers' compensation claims under the Workers' Compensation Act. Both Gonzalez and Repyak aver in their complaints that Prestress informed them that they were being discharged because they filed claims for benefits under the Workers' Compensation Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.1 et seq.), and aver that there was no other reason for their discharge.

In both cases, the circuit court granted Prestress' motion to dismiss for failure to state a cause of action. The appellate court affirmed both dismissals and, in Midgett, we reversed the circuit and appellate court judgments and remanded the causes for proceedings consistent with our holding there, that the complaints stated a valid tort claim for retaliatory discharge in violation of clearly mandated public policy. On remand, Prestress filed answers to each complaint, raising two affirmative defenses: (1) that each claim is preempted by section 301; and (2) that each claim is barred for failure to pursue and exhaust the grievance procedure provided by the collective-bargaining agreement.

Gonzalez and Repyak moved to strike the affirmative defenses. The circuit court granted the motions but found that a question of law existed on which there was a substantial difference of opinion and that an immediate appeal from the interlocutory order under our Rule 308 (87 Ill.2d R. 308) would materially advance the ultimate termination of the litigation. The appellate court denied Prestress' petitions for interlocutory appeal. We granted leave to appeal to consider Prestress' affirmative defenses in light of Allis-Chalmers Corp. v. Lueck (1985), 471 U.S. 202, 85 L.Ed.2d 206, 105 S.Ct. 1904.

On its face, section 301 vests jurisdiction over suits for breach of collective-bargaining agreements only in the Federal district courts. (29 U.S.C. § 185(a) (1982).) However, in Charles Dowd Box Co. v. Courtney (1962), 368 U.S. 502, 7 L.Ed.2d 483, 82 S.Ct. 519, the Supreme Court found that, in enacting section 301, Congress intended both State and Federal courts to have concurrent jurisdiction over suits alleging a breach of a collective-bargaining agreement. Although State courts have concurrent jurisdiction over section 301 claims, principles of Federal labor law preempt inconsistent State law. (Teamsters v. Lucas Flour Co. (1962), 369 U.S. 95, 104, 7 L.Ed.2d 593, 600, 82 S.Ct. 571, 577.) Based upon the recent decision of Allis-Chalmers Corp. v. Lueck (1985), 471 U.S. 202, 85 L.Ed.2d 206, 105 S.Ct. 1904, where the Supreme Court extended the contours of section 301 to include State tort claims derived from a labor contract, Prestress argues that the instant claims fall within the preemptive ambit of section 301.

In Allis-Chalmers, a unionized employee filed suit against both his employer and an insurance company which administered the disability plan incorporated into the collective-bargaining agreement between the employer and the union. A separate letter of understanding, binding upon the parties, created a three-step grievance procedure for disputes concerning disability payments under the plan. Dissatisfied with the manner in which disability payments were made following a non-occupational injury, the employee alleged bad-faith handling of his disability claim, a tort under Wisconsin law. The Wisconsin Supreme Court found that a tort claim of bad faith was distinguishable from a bad-faith breach-of-contract claim and thus concluded that the action did not arise under section 301.

The United States Supreme Court reversed, holding that the State tort claim was preempted by section 301. In so doing, the Supreme Court first found that congressional policy favoring the administration of collective-bargaining agreements under a uniform body of Federal law required that the preemptive force of section 301 extend beyond suits for breach of a labor contract. "Any other result" the court reasoned, "would elevate form over substance and allow parties to evade the requirements of section 301 by relabeling their contract claims as claims for tortious breach of contract." (Allis-Chalmers Corp. v. Lueck (1985), 471 U.S. 202, 211, 85 L.Ed.2d 206, 215, 105 S.Ct. 1904, 1911.) The court, however, also emphasized:

"Of course, not every dispute concerning employment, or tangentially involving a provision of a collective-bargaining agreement, is pre-empted by section 301 or other provisions of the federal labor law. * * * In extending the pre-emptive effect of section 301 beyond suits for breach of contract, it would be inconsistent with congressional intent under that section to pre-empt state rules that proscribe conduct, or establish rights and obligations, independent of a labor contract." (Emphasis added.) 471 U.S. 202, 211-12, 85 L.Ed.2d 206, 215-16, 105 S.Ct. 1904, 1911-12.

With this caveat, the court framed the test as "whether the [tort claim as applied] confers non-negotiable state-law rights on employers or employees independent of any right established by contract, or, instead, whether evaluation of the tort claim is inextricably intertwined with consideration of the terms of the labor contract." (471 U.S. 202, 213, 85 L.Ed.2d 206, 216, 105 S.Ct. 1904, 1912.) After carefully examining Wisconsin case law, the court observed that the State-imposed tort duty and right asserted in the claim were actually derived from an implied covenant of good faith and fair dealing found in every contract executed in Wisconsin. The court concluded that "[b]ecause the right asserted not only derives from the contract, but is defined by the contractual obligation of good faith, any attempt to assess liability here inevitably will involve contract interpretation." (471 U.S. 202, 218, 85 L.Ed.2d 206, 219, 105 S.Ct. 1904, 1914-15.) The court thus held that section 301 preempted the derivative tort claim.

As an additional reason for finding preemption, the court noted that if section 301 did not preempt this type of derivative tort claim, the arbitration process would be emasculated since almost any wilful breach of contract can be brought as a tort action for breach of a good-faith duty under contract. To give a fair measure of ...


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