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LOEWEN GROUP INTL. v. HABERICHTER

August 22, 1994

LOEWEN GROUP INTERNATIONAL, INC., Plaintiff,
v.
WILLIAM J. HABERICHTER, Defendant.



The opinion of the court was delivered by: MARVIN E. ASPEN

 MARVIN E. ASPEN, District Judge:

 Among other things, plaintiff Loewen Group International, Inc. ("Loewen") owns and operates funeral homes and cemeteries. Loewen is currently suing defendant William J. Haberichter ("Haberichter") for breaching an employment agreement that included a covenant not to compete. Presently before us is Haberichter's converted motion for summary judgment. *fn1" For the following reasons, we grant the motion.

 I. Factual Background

 In 1992, Loewen, a Delaware corporation, acquired the funeral home business of Donovan and Schaer Funeral Homes, P.C. ("D & S"). At the time of the purchase, Haberichter was an assistant manager at D & S's Arlington Heights' location. *fn2" According to Loewen, D & S, like most funeral home businesses, relies heavily on the goodwill and local contacts of its employees within the community in which it operates. Consequently, it is not unusual for buyers to include, as a condition of sale, that certain key employees of the seller remain with the business for at least a transitional period. Similarly, sellers generally agree not to compete with their former business, either directly or indirectly, within a reasonable radius and for a reasonable period of time.

 In the Asset Purchase Agreement signed by Loewen and D & S, D & S agreed not to participate in a competing business within 50 miles of either the Arlington Heights or Des Plaines facility. Furthermore, in addition to providing that each of D & S's principals *fn3" would enter into similar covenants not to compete, the Agreement required Loewen to enter into individual employment contracts with, among others, Haberichter. If Haberichter did not wish to be bound by such an agreement, he could decline. However, if he chose to avail himself of an employment agreement, the Agreement stipulated that the employment contract would contain a covenant not to compete. Cmplt., Exh. B at PP 12 & 13.

 In February, 1992, Haberichter and Loewen signed an individual employment contract under which Haberichter was to work for Loewen for at least five years at an annual salary of $ 52,000 and was to refrain from competing with Loewen within a ten mile radius of the facility for a period of at least ten years. As separate consideration for this covenant, Haberichter received $ 75,000. Cmplt., Exh. C. at P 12(b).

 According to Loewen, barely had the ink dried on the employment agreement before Haberichter began making plans to set up a competing funeral home. Haberichter allegedly compiled records and information regarding families D & S had served in Arlington Heights, prepared a business plan and financial projections for his potential facility, and began getting the financing and permits necessary to launch a funeral home. Finally, in November, 1993, Haberichter told Loewen that he was planning to open a competing funeral home in April, 1994, and that he had been working on the project for several months. *fn4" At the same time, Haberichter tendered his resignation, seeking to obtain severance benefits pursuant to his employment agreement. Loewen did not permit Haberichter to "resign," but has sued its former employee for breach of the employment agreement (Count I), breach of the covenant not to compete (Count II), breach of fiduciary duty (Count III), and for injunctive relief (Count IV).

 II. Discussion

 As discussed above, we converted Haberichter's motion to a motion for summary judgment in order to address legal issues stemming from Haberichter's union status. Although Loewen was given an opportunity to challenge Haberichter's union membership, it proffered no evidence suggesting that the defendant, in fact, was not a member of the Funeral Directors and Embalmers Union Local No. 727. Accordingly, we proceed to address the merits of Haberichter's motion.

 A. Preemption of Counts I, II and III by § 301 of the Labor Management Relations Act

 Section 301 of the LMRA, 29 U.S.C. § 185(a), confers jurisdiction on federal courts over disputes involving violations of collective bargaining agreements. In an effort to ensure uniformity of adjudication, the Supreme Court has ruled that "if the resolution of a state-law claim depends upon the meaning of a collective-bargaining agreement," the state-law claim is preempted. Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 108 S. Ct. 1877, 1885, 100 L. Ed. 2d 410 (1988). See also Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S. Ct. 1904, 85 L. Ed. 2d 206 (1985). However, the Court emphasized that "an application of state law is pre-empted by § 301 of the [LMRA] only if such application requires the interpretation of a collective bargaining agreement." Accordingly, in ruling on state law claims, a court may look at the same facts that would govern the outcome of a contract claim, but the claim will only be preempted if the court is called upon to interpret a term of a collective bargaining agreement. See Pantoja v. Texas Gas and Transmission Corp., 890 F.2d 955, 959 at n.1 (7th Cir. 1989) (court held that § 301 did not preempt retaliatory discharge claim where complaint frequently referred to collective bargaining agreement, but did not require interpretation of any terms).

 Here, the parties disagree about whether resolution of Counts I (breach of the employment contract), II (breach of the covenant not to compete), and III (breach of fiduciary duty) will require this Court to interpret the collective bargaining agreement. Because Loewen is suing Haberichter based on an independent employment contract, rather than on the collective bargaining agreement itself, Loewen maintains that Counts I, II, and III do not, and logically will not, require any interpretation of the collective bargaining agreement. Haberichter, on the other hand, contends that the collective bargaining agreement is inescapably implicated here, because the employment agreement contains terms that conflict with the collective bargaining agreement, imposing on Haberichter terms that are more onerous than those contained in the union agreement.

 Both positions have merit. There is no question that a plaintiff may pursue state law claims in connection with an individual employment contract, despite the fact that the relationship is also covered by a collective bargaining agreement, as long as the complaint is not "substantially dependent" upon interpretation of the collective bargaining agreement. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 394-95, 107 S. Ct. 2425, 2430-31, 96 L. Ed. 2d 318 (1987) ("As the Court has stated, 'it would be inconsistent with congressional intent under [§ 301] to pre-empt state rules that proscribe conduct, or establish rights and obligations, independent of a labor contract.'") (quoting Allis-Chalmers Corp., 471 U.S. at 212, 105 S. Ct. at 1912)). See also Lingle, 486 U.S. at 409-10, 108 S. Ct. at 1883 ("If dispute resolution pursuant to a collective bargaining agreement, on the one hand, and state law, on the ...


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