RICHARD ANTHONY, ET AL.
VERIZON VIRGINIA, INC., ET AL
As Corrected July 15, 2014.
FROM THE CIRCUIT COURT OF THE CITY OF PORTSMOUTH. James A. Cales, Jr., Judge.
James D. Hundley (D. Brooks Hundley; William C. Sandel, III; Hundley & Johnson, on briefs), for appellants.
Patricia A. Dunn (William M. Furr; Jones Day; Willcox & Savage, on brief), for appellee Verizon Virginia Inc.
Katherine A. Roe (SuAnne Hardee Bryant; Davis Law Group, on brief), for appellee Communications Workers of America, AFL-CIO, District 2.
Present: Kinser, C.J., Lemons, Millette, Mims, McClanahan, and Powell, JJ., and Russell, S.J. OPINION BY JUSTICE DONALD W. LEMONS. JUSTICE McCLANAHAN, concurring in part and dissenting in part. JUSTICE POWELL, concurring in part and dissenting in part.
DONALD W. LEMONS, JUSTICE.
In this appeal, we consider whether the Circuit Court of the City of Portsmouth (" circuit court" ) erred by holding that the plaintiffs' state law claims were completely preempted by § 301(a) of the Labor Management Relations Act of 1947 (" LMRA" ), 29 U.S.C. § 185(a), and by granting the demurrers filed by Verizon Virginia, Inc. (" Verizon" ) and the Communication Workers of America, AFL-CIO District 2 (the " CWA" ).
I. Allegations in the Complaint and Proceedings
Richard Anthony, Michael Giles, Jeremy Autry, George Cummings, James Hodge, William Murden, Jeffrey Reynolds, Pharoah Mosby, Christopher Lee, and Ricky Rosser (collectively, " employees" ) are technicians formerly employed by Verizon. Each was a member of the CWA.
In May 2010, the employees allegedly received an Enhanced Income Security Plan (" EISP" ) which stated that Verizon had a surplus of 12,000 employees and potentially would conduct a layoff. Originally, the employees were told their jobs were not in jeopardy given their seniority. However, on June 15, 2010, the employees were told by the CWA and Verizon (collectively, " defendants" ) that their jobs were subject to termination in August 2010; and if they did not accept the EISP and voluntarily resign, they would not receive any enhanced severance benefits. Given this information, each of the employees accepted the EISP and their employment with Verizon was terminated on July 3, 2010.
According to the complaints, the Virginia Employment Commission conducted a hearing shortly after the employees accepted the EISPs. In the hearing, Verizon allegedly claimed there was not a surplus, the employees' jobs were never in jeopardy, and the employees voluntarily resigned. Additionally, Verizon allegedly advertised a shortage of 200 technicians in the employees' region shortly after representing to the employees that there was a surplus.
On October 7, 2011, Richard Anthony filed a complaint in the circuit court alleging actual and constructive fraud against Verizon and constructive fraud against the CWA:
The defendants, CWA and Verizon, negligently misrepresented material facts with the intent that plaintiff would rely upon such representations.
The plaintiff relied upon the aforementioned negligent misrepresentations made by the defendants to his detriment and sustained substantial damages.
The defendant, Verizon, misrepresented material facts, knowingly and intentionally, with the intent to mislead plaintiff, and plaintiff relied upon such misrepresentations to his detriment causing him to sustain substantial financial losses and damages.
Anthony alleges that he and similarly situated employees were " misled . . . in order to obtain their signatures to the [Enhanced Income Security Plan], thereby removing those workers with more seniority, higher salaries and more fringe benefits from [the] payroll." Michael Giles, Jeremy Autry, and George Cummings filed virtually identical complaints on October 10, 2011. James Hodge, William Murden, Jeffrey Reynolds, Pharoah Mosby, and Christopher Lee filed similar complaints on October 13, 2011. Finally, on October 14, 2011, Ricky Rosser filed his complaint alleging actual and constructive fraud and negligent infliction of emotional distress.
After the employees filed their complaints in circuit court, the defendants filed notices of removal to the United States District Court for the Eastern District of Virginia (" federal district court" ), arguing that the employees' state-law claims were completely preempted by § 301 of the LMRA. The notices of removal stated that " [b]ecause each of these claims will require a reviewing court to interpret the parties' collective bargaining agreements, and because each is inextricably intertwined with the terms of those agreements, this action falls squarely within the ambit of Section 301 of the LMRA." The defendants also filed motions in the district court under Rule 12(b)(6) of the Federal Rules of Civil Procedure seeking to dismiss each of the employees' claims. In response, the employees filed motions to remand to state court.
Based on these filings, the federal district court entered an order on July 2, 2012, denying the defendants' motions to dismiss and granting the employees' motions to remand. The federal district court held:
Defendants argue that Plaintiff[s] must refer to the collective bargaining agreement in two ways: First, the collective bargaining agreement is relevant to determining whether Plaintiff[s] [were] really at risk of being terminated. Second, Plaintiff[s] will have to show that [their] fear of termination was reasonable despite any protections that [they] had under the collective bargaining agreement.
Defendants' first argument is unpersuasive. Even if the collective bargaining agreement reinforces Plaintiffs' claim[s] that [they were] not actually at risk of termination, Plaintiff[s] do not rely on the agreement, but instead rel[y] on Verizon's hiring practices in late 2010 to show that [they] [were] in no danger of being fired, and that Defendants' representations to the contrary were false.
Defendants' second argument also fails. Plaintiff[s] do not contend that Defendants failed to warn [them] of something for which they were duty-bound to warn.
Williams v. Nat'l Football League, 582 F.3d 863, 881 & n.14 (8th Cir. 2009). Nor do [they] assert that Defendants made false factual allegations that were tailored to satisfy the collective bargaining agreement.
Augustin v. SecTek, Inc., 807 F.Supp.2d 519, 525 (E.D. Va. 2011).
Instead, Plaintiff[s] claim that [they] relied on an affirmative statement that Verizon intended to do something (terminate [them]), which was possibly prohibited by the collective bargaining agreement. Regardless of whether the collective bargaining agreement prohibited Verizon from firing Plaintiff[s], [their] reliance on statements, made by both [their] union and employer, that Verizon was likely to fire [them] in violation of the collective bargaining agreement was reasonable.
When the case was remanded to circuit court, Verizon and the CWA filed demurrers to each of the complaints, arguing the state-law claims were completely preempted by § 301 of the LMRA. Although the federal district court had previously decided that the employees' state-law claims were not completely preempted and there was no federal jurisdiction, the circuit court considered the defendants' complete preemption argument. The circuit court consolidated these cases and, following a hearing, it issued a letter opinion on December 27, 2012, holding:
Plaintiffs' claims do in fact require the interpretation of the collective bargaining agreement (CBA) between Verizon and the Union representatives. Specifically, the Plaintiff[s] allege that Verizon determined it had a " surplus" of employees which prompted the issuance of a severance package to the defendants. It was this surplus that then triggered the alleged misrepresentations to the Plaintiffs. The Complaint goes on to state that Verizon then went before the State Corporation Commission and stated that they did not have a surplus in regards to the Plaintiffs' jobs. Were this case to continue these facts would be hotly litigated and the term surplus would supply the heat.
Unfortunately, for the Plaintiffs such a surplus is provided for in the CBA. Such an event, in this context, carries with it duties and responsibilities for Verizon and the Union . . . . The acts that were undertaken by the Defendants will be at issue and those acts are governed by the CBA. Therefore, allegations such as are before this Court, would require this judicial body to inquire as to what actions were taken and why, which would cast our net of inquiry squarely over the CBA. This is flatly forbidden under superseding federal law.
On March 26, 2013, following a rehearing, the circuit court granted the defendants' demurrers on the ground of complete preemption, and dismissed the cases with prejudice. The employees filed timely notices of appeal and we granted an appeal based on their single assignment of error:
The circuit court erred in dismissing the Appellants['] Complaint on the basis that section 301 of the Labor Management Relations Act (" LMRA" ), 29 U.S.C. § 185, preempts the Appellants['] claims.
A. Standard of Review
Whether the employees' state law claims for actual and constructive fraud and negligent infliction of emotional distress are completely preempted by § 301 of the LMRA is a question of federal law reviewed de novo.
See Maretta v. Hillman, 283 Va. 34, 40, 722 S.E.2d 32, 34 (2012). Whether a state claim is completely preempted by federal law is a question of congressional intent: " The purpose of Congress is the ultimate touchstone."
Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 55 L.Ed.2d 443 (1978). " While the nature of the state tort is a matter of state law, the question whether the . . . tort is sufficiently independent of federal contract interpretation to avoid pre-emption is, of course, a question of federal law."
Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 213-14, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985).
" At the demurrer stage, it is not the function of the trial court to decide the merits of the allegations set forth in a complaint, but only to determine whether the factual allegations pled and the reasonable inferences drawn therefrom are sufficient to state a cause of action." Friends of the
Rappahannock v. Caroline Cnty. Board of Supervisors, 286 Va. 38, 44, 743 S.E.2d 132, 135 (2013) (citing
Riverview Farm Assocs. Va. Gen. P'ship v. Board of Supervisors of Charles County, 259 Va. 419, 427, 528 S.E.2d 99, 103 (2000)). On appeal, we accept as true " all facts properly pled, as well as reasonable inferences from those facts."
Steward v. Holland Family Props., LLC, 284 Va. 282, 286, 726 S.E.2d 251, 253 (2012).
B. Complete Preemption