NO. 91-346
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
BARBARA FOSTER,
Plaintiff and Appellant,
ALBERTSONS, INC., a corporation doing business
under the laws of the State of Montana; and
BOB ENGLE and KEN BLACKBURN, as individuals,
Defendants and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Jeffrey Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Peter Michael Meloy argued, Meloy Law Office,
Helena, Montana
For Respondents:
Donald Robinson argued, Poore, Roth & Robinson,
Butte, Montana
William Sternhagen, Keller, Reynolds, Drake,
Sternhagen & Johnson, Helena, Montana
submitted: M ~ Y 2 8 ~
I992
Z!
C 3 2 ? ;A
CLERK D P SisPREi'ylC COURT
s iATE OF MUIUTANA
Justice Karla M. Gray delivered the Opinion of the Court.
This appeal arises from the District Court of the First
Judicial ~istrict,Lewis and Clark County. The appellant, Barbara
Foster, appeals that portion of the judgment entered in the case
which was adverse to her following a jury trial on claims she
brought against the respondents, Albertsons, Inc., Bob Engle and
Ken Blackburn, after she was discharged from employment. We affirm
in part, reverse in part and remand.
The appellant raises the following issues:
1. Did the District Court err in directing a verdict in favor
of the respondents on the appellant's breach of the implied
covenant of good faith and fair dealing and wrongful discharge
claims?
2. Did the District Court err in directing a verdict in favor
of the respondents on the appellant's intentional infliction of
emotional distress claim?
The appellant began working for Albertsons in Helena as a
grocery clerk in January 1984. She was employed under the terms of
a collective bargaining agreement between Albertsons and the United
Food and Commercial Workers International Union, The collective
bargaining agreement contained a Ifjust cause" provision for the
discharge of an employee.
The appellant testified that during the course of her
employment with Albertsons respondent Bob Engle, who was the
manager of the store, sexually harassed her. She testified that
Engle made lewd comments, solicited social contact and fondled her
2
while at work. She further testified that she consistently
rejected Englels advances and did her best to ignore his sexual
innuendos and comments. Engle denied sexually harassing the
appellant in any manner.
Testimony also reflected that in early March 1987, Engle and
respondent Ken Blackburn, the loss prevention manager at
Albertsons, began to suspect that the appellant was mishandling
company funds and failing to record certain customer purchases.
"Special shopperst* or "test shopperst1 were hired to pose as
impatient customers who would leave the correct change for their
purchase at the checkstand during another customer's transaction.
Company policy required that if an impatient customer left money,
the money was to be recorded as a separate sale immediately after
completing the other customer's transaction. The appellant was
aware of this procedure.
Engle and Blackburn were unable to locate purchases made by
the test shoppers on the cash register tapes from the appellant's
till. On March 16, 1987, Engle and Blackburn summoned the
appellant into the store office; during the time she was there her
employment was terminated. The appellant testified that she was
forced to remain in the office for more than two hours and that
Engle forced her back in her chair each time she sought to leave.
Engle and Blackburn each testified that the appellant was not
detained against her will and not physically pushed back in her
chair. While in the office, the appellant did write and sign a
statement admitting to dishonest behavior.
After her termination, the appellant filed a claim of sex
discrimination against Albertsons and Engle with the Montana Human
Rights Commission asserting that she had been sexually harassed by
Engle throughout the course of her employment with Albertsons.
After receiving a "right to suet1letter from the Human Rights
Commission, the appellant filed the present action in the District
Court on March 11, 1988. The appellant never sought to utilize the
grievance procedure under the collective bargaining agreement
covering her employment with Albertsons.
The appellant's complaint named Albertsons and Engle and
Blackburn, individually, as defendants. Although not artfully
drafted, her complaint appears to have sought recovery of damages
for the following claims:
Count I -- Breach of the implied covenant of good faith and
fair dealing;
Court I1 -- False imprisonment;
Count I11 -- Wrongful damage to her marriage;
Count IV -- Assault and battery;
Count V -- Negligent and intentional infliction of emotional
distress;
Count VI -- Defamation; and
Count VII -- Wrongful discharge.
The case was tried to a jury. Upon motion of the respondents,
the court directed a verdict in their favor on the defamation claim
on the grounds that there was no evidence that the defamatory
matter was "published." It also directed a verdict on the implied
covenant and wrongful discharge claims based on its conclusion that
the claims were preempted by federal labor law because the
appellant's employment with Albertsons was covered by a collective
bargaining agreement. On its own motion, the court directed a
verdict in favor of the respondents on the intentional infliction
of emotional distress claim based on its conclusion that the tort
was not recognized in Montana as a separate cause of action. It
also directed a verdict against the appellant on the wrongful
damage to marriage claim on the grounds that, while it might
constitute an element of damages, it could not be a separate count.
The case was submitted to the jury by way of a special verdict
form which stated as follows:
We, the jury in the above-entitled
matter, find the following special verdict in
this case:
Issue No. 1: Did the Defendants commit
an assault or battery against the Plaintiff?
Answer: Yes - No-
Issue No. 2 : Did the Defendants engage in
sex discrimination against the Plaintiff in
violation of the Constitution of the State of
Montana?
Answer: Yes - No -
Issue No. 3: Did the Defendants falsely
imprison the Plaintiff?
Answer: Yes - NO -
If you answered "non to Issues 1, 2, and
3, then proceed no further. Have your
foreperson sign this verdict and inform the
Bailiff that you have reached a verdict. If
you answered Issue Nos. 1, 2, and/or 3 "yes",
then answer the following:
Issue No. 4: [Tlhe amount of money
awarded to the Plaintiff for her losses is $
Issue No. 5: Did the Defendants act in a
wilful, wanton, reckless and malicious fashion
against the Plaintiff, justifying an award of
punitive damages?
Answer: Yes No
(Note: Eight of you must agree to your answer
to each issue).
In relation to Issue No. 2 of the special verdict form, the
jury was given an instruction which set forth in its entirety
Article 11, Section 4, of the Montana Constitution:
INSTRUCTION NO. 19
The dignity of the human being is inviolable. No
person shall be denied the equal protection of the laws.
Neither the state nor any person, firm[, ] corporation, or
institution shall discriminate against any person in the
exercise of his civil or political rights on account of
race, color, sex, culture, social origin or condition, or
political or religious ideas.
The jury found for the appellant on the assault and battery
and false imprisonment issues and for the respondents on the sex
discrimination issue. The jury also found that the respondents'
conduct toward the appellant justified an award of punitive
damages. It awarded the appellant $5,000 in general damages and,
in a separate post-trial proceeding, $5,000 in punitive damages.
The appellant's motion to increase the punitive damages award was
denied by the District Court. The appellant obtained new counsel
and appealed.
1.
Did the District Court err in directing a verdict in favor of
the respondents on the appellant's claims of breach of the implied
covenant of good faith and fair dealing and wrongful discharge?
The District Court directed a verdict against the appellant as
a matter of law on her claims of breach of the implied covenant of
good faith and fair dealing and wrongful discharge. It concluded
that the claims were preempted by 5 301 of the Labor Management
Relations Act of 1947 (LMRA), 61 Stat. 156, 29 U.S.C. 5 l8Ei(a),
because hex employment with Albertsons was covered by a collective
bargaining agreement. Our standard of review on appeal is whether
the District Court's interpretation of the law is correct. Steer,
Inc. v. Department of Revenue (1990), 245 Mont. 470, 803 P.2d 601.
Section 301 of the LMRA provides that:
Suits for violation of contracts between an employer
and a labor organization representing employees in an
industry affecting commerce as defined in this Act, or
between any such labor organizations, may be brought in
any district court of the United States having
jurisdiction of the parties, without respect to the
amount in controversy or without regard to the
citizenship of the parties.
The United States Supreme Court has interpreted 301 as a
congressional mandate to develop a unified federal common law to
address labor contract disputes. Textile Workers Union v. Lincoln
Mills (1957), 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972. In order
to ensure a uniform interpretation of labor contract terms, federal
labor law preempts, pursuant to § 301, any state-law claim which is
based on a collective bargaining agreement or is substantially
dependent on an interpretation of its terms. Allis-Chalmers Corp.
v. Lueck (1985), 471 U.S. 202, 220, 105 S.Ct. 1904, 1916, 85
The District Court's conclusion that the appellant's claims
were preempted by federal labor law was based on our decisions in
Brinkman v. State (1986), 224 Mont. 238, 729 P.2d 1301; Smith v.
Montana Power Co. (1987), 225 Mont. 166, 731 P.2d 924; and Fellows
v. Sears, Roebuck and Co. (1990), 244 Mont. 7, 795 P.2d 484. In
ruling on the question of preemption, the District Court stated:
The wrongful discharge action and the violation of
the covenant as it relates to losing the job, the cases
are pretty clear. I think the Brinkman and Montana Power
[Smith] case and Fellows case, that they're right. She
has to go through the collective bargaining agreement.
I don't have jurisdiction to even address those items
based on those cases, and the fact that they [the
respondents] filed a motion for summary judgment, and I
agree, it was untimely and thus denied, doesn't preclude
them from raising that on a motion for directed verdict.
So, in that regard, the motion is also granted.
Each of the cases relied on by the District Court considered the
preemptive effect of 5 301 on state-law claims where the employment
relationship was covered by a collective bargaining agreement.
Because Smith and Fellows were at least partially premised on our
decision in Brinkman, a focus on Brinkman is appropriate.
The plaintiff in Brinkman was a state employee whose
employment was covered by a collective bargaining agreement between
the State of Montana and the Montana Public Employees Association.
The plaintiff brought suit against the State alleging that he had
been wrongfully discharged in retaliation for his work-related
injury, thus violating public policy. He also alleged that he was
discharged in violation of an implied covenant of good faith and
fair dealing. The district court granted summary judgment against
the plaintiff, holding that he was barred from further proceedings
pursuant to g 301 because of his failure to exhaust contractual
remedies under the collective bargaining agreement.
Brinkman contended on appeal that under our holding in
Malquist v. Foley (1986), 220 Mont. 176, 714 P.2d 995, a state-law
claim for discharge in violation of public policy would not be
preempted by federal law. In Malauist, we cited approvingly from
Garibaldi v. Lucky Food Stores, Inc. (9th Cir. 1984), 726 F.2d
1367, which held that claims for wrongful discharge in violation of
public policy would not be preempted. Garibaldi involved an
employee who was discharged for reporting a shipment of adulterated
milk to health officials.
We agreed with the district court in Brinkman that the
plaintiff's claims were preempted by 5 301. We distinguished
Malauist, stating that it was inapplicable because the collective
bargaining agreement in Malauist did not cover the "conduct
complained of" (blacklisting). Brinkman, 224 Mont. at 245, 729
P.2d at 1306. We also distinguished Garibaldi, clarifying that in
that case the state-law claim furthered a state interest in
protecting the general public which transcended the employment
relationship. Brinkman, 224 Mont. at 247, 729 P.2d at 1308. We
concluded that Brinkman's claims did not involve a state interest
in protecting the general public which transcended the employment
relationship and that the state interest which did exist was
"completely and inexorably intertwinedw with the employment
relationship because the collective bargaining agreement protected
the plaintiff from discharge without just cause. Brinkman, 224
Mont. at 247-48, 729 P.2d at 1308.
The appellant asserts that Brinkman is no longer viable as a
standard for 5 301 preemption in light of the United States Supreme
Court's decision in Lingle v. Norge Division of Magic Chef, Inc.
(1988), 486 U.S. 399, 108 S.Ct. 1877, 100 L.Ed.2d 410. We agree.
In Linqle, the issue presented was whether an Illinois
employee covered by a collective bargaining agreement that provided
a remedy for discharge without just cause could enforce her state-
law remedy for retaliatory discharge for filing a workers'
compensation claim. After Lingle1s action was removed to federal
court on the basis of diversity jurisdiction, the federal district
court dismissed her state-law claim based on 5 301 preemption. It
concluded that the retaliatory discharge claim was "inextricably
intertwined" with the provision in the collective bargaining
agreement which prohibited discharge without just cause. Linsle,
486 U.S. at 402. The Seventh Circuit Court of Appeals agreed that
the state-law claim was preempted by 5 301, concluding that the
disposition of the retaliatory discharge claim involved the same
factual analysis as the contractual determination under the
collective bargaining agreement of whether Lingle was discharged
for just cause. Linale, 486 U.S. at 402.
The Supreme Court reversed the Court of Appeals' decision,
stating:
We agree with the court's explanation that the state-law
analysis might well involve attention to the same factual
considerations as the contractual determination of
whether Lingle was fired for just cause. But we disagree
with the court's conclusion that such parallelism renders
the state-law analysis dependent upon the contractual
analysis. . . .
5 301 pre-emption merely ensures that
federal law will be the basis for interpreting
collective-bargaining agreements, and says nothing about
the substantive rights a State may provide to workers
when adjudication of those rights does not depend upon
the interpretation of such agreements.
Linale, 486 U.S. at 408-09.
The Supreme Court noted that to prove retaliatory discharge
under Illinois law Lingle had to show (1) that she was discharged,
and (2) that the employer's motive in discharging her was to deter
her from exercising her rights under the state workers1
compensation laws or to interfere with her exercise of those
rights. Linqle, 486 U.S. at 407. It held that the claim was not
preempted by § 301, concluding:
Each of these purely factual questions pertains to the
conduct of the employee and the conduct and motivation of
the employer. Neither of the elements requires a court
to interpret any term of a collective-bargaining
agreement. To defend against a retaliatory discharge
claim, an employer must show that it had a nonretaliatory
reason forthe discharge, [citation omitted]; this purely
factual inquiry likewise does not turn on the meaning of
any provision of a collective-bargaining agreement.
Thus, the state-law remedy in this case is "independent"
of the collective-bargaining agreement in the sense of
"independentf1that matters for S301 pre-emption purposes:
resolution of the state-law claim does not require
construing the collective-bargaining agreement.
Linale, 486 U.S. at 407.
Finally, the Supreme Court noted in Linqle that there was
nothing novel in its recognition in that case that substantive
rights in a labor relations context can exist without the necessity
of interpreting collective bargaining agreements. Linqle, 486 U.S.
at 411. Discussing antidiscrimination laws in particular, the
Supreme Court stated that:
The operation of the antidiscrimination laws does,
however, illustrate the relevant point for S301 pre-
emption analysis that the mere fact that a broad
contractual protection against discriminatory--or
retaliatory--discharge may provide a remedy for conduct
that coincidentally violates state law does not make the
existence ... of the state-law violation dependent upon
the terms of the private contract.
Linqle, 486 U.S. at 412-13.
Linsle holds that a state-law claim is preempted by S 301 only
where its resolution requires construing the collective bargaining
agreement. This is true even if the state-law analysis involves
the same factual considerations as the contractual determination
under the collective bargaining agreement of whether the employee
was discharged for just cause. Thus, our decision in Brinkman is
overruled to the extent that it holds that a state-law claim is
preempted merely because resolution of such a claim requires the
same analysis of the facts as the contractual determination of just
cause under the collective bargaining agreement.
We now address the appellant's state-law claims of breach of
the implied covenant of good faith and fair dealing and wrongful
discharge in light of the Supreme Court's preemption analysis in
Linale. The appellant's implied covenant claim comprised Count I
of her complaint. In this count, the appellant listed specific
allegations of misconduct on the part of the respondents which
formed the bases of her claim. These included allegations that
Engle sexually harassed her throughout her period of employment
with Albertsons and discriminated against her on the basis of sex
in violation of the Montana Constitution.
The District Court correctly concluded that the appellant's
12
breach of the implied covenant of good faith and fair dealing claim
was preempted by § 301. Any implied covenant of good faith and
fair dealing in the employment context arises from the underlying
contract of employment which, here, is the collective bargaining
agreement. Collective bargaining agreements must be interpreted by
application of federal law, not state law. Teamsters Union v.
Lucas Flour Co. (l962), 369 U.S. 95, 102, 82 S.Ct. 571, 576, 7
L.Ed.2d 593, 598. Because an implied covenant arises from or is
implied in the collective bargaining agreement, questions involving
the existence and breach of an implied covenant necessarily require
placing the terms of the collective bargaining agreement in issue.
Thus, the implied covenant claim is preempted by federal law
pursuant to 5 301. See Paige v. Henry J. Kaiser Co. (9th Cir.
1987), 826 F.2d 857, a.
denied, 486 U.S. 1054, 108 S.Ct. 2819,
100 L.Ed.2d 921 (1988). We hold that the District Court did not
err in directing a verdict in favor of the respondents on the
appellant's breach of the implied covenant claim.
The appellant's wrongful discharge claim comprised Count
VII of her complaint. In this count, the appellant incorporated by
reference the specific allegations of Count I, including those of
sexual harassment and sex discrimination. The appellant asserted
that she was discharged in retaliation for resisting Englels
alleged sexual harassment activities.
Montana has recognized a common law cause of action for
retaliatory discharge related to sexual harassment. Specifically,
we recognized a cause of action for discharge from employment that
violates public policy. Drinkwalter v. Shipton Supply Co. (19871,
225 Mont. 380, 732 P.2d 1335; Dare v. Montana Petroleum Marketing
Co. (l984), 212 Mont. 274, 687 P.2d 1015. Sexual harassment is
against public policy. Drinkwalter, 225 Mont. at 384, 732 P.2d at
1338 (citing Holien v. Sears, Roebuck and Co. (Or. 1984), 689 P.2d
1292 and Chamberlin v. 101 Realty, Inc. ( D . N . H . 1985), 626 F.Supp.
865).
To prove retaliatory discharge, the appellant would have to
show that (1) she was discharged, (2) she was subjected to sexual
harassment during the course of employment, and (3) her employer's
motivation in discharging her was to retaliate for her resistance
to those sexual harassment activities. Holien, 689 P.2d at 1300.
As in Linsle, each of these purely factual questions, including the
respondents' defense against the claim, pertains to the conduct of
the appellant and the conduct and motivation of the respondents.
While the factual inquiry may parallel that of the contractual
determination of just cause, it does not turn on the meaning of any
term of the collective bargaining agreement. Thus, the appellantls
wrongful discharge claim is independent of the collective
bargaining agreement for purposes of 5 301 preemption. Conse-
quently, the District Court incorrectly concluded that the
appellant's wrongful discharge claim was preempted by 5 301.
The respondents assert that Linsle is distinguishable from the
present case because in Linqle the plaintiff's complaint was
dismissed in its entirety by the federal district court. They
assert that in this case the appellant was given the opportunity to
present and litigate" her rlsexual i s c r i m i n a t i o n / h a r a ~ s m e n t ~ ~
llfully d
claim by way of Issue N o . 2 of t h e special v e r d i c t f o r m and that
the jury rejected her allegations of harassment. As a result, the
respondents argue that allowing the appellant to litigate her
wrongful discharge claim, which is based on allegations of sexual
harassment already rejected by the jury, impermissibly gives her a
"second bite of the apple."
Based on the record before us, we conclude that the appellant
was not given the opportunity to fully present her claim to the
jury. The appellant did not bring a sexual harassment claim
against the respondents as a separate cause of action. Rather, her
specific allegations of sexual harassment formed the basis of her
retaliatory discharge claim. The jury instruction proposed by the
appellant which would have attempted to tie the harassment
testimony directly to one of the pleaded counts--wrongful
discharge--was not given; indeed, it could not have been given once
the District Court directed a verdict on the wrongful discharge
claim.
Instead, the special verdict form submitted to the jury, which
appears to have been based on one offered by the respondents, asked
the jury whether the respondents engaged in sex discrimination
against the appellant in violation of the Montana Constitution.
Jury Instruction No. 19 set forth Article IT, Section 4, of the
Montana Constitution and stated in part that ll[n]either the state
nor any person, firm[,] corporation, or institution shall
discriminate against any person in the exercise of his civil or
political rights on account of race, color, sex, culture, social
origin or condition, or political or religious ideas." The jury
found that the respondents did not engage in sex discrimination
against the appellant in violation of the constitution.
It is clear that the appellant testified extensively at trial
regarding Engle's acts of sexual harassment, including allegations
that Engle made sexual comments and advances to her and fondled her
while she was at work. It is also clear that the jury was given
the language of Article 11, Section 4, of the Montana Constitution
and was asked to determine whether the appellant was subjected to
sex discrimination by the respondents. From the record before us,
however, we are not assured that the jury was provided with the
appropriate framework in which to tie, in any meaningful way, the
appellant's testimony to the constitutional language provided in
Instruction No. 19. Given the language of the special verdict form
and Instruction No. 19, we cannot conclude that the jury rejected
the appellant's specific allegations of ongoing sexual harassment
when it determined that the respondents did not engage in sex
discrimination in violation of the constitution. We hold that the
District Court erred in directing a verdict in favor of the
respondents on the appellant's wrongful discharge claim.
11.
Did the District Court err in directing a verdict in favor of
the respondents on the appellant's intentional infliction of
emotional distress claim?
The District Court, on its own motion, directed a verdict in
favor of the respondents on the appellant's intentional infliction
of emotional distress claim. The directed verdict was entered as
a matter of law based on the trial court's conclusion that this
Court has not recognized the tort of intentional infliction of
emotional distress as a separate cause of action. We conclude that
the District Court erred in directing a verdict on this claim.
In Doohan v. Bigfork School Dist. No. 38 (lggl), 247 Mont.
125, 805 P.2d 1354, we stated that we have not rejected the
validity of the tort of intentional infliction of emotional
distress as a separate cause of action. Rather, we simply have not
addressed a factual situation that would give rise to liability for
the tort under the "extreme and outrageous conduct" standard set
forth in 5 46 of the Restatement (Second) of Torts. Doohan, 247
Mont. at 138, 805 P.2d at 1362. Comment "d" to 5 46 explains that
the nature of the conduct which gives rise to liability for the
tort is extreme and outrageous conduct going "beyond all possible
bounds of decency, and to be regarded as atrocious, and utterly
intolerable in a civilized community." We further stated in Doohan
that whether a plaintiff has introduced sufficient evidence to
support a prima facie case for intentional infliction of emotional
distress which would survive a motion for a directed verdict is a
question of law. Doohan, 247 Mont. at 142, 805 P.2d at 1365.
In light of Doohan, it is clear that the District Court erred
in concluding that the appellant's intentional infliction of
emotional distress claim was subject to a directed verdict solely
on the basis that it was brought as a separate cause of action.
The parties had no opportunity to argue whether, under the legal
standard set forth in Daohan, the evidence established the
threshold level of conduct necessary to survive a motion for a
directed verdict. We conclude that it is necessary to remand for
such further proceedings on the intentional infliction of emotional
distress claim as may be appropriate based on the evidence
presented at a new trial in this cause.
Affirmed in part, reversed in part and remanded for further
proceedings consistent with this opinion.
We concur:
..-
July 27, 1992
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
Peter Michael Meloy
Meloy Law Office
80 S. Warren
P.O. Box 1241
Helena, MT 59624
Donald Robinson
Attorney at Law
1341 Harrison Avenue
P.O. Box 3328
Butte, MT 59701
William G. Sternhagen
Keller, Reynolds, Drake, et al.
38 South Last Chance Gulch
Helena, MT 59601
Dennis G. Loveless
Attorney at Law
P.O. Box 225
Helena, MT 59624-0225
ED SMITH
CLERK O F THE SUPREME COURT
STATROF MONTANA