Michael Ramsey v. Laborers Local 1191

HENRY v LABORERS’ LOCAL 1191 RAMSEY v LABORERS’ LOCAL 1191 Docket Nos. 145631 and 145632. Argued October 8, 2013 (Calendar No. 2). Decided May 5, 2014. Anthony Henry and Keith White brought an action in the Wayne Circuit Court against Laborers’ Local 1191 (a labor union that represents construction workers), Michael Aaron (the union’s business manager), and Bruce Ruedisueli (the union’s president), alleging that their indefinite layoff from employment at the union was unlawful retaliation under the Whistleblowers’ Protection Act (WPA), MCL 15.361 et seq. Henry and White had worked as business agents for the union until their terminations. They alleged that defendants asked several union members to repair the fagade of the Trade Union Leadership Council building. The union recorded payments for the work as picket duty even though the members did not engage in picket duty on those days. Henry and White believed that Aaron was involved in criminal activity, including fraud, an illegal kickback scheme, and misappropriation of union funds. They also believed that the union had required members to work without proper safety precautions and without receiving union wages. Henry circulated an unsigned open letter to the union’s leadership and distributed it to the union’s membership, the union’s parent leadership, and local news outlets. The letter asked why the union was paying members out of its picket fund to work on a for-profit establishment and suggested that Aaron had received illegal kickbacks from the council in exchange for providing the council free construction labor. Henry and White subsequently contacted the United States Department of Labor with their suspicions and informed the union of their decision to report the allegations. The Department of Labor investigated the allegations and interviewed several union employees and officials. It referred the matter to an assistant United States attorney, who declined to intervene. Aaron later notified Henry and White that they had been indefinitely laid off from employment at the union. During the pendency of Henry and White’s action, Michael Dowdy and Glenn Ramsey (also business agents for the union) were terminated from their employment. Dowdy and Ramsey filed a separate WPA action in the Wayne Circuit Court against the union, Aaron, and Ruedisueli, claiming that they had been terminated for their cooperation in the Department of Labor’s investigation and disclosing to investigators facts substantiating the allegations of criminal misconduct. Defendants moved for summary disposition in the Henry/White lawsuit and for partial summary disposition in the Dowdy/Ramsey lawsuit, alleging that the Labor-Management Reporting and Disclosure Act (LMRDA), 29 USC 401 et seq., preempted plaintiffs’ WPA claims and that, as a result, the court lacked subject-matter jurisdiction to hear them. The court, Jeanne Stempien, J., denied both motions, concluding that the WPA’s protection of an employee against an employer’s retaliatory employment actions does not contravene the LMRDA because the LMRDA only protects from retaliation the rights afforded union members. Defendants appealed in each case, reasserting their claim of LMRDA preemption and raising the new defense that the National Labor Relations Act (NLRA), 29 USC 151 et seq., independently preempted the circuit court from exercising subject-matter jurisdiction. The Court of Appeals, Ronayne Krause, RJ., and Saad and Wilder, JJ., consolidated the appeals and affirmed in an unpublished opinion per curiam, issued July 3, 2012 (Docket Nos. 302373 and 302710), agreeing that plaintiffs had not alleged any infringement of their membership rights and that, as a result, the LMRDA’s protections did not cover their claims. The panel also held that the WPA did not undermine the LMRDA’s purpose of giving elected union officials the discretion to implement policies that reflect the wishes of union membership because claims of wrongful discharge for refusing to commit or aid in committing a crime did not infringe the union leaders’ discretion Finally, the panel held that the NLRA did not preempt plaintiffs’ claims because a claim for retaliatory discharge arising out of an employee’s report of suspected illegal activity or participation in an investigation of it is only of peripheral concern to the NLRA’s purpose of protecting employees’ rights to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection. The Supreme Court granted defendants’ applications for leave to appeal. 493 Mich 934 (2013). In an opinion by Justice Kelly, joined by Chief Justice Young and Justices Cavanagh, Markman, McCormack, and Viviano, the Supreme Court held: Neither the National Labor Relations Act nor the Labor-Management Reporting and Disclosure Act preempts Whistleblowers’ Protection Act claims premised on retaliation for reporting suspected criminal misconduct, and state courts have subject-matter jurisdiction over those claims. 1. Preemption is fundamentally a question of congressional intent. Congress can preempt state law either explicitly or implicitly. In the absence of explicit statutory language, state law is preempted when it regulates conduct in a field that Congress intended the federal government to occupy exclusively or when it actually conflicts with federal law. There is no single formula to apply preemption principles in all contexts. Rather, a court must examine congressional intent to preempt state law in the specific context of the statute or statutes at issue, in this case how the WPA operates against the background of the NLRA and the LMRDA. 2. With respect to the NLRA, § 7 of that act, 29 USC 157, states that employees have the rights to self-organization; form, join, or assist labor organizations; bargain collectively through representatives of their own choosing; and engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. Section 8(a)(1), 29 USC 158(a)(1), states that it is an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed by § 7. The NLRA both creates federal rules regarding labor relations and delegates enforcement of that policy to an administrative agency, the National Labor Relations Board (NLRB). When am activity is arguably subject to § 7 or § 8 of the act, the states and the federal courts must defer to the exclusive competence of the NLRB to avert the danger of state interference with national policy. “Arguably subject” means that the party asserting preemption must advance an interpretation of the act that is not plainly contrary to its language and has not been authoritatively rejected by the courts or the board. There are two related exceptions to preemption of state law regulations that are arguably subject to § 7 or § 8. The first is when the activity regulated is merely a peripheral concern of the NLRA. The second is when the regulated conduct touches interests so deeply rooted in local feeling and responsibility that in the absence of compelling congressional direction, a court could not infer that Congress had deprived the states of the power to act. Courts must consider whether there exists a significant state interest in protecting the citizen from the challenged conduct and whether the exercise of state jurisdiction over the state claim entails little risk of interference with the regulatory jurisdiction of the NLRB. When the conduct at issue in the state litigation is arguably prohibited by the NLRA and thus within the exclusive jurisdiction of the NLRB, the critical inquiry in determining whether an exception applies is whether the controversy presented to the state court is identical with that which could he presented to the board. When it is identical, states cannot subject violators to a supplemental sanction for violations of the NLRA. 3. With respect to the LMRDA, 29 USC 411(a)(2) protects union members’ freedom of expression and assembly by giving every member the right to meet and assemble freely with other members; express any views, arguments, or opinions; and express at meetings the member’s views on any business properly before the meeting. It also gives union members procedural protections against discipline by the union. When a plaintiff has dual status as both an employee and a member of the union, the LMRDA only provides protection from discipline in the member’s capacity as a member, not in his or her capacity as an employee. This limitation ensures the freedom of elected union leaders to choose staff whose views are compatible with their own, which is an integral part of the LMRDA’s purpose of ensuring a union administration’s responsiveness to the mandate of a union election. Because conduct protected under the LMRDA does not extend to a union member’s rights as an employee, a state-law retaliation claim brought by a union employee as an employee is preempted to the extent that it conflicts with the LMRDA’s purposes. Likewise, the LMRDA preempts state law that would unduly limit the discretion of union officials to select their employees. As a result, when a union employee brings a state-law retaliation claim as an employee, a court must analyze whether the claim conflicts with the LMRDA’s purpose and goal of protecting democratic processes in union leadership. A state-law retaliation claim is not preempted when it does not conflict with the purposes of the LMRDA. The discretion the LMRDA affords unions to choose their employees is not limitless. The act does not preempt state wrongful-termination claims in cases in which elected union officials attempt to use their discretion as a shield to hide alleged criminal misconduct. Any other conclusion would undermine the explicit purpose of the LMRDA to eliminate or prevent improper practices on the part of labor organizations, employers, labor-relations consultants, and their officers and representatives. In fact, protecting union employees from retaliation when they raise claims of criminal wrongdoing helps to protect the interests of rank-and-file union members and safeguard union democracy and, as a result, achieve the purposes of the LMRDA. 4. The WPA specifically regulates an employer’s retaliation against employees who report a violation or suspected violation of law. MCL 15.362 provides that an employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee’s compensation, terms, conditions, location, or privileges of employment because the employee reports or is about to report a violation or a suspected violation of a law or regulation or rule to a public body or because an employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body or a court action. 5. When assessing claims of NLRA preemption, it is the conduct being regulated, not the formal description of governing legal standards, that is the proper focus. The specific conduct plaintiffs alleged in their WPA claims is that defendants unlawfully retaliated against them for reporting suspected wrongdoing to the Department of Labor. Plaintiffs’ allegations of wrongdoing fell into two general categories: (1) improper working conditions (that workers were paid unfairly and were not provided with necessary safety precautions) and (2) criminality (that defendants were engaged in fraud, embezzlement, and misuse of union funds). Basic to the right guaranteed to employees in § 7 of the NLRA to form, join or assist labor organizations is the right to engage in concerted activities to persuade other employees to join for their mutual aid and protection. The mutual-aid-or-protection clause in § 7 protects employees from retaliation by their employers when they seek to improve working conditions through resort to administrative and judicial forums, among other activities intended to improve working conditions. Similarly, the relevant inquiry when examining whether activity is concerted is whether the employee acted with the purpose of furthering group goals. 6. The NLRA preempted plaintiffs’ WPA claims related to improper working conditions. Plaintiffs unquestionably acted with the purpose of furthering group goals when they disputed the working conditions for union members. Their claims of unfair wages and an unsafe work environment were prototypical issues of dispute under the NLRA. Therefore, plaintiffs’ conduct to improve unfair wages and an unsafe work environment was arguably protected under § 7 of the NLRA, and § 8 specifically prohibited defendants from retaliating against plaintiffs for engaging in conduct protected under § 7. Neither of the two exceptions to NLRA preemption applied to plaintiffs’ concerted activity regarding working conditions because those conditions are of central, not peripheral, concern to the NLRA’s purposes. Because this protection has been central to the NLRA’s purposes for nearly 80 years, the more recent attempt of the WPA to regulate retaliation for an alleged unfair labor practice does not touch interests so deeply rooted in local feeling and responsibility that a court could not infer that Congress intended the NLRB to have exclusive jurisdiction over a state whistleblower claim arising out of complaints regarding an employer’s improper working conditions. 7. The NLRA did not preempt the WPA with respect to plaintiffs’ claims alleging retaliation for reporting defendants’ criminal wrongdoing. While the NLRA regulates employees’ concerted activities for their mutual aid or protection, it does not regulate the reporting of federal and state crimes. Section 7 is not so broad that it protects all concerted activities by employees. At some point the relationship between the concerted activity and the employees’ interests as employees becomes so attenuated that an activity cannot fairly be deemed to come within the mutual-aid- or-protection clause. The allegations of criminal misconduct that plaintiffs communicated to the Department of Labor did not relate to the employer’s labor practices. Rather, a state court can adjudicate the underlying allegations of embezzlement and other criminal misconduct without having to consider an employer’s labor practices or whether employees engaged in protected activity when reporting those allegations. Moreover, Michigan has a deeply rooted and substantial interest in enforcing its criminal laws, which the NLRB has no authority to enforce and which the WPA assists by protecting employees who report allegations of criminal misconduct, interests that are separate from the interests articulated in the NLRA. 8. Plaintiffs’ WPA claims premised on reporting defendants’ alleged criminal misconduct also survived defendants’ assertion of LMRDA preemption. Although the LMRDA does not provide union employees who have been terminated a cause of action for retaliation taken against them as employees, states are not completely forbidden from restricting a union leader’s discretion to terminate a union employee. If a union retaliates against a union employee as an employee, any underlying state-law retaliation claim is preempted only to the extent that it conflicts with the purposes of the LMRDA. States are afforded considerably more freedom to supplement the LMRDA federal scheme as long as no conflict arises between state law and the LMRDA. A union employer’s discretion in employment decisions must yield in cases in which elected union officials attempt to use that discretion as a shield to hide alleged criminal misconduct. As a result, the LMRDA allows state-law retaliation claims to proceed in state courts. Affirmed in part and remanded. Justice Zahra, concurring in part and dissenting in part, joined the majority’s opinion in Parts I, II, 111(A), (C), (D), and IV(B), but dissented from Parts III(B) and IV(A) and the outcome of the case. Justice Zahra agreed that the LMRDA did not preempt plaintiffs’ WPA claims but disagreed with the majority’s conclusion that the NLRA did not preempt those claims. Conduct is arguably prohibited by the NLRA if the underlying activity that is the subject matter of the litigation is arguably subject to the protections of § 7 or the prohibitions of § 8. Plaintiffs’ WPA claims were arguably subject to the NLRA because plaintiffs’ reporting of alleged wrongful conduct was done to assist their labor organization by revealing that the organization’s assets might be subject to depletion through fraud, embezzlement, and misuse of union funds. The union officials, in their capacity as employers, were prohibited by the NLRA from discharging their employees simply because the employees reported their suspicions of illegal activity that would harm the union. Moreover, plaintiffs’ claims did not fall within what is effectively one exception to NLRA preemption for deeply rooted state interests that are of peripheral concern to the NLRA. In general, when courts determine the applicability of the exception, they effectively presume that claims grounded in state law reflect deeply rooted state interests and inquire instead whether the conduct at issue is of peripheral concern to the NLRA, engaging in a fact-intensive inquiry to decide whether both the NLRA and the state statute, as applied, prohibit the complained-of activity. When the NLRA and state law do not prohibit the same conduct, the preemption exception will apply. Plaintiffs’ claims here sounded in retaliatory discharge. They reported alleged criminal conduct that triggered protection under the WPA and simultaneously assisted a labor organization, which entitled their activity to NLRA protection. Thus, both the WPA and the NLRA prohibited discharge for the protected action, and the NLRA preempted the WPA. In addition, plaintiffs’ WPA claims represented a classic example of unacceptable NLRA circumvention through artful pleading. Justice Zahra would have reversed the judgment of the Court of Appeals and dismissed plaintiffs’ WPA claims because they were preempted by the NLRA. Employers and Employees — Whistleblowers’ Protection Act — National Labor Relations Act — Labor-Management Reporting and Disclosure Act — Federal Preemption of Whistleblower Claims — Criminal Conduct. Neither the National Labor Relations Act, 29 USC 151 et seq., nor the Labor-Management Reporting and Disclosure Act, 29 USC 401 et seq., preempts claims brought under the Whistleblowers’ Protection Act, MCL 15.361 et seq., that are premised on retaliation for reporting suspected criminal misconduct, and state courts have subject-matter jurisdiction over those claims. Joel B. Sklar and Robert Dinges for Anthony Henry and Keith White. Giarmarco, Mullins & Horton, PC (by Ben M. Gonek) for Michael Ramsey and Glenn Dowdy. Legghio & Israel, PC (by Christopher P. Legghio and Michael J. Bommarito) for Laborers’ Local 1191 and Michael Aaron. Law Offices of J. Douglas Korney (by J. Douglas Korney) for Bruce Ruedisueli. Amicus Curiae: Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, and Susan Przekop-Shaw, Jason Hawkins, and Bradley A. Fowler, Assistant Attorneys General, for the Attorney General. KELLY, J. This case involves whether, and the extent to which, plaintiffs’ claims asserted under the Michigan Whistleblowers’ Protection Act (WPA) are preempted by the National Labor Relations Act (NLRA) and the Labor-Management Reporting and Disclosure Act (LMRDA). Plaintiffs allege that defendants violated the WPA when they discharged plaintiffs in retaliation for reporting to the United States Department of Labor their suspicions of fraud, embezzlement, improper wages, and unsafe working conditions or for participating in the Department of Labor’s ensuing investigation. Defendants argue that the NLRA and LMRDA preempt plaintiffs’ WPA claims and, as a result, the state court must dismiss those claims. Congress