Jara v. BUCKBEE-MEARS CO., ST. PAUL

OPINION

LANSING, Judge.

Individual employees and their bargaining representative sued for misrepresentation and breach of contract after the employer declined to build a new plant. The employees and the union appeal the dismissal of their complaint for lack of subject matter jurisdiction. We affirm.

FACTS

Since 1982, the Buckbee-Mears Company has negotiated various wage and benefit concessions from its employees and their bargaining representative (the union), promising in return to keep its St. Paul plant open if it achieved profitability. The union claims that concessions were made in exchange for Buckbee-Mears’ additional promise to build a new plant, but the parties’ two bargaining agreements since 1982, both of which contained integration clauses limiting their agreement to the contract’s express terms, do not contain a promise to build a new plant. In October 1987, the union sued Buckbee-Mears for fraud, negligent misrepresentation, unjust enrichment and breach of contract.

The trial court stayed the union’s suit pending an arbitrator’s decision on the breach of contract claim. In January 1990, the arbitrator held that because the union alleged no breach of the agreement’s express terms, she had no jurisdiction to resolve the dispute. The trial court granted Buckbee-Mears’ motion to dismiss for lack of subject matter jurisdiction, concluding that the union’s claims arguably involved unfair labor practices and that jurisdiction was preempted under federal labor law.

ISSUES

1. Are the union’s misrepresentation claims preempted by the National Labor Relations Board’s primary jurisdiction?

2. Has the union asserted cognizable contract or quasi-contract claims under section 301 of the Labor Management Relations Act?

ANALYSIS

I

When an activity is arguably subject to section 7 or 8 of the National Labor Relations Act (NLRA), both the state and federal courts must defer to the exclusive competence of the National Labor Relations Board (NLRB) to avoid the danger of state interference with national policy. See San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245, 79 S.Ct. 773, 780, 3 L.Ed.2d 775 (1959). The party asserting preemption must show that the alleged activity is arguably protected or prohibited by the NLRA and that the NLRB reasonably could uphold the party’s claim. See International Longshoremen’s Ass’n v. Davis, 476 U.S. 380, 395, 106 S.Ct. 1904, 1914, 90 L.Ed.2d 389 (1986).

Section 8(d) of the NLRA requires employers to bargain in good faith on “wages, hours and other terms and conditions of employment.” 29 U.S.C. § 158(d) (1989). The building of a new plant appears to lie at the “core of entrepreneurial control,” and would not likely be considered a mandatory subject of bargaining. See Ford Motor Co. v. N.L.R.B., 441 U.S. 488, 498, 99 S.Ct. 1842, 1849, 60 L.Ed.2d 420 (1979) (employers are not obligated to bargain over matters exclusively managerial in nature).

However, the duty to bargain in good faith includes the obligation to provide adequate and honest information during negotiations. See Wells v. General Motors Corp., 881 F.2d 166, 169 n. 3 (5th Cir.1989) (citing N.L.R.B. v. Truitt Mfg. Co., 351 U.S. 149, 152, 76 S.Ct. 753, 755, 100 L.Ed. 1027 (1956)), cert. denied, — U.S.-, 110 S.Ct. 1959, 109 L.Ed.2d 321 (1990). When an employer fraudulently induces concessions during bargaining negotiations, its conduct arguably constitutes an unfair labor practice, over which the NLRB has primary jurisdiction. See Serrano v. Jones & Laughlin Steel Co., 790 F.2d 1279, 1287 (6th Cir.1986); see generally Sears, Roebuck & Co. v. San Diego County Dist. Council of Carpenters, 436 U.S. 180, 199 n. 29, 98 S.Ct. 1745, 1758 n. 29, 56 L.Ed.2d 209 (1978) (“primary jurisdiction” refers to the policy of preempting state court jurisdiction over activities subject to the unfair labor practice jurisdiction of the NLRB).

The union asserts state court jurisdiction based on its theory that to obtain wage and benefit concessions, Buckbee-Mears fraudulently misled it during negotiations about benefits to be received, including the opening of a new plant. This claim has at its center the question of the company’s good faith in bargaining and the adverse impact of the company’s alleged fraud on the parties’ negotiations. We recognize our limited authority to regulate federally protected or prohibited conduct when the conduct is of only peripheral concern to the NLRA or touches interests deeply rooted in local law, see Belknap, Inc. v. Hale, 463 U.S. 491, 497, 103 S.Ct. 3172, 3177, 77 L.Ed.2d 798 (1983), but we find the union’s claims on the failure to build a new plant to be inextricably tied to Buckbee-Mears’ good-faith bargaining duty. Minnesota’s interest in remedying fraud notwithstanding, the substance of the dispute is the same under state and federal law and our law must yield to the jurisdiction of the NLRB. See Parker v. Connors Steel Co., 855 F.2d 1510, 1518 (11th Cir.1988), cert. denied, 490 U.S. 1066, 109 S.Ct. 2066, 104 L.Ed.2d 631 (1989).

II

The union sued under section 301 of the Labor Management Relations Act (LMRA) for breach of contract, promissory estoppel, and breach of an implied covenant of good faith and fair dealing. Section 301 grants concurrent jurisdiction to state and federal courts over suits for breach of labor agreements, even when the challenged conduct would arguably constitute an unfair labor practice. See 29 U.S.C. § 185(a) (1989); Amalgamated Ass’n of Street, Elec. Ry. & Motor Coach Employees of America v. Lockridge, 403 U.S. 274, 298, 91 S.Ct. 1909, 1924, 29 L.Ed.2d 473 (1971). Federal common law governs the interpretation of bargaining agreements in such suits. See Local 174, Teamsters, Chauffeurs, Warehousemen & Helpers of America v. Lucas Flour Co., 369 U.S. 95, 104, 82 S.Ct. 571, 577, 7 L.Ed.2d 593 (1962).

To fall within section 301, the union’s claims must be founded directly on rights created by its bargaining agreement with Buckbee-Mears or be substantially dependent on analysis of the agreement. See Caterpillar Inc. v. Williams, 482 U.S. 386, 394, 107 S.Ct. 2425, 2431, 96 L.Ed.2d 318 (1987). The union’s breach of contract claim alleges a proper jurisdictional basis under section 301, but that basis is unsupported by the contract’s express terms.

The promissory estoppel claim also fails, on these facts, to assert a viable section 301 claim. Although federal courts have applied estoppel principles under section 301, see Hass v. Darigold Dairy Products, Co., 751 F.2d 1096 (9th Cir.1985), the parol evidence rule bars the union’s extrinsic evidence of oral promises made during negotiations for the parties’ written bargaining agreement. See Abbington v. Dayton Malleable, Inc., 561 F.Supp. 1290, 1296 n. 17 (S.D.Ohio 1983), aff'd mem. 738 F.2d 438 (6th Cir.1984); see also Jansen v. Herman, 304 Minn. 572, 575, 230 N.W.2d 460, 463 (1975) (oral evidence of discussions, negotiations, or understandings is not admissible to vary or to contradict terms of an unambiguous and integrated contract). The parties’ bargaining agreement is clear and complete. The law does not permit the union, through a promissory estoppel claim, to rely on evidence of oral agreements to alter its contract. See Abbington, 561 F.Supp. at 1296 n. 17.

We also affirm the dismissal of the final claim for breach of an implied covenant of good faith and fair dealing. Minnesota courts have consistently declined to read this covenant into written employment contracts. See Hunt v. IBM Mid America Employees Fed. Credit Union, 384 N.W.2d 853, 858 (Minn.1986). Although some federal courts have implied such a covenant into labor agreements, it is typically limited to preserving a party’s right to receive “the fruits of the contract.” See United Steelworkers of America (AFL-CIO) v. New Park Mining Co., 273 F.2d 352, 357 (10th Cir.1959); see also Jeffers v. Convoy Co., 636 F.Supp. 1337, 1344-45 (D.Minn.1986) (refusing to recognize implied covenant in contract of employee covered by labor agreement).

These contract and quasi-contract claims essentially restate the initial misrepresentation claims. Allowing an action under section 301, despite the absence of a basis in the parties’ agreement, would not only exceed the section’s jurisdictional grant but also circumvent the preemption principles of Garmon.

DECISION

The union’s misrepresentation claims arguably constitute an unfair labor practice, the resolution of which is left to the primary jurisdiction of the NLRB. Because its contractual claims also fail to establish a proper jurisdictional basis for suit under section 301 of the LMRA, we affirm the trial court’s dismissal of its complaint.

Affirmed.