Allis-Chalmers Corp. v. Lueck

In Allis-Chalmers v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985), an employee was entitled to benefits for personal injury under an employer-funded insurance policy included in the collective agreement. The collective agreement further provided that disputes regarding insurance-related issues would be subject to a grievance procedure culminating in final and binding arbitration. The employee submitted his claims under the policy. While all the claims were eventually satisfied, the employee claimed that harassing conduct by his employer hindered his receipt of benefits. Without invoking the grievance procedure, the employee brought a state tort claim against his employer for bad-faith handling of his insurance claims. Id. 105 S.Ct. at 1907-08. The Supreme Court held that the state tort claim was preempted by section 301. The Court expressly rejected the notion that section 301 preempted only contract claims: If the policies that animate Sec. 301 of the Labor-Management Relations Act are to be given their proper range, ... the pre-emptive effect of Sec. 301 must extend beyond suits alleging contract violations. These policies require that "the relationships created by a collective-bargaining agreement" be defined by application of "an evolving federal common law grounded in national labor policy." Id. 105 S.Ct. at 1911, quoting Bowen v. United States Postal Service, 459 U.S. 212, 224-25, 103 S.Ct. 588, 595-96, 74 L.Ed.2d 402 (1983) Section 301 therefore also preempts tort claims which, "as applied, would frustrate the federal labor-contract scheme established in Sec. 301." Allis-Chalmers, 105 S.Ct. at 1910. The Court declined to delineate the precise contours of section 301 preemption, as it observed that the "full scope of the pre-emptive effect of federal labor-contract law remains to be fleshed out on a case-by-case basis." Id. at 1916. At the same time, it did hold that "when resolution of a state-law claim is substantially dependent upon analysis of the terms of an agreement made between the parties in a labor contract, that claim must either be treated as a Sec. 301 claim or dismissed as pre-empted by federal labor-contract law." Id. In Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985), the United States Supreme Court held that "when resolution of a state-law claim is substantially dependent upon analysis of the terms of an agreement made between the parties in a labor contract," the claim is preempted by Sec. 301 of the Labor Management Relations Act. Id. at 220, 105 S.Ct. at 1916. Specifically, it held that Sec. 301 preempted a state law tort action for bad-faith delay in making disability-benefit payments due under a collective bargaining agreement. The Court noted that the need for uniform interpretation of collective bargaining contracts necessitates some degree of federal preemption under Sec. 301: " 'The possibility that individual contract terms might have different meanings under state and federal law would inevitably exert a disruptive influence upon both the negotiation and administration of collective agreements.' " Id. at 210, 105 S.Ct. at 1910 (quoting Teamsters v. Lucas Flour Co., 369 U.S. 95, 103-04, 82 S.Ct. 571, 576-77, 7 L.Ed.2d 593 (1962)). Therefore, the Court concluded, "questions relating to what the parties to a labor agreement agreed, and what legal consequences were intended to flow from breaches of that agreement, must be resolved by reference to uniform federal law, whether such questions arise in the context of a suit for breach of contract or in a suit alleging liability in tort." Id. at 211, 105 S.Ct. at 1911. In AllisChalmers Corp. v. Lueck, 471 U. S. 202 (1985), the Court applied 301 pre-emption to a state-law claim for bad-faith handling of a worker's compensation claim because the duties the employer owed the employee, including the duty of good faith, were rooted firmly in the CBA. Its pre-emption finding was based on the fact that "the right asserted not only derives from the contract, but is defined by the contractual obligation of good faith, so that any attempt to assess liability here inevitably will involve contract interpretation." Id., at 218.