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Fired for eating a cookie after 33 years on job; did employer breach CBA?

By Lisa Milam-Perez, J.D.

A supermarket employee who ostensibly was fired for eating a cookie from the store’s inventory may proceed with her hybrid LMRA, Section 301 claim against her employer, a federal district court in New Jersey held. The employee contended that she was actually discharged for complaining of harassment by a coworker, after which she was met with hostility by her union and employer alike. She also claimed the union and employer had a tacit understanding that the union would limit the number of grievances it would pursue—and apparently hers was not one of them. A breach of contract claim based on the employee manual did not survive, as the handbook was not a contract. Her claim alleging the employer violated a covenant of good faith and fair dealing was dismissed as well, since it was not a stand-alone cause of action, it could not attach to her failed breach of contract claim, and, as a state-law claim, it could not “be grafted onto the CBA… without running afoul of the broad preemptive effect of federal labor law.” (Luongo v. Village Supermarket, Inc., June 2, 2017, McNulty, K.).

Discharge. The employee had worked for the supermarket for 33 years when she was fired, ostensibly for eating a cookie, worth 35 cents, from the store inventory. Other employees routinely did the same, she said, and faced no discipline for the infraction. Moreover, the applicable CBA has a just-cause discharge provision and a grievance and arbitration procedure. On the day of her initial “verbal” discharge, she asked her union rep to file a grievance but, eight days later and having heard nothing, she filed a formal written grievance on her own, through her attorney. The union didn’t follow the grievance procedure; it did nothing to investigate or give her an opportunity to challenge her termination. She was formally discharged one month after her verbal discharge, and she filed a hybrid action under LMRA, Section 301 (although she did not name the union as a defendant). At issue here was the employer’s motion to dismiss.

LMRA claim. The court spent little time on the employee’s LMRA claim, except to reject theemployer’s procedural defenses. The original complaint was filed in state court nearly eight months after her formal discharge, and the CBA requires the union to file a grievance within 10 days of discharge. By the employer’s timeline of events, that meant her suit wasn’t filed within the LMRA’s slim six-month limitations period. However, the court said it could not discern from the face of the complaint the precise point at which she knew or should have known that pursuing relief through the union was hopeless, and that’s the point at which the limitations clock begins to run on a Section 301 claim.

As for the employer’s defense that she failed to exhaust the grievance and arbitration procedures, there were facts in dispute on this point, which only could be established by extrinsic evidence, and so could not be resolved on a motion to dismiss.

Handbook was not a contract. The employee alleged that the employer entered into an implied contract with her, via the employee handbook, widely disseminated to employees, and through its longstanding practices and procedures. Included in its terms was a commitment to abide by “the use of corrective action, prior warnings, and consistency in the application of discipline to employees,” she argued, and her discharge without warning breached that contract.

However, it is well-established under New Jersey law that any implied contract based on an employee handbook is negated by the inclusion of a “clear and prominent” disclaimer, and the handbook in question “clearly and conspicuously disclaims contractual status,” the court found. It expressly states that employees may be fired “at any time for any reason, with or without notice,” and informs employees that their rights against the employer are to be found in the CBA. Moreover, the disclaimer was sufficiently prominent: in fact, it’s the first entry in the table of contents and it stands on its own page directly after the table of contents. The disclaimer bears a title and is printed in a large font that contrasts with the font used elsewhere in the handbook. Looking at the disclaimer “through the eyes of an employee,” the court found it sufficiently clear and prominent to be effective as a matter of law. Consequently, the employee handbook was not a binding contract, and the employee’s breach of contract claim was dismissed.

No contract, no implied covenant. It followed, then, that the employee’s claim for breach of the implied covenant of good faith and fair dealing was dismissed too. Under New Jersey law, every contract contains an implied covenant of good faith and fair dealing, but a breach of such a covenant is not a free-standing cause of action—it requires an underlying contract to be actionable. Having found the employee handbook was not a valid and enforceable contract, the court now found there was no contractual covenant, whether express or implied, to breach.

Nor could she hang her implied covenant claim onto the CBA without implicating preemption concerns. At any rate, a covenant of good faith and fair dealing is implicit in the CBA itself. Thus, even if such a claim were viable, it would be superfluous, and must be dismissed, the court found.