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Enslin v. Coca-Cola Co.

United States District Court, E.D. Pennsylvania

March 31, 2017

SHANE K. ENSLIN, on behalf of himself and all others similarly situated, Plaintiff,


          Joseph F. Leeson, Jr. United States District Judge

         I. Introduction

         Shane Enslin is a former employee of The Coca-Cola Company.[1] Like many employees, Enslin provided Coca-Cola with various types of personal information during the hiring process, including his home address, telephone number, social security number, and driver's license number. In 2013-long after Enslin left the company-Coca-Cola discovered that one of its information technology employees had been taking home old laptop computers that were no longer in use, keeping some for himself and giving away others. After an investigation, Coca-Cola found that some of those computers still contained remnants of personal information relating to current and former Coca-Cola employees. Enslin was one of those employees.

         A few months after Coca-Cola notified him and the other affected employees of the breach, he was the victim of fraud. Enslin blames Coca-Cola. He has sued the company and a number of its affiliates for breach of contract and unjust enrichment, claiming that Coca-Cola promised-either expressly or implicitly-to secure his personal information and did not hold up its end of the bargain. But in the Court's view, Coca-Cola owed him no such contractual duty.

         II. Background

         Enslin was hired in 1996 by Keystone Coca-Cola. At the time, Keystone Coca-Cola was an independent Coca-Cola bottler and distributor, and Enslin was hired as a technician to repair Coca-Cola equipment around the area, such as soda fountains and vending machines.

         In the late 1980s and 1990s, many of Coca-Cola's independent bottlers were acquired by Coca-Cola Enterprises, Inc., an affiliate of the parent Coca-Cola Company. That time came for Keystone Coca-Cola in 2001. As part of the transition, Enslin was required to complete Coca-Cola Enterprises' employment paperwork, including a standard form employment application, which asked for his home address, telephone number, social security number, and driver's license number. That application also contained a certification that Enslin was required to sign, which stated, “If employed, I agree to follow the rules, regulations and other directives of the Company.” Pl.'s Mot. Ex. A, at 0001102, ECF No. 168 The same day that Enslin completed the application, he also signed an acknowledgment that he had read the Coca-Cola Enterprises' handbook, titled the “Code of Business Conduct.” During discovery in this case, neither side was able to locate a copy of the Code in effect on that date in 2001, but Coca-Cola produced a copy of the Code from the 1990s, which Enslin believes is “substantially similar” to the one he reviewed in 2001. Enslin Decl. ¶ 13, ECF No. 164. He relies on the contents of that Code to support his breach of contract claim, and for the purpose of this opinion, the Court will as well.

         In addition to the Code, Coca-Cola Enterprises also maintained an extensive collection of policies related to the use of its information technology resources, including an overall acceptable use policy, an asset protection policy, and information classification standards, which relate to the handling of different types of confidential information.

         Enslin left Coca-Cola Enterprises in 2007. The Coca-Cola Company later acquired the North American bottling operations that Coca-Cola Enterprises had accumulated, vertically integrating the bottlers with the parent company.

         In 2013, Coca-Cola discovered that one of its information technology employees had been taking home older laptop computers that were no longer in use without permission. Some of those laptops he used himself; others were later found in the homes of some acquaintances. A few more he apparently gave away to settle a debt. After it learned of the breach, Coca-Cola sought to recover its missing hardware, and while it has “a very good feeling” that it has been able to recover it all, it cannot say for sure.[2] After examining the equipment it did recover, Coca- Cola discovered that some of the laptops had previously been used by members of its human resources department and still contained personal information of some present and former employees. The company compiled a list of every employee whose personal information it found on those machines, sent a letter to each of them about the incident, and provided for them to each receive a year of free credit monitoring and fraud restoration services. In total, the laptops contained information tied to 74, 000 different employees, including Enslin.

         A few months after he received word of the breach, a number of accounts that Enslin and his spouse maintained with online retailers were compromised and used to make unauthorized purchases. As mentioned, Enslin has sued Coca-Cola and a number of its affiliates for breach of contract and unjust enrichment.[3] He claims certain provisions in the Code of Conduct and information technology policies, which deal with safeguarding sensitive information, show that Coca-Cola promised-either expressly or implicitly-to safeguard the personal information he provided on his 2001 Coca-Cola Enterprises employment application. He also seeks to represent a class of former and current Coca-Cola employees affected by the breach.

         Before the Court are summary judgment motions from both sides. Enslin has filed a partial summary judgment motion, seeking to establish only that Coca-Cola owed him a contractual duty to secure his personal information. Coca-Cola, on the other hand, contends that a jury could not find for Enslin on either his breach of contract claim or his claim under the law of restitution, and it seeks the entry of judgment in its favor on both claims. Also pending is Enslin's motion for class certification. The summary judgment motions will be taken up first-in part because Coca-Cola's summary judgment motion raises a threshold challenge to the Court's subject matter jurisdiction.[4]

         III. Enslin's claims are not preempted by the Labor Management Relations Act nor subject to the requirement of exhaustion.

         During both his time at Keystone Coca-Cola and later at Coca-Cola Enterprises, Enslin was a member of the International Brotherhood of Teamsters. Initially, he was a member of Local Union Number 229 and later, after his job location moved from Mount Pocono, Pennsylvania, to Pittston, Pennsylvania, he became a member of Local Union Number 401. Both of those unions had collective bargaining agreements (CBAs) with Enslin's employers.[5] In Coca-Cola's view, Enslin's contention that Coca-Cola Enterprises formed a contract with him to safeguard his personal information is flatly inconsistent with the fact that his employment relationship was governed at all times by a CBA. At the least, the company contends that reconciling Enslin's claims with his status as a member of a collective bargaining unit will require an interpretation of one or both CBAs. Either way, Coca-Cola suggests that these considerations pose a problem for Enslin's claims because of the “extraordinary” preemptive force that the Labor Management Relations Act exerts over state-law claims that implicate CBAs. See Caterpillar Inc. v. Williams, 482 U.S. 386, 393-94 (1987) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)).

         At issue is § 301 of the Labor Management Relations Act, 29 U.S.C. § 185(a). On its face, § 301 simply grants the district courts jurisdiction to hear “[s]uits for violation of contracts between an employer and a labor organization, ” but § 301 has long been held to do far more than just grant the federal courts jurisdiction to hear disputes over labor contracts. The statute is understood to embody “a congressional mandate to the federal courts to fashion a body of federal common law to be used to address disputes arising out of labor contracts, ” Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 209 (1985), motivated by concerns that if the interpretation of CBAs fell to an unpredictable mixture of state and federal law, “the process of negotiating an agreement would be made immeasurably more difficult by the necessity of trying to formulate contract provisions in such a way as to contain the same meaning under two or more systems of law which might someday be invoked in enforcing the contract.” Id. at 210 (quoting Teamsters v. Lucas Flour Co., 369 U.S. 95, 103 (1962)).

         As a result, whenever a plaintiff brings a state-law claim whose resolution is “substantially dependent upon an analysis of a collective-bargaining agreement, ” § 301 preempts the claim. Caterpillar, 482 U.S. at 386 (quoting Int'l Bhd. of Elec. Workers v. Hechler, 481 U.S. 851, 859 n.3 (1987)). That does not mean that every claim that touches upon a CBA is preempted. The mere fact that a CBA may need to be consulted to resolve a state-law claim does not lead to preemption, as long as the meaning of the applicable portion of the CBA is not in dispute. See Livadas v. Bradshaw, 512 U.S. 107, 124 (1994). Nor is preemption warranted if a dispute over the meaning of a CBA is introduced into the case by a defendant's defense, rather than by the elements of the plaintiff's state-law claim. Caterpillar, 482 U.S. at 399 (recognizing that “a defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law”). Section 301's preemptive force is broad, but “not every dispute concerning employment, or tangentially involving a provision of a collective-bargaining agreement, is pre-empted by § 301.” Allis-Chalmers, 471 U.S. at 211.

         Before applying these principles to Enslin's claims, it is important to note what preemption would mean under these circumstances. When a plaintiff's claim is preempted by § 301, that does not mean that the plaintiff is necessarily barred from recovering. “Preemption” in this context does not refer to the ordinary notion of “conflict” or “defensive” preemption, where a law with preemptive force extinguishes a plaintiff's right of recovery. Rather, when a state-law claim is preempted by § 301, the claim is simply transformed into a federal cause of action, to be governed by a uniform body of federal common law. Under this type of preemption, referred to as complete preemption, “any claim purportedly based on [a] pre-empted state law is considered, from its inception, a federal claim.” Caterpillar, 482 U.S. at 393; see Allis-Chalmers, 471 U.S. at 220-21 (recognizing that if a state-law claim is preempted by § 301, it may simply “be treated as a § 301 claim”).

         Since § 301 preemption would not do away with Enslin's right to recover but rather just transform his state-law claims into federal claims (to be governed by federal common law), the possibility that they may be § 301 preempted does not, in and of itself, necessarily pose a problem for him. The problem is that if his claims do depend upon an interpretation of a CBA, he may have needed to exhaust those claims through a grievance procedure before filing this suit.

         Both of the CBAs that applied to Enslin-the agreement with Local 229 and the agreement with Local 401-contain mandatory grievance procedures that a union member must follow, and their scope is broad. The language in both agreements is nearly identical: under the Local 401 agreement, a union member must grieve any “dispute over the interpretation or application of an article or section of this Agreement, ” Defs.' Mot. Ex. 5, at 12, and under the Local 229 agreement, a union member must grieve any “dispute over the interpretation or application of a specific article or section of this Agreement, ” Defs.' Mot. Exs. 18., at 21. That language closely tracks the broad standard for preemption under § 301-both turn on whether a dispute is presented over the interpretation of a CBA-so if Enslin's claims are preempted by § 301, that also would likely trigger the mandatory grievance procedures in the CBAs.

         When a CBA contains a dispute resolution procedure, that procedure must be exhausted “before filing a complaint in federal court ‘unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'” Angst v. Mack Trucks, Inc., 969 F.2d 1530, 1537 (3d Cir. 1992) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 (1960)). Hoping to cover his bases, Enslin sent a letter to Local 401 on December 29, 2016-a week after he received Coca-Cola's summary judgment motion-attempting to invoke the grievance procedures. The union's officer responded by letter a few days later, informing him that the union would not pursue his grievance. The letter pointed out that “no contact [had] been made with the Local until now”- more than two years after Enslin filed his federal suit-which meant that “any claim of a grievance is untimely.” Pl.'s Opp'n Ex. Q. That was likely a reference to the fact that the grievance procedures in the Local 401 CBA require all claims to be raised within five business days.

         Enslin contends that the union's decision not to pursue his grievance satisfies his obligation to exhaust the grievance procedures, but that is not so. Just as a failure to utilize available grievance procedures bars a union member from seeking relief in court, so too does a failure “to invoke them in a timely manner.” Carr v. Pac. Mar. Ass'n, 904 F.2d 1313, 1317 (9th Cir. 1990) (Kozinski, J.) (citing Republic Steel Corp. v. Maddox, 379 U.S. 650, 652 (1965)); see Wiggins v. Heinz N. Am., 243 F. App'x 663, 664 (3d Cir. 2007) (explaining that a union member whose grievance was filed untimely under the CBA failed to exhaust his claim). If this were not the case, Enslin could sidestep the grievance process by simply ignoring it. See Allis-Chalmers, 471 U.S. at 220.

         Thus, the question remains whether Enslin's claims fall within the scope of the grievance procedures under the CBAs. If they do, his claims are likely barred.[6] If they do not, they can proceed here. In the Court's view, his claims are neither subject to § 301 preemption nor within the scope of the grievance procedures because they do not substantially depend upon an interpretation of either CBA.

         Coca-Cola's primary contention is that Enslin's claims cannot be resolved without analyzing the CBAs because both agreements contain exclusivity provisions that restrict the ability of the Coca-Cola entities and the union members to enter into side agreements outside of the collective bargaining process. Once again, the two agreements contain quite similar language. The Local 229 agreement-which governed Enslin's employment relationship in 2001, when he claims that a contract was formed to safeguard his personal information[7]- provides that “[n]o employee shall be asked to make any written or verbal Agreement which may in any way conflict with the terms of this Agreement.” Defs.' Mot. Ex. 18, at 23. Similarly, the Local 401 agreement, which governed the latter part of Enslin's time as a Coca-Cola employee, provides that “[t]he Employer agrees not to enter into any agreement or contract with his employees, individually or collectively, which in any way conflicts with the terms and provisions of this Agreement without the knowledge and consent of the Local Union.” Defs.' Mot. Ex. 5, at 27.

         There is no need to interpret either of those provisions to assess the viability of Enslin's claims. Coca-Cola concedes that neither CBA contains any terms that relate to the safeguarding of personal information, so if Coca-Cola did form an independent agreement with Enslin on that topic, that agreement would not “in any way conflict with the terms” of either one. Since it is plain that the exclusivity provisions in the CBAs would not be an impediment to the contract that Enslin claims he formed with Coca-Cola, there is no need to “interpret” those provisions to see that there is no conflict between them and the contract Enslin claims to have. As the Seventh Circuit explained,

merely examining [a] collective bargaining agreement to determine whether a conflict actually exists [with an alleged side agreement] is not “interpreting” the collective bargaining agreement . . . . “If it were, the section 301 pre-emption doctrine would swallow the rule that employees covered by collective bargaining agreements are entitled ‘to assert legal rights independent of that agreement, including state-law contract rights, so long as the contract relied upon is not a collective-bargaining agreement.'”

Loewen Grp. Int'l, Inc. v. Haberichter, 65 F.3d 1417, 1423 (7th Cir. 1995) (citation omitted) (quoting Milne Emps. Ass'n v. Sun Carriers, 960 F.2d 1401, 1409-10 (9th Cir. 1995)); see also Kline v. Sec. Guards, Inc., 386 F.3d 246, 256 (3d Cir. 2004) (“[T]he mere fact that we must look at the CBA in order to determine that it is silent on any issue relevant to Appellant's state claims does not mean that we have ‘interpreted' the CBA.”).

         More difficult for Enslin is a substitution clause in the CBA for Local 401, which took effect in March 2004-after the time that he claims Coca-Cola formed a contract with him to safeguard his personal information. That CBA provides that as of the date it took effect, it was intended to “represent[] the complete Agreement between the parties, ” and “[a]ny previous written or verbal agreement shall be deemed to be superseded by the terms and conditions of this Agreement.” Defs.' Ex. 5, at 27. Reconciling that provision with Enslin's contention that he has an independent agreement with Coca-Cola that was formed in 2001 is a more difficult problem- one that cannot be resolved with just a “mere glance” at the CBA. See In re Bentz Metal Prods., 253 F.3d 283, 289 (7th Cir. 2001) (en banc).

         But this interpretive question arises only as part of Coca-Cola's defense to Enslin's claims, not as part of Enslin's case-in-chief. Whether a later contract, like the Local 401 CBA, may have superseded an earlier agreement is for Coca-Cola to show, because “[t]he party asserting a novation or substituted contract has the burden of proving that the parties intended to discharge the earlier contract.” Buttonwood Farms, Inc. v. Carson, 478 A.2d 484, 486 (Pa. Super. Ct. 1984); see 6 Arthur Linton Corbin, Corbin on Contracts § 1293 (1962) (“No one will be held to have surrendered or modified any of his contract rights unless he is shown to have assented thereto in a manner that satisfies the requirements of a valid contract.”). As previously mentioned, an interpretive question raised only through a defendant's defense does not trigger § 301 preemption. See Caterpillar, 482 U.S. at 399 (explaining that “a defendant cannot, merely by injecting a federal question into an action . . ., transform the action into one arising under federal law”). Nor does it suffice to bring Enslin's claims into the scope of the mandatory grievance procedures because it does not alter the fact that Enslin's claims are concerned with the existence of an agreement independent of the CBA, not a “dispute over the interpretation or application” of a section or article of the CBA. See Id. at 399 n.15 (“Caterpillar contends that the Court of Appeals' decision offends the paramount national labor policy of referring disputes to arbitration . . . . This argument presumes that respondents' claims are arbitrable, when, in fact, they are alleged to grow out of individual employment contracts to which the grievance-arbitration procedures in the collective-bargaining agreement have no application.”). But see Cavallaro v. UMass Mem'l Healthcare, Inc., 678 F.3d 1, 7 (1st Cir. 2012) (concluding that the interpretive dispute that would inevitably arise from an employer's claim that a later CBA superseded earlier, independent contracts was sufficient to require the union members to seek redress through the CBA's dispute resolution procedures).

         Finally, Coca-Cola suggests that because both CBAs expressly permitted Coca-Cola Enterprises to “establish reasonable rules, programs and policies, ”[8] Enslin's reliance on the Coca-Cola Enterprises' Code of Conduct and information technology policies to support his claims is a sufficient nexus to the CBAs to bring his claims within the scope of § 301 and the mandatory grievance procedures. But the mere fact that the CBAs recognized Coca-Cola Enterprises' authority to establish the rules, programs, and policies that Enslin relies upon does not mean that his claims are “founded directly on rights created by collective-bargaining agreements” or “substantially dependent on an analysis of a collective-bargaining agreement.” See Id. at 394 (quoting Hechler, 481 U.S. at 859 n.3).

         For these reasons, Enslin's claims are neither preempted by § 301 nor subject to the grievance procedures in the CBAs. Accordingly, the Court turns to the merits of the parties' summary judgment motions.

         IV. Coca-Cola was not contractually obligated to safeguard Enslin's personal information.

         A. ...

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