Batson v. Shiflett

⁶⁹² KARWACKI, Judge. In Batson v. Shiflett, 86 Md.App. 340 , 586 A.2d 792 (1991), the Court of Special Appeals affirmed a judgment entered on a jury verdict in the Circuit Court for Baltimore County awarding compensatory and punitive damages against petitioners, Industrial Union of Marine and Shipbuilding Workers of America, IAM, District Lodge 4 (National Union) and Arthur E. Batson, Jr., its President, in favor of respondent, A. Spencer Shiflett, Jr., former President of Local 33, an affiliate of the National Union. The jury credited Shiflett’s allegations that he was defamed in leaflets disseminated and speeches made by Batson and subjected to intentional infliction of emotional distress by the National Union and Batson in the course of a heated labor dispute. We granted certiorari to consider the following issues: —whether the decision below violated principles of issue preclusion and of federal labor law preemption. —whether the evidence demonstrated that the allegedly defamatory statements at issue were substantially true, or, even if they were not, whether there was clear and convincing evidence that the statements were made with actual (constitutional) malice. —whether the jury was properly instructed as to the element of malice in the defamation action. —whether the holding that petitioners’ conduct was sufficiently “extreme and outrageous” to permit recovery for intentional infliction of emotional distress conflicts with Maryland law, federal labor law, or the First Amendment.

I. Shiflett began his employment at the Sparrows Point shipyard of the Bethlehem Steel Corporation, (Bethlehem) in 1967, and shortly thereafter became a member of Local 33. After serving in a variety of local union offices, Shiflett was elected President of Local 33 in 1980, and was re-elected in ⁶⁹³ 1983. The facts underlying this appeal stem from a dispute that arose in 1984, while Shiflett was president of Local 33. The National Union and Local 33 together maintained a collective bargaining agreement covering Bethlehem’s shipyard at Sparrows Point.

That agreement was due to expire on August 19, 1984. In March of 1984, Local 33 and Bethlehem executed a new long-term agreement which substantially reduced wages and benefits at the Sparrows Point shipyard. The National Union denied having any knowledge of the negotiations and denied authorizing Local 33 to negotiate the agreement. 1 Batson and the National Union’s General Executive Board immediately repudiated the new agreement 2 and threatened to place Local 33 in trusteeship, which would have resulted in Shiflett’s ouster as President. Bethlehem and Local 33 claimed that Batson and the National Union had authorized Local 33 to negotiate the agreement without involving the National Union.

Consequently, an intense legal battle erupted. As a result of the National Union’s attempts to nullify the agreement, Local 33 and Bethlehem filed identical unfair labor practice charges against the National Union with the National Labor Relations Board (NLRB). Local 33 and Bethlehem alleged that the National Union’s repudiation of the new agreement constituted the unfair labor practice of a “refusal to bargain” in violation of § 8(b)(3) of the National Labor Relations Act of 1935 (NLRA), 29 U.S.C. §§ 151-169 (1988). Local 33 also charged that the National Union violated § 8(b)(1)(A) of the NLRA by filing internal union charges against officials of Local 33, including Shiflett, in order to remove them from office.

A lengthy evidentiary ⁶⁹⁴ hearing was held before NLRB Administrative Law Judge David Evans. The crucial contested fact in that proceeding was whether, as alleged, Batson and the National Union had authorized Shiflett and his fellow officers of Local 33 to negotiate and execute the new collective bargaining agreement without the National Union’s involvement. Judge Evans dismissed the charges, resolving the dispute in favor of the National Union and Batson, and ruled that the collective bargaining agreement executed by Bethlehem and Local 33 in March of 1984 was null and void. He discredited portions of Shiflett’s testimony, including his statement that Batson had authorized the new contract.

The NLRB affirmed Judge Evans in a published opinion. Marine & Shipbuilding Workers, 277 NLRB No. 191 , 121 L.R.R.M. (BNA) 1146 (NLRB January 10, 1986). While the NLRB found no basis to reverse any of Judge Evans’s credibility findings, it disavowed any. reliance on several specific credibility findings, none of which involved Shiflett’s testimony.

Bethlehem later agreed to pay $280,000 to union members and the National Union for compensation lost while the voided agreement was in force. Following Judge Evans’s ruling, both Shiflett and Batson began distributing handbills to the Local 33 membership, each attacking his critics. Batson published a total of six flyers; at issue here are two of those leaflets, Flyer No. 3 and Flyer No. 5. Flyer No. 3 alleged that through their leaflets; Shiflett and his supporters were trying “to steer your attention away from their crimes of conspiracy, penury, falsification of records, illegal contract ratification and violation of both the National [Union’s] Constitution and By-Laws of your Union.” The National Union and Batson describe this flyer as a report of the disposition of the case decided by Judge Evans and claim that the accusations were justified by the decision.

About this same time, a separate dispute arose concerning Local 33’s financial affairs. The National Union, after ⁶⁹⁵ an examination of the Local’s records performed by National Union Vice President/Secretary-Treasurer Robert Pemberton, accused Shiflett and his fellow Local 33 officer, James Harmon, of misuse of Local 33’s petty cash, receiving reimbursement for the same expenses twice, personal use of Local 33 monies, and misappropriating food donation funds. Shiflett issued a flyer stating that he could answer the charges but that it would be “a total waste of time.” Batson responded with Flyer No. 5, which challenged Shiflett: “[W]e think that you ought to answer these specific charges because all of the checks paid to Harmon were signed by you. If Harmon is guilty of misuse of the locals [sic] funds then you may be too.

A point of interest is that we have just started checking Alvin Shiflett’s gas receipts and have already found Mrs. Shiflett charging gas to the local.” Batson allegedly reviewed the relevant materials and relied on Pemberton’s examination of the Local’s financial records in concluding that Harmon and Shiflett had engaged in financial improprieties. At the National Union’s convention held in October of 1984, before Judge Evans's decision was filed, Batson announced to the delegates that he would “nail” Shiflett for negotiating the agreement with Bethlehem without authorization. According to Shiflett, the National Union conducted several heavily attended meetings of the Local 33 membership in December, 1984 and January, 1985, at which Batson repeated the allegations of financial improprieties in Flyer No. 5, called Shiflett a “crook,” and accused him of lying and committing perjury. Batson and Pemberton also met with Bethlehem management officials on December 4, 1984, and told them that Shiflett would be removed from office immediately for embezzlement and misappropriation of Local 33 funds.

Shiflett claims that Batson’s allegations quickly spread throughout the shipyard, causing many Local 33 members to believe that Shiflett was a crook and a ⁶⁹⁶ thief, and that he had been found guilty of the crimes alleged in Flyer No. 3. In June of 1985, the National Union and Batson called a special election of all Local 33 officers because of the alleged financial improprieties of Local 33’s Executive Secretary, James Harmon. Shiflett ran for re-election but lost. Shiflett claims that his fellow workers refused to accept his campaign literature, calling him a “crook” and a “thief.” He attributes his defeat to the election being held in the midst of the proliferation of false accusations against him by Batson and the National Union.

On August 1, 1985; Shiflett filed this action against the National Union, Batson and Pemberton 3 alleging defamation, intentional infliction of emotional distress, and conspiracy. Shiflett alleged that both prior and subsequent to Administrative Law Judge Evans’s decision, Batson and the National Union engaged in a campaign to remove him from office. The case was tried before a jury for ten days. Prior to submission of the case to the jury, the court granted judgment in favor of Batson and National Union on the conspiracy count and on two of the defamation counts.

Six defamation counts 4 and the intentional infliction of emotional distress count were submitted to the jury. Shiflett offered evidence that the allegedly false accusations of the National Union and Batson caused him to become extremely upset and nervous; he was unable to sleep, and his appearance became disheveled. Shiflett testified that he found it extremely difficult to work and, at times, when he was driving to work he would turn his car around and return home. He drank heavily, took drugs, ⁶⁹⁷ and eventually required in-patient hospitalization for depression and alcohol abuse.

Subsequent to his hospitalization, Shiflett obtained mental health counselling and medication. He claims to have lost control of his life, a claim which was supported by the testimony of his personal physician, Dr. Burton D’Lugoff, Assistant Professor of Medicine and Psychiatry at the Johns Hopkins Medical School. Evidence demonstrated that after losing the election for the presidency of Local 33, Shiflett accepted a management position with Bethlehem, which resulted in a $17,000 reduction in his income, from $45,000 to $28,000. He was laid off in January, 1989.

Eventually, he resigned from Bethlehem because of his discomfort there. He then worked several odd jobs and was employed in a North Carolina pizza shop at the time of trial. The National Union and Batson objected at trial to retrying the issues raised by Flyer No. 3, issues which they argued the NLRB already had decided. The defendants requested that the trial judge instruct the jury that it was bound by the NLRB’s decision, including the ruling that the Local 33/Bethlehem contract had been unlawfully executed.

The trial judge refused and instead instructed the jury that it was not bound by the NLRB decision, and that it must decide those issues independently. At the close of testimony, the parties agreed to the form of a special verdict sheet to be submitted to the jury. 5 ⁶⁹⁸ After deliberating for two days, the jury found in favor of Shiflett on each liability issue and awarded him $730,000: $610,000 in compensatory damages against the National Union and Batson; $50,000 in punitive damages against the National Union; and $70,000 in punitive damages against Batson. Because of the form of the special verdict, the jury’s award of compensatory and punitive damages against the National Union and Batson was not apportioned between their liabilities for defamation and intentional infliction of emotional distress. The court denied the motions of National Union and Batson for judgment N.O.V. and for a new trial.

II

Petitioners assert that the administrative law judge’s factual findings should have precluded any finding by the jury that Shiflett was defamed in Flyer No. 3. They argue: “Flyer No. 3 accused Shiflett of: 1) conspiring with Bethlehem Steel; 2) perjuring himself before the NLRB; 3) backdating documents; and 4) illegally ratifying a labor contract. If the NLRB’s fact-findings are credited, each of these statements is true, and, therefore, could not ⁶⁹⁹ be tortious. The trial judge nevertheless allowed the case to proceed, and instructed the jury accordingly that it was free to consider these factual issues for itself, notwithstanding the NLRB’s prior determination.

The jury then heard much of the same evidence the NLRB heard, and reached the opposite conclusion; it found the statements false, and equally improperly, found them tortious.” This claim of “issue preclusion” is properly characterized as the defense of “collateral estoppel.” See Murray International v. Graham, 315 Md. 543, 547 , 555 A.2d 502, 503-04 (1989); Mackall v. Zayre Corp., 293 Md. 221, 227-28 , 443 A.2d 98, 101-02 (1982). This Court has repeatedly recognized that there is a distinction between the principles of res judicata and collateral estoppel. Welsh v. Gerber Products, 315 Md. 510, 516 , 555 A.2d 486, 489 (1989); Mackall, 293 Md. at 227 , 443 A.2d at 101 ; Bankers & Ship. Ins. v. Electro Enter., 287 Md. 641, 652 , 415 A.2d 278, 284 (1980); Cook v. State, 281 Md. 665, 668-69 , 381 A.2d 671, 673 , cert. denied, 439 U.S. 839 , 99 S.Ct. 126 , 58 L.Ed.2d 136 (1978); MPC, Inc. v. Kenny, 279 Md. 29, 32 , 367 A.2d 486, 488-89 (1977); Sterling v. Local 438, etc., 207 Md. 132, 140-41 , 113 A.2d 389, 393 , cert. denied, 350 U.S. 875 , 76 S.Ct. 119 , 100 L.Ed.2d 773 (1955).

See LeBrun v. Marcey, 199 Md. 223, 226-27 , 86 A.2d 512, 514 (1952). This distinction was aptly expressed in Mackall : “[I]f a proceeding between parties involves the same cause of action as a previous proceeding between the same parties, the principle of res judicata applies and all matters actually litigated or that could have been litigated are conclusive in the subsequent proceeding. If a proceeding between parties does not involve the same cause of action as a previous proceeding between the same parties, the principle of collateral estoppel applies, and only those facts or issues actually litigated in the previous action are conclusive in the subsequent proceeding.” 293 Md. at 228 , 443 A.2d at 102 (citations omitted). Here, the initial proceeding involved an administrative action to ⁷⁰⁰ remedy an alleged unfair labor practice, whereas the subsequent judicial proceeding involved common law tort actions.

Manifestly, the two cases involve different causes of action; therefore, the principles of collateral estoppel apply. Shiflett argues that this defense is neither available in nor applicable to the instant dispute. We shall address each of the assertions separately. A. Shiflett argues that petitioners’ defense of collateral estoppel is an affirmative defense which was not raised in the answer to his complaint and has been waived under Maryland Rule 2-323(g), which identifies those “Affirmative Defenses” which “shall be set forth by separate defenses” in an answer to a complaint.

Collateral estoppel is such a defense. Although petitioners in their answer raised nine separate “affirmative defenses,” they failed to plead either collateral estoppel or res judicata. Indeed, it is unclear from the record whether the defense of collateral estoppel was properly raised at any point in the trial court. 6 Md.Rule 8-131(a) provides that “[ojrdinarily” the appellate court will not decide any issue unless it plainly appears by the record to have been raised in or decided by the trial court. The Court of Special Appeals, however, in the exercise of its discretion under that rule, expressly decided the question of collateral estoppel now posed to us by the petitioners.

That question was squarely raised in the petition for certiorari. The respondent did not file a cross-petition for certiorari and, therefore, did not raise the issue of whether the Court of Special Appeals abused its discretion under Md.Rule 8-131(a) by addressing the question. In reviewing a decision rendered by the Court of Special Appeals, this Court ordinarily will consider only an ⁷⁰¹ issue that has been raised in the petition for certiorari or any cross-petition. Md.Rule 8-131(b)(l).

Compare Neal v. Fisher, 312 Md. 685 , 691 n. 5, 541 A.2d 1314 , 1317 n. 5 (1988); Dean v. State, 291 Md. 198, 202 , 434 A.2d 552, 554 (1981); First Nat’l Bank v. Fid. & Dep. Co., 283 Md 228, 230-31, 389 A.2d 359, 361 (1978); Coleman v. State, 281 Md. 538, 547 , 380 A.2d 49, 55 (1977); Mazor v. State, Dep’t of Correction, 279 Md. 355 , 370-71 n. 8, 369 A.2d 82 , 92 n. 8 (1977); McMorris v. State, 277 Md. 62 , 65 n. 2, 355 A.2d 438 , 440 n. 2 (1976); Dempsey v. State, 277 Md. 134, 142-43 , 355 A.2d 455, 459 (1976); Walston v. Sun Cab Co., 267 Md. 559, 564-69 , 298 A.2d 391, 394-97 (1973). Under these circumstances, we shall address petitioners’ arguments based upon collateral estoppel. B. The Court of Special Appeals used the following test for determining whether the NLRB decision is entitled to preclusive effect: “Whether an administrative agency’s declaration should be given preclusive effect hinges on three factors: ‘(1) whether the [agency] was acting in a judicial capacity; (2) whether the issue presented to the district court was actually litigated before the [agency]; and (3) whether its resolution was necessary to the [agency’s] decision.’ ” Batson, 86 Md.App. at 356 , 586 A.2d at 799 (quoting West Coast Truck Lines v. American Industries, 893 F.2d 229, 234-35 (9th Cir.1990)).

This test was first enunciated in Exxon Corp. v. Fischer, 807 F.2d 842, 845-46 (9th Cir.1987), and its three prongs are supported by the Supreme Court caselaw on issue preclusion. In United States v. Utah Constr. Co., 384 U.S. 394 , 86 S.Ct. 1545 , 16 L.Ed.2d 642 (1966), the Court spoke particularly to the preclusive effect of administrative law rulings, stating that: “When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly ⁷⁰² before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose.” Id. at 422 , 86 S.Ct. at 1560 , 16 L.Ed.2d at 661 . Thus, agency findings made in the course of proceedings that are judicial in nature should be given the same preclusive effect as findings made by a court.

Prongs one and two of the Exxon test incorporate these considerations. Since Utah Constr. Co., collateral estoppel routinely has been applied to factual determinations made by federal agencies following a fair adversarial hearing. West Coast Truck Lines v. American Industries, 893 F.2d 229, 234-35 (9th Cir. 1990) (Interstate Commerce Commission); Frye v. United Steelworkers of America, 767 F.2d 1216, 1219-21 (7th Cir.) (NLRB), cert. denied, 474 U.S. 1007 , 106 S.Ct. 530 , 88 L.Ed.2d 461 (1985); Consolidated Exp., Inc. v. New York Shipping, Inc., 602 F.2d 494 , 503 (3d Cir.1979) (NLRB), vacated on other grounds, 448 U.S. 902 , 100 S.Ct. 3040 , 65 L.Ed.2d 1131 (1980); Safir v. Gibson, 432 F.2d 137, 143-45 (2d Cir.) (Federal Maritime Commission), cert. denied, 400 U.S. 942 , 91 S.Ct. 241 , 27 L.Ed.2d 246 (1970); Hudson-Berlind Corp. v. Local 807, Intern.

Broth., 597 F.Supp. 1282, 1286-87 (E.D.N.Y.1984) (NLRB); Chocallo v. Bureau of Hearings and Appeals, SSA, 548 F.Supp. 1349, 1362 (E.D.Pa.1982) (Merit Systems Protections Board), aff'd, 716 F.2d 889 (3d Cir.), cert. denied, 464 U.S. 983 , 104 S.Ct. 426 , 78 L.Ed.2d 360 (1983); Spancrete Northeast v. International Ass’n, etc., 514 F.Supp. 326, 331 (N.D.N.Y.) (NLRB), aff'd, 679 F.2d 874 (2d Cir.1981); Moore v. Allied Chemical Corp., 480 F.Supp. 377, 382-87 (E.D.Va.1979) (Occupational Health and Safety Administration); Whitman Elec. Inc. v. Local 363, Int. Bro. of Elec. W., 398 F.Supp. 1218, 1221 (S.D.N.Y.1974) (NLRB).

Compare these cases where collateral estoppel did not apply, City of Pompano Beach v. F.A.A., 774 F.2d 1529 , 1538-39 n. 10 (11th Cir.1985) (Federal Aviation Administration); Rosenfeld v. Department of Army, 769 F.2d 237, 240-41 (4th Cir.1985) (Civil Service Commission); Pantex Towing Corp. v. Glidewell, 763 F.2d ⁷⁰³ 1241, 1245-46 (11th Cir.1985) (NLRB); Nasem v. Brown, 595 F.2d 801, 806-07 (D.C.Cir.1979) (Civil Service Commission’s Office of Federal Equal Employment Opportunity); Associated Indus. of N. Y.S., Inc. v. United States Dept. of L., 487 F.2d 342 , 350 n. 10 (2d Cir.1973) (Department of Labor); Pygatt v. Painters’ Local No. 277, 763 F.Supp. 1301, 1307 (D.N.J.1991) (NLRB); Horton v. Hartford Life Ins. Co., 570 F.Supp. 1120, 1121-22 (N.D.Miss.1983) (Social Security Administration); Lykes Bros. S.S. Co. v. General Dynamics Corp., 512 F.Supp. 1266, 1269 (D.Mass.1981) (Office of Ship Construction); Old Dutch Farms, Inc. v. Milk Driv. & Dairy Emp. Loc.

U. No. 584, 281 F.Supp. 971, 974-75 (E.D.N.Y.1968) (NLRB). In Parklane Hosiery Co. v. Shore, 439 U.S. 322 , 99 S.Ct. 645 , 58 L.Ed.2d 552 (1979), the Court discussed the distinction between res judicata and collateral estoppel, remarking that: “Under the doctrine of res judicata, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, the second action is upon a different cause of action and the judgment in the prior suit precludes relitigation of issues actually litigated and necessary to the outcome of the first action.” Id. at 326 n. 5, 99 S.Ct. at 649 n. 5, 58 L.Ed.2d at 559 n. 5 (emphasis added). These factors are incorporated in prongs two and three of the Exxon test, that the issues be actually litigated and necessary to the outcome of the first action.

The rule in Maryland does not differ in any material respect from that adopted by the federal courts. 7 Sugarloaf v. Waste Disposal, 323 Md. 641 , 658-59 n. 13, 594 A.2d ⁷⁰⁴ 1115, 1123-24 n. 13 (1991) (no preclusive effect given to non-trial type hearing by Air Management Administration of the State Department of the Environment); White v. Prince George’s Co., 282 Md. 641, 658-59 , 387 A.2d 260, 270 (1978) (preclusive effect given to quasi judicial proceeding of Maryland Tax Court, which is an administrative agency). Recently in Sugarloaf, supra, we stated that: “[i]t is well settled that the doctrine [of res judicata] is only applicable to agency decisions in which: ‘ “[the] agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate.” ... The threshold inquiry is whether the earlier proceeding is the essential equivalent of a judicial proceeding.’ ” 323 Md. at 659 n. 13, 594 A.2d at 1123 -24 n. 13 (quoting William J. Davis, Inc. v. Young, 412 A.2d 1187, 1194 (D.C.App.1980)). Thus, current Maryland law on the preclusive effect of administrative agency decisions, under principles of res judicata or collateral estoppel, incorporates parallel considerations to those reflected in the Exxon test.

In Ewing v. Koppers Co., 312 Md. 45 , 537 A.2d 1173 (1988), we considered a related question. There, an employee who alleged that he was discharged because he had made a worker’s compensation claim filed a grievance against his employer under the collective bargaining agreement which fixed the terms and conditions of his employment. The employer denied the employee’s allegation, insisting that he had been fired for a number of reasons unrelated to any worker’s compensation claim. The collective bargaining agreement provided for the resolution of the grievance by binding arbitration.

After a hearing, the arbitrator found in favor of the employer. Shortly thereafter, the employee filed suit for wrongful discharge, alleging that he had been terminated in retaliation for an earlier filing of a worker’s compensation claim. The trial court granted summary judgment in the employer’s favor. We affirmed on the ground that the decision of the arbitrator that the employ ⁷⁰⁵ ee’s discharge was justified by reasons unrelated to his worker’s compensation claim precluded any relitigation of that issue in a judicial proceeding.

We there commented: “The general rule suggested by §§ 83 and 84 of the Restatement (Second) of Judgments (1982) is that a valid and final award of arbitration should be given the same res judicata effect as a judgment of a court if the procedure leading to the arbitration award embraced elements of adjudicatory procedure consistent with established principles of due process, and if according preclusive effect would not be incompatible with a legal policy or contractual requirement that the second tribunal be free to make an independent determination. With respect to the procedural requirements of the arbitration proceeding, comment c to § 84 states, in part: “ ‘When the arbitration procedure leading to an award is very informal, the findings in the arbitration should not be carried over through issue preclusion to another action where the issue would otherwise be subjected to much more intensive consideration. * * * * * * When arbitration affords opportunity for presentation of evidence and arguments substantially similar in form and scope to judicial proceedings, the award should have the same effect on issues necessarily determined as a judgment has. Economies of time and effort are thereby achieved for the prevailing party and for the tribunal in which the issue subsequently arises.’ ” Id. 312 Md. at 57, 537 A.2d at 1178-79 . We are persuaded that the Court of Special Appeals properly utilized the Exxon test, and we shall apply that three prong test in the case sub judice.

We agree with the conclusion of the Court of Special Appeals that the first prong is satisfied in this case: “By conducting a hearing, allowing the parties to present evidence and ruling on a dispute of law, the [agency] acted in a judicial capacity.” Batson, 86 Md.App. at 356 , 586 A.2d at ⁷⁰⁶ 799 (quoting West Coast Truck Lines, 893 F.2d at 235 ). The second prong of the Exxon test is whether the issue presented to the court was actually litigated- before the agency. Under both federal and Maryland law, the principle of collateral estoppel should only be applied where the identical issue sought to be relitigated was actually determined in the earlier proceeding. See Montana v. United States, 440 U.S. 147, 153 , 99 S.Ct. 970, 973 , 59 L.Ed.2d 210, 216-17 (1979); Cassidy v. Board of Education, 316 Md. 50, 57 , 557 A.2d 227, 230 (1989); Mackall, 293 Md. at 228 , 443 A.2d at 102 .

If anything is left to conjecture as to what was necessarily decided there can be no collateral estoppel. It must appear that the precise issue was raised and resolved in the former proceeding. Thus, we must determine whether the identical issues had to be decided by the jury in the instant case as were decided in the NLRB proceeding. Significantly, Flyer No. 3 accused Shiflett of having committed “crimes.” The NLRB finding of illegal contract ratification was a civil determination and is not conclusive on the issue of whether Shiflett committed criminal acts, which was the substance of the defamatory statement.

See Roper v. Mabry, 15 Wash.App. 819, 822 , 551 P.2d 1381, 1384 (Wash.Ct.App.1976) (civil court’s findings against defendant for fraud, wrongful taking of money and breach of fiduciary duty did not collaterally estop his subsequent defamation claim against business partner who called defendant a “thief” who “stole” and “embezzled” corporate money). The elements, proof, and nature of civil liability for illegal contract ratification are not identical to those of the crimes of conspiracy, perjury, 8 or falsification of records. 9 ⁷⁰⁷ Thus, the issues decided in the prior proceeding are not identical to those in the present action. See Street v. National Broadcasting Co., 645 F.2d 1227, 1233 (6th Cir. 1981) (Truth of allegedly libelous statement, that plaintiff falsely accused man of rape, was not established by determination in prior criminal rape trial that acquitted accused, and thus, was not subject to collateral estoppel), cert. dismissed, 454 U.S. 1095 , 102 S.Ct. 667 , 70 L.Ed.2d 636 (1989); Moore v. Allied Chemical Corp., 480 F.Supp. 377, 387 (E.D.Va.1979) (Truth of allegedly libelous statement, blaming plaintiff as “real culprit” for injuries resulting from toxic substance production, was not established by plaintiffs admission during OSHA proceeding of responsibility for conditions at work site, and thus, was not subject to collateral estoppel). Moreover, the relevant issue actually litigated in the NLRB proceeding was whether Local 33 had the authority to negotiate and reach a binding agreement with Bethlehem.

The petitioners’ statements about Shiflett in Flyer No. 3 were not at issue and therefore, were not evaluated. The issue presented in the subsequent tort action was whether the petitioners’ statements defamed Shiflett or whether petitioners’ conduct caused Shiflett severe emotional distress. Accordingly, under the second prong of the Exxon test and the applicable principles of collateral estoppel, Shiflett was not prevented from litigating the alleged defamation and intentional infliction of emotional distress resulting from the language employed in Flyer No. 3 in the subsequent tort action. The third factor of the Exxon test is whether resolution of the issue was necessary to the agency’s decision.

A factual issue is necessary to the determination only if its resolution is required to support the judgment entered in ⁷⁰⁸ the prior proceeding. See 18 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 4421, at 192 (1981). Contrary to the petitioners’ contentions, the agency never explicitly found Shiflett guilty of any wrongdoing, nor was such a finding necessary to the agency’s decision. Rather,- the key issue before the NLRB was whether Bat-son authorized Local 33 to negotiate and execute the agreement with Bethlehem.

Finding that Batson had not authorized such negotiations and agreement, the agency merely nullified the contract that Local 33 negotiated with Bethlehem. Accordingly, the NLRB decision that the National Union did not authorize Local 33 to negotiate a new agreement with Bethlehem did not establish the truth of the allegedly libelous statements in Flyer 3 that Shiflett was guilty of the “crimes of conspiracy, peijury, [and] falsification of records.” Consequently, Shiflett was not collaterally es-topped from proving the falsity of those statements in the instant case.

III

While this case involves allegedly defamatory statements made in Flyers No. 3 and No. 5 and during four different meetings, petitioners have raised the preemption defense only with respect to the statements in Flyer No. 3. Flyer No. 3 accused Shiflett of the “crimes of conspiracy, perjury, [and] falsification of records” based on the NLRB decision. Congress’ power to preempt state law is derived from the Supremacy Clause of Art. VI of the Federal Constitution. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 , 6 L.Ed. 23 (1824).

Congressional power to legislate in the area of labor relations is long established. See Labor Board v. Jones & Laughlin, 301 U.S. 1 , 57 S.Ct. 615 , 81 L.Ed. 893 (1937). Because Congress has never exercised authority to occupy the entire field in the area of labor legislation, the question of whether a certain state action is preempted by federal law is one of congressional intent. ⁷⁰⁹ Malone v. White Motor Corp., 435 U.S. 497, 504 , 98 S.Ct. 1185, 1190 , 55 L.Ed.2d 443, 450 (1978) (“The purpose of Congress is the ultimate touchstone.”) (quoting Retail Clerks v. Schermerhorn, 375 U.S. 96, 103 , 84 S.Ct. 219, 223 , 11 L.Ed.2d 179, 184 (1963)). Congress has not explicitly stated whether and to what extent it intended to preempt state regulation of labor relations.

Therefore, the Supreme Court has declared when the states may and may not act respecting labor relations, establishing several types of labor law preemption. One is based on San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236 , 79 S.Ct. 773 , 3 L.Ed.2d 775 (1959). A second type of labor law preemption is based on § 301 of the Labor Management Relations Act of 1947 (LMRA), 29 U.S.C. § 185 (1988).

The petitioners argue that “[t]he judgment below — resting entirely upon state law — runs afoul of both Garmon preemption and § 301 preemption.” We disagree. Garmon preemption does not apply because the conduct that forms the basis for Shiflett’s claims of defamation and intentional infliction of emotional distress is not covered by the NLRA and has been excepted from preemption by the Supreme Court. Section 301 preemption does not apply because resolution of Shiflett’s claims does not depend upon interpretation of contracts covered by § 301 of the LMRA. A. The Supreme Court first discussed the extent of federal labor preemption in San Diego Bldg.

Trades Council v. Garmon, supra. In Garmon , the state court had entertained a suit for an injunction and damages brought by an employer against a union for picketing directed at his customers and suppliers. The picketing had the purpose of pressuring the employer into establishing a union shop. The state trial court rendered judgment for the employer, enjoining the picketing and awarding damages.

On appeal, the state Supreme Court affirmed that judgment, holding that the state court had jurisdiction over the dispute. The U.S. Supreme Court granted certiorari to determine wheth ⁷¹⁰ er the state court had jurisdiction to award damages arising out of peaceful union activity. The Court rejected the proposition that preemption could be decided on a case by case basis, declaring that general rules were necessary. The Court then formulated the general rule that state regulation is preempted first, “[w]hen it is clear or may fairly be assumed that the activities which a State purports to regulate are protected by § 7 of the National Labor Relations Act, or constitute an unfair labor practice under § 8.” Id. at 244, 79 S.Ct. at 779 , 3 L.Ed.2d at 782 .

Even where it is not clear that the activity is protected or prohibited, the determination of the status of other activity is to be made by the NLRB, the agency declared by Congress to have special competence. This led to the second part of the Garmon test: “[w]hen an activity is arguably subject to § 7 or § 8 of the Act, the States as well as the federal courts must defer to the exclusive competence of the [NLRB] ...” Id. at 245, 79 S.Ct. at 780 , 3 L.Ed.2d at 783 . The Court, however, recognized two exceptions to this general rule. States may regulate activity (1) which is “merely a peripheral concern” of the NLRA, and (2) “where the regulated conduct touches interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, we could not infer that Congress had deprived the States of the power to act.” Id. at 243-44 , 79 S.Ct. at 779 , 3 L.Ed.2d at 782 (footnote omitted).

These exceptions were explicated in later Supreme Court cases. Following Garmon , the Supreme Court rendered its decision in Linn v. Plant Guard Workers, 383 U.S. 53 , 86 S.Ct. 657 , 15 L.Ed.2d 582 (1966), which concerned an allegedly libelous leaflet about a company official which was circulated by a union during an organizing campaign. A defamation action was brought against the union. The United States District Court dismissed the complaint on the ground that the NLRB had exclusive jurisdiction over the subject matter because the case was controlled by Garmon .

On appeal, the Supreme Court noted the importance of uniform ⁷¹¹ labor regulation and observed that labor disputes are “ordinarily heated affairs ... frequently characterized by ... personal accusations, misrepresentations and distortions.” Id. at 58, 86 S.Ct. at 660-61, 15 L.Ed.2d at 587 . Nevertheless, the Court found that the intentional circulation of defamatory materials fits within the exceptions specifically carved out by Garmon and therefore was not protected by the NLRA. Consequently, the Court held that a state is not preempted from applying its libel laws to statements made in the context of labor-management relations, so long as the state applies a standard no more inclusive than that announced in New York Times Co. v. Sullivan, 376 U.S. 254, 280 , 84 S.Ct. 710, 726 , 11 L.Ed.2d 686, 706 (1964): that the defamatory statements must have been published with knowledge of their falsity or with reckless disregard of their falsity, and that a plaintiff can recover damages only upon proof that the statements caused actual injury. 10 This exception to the Garmon rule was justified on several grounds. First, the Court noted that the underlying conduct — the intentional circulation of defamatory material known to be false — was not protected under the NLRA, and thus, there was no risk that permitting the state cause of action to proceed would result in state regulation of conduct that Congress intended to protect.

Second, state regulation of malicious defamation is “merely a peripheral concern” of the NLRA, and the state has an overriding interest in protecting its citizens from malicious libel. This interest is “ ‘so deeply rooted in local feeling and responsibility’ that it fits within the exception specifically carved out by Garmon.” Id. 383 U.S. at 62 , 86 S.Ct. at 663, 15 L.Ed.2d at 589 . Third, since the NLRA does not prescribe any procedure for dealing with tortious conduct, existing liabilities ⁷¹² for such conduct are not eliminated. Thus, while the NLRB may find that the defamation violates § 8 and justifies setting aside an election, “[t]he injury that the statement might cause to an individual’s reputation ... has no relevance to the Board’s function.” Id. at 63, 86 S.Ct. at 663, 15 L.Ed.2d at 590 .

Fourth, the NLRB “can award no damages, impose no penalty, or give any other relief to the defamed individual.” Id. This “lack of concern with the ‘personal’ injury caused by malicious libel, together with [the NLRB’s] inability to provide redress to the maligned party, vitiates the ordinary arguments for pre-emption.” Id. at 64 , 86 S.Ct. at 663-64, 15 L.Ed.2d at 590 . The Court observed that damages for personal injuries should be assessed without regard to the merits of the labor controversy, and also suggested that an excessive damage remedy might be preempted. In Farmer v. United Bhd. of Carpenters, 430 U.S. 290 , 97 S.Ct. 1056 , 51 L.Ed.2d 338 (1977), the Supreme Court fully adopted its Linn rationale in recognizing that state courts retained jurisdiction over claims of intentional infliction of emotional distress brought against union officers.

Plaintiff union member alleged that because he had a disagreement with local union officers, the union refused to refer him out of the union hiring hall and reacted to his complaint against this discrimination with “a campaign of personal abuse and harassment in addition to continued discrimination in referrals.” The Farmer Court emphasized that the NLRA does not protect “outrageous conduct” by union officers, and the state has a substantial interest in prohibiting such conduct, an interest no less worthy of protection than damage to reputation. The Court opined that although plaintiff’s challenge of the union’s conduct, as in Linn , risks interference with the NLRA, because the discrimination in hiring hall referrals would make out an unfair labor practice, this risk does not counterbalance the substantial state interest in protecting its citizens. If the charges in the complaint were filed with the NLRB, the Court instructed, the Board would not consider the union’s ⁷¹³ conduct that allegedly caused emotional distress and physical injury. Conversely, the state court action could be adjudicated without considering the merits of the underlying labor dispute.

The Court cautioned that “it is essential that the state tort be either unrelated to employment discrimination or a function of the particularly abusive manner in which the discrimination is accomplished or threatened rather than a function of the actual or threatened discrimination itself.” Id. at 305, 97 S.Ct. at 1066 , 51 L.Ed.2d at 353 (footnote omitted). The jury is to be instructed that the employment discrimination issue should play no part in its determination of liability for damages, and the conduct complained of must be “outrageous” — merely robust language or the clash of strong personalities is not enough to sustain state court jurisdiction. Finally, the state trial courts have the responsibility to assure that the damages awarded are not excessive. The National Union and Batson rebut these Supreme Court holdings by quoting one sentence of Farmer stating that the Court found no preemption in that case because “the state-court tort action can be adjudicated without resolution of the ‘merits’ of the underlying labor dispute.” Id. at 304 , 97 S.Ct. at 1065 , 51 L.Ed.2d at 353 .

The petitioners assert that the jury’s finding on the tort claims here usurped the function of the NLRB and overruled the NLRB’s decision on the merits of the labor dispute. However, a review of the Farmer Court’s discussion of this issue clearly establishes that the petitioners quoted Farmer out of context. While recognizing that “[t]here is, to be sure, some risk that the state cause of action for infliction of emotional distress will touch on an area of primary federal concern,” Id. at 303 , 97 S.Ct. at 1065 , 51 L.Ed.2d at 352 , the Court went on to explain: “Viewed, however, in light of the discrete concerns of the federal scheme and the state tort law, that potential ⁷¹⁴ for interference is insufficient to counterbalance the legitimate and substantial interest of the State in protecting its citizens. If the charges in Hill’s complaint were filed with the Board, the focus of any unfair labor practice proceeding would be on whether the statements or conduct on the part of Union officials discriminated or threatened discrimination against him in employment referrals for reasons other than failure to pay Union dues.

Whether the statements or conduct of the respondents also caused Hill severe emotional distress and physical injury would play no role in the Board’s disposition of the case, and the Board could not award Hill damages for pain, suffering, or medical expenses. Conversely, the state-court tort action can be adjudicated without resolution of the 'merits’ of the underlying labor dispute. Recovery for the tort of emotional distress under California law requires proof that the defendant intentionally engaged in outrageous conduct causing the plaintiff to sustain mental distress. The state court need not consider, much less resolve, whether a union discriminated or threatened to discriminate against an employee in terms of employment opportunities.” Id. at 304 , 97 S.Ct. at 1065-66 , 51 L.Ed.2d at 352-53 (citations omitted).

Thus, where the conduct at issue in the state litigation is said to be arguably prohibited by the NLRA and hence within the exclusive jurisdiction of the NLRB, as contended here, the critical inquiry in applying the Garmon rules is “whether the controversy presented to the state court is identical with that which could be presented to the Board,” Belknap, Inc. v. Hale, 463 U.S. 491, 510 , 103 S.Ct. 3172, 3183 , 77 L.Ed.2d 798, 814 (1983), not whether there is a similarity of facts to be presented before the NLRB and the state court, or whether the same events and conduct gave rise to both an unfair labor practice claim and a state tort claim. The petitioners contend that the issue of improper ratification of Local 33/Bethlehem contract was prohibited by § 8 of the NLRA and within the NLRB’s exclusive ⁷¹⁵ jurisdiction, and therefore, no other tribunal had the authority to hear a case resolving the question of ratification. We agree. The facts of this case, however, do not fit that characterization.

The jury in this case resolved the issues of defamation and intentional infliction of emotional distress, not that of illegal contract ratification. The petitioners, further, assert that here a state jury was required to decide factual issues identical to factual issues that had already been fully adjudicated by the NLRB, and that in order for there to be a state cause of action, the jury had to resolve those issues contrary to the way they were resolved by the Board. What the National Union and Batson fail to understand is that the issues before the jury were completely different from the issues before the administrative law judge. The conduct giving rise to the torts occurred after the administrative hearing and was not the same conduct which formed the basis of the unfair labor practice charges.

In Flyer No. 3, the National Union and Batson accused Shiflett of committing the “crimes of conspiracy, perjury, [and] falsification of records.” At trial, Shiflett introduced evidence to establish that these statements were false, defamatory and made with actual malice. In contrast, the issue before the administrative law judge and the focus of that proceeding concerned whether Local 33 had authority to negotiate and reach a binding agreement with Bethlehem. The jury did not have to decide this issue. Whether the National Union and Batson’s statements that Shiflett committed “crimes” defamed Shiflett or whether their conduct caused Shiflett severe emotional distress played no role in the disposition of the NLRB case.

In summary, since the focus of each proceeding was different, the state tort claims were not preempted. 11 ⁷¹⁶ It is inconsequential that some of the evidence introduced at the trial was similar to evidence introduced at the hearing before the administrative law judge. This would be true with virtually every state proceeding arising out of a labor dispute. “The determination of potential interference require[s] a more searching comparison than merely the factual bases of each controversy. Cf. [Local 926, Intern. Union of Operating Engineers ] Jones, 460 U.S. [669] at 689, 103 S.Ct. [1453] at 1465 [ 75 L.Ed.2d 368 (1983)] (Rehnquist, J., dissenting) (quoting Farmer v. Carpenters, 430 U.S. 290, 304 , 97 S.Ct. 1056, 1065 , 51 L.Ed.2d 338 (1977)).

The broader inquiry into the controversies [involves] an examination of the interests protected by and relief requested for each claim. See Belknap, 463 U.S. at 510-11 , 103 S.Ct. at 3183-84 ; Sears [, Roebuck and Co. v. San Diego County Dist. Council,] 436 U.S. [180] at 188-89, 198, 98 S.Ct. [1745] at 1753, 1758 [ 56 L.Ed.2d 209 (1978)].” Windfield v. Groen Div. Dover Corp., 890 F.2d 764, 768 (5th Cir.1989).

As the Farmer Court explained, a state court is permitted to consider the same evidence and evaluate the same events and conduct that was or may be the subject of an unfair labor practice proceeding for the purpose of determining whether a tort had been committed. Farmer, 430 U.S. at 304 , 97 S.Ct. at 1065 , 51 L.Ed.2d at 352-53 . Since the concerns, focus, and legal issues in the state court proceeding are different and do not require interpretation of federal labor law, and since the State has an overriding concern in protecting its citizens from defamatory attacks and outrageous conduct, there is no preemption. See Belknap, 463 U.S. at 509-11 , 103 S.Ct. at 3182-83 , 77 L.Ed.2d at 814—15; Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180, 197 , 98 S.Ct. 1745, 1757 , 56 L.Ed.2d 209, 225 (1978); Windfield, 890 F.2d at 768-69 .

The petitioners rely on DeSantiago v. Laborers Intern. Union Local 1140, 914 F.2d 125 (8th Cir.1990) for the proposition that when there is no significant difference between allegations found by the NLRB to be unfair labor ⁷¹⁷ practices and allegations contained in a subsequent state tort suit, the claims are within the exclusive jurisdiction of the NLRB and, therefore, preempted. Petitioners’ reliance is misplaced; DeSantiago is distinguishable on its facts. There, the union members sued their local union in state court alleging intentional interference with their employment contracts, violation of their rights under the state “right to work” and “anti-blacklisting” laws, and violation of their rights under the union constitution.

The union members argued that although they had already obtained redress against the local union in an NLRB proceeding, they should be