Niehaus v. Greyhound Lines, Inc.
| Decision Date | 12 April 1999 |
| Docket Number | CLC,D,AFL-CI,CL,No. 97-17384,97-17384 |
| Citation | 173 F.3d 1207 |
| Parties | 160 L.R.R.M. (BNA) 2995, 138 Lab.Cas. P 58,627, 99 Cal. Daily Op. Serv. 2654, 1999 Daily Journal D.A.R. 3480 Carl E. NIEHAUS, Plaintiff-Appellee, v. GREYHOUND LINES, INC., Defendant, Amalgamated Transit Union,, and National Local 1700-ATU,, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
David S. Allen, Jacobs, Burns, Sugarman, Orlove & Stanton, Chicago, Illinois, for the defendants-appellants.
Joseph E. Orzano, Reno, Nevada, for the plaintiff-appellee.
Appeal from the United States District Court for the District of Nevada Edward C. Reed, Jr., District Judge, Presiding. D.C. No. CV-96-00425-ECR.
Before: WOOD, * THOMPSON, and THOMAS, Circuit Judges.
Plaintiff-appellee Carl E. Niehaus was employed by Greyhound Lines, Inc. from 1961 until 1995. Niehaus lost his job with Greyhound in January 1995 and soon thereafter filed a wrongful termination lawsuit in Nevada state court against Greyhound, the Amalgamated Transit Union, which represented Greyhound employees, and several individuals. The defendants removed the case to federal court. After disposing of all of Niehaus' federal claims, the district court held that his remaining state law claims were not preempted by federal labor law and remanded the matter to state court. Defendant-appellants, Amalgamated Transit Union and Amalgamated Transit Union Local 1700, appeal, arguing that preemption was mandatory under the facts of this case, and that the district court's decision to remand the matter to state court was therefore in error.
From 1961 until 1986, Carl Niehaus was employed as a Greyhound "station employee" in various positions, all of which were represented by Amalgamated Transit Union Local 1225 ("Local 1225"), a local union affiliated with the Amalgamated Transit Union ("International Union"). In 1986, Niehaus was offered a non-union position in Greyhound management. Niehaus claims that while he was considering the move to management, Russell Buell, the president of Local 1225, assured him that he could return to union status if he ever left Greyhound management. At that time, the collective bargaining agreement applicable to Niehaus' position provided:
All present bargaining unit members who had accepted supervisory status prior to December 3, 1983, will continue to retain and accumulate seniority as in the past. Effective December 3, 1983, employees under the terms of this agreement represented by Locals 1055, 1222, 1223, 1225, 1384, and 1508 accepting official positions with the Company will retain, but not accumulate seniority.
In June 1986, Niehaus accepted the management position. He remained in management until January 1995. Niehaus claims that, in 1994, he consulted his supervisors at Greyhound and Buell about his decision to return to the union. In early January 1995, Niehaus notified both Greyhound and Amalgamated Transit Union Local 1700 ("Local 1700") 1 of his "decision to return to the Amalgamated Transit Union unit effective January 16, 1995," and that he was "relinquishing the supervisory position of Customer Service Manager." Niehaus asserts that he believed that, in order to return to the union, he had to resign from management, notify the union of his decision to return, and wait to be reinstated by the union. However, Local 1700 informed Niehaus that, because he had been in a management position for longer than two years, he did not have a right to return to union status based on the new collective bargaining agreement which went into effect March 19, 1987. This agreement provided:
Unit employees accepting supervisory positions with the Company shall retain seniority during the first twenty-four (24) months in such positions, and shall suffer no loss of seniority if they return to the unit within that time.
Meanwhile, Greyhound treated Niehaus' notification as a resignation. Niehaus contacted Local 1700 and then the International Union repeatedly, attempting to convince them of his "right" to return to union status. The unions continued to assert that Niehaus had no right to return to union status and would have to apply to Greyhound as a new employee. If he was hired, he could then return to the union.
In June 1996, Niehaus filed suit in Nevada state court against Greyhound, his former supervisor, and the International Union. The defendants removed the lawsuit to federal court, where Niehaus filed an amended complaint adding Local 1700 as a defendant. The amended complaint raised three federal claims: breach of the collective bargaining agreement, breach of the duty of fair representation, and age discrimination. It also raised state law claims for fraud, negligent misrepresentation, breach of the covenant of good faith, and breach of contract. Local 1700 filed a motion for summary judgment. The International Union filed a motion to dismiss, which the court treated as a motion for summary judgment because it included matters outside the pleadings. While these motions were pending, Niehaus settled with Greyhound and his former supervisor.
On September 30, 1997, the district court issued an order dismissing Niehaus' duty of fair representation and collective bargaining claims for lack of standing, holding that Niehaus was neither a member of the bargaining unit covered by the 1987 collective bargaining agreement or a third party beneficiary of that agreement. The court also granted summary judgment to the defendants on Niehaus' age discrimination claim based on the conclusion that Niehaus had failed to make out a prima facie case of age discrimination. The court held that, to the extent that Niehaus was claiming that the defendants breached the collective bargaining agreement, his state law claims were preempted by federal labor law. However, the court determined that Niehaus had alleged other, independent claims arising from a separate contract that Niehaus contends existed between himself and the unions, based on his consultations with union official Buell. Because Niehaus was not subject to the collective bargaining agreement, the court reasoned that this separate contract could not have covered rights included in the collective bargaining agreement and, therefore, Niehaus' state law claims were not based directly on rights created by the collective bargaining agreement. Furthermore, because the court found that Niehaus had no rights under the collective bargaining agreement, it held that his claims neither relied upon nor required an interpretation of that agreement. Therefore, the court held that Niehaus' state law claims based on an alleged separate contract were not preempted and remanded the matter to state court. After filing an unsuccessful Fed.R.Civ.P. 59(e) motion, the International Union and Local 1700 brought this appeal, asserting that Niehaus' state law claims are completely preempted by federal labor law and, therefore, the district court erred in remanding the matter to state court.
As an initial matter, Niehaus asserts that this court does not have jurisdiction to review the district court's remand of his pendant state claims. However, a district court order remanding pendant state claims on discretionary grounds is not a remand on jurisdictional grounds pursuant to 28 U.S.C. § 1447(c), Lee v. City of Beaumont, 12 F.3d 933, 935 (9th Cir.1993), and we may review remand orders based on grounds other than those set forth in § 1447(c). Quackenbush v Allstate Ins. Co., 517 U.S. 706, 711-12, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996). Furthermore, Appellants have presented their appeal in the proper form for review. The district court made the substantive decision that the state law claims were not preempted by federal law, see Sever v. Alaska Pulp Corp., 978 F.2d 1529, 1539 (9th Cir.1992), and when a remand order is based on a substantive determination of the merits, the order is reviewable on appeal as a final collateral order. Lee, 12 F.3d at 936. We have jurisdiction pursuant to 28 U.S.C. § 1291 and turn our attention to the merits of Appellants' claims.
The unions argue that the district court erred in remanding Niehaus' state law claims to state court because the claims were preempted by federal labor law. A district court's decision that state law claims are not preempted by federal law is a question of law which we review de novo. Toumajian v. Frailey, 135 F.3d 648, 652 (9th Cir.1998).
"Section 301 of the Labor Management Relations Act (LMRA) preempts state law claims that are based directly on rights created by a collective bargaining agreement as well as claims that are substantially dependent on an interpretation of a...
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