482 U.S. 386 (1987), 86-526, Caterpillar, Inc. v. Williams

Docket Nº:No. 86-526
Citation:482 U.S. 386, 107 S.Ct. 2425, 96 L.Ed.2d 318, 55 U.S.L.W. 4804
Party Name:Caterpillar, Inc. v. Williams
Case Date:June 09, 1987
Court:United States Supreme Court
 
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Page 386

482 U.S. 386 (1987)

107 S.Ct. 2425, 96 L.Ed.2d 318, 55 U.S.L.W. 4804

Caterpillar, Inc.

v.

Williams

No. 86-526

United States Supreme Court

June 9, 1987

Argued April 21, 1987

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

Syllabus

Caterpillar Tractor Co. (Caterpillar) hired respondents to work at its San Leandro, California, facility in positions covered by its collective bargaining agreement with a union. Respondents eventually assumed management and other positions outside the bargaining unit, and allegedly were repeatedly assured by Caterpillar that, if the San Leandro facility ever closed, Caterpillar would employ them at other facilities. Subsequently, they were downgraded to unionized positions, but allegedly assured that the downgrades were temporary. However, Caterpillar later notified them that its San Leandro plant would close and that they would be laid off. Respondents then filed this action, based solely on state law, in a California state court, alleging that Caterpillar thereby breached their individual employment contracts. Caterpillar removed the action to Federal District Court, arguing that removal was proper because any individual employment contracts made with respondents were, as a matter of federal substantive labor law, merged into and superseded by the collective bargaining agreement. Respondents denied that they alleged any federal claim, and sought remand of the action to the state court. The Federal District Court held that removal was proper, and dismissed the case when respondents refused to amend the complaint to attempt to state a claim under § 301 of the Labor Management Relations Act, 1947, which confers federal jurisdiction as to suits for violations of collective bargaining agreements. The Court of Appeals reversed, holding that the case was improperly removed.

Held: Respondents' state law complaint for breach of the individual employment contracts is not removable to Federal District Court. Pp. 391-399.

(a) The presence or absence of federal question jurisdiction that will support removal is governed by the "well-pleaded complaint rule," under which federal jurisdiction exists only when a federal question is presented on the face of the properly pleaded complaint. Ordinarily, a case may not be removed on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the complaint, and even if both parties concede that the federal defense is the only question truly at issue. However, under the "complete preemption doctrine," which is a corollary to the well-pleaded complaint rule, once an area of state law has been completely preempted, any claim purportedly

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based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law. Pp. 391-394.

(b) Respondents' state law contract claims are not "completely preempted" § 301 claims. Section 301 governs claims founded directly on rights created by collective bargaining agreements and claims substantially dependent on analysis of such agreements. However, respondents alleged that Caterpillar breached individual employment contracts with them, and § 301 says nothing about the [107 S.Ct. 2427] content or validity of such contracts. Although respondents, as bargaining unit employees at the time of the plant closing, could have brought suit under the collective agreement, they, as masters of the complaint, chose not to do so. Moreover, their complaint is not substantially dependent upon interpretation of the collective bargaining agreement. Pp. 394-395.

(c) J. I. Case Co. v. NLRB, 321 U.S. 332, does not support Caterpillar's contention that, when respondents returned to the collective bargaining unit, their individual employment contracts were subsumed into, or eliminated by, the collective bargaining agreement so as to be preempted by § 301. That decision does not stand for the general proposition that all individual employment contracts are inevitably superseded by a subsequent collective agreement. The fact that an employer may raise such a question in state court and might ultimately prove that the employee's claims are preempted does not establish that they are removable. Pp. 395-398.

(d) There is no merit to Caterpillar's argument that § 301 preempts a state law claim when the employer raises only a defense that requires a court to interpret or apply a collective bargaining agreement, such as Caterpillar's defense claiming that, in its collective bargaining agreement, its unionized employees waived any preexisting individual employment contract rights. The presence of a federal question, even a § 301 question, in a defensive argument does not overcome the paramount policies embodied in the well-pleaded complaint rule. Pp. 398-399.

786 F.2d 928, affirmed.

BRENNAN, J., delivered the opinion for a unanimous Court.

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BRENNAN, J., lead opinion

JUSTICE BRENNAN delivered the opinion of the Court.

The question for decision is whether respondents' state law complaint for breach of individual employment contracts is completely preempted by § 301 of the Labor Management Relations Act, 1947 (LMRA), 61 Stat. 156, 29 U.S.C. § 185, and therefore removable to Federal District Court.

I

At various times between 1956 and 1968, Caterpillar Tractor Company (Caterpillar) hired respondents to work at its San Leandro, California, facility. Complaint ¶¶ 10-26, App. to Pet. for Cert. (App.) A-40 - A-42. Initially, each respondent filled a position covered by the collective bargaining agreement between Caterpillar and Local Lodge No. 284, International Association of Machinists (Union). Each eventually became either a managerial or a weekly salaried employee, positions outside the coverage of the collective bargaining agreement. Respondents held the latter positions for periods ranging from 3 to 15 years; all but two respondents served 8 years or more. App. A-97 - A-98.

Respondents allege that, "[d]uring the course of [their] employment, as management or weekly salaried employees," Caterpillar made oral and written representations that

they could look forward to indefinite and lasting employment with the corporation, and that they could count on the corporation to take care of them.

Complaint ¶¶ 27A, 27D, App. A-43.

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More specifically, respondents claim that,

while serving Caterpillar as managers or weekly salaried employees, [they] were assured that, if the San Leandro facility of Caterpillar ever closed, Caterpillar would provide employment opportunities for [them] at other facilities of Caterpillar, its subsidiaries, divisions, or related companies.

Id. ¶ 27F, App. A-48.1 Respondents maintain that these "promises were continually and repeatedly made," and that they created "a total employment agreement wholly independent of the collective bargaining agreement pertaining to hourly employees." Id. ¶ 29, App. A-49.2 In reliance on these promises, respondents assert, they "continued to remain in Caterpillar's employ rather than seeking other employment." Id. ¶ 31, App. A-49.

Between May, 1980, and January, 1984, Caterpillar downgraded respondents from managerial and weekly salaried positions to hourly positions covered by the collective bargaining agreement. Respondents allege that, at the time they were downgraded to unionized positions, Caterpillar supervisors orally assured them that the downgrades were temporary. Id. ¶ 27F, App. A-48. On December 15, 1983, Caterpillar notified respondents that its San Leandro plant would close and that they would be laid off.

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On December 17, 1984, respondents filed an action based solely on state law in California state court, contending that Caterpillar

breached [its] employment agreement by notifying [respondents] that the San Leandro plant would be closed and subsequently advising [respondents] that they would be terminated

without regard to the individual employment contracts. Id. ¶ 32, App. A-49.3 Caterpillar then removed the action to federal court, arguing that removal was proper because any individual employment contracts made with respondents "were, as a matter of federal substantive labor law, merged into and superseded by the . . . collective bargaining agreements." Petition for Removal, App. A-36. Respondents denied that they alleged any federal claim, and immediately sought remand of the action to the state court. In an oral opinion, the District Court held that removal to federal court was proper, and dismissed the case when respondents refused to amend their complaint to attempt to state a claim under § 301 of the LMRA. App. A-4.

The Court of Appeals for the Ninth Circuit reversed, holding that the case was improperly removed. 786 F.2d 928 (1986). The court determined that respondents' state law claims were not grounded, either directly or indirectly, upon rights or liabilities created by the collective bargaining agreement. Caterpillar's claim that its collective bargaining agreement with the Union superseded and extinguished all previous individual employment contracts alleged by respondents was deemed irrelevant. The court labeled this argument a "defensive allegation," "raised to defeat the [respondents'] claims grounded in those independent contracts." Id. at 936. Since respondents' cause of action did not require interpretation or application of the collective bargaining agreement,

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the court concluded that the complaint did not arise under [107 S.Ct. 2429] § 301 and was not removable to federal court.4

We granted certiorari, 479 U.S. 960 (1986), and now affirm.

II

A

The Court recently set forth in some detail "[t]he century-old jurisdictional framework governing removal of federal

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question cases from state into federal courts," Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 63 (1987) (citing Franchise Tax Board of Cal....

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