Cavallaro v. Umass Memorial Healthcare, Inc.

• Decision Date: 18 April 2012
• Docket Number: Nos. 11–1073,11–1793.,s. 11–1073
• Citation: 18 Wage & Hour Cas.2d (BNA) 1732,678 F.3d 1
• Parties: Patricia CAVALLARO, on behalf of herself and all other employees similarly situated; Monique Herman, on behalf of herself and all other employees similarly situated, Plaintiffs, Appellants, v. UMASS MEMORIAL HEALTHCARE, INC.; UMass Memorial Hospitals, Inc.; UMass Memorial Medical Center, Inc.; HealthAlliance Hospitals, Inc.; Marlborough Hospital; The Clinton Hospital Association; Wing Memorial Hospital Corporation; John O'Brien; Patricia Webb, Defendants, Appellees. Patricia Cavallaro, on behalf of herself and all other employees similarly situated; Monique Herman, on behalf of herself and all other employees similarly situated, Plaintiffs, Appellants, v. UMass Memorial Health Care, Inc.; UMass Memorial Hospitals, Inc.; UMass Memorial Medical Center, Inc.; HealthAlliance Hospitals, Inc.; Marlborough Hospital; The Clinton Hospital Association; Wing Memorial Hospital Corporation; John O'Brien; Patricia Webb; UMass Memorial Healthcare 401K, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

678 F.3d 1

18 Wage & Hour Cas.2d (BNA) 1732

Patricia CAVALLARO, on behalf of herself and all other employees similarly situated; Monique Herman, on behalf of herself and all other employees similarly situated, Plaintiffs, Appellants,

v.UMASS MEMORIAL HEALTHCARE, INC.; UMass Memorial Hospitals, Inc.; UMass Memorial Medical Center, Inc.; HealthAlliance Hospitals, Inc.; Marlborough Hospital; The Clinton Hospital Association; Wing Memorial Hospital Corporation; John O'Brien; Patricia Webb, Defendants, Appellees.

Patricia Cavallaro, on behalf of herself and all other employees similarly situated; Monique Herman, on behalf of herself and all other employees similarly situated, Plaintiffs, Appellants,

v.UMass Memorial Health Care, Inc.; UMass Memorial Hospitals, Inc.; UMass Memorial Medical Center, Inc.; HealthAlliance Hospitals, Inc.; Marlborough Hospital; The Clinton Hospital Association; Wing Memorial Hospital Corporation; John O'Brien; Patricia Webb; UMass Memorial Healthcare 401K, Defendants, Appellees.

Nos. 11–1073, 11–1793.

United States Court of Appeals, First Circuit.

Heard Nov. 10, 2011.

Decided April 18, 2012.

Patrick J. Solomon with whom Guy A. Talia, Thomas & Solomon LLP, Jody L. Newman and Collora LLP were on brief for appellants.

Lisa A. Schreter with whom Angelo Spinola, Bradley E. Strawn, Anne M. Mellen, Gregory C. Keating and Littler Mendelson, P.C. were on brief for appellees.

Before BOUDIN, LIPEZ and HOWARD, Circuit Judges.

BOUDIN, Circuit Judge.

This appeal embraces two of the many private lawsuits brought against healthcare providers throughout the country by a single law firm. These two suits, like others of the same pattern, allege that various hospital employees who work for the particular hospital or hospital group have been deprived of compensation for work performed during their meal break, for work performed before and after shifts, and for time spent attending training sessions.

The named plaintiffs, Patricia Cavallaro and Monique Herman, brought the two lawsuits at issue here seeking to represent a potential class of hospital employees—some covered by collective bargaining agreements (“CBAs”) and others not; the defendants were eight named entities (primarily hospitals and health care providers) in the UMass Memorial Healthcare network (“UMass”) and two officials of UMass (CEO John O'Brien and Human Resources VP Patricia Webb). Ultimately, the district court dismissed all but one claim on grounds of “complete preemption”and the remaining claim on the merits.¹

One case, denominated No. 11–1073 in this court, began as an action in Massachusetts state court and asserted only state law claims, reflecting the type of wage issues loosely described above, based on contract, common law torts and regulatory statutes. The case was removed by UMass on the ground—revealed not in the complaint but in the motion to dismiss—that Cavallaro and Herman are employees of one network hospital, UMass Memorial Medical Center (“UMMC”) and, as members of the Massachusetts Nursing Association, the terms of their employment are governed by a CBA.

The second case, No. 11–1793 in this court, began as an original action in the federal district court and, raising like wage issues, asserted claims under federal law—specifically, the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 206–207, and the Employee Retirement Income Security Act (“ERISA”), id. §§ 1059(a)(1), 1104(a)(1). The district court dismissed the claims on the ground that the plaintiffs had failed adequately to allege an employment relationship with any of the named defendants.²

The plaintiffs appeal in each of the two cases. The two appeals, although addressed to the same or overlapping conduct, present different questions and we address them separately. The issues relating to the state law claims largely turn on legal doctrine as to which our review is de novo. O'Donnell v. Boggs, 611 F.3d 50, 53 (1st Cir.2010). The dismissal of the federal action rested on a judgment call as to which the standard of review, given the circumstances, does not fit neatly into one category.

No. 11–1073 (State Law Claims). The original state complaint alleged thirteen counts that may be grouped as follows:

-violation of the Massachusetts Payment of Wages Act, Mass. Gen. Laws ch. 149, § 148 (Count 1);

-violation of the overtime provision of the Massachusetts Fair Minimum Wage Act, Mass. Gen. Laws ch. 151, § 1A (Count 2);

-breach of contract or implied contract (Counts 3, 4 and 5);

-money had and received; quantum meruit/unjust enrichment (Counts 6 and 7);

-fraud and conversion (Counts 8 and 12);

-negligent misrepresentation (Count 9);

-equitable and promissory estoppel (Counts 10 and 11); and

-failure to keep accurate records (Count 13).

Counts 10 and 11 (resting on estoppel theories) were dismissed by stipulation but, to avoid confusion, our discussion below retains the original numbering.

In removing the case to federal court, UMass argued that section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185, “completely preempts” plaintiffs' state law claims, thereby transmutingthe state law claims into federal claims and permitting removal under federal question doctrine, 28 U.S.C. §§ 1331, 1441(b). UMass then moved to dismiss all claims with prejudice on the ground that they implicated CBAs and plaintiffs had failed to exhaust CBA remedies, while Cavallaro and Herman moved to remand to state court.

The district court declined to remand and ultimately dismissed all of the claims, save for Count 2, for failure to exhaust CBA remedies required by the relevant CBA. As for Count 2, the court did not determine whether the claim would be barred on this basis because it found that no such claim existed here in light of the statute's “hospital” exemption and, exercising supplemental jurisdiction, it dismissed that claim on the merits. This appeal followed.

Plaintiffs say that the claims were all based on state law and that, in allowing removal, the district court misunderstood the distinction between “complete preemption,” which authorizes removal, and “defensive preemption,” which merely blocks, or diverts to CBA remedies, a claim otherwise properly in federal court. As we will see, the complete preemption concept has a core meaning which suffices to establish jurisdiction over the case in the district court, although the concept's full present contours pose uncertainties that complicate the disposition of the claims once in federal court.

Removal is authorized for “[a]ny civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States.” 28 U.S.C. § 1441(b). Here, all of the claims set forth in the state court complaint purport to arise under state law; and this, under the well-pleaded complaint rule, would ordinarily bar removal, Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9–11, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), were it not for the complete preemption exception. That concept, exemplified by Avco Corp. v. Aero Lodge No. 735, Int'l Ass'n of Machinists, 390 U.S. 557, 560, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968), is now firmly embedded. See note 4, below.

“Complete preemption,” as distinct from the more familiar concept of defensive preemption,³ applies where a purported state claim either is re-characterized as a federal claim or—and here, Supreme Court doctrine has become unstable—is otherwise so related to federal law as to permit the removal. The Court refined the concept primarily in labor cases, extending by analogy to a limited number of other federal statutes.⁴ The most familiar example is a claim brought under state contract law to enforce a CBA subject to federal jurisdiction under section 301 of the LMRA. E.g., Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 102–04, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962); see also Allis–Chalmers Corp. v. Lueck, 471 U.S. 202, 210–13, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985).

The complete preemption doctrine grew out of the Court's holding that (1) section 301 required the federal courts to create a body of federal common law for CBAs affecting interstate commerce, Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456–57, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957); (2) this body displaced state contract law, id.; and (3) by this alchemy the purported state claim became a federal contract claim allowing removal as one within the federal “arising under” jurisdiction under section 1441(b), Avco, 390 U.S. at 560, 88 S.Ct. 1235.

Partly to protect the use of arbitration and grievance procedures common to CBAs, the Supreme Court declined to limit complete preemption to contract claims eo nomine, Lueck, 471 U.S. at 211, 105 S.Ct. 1904, but explicitly extended complete preemption to state law claims “founded directly on rights created by collective-bargaining agreements” or “substantially dependent on analysis of a collective-bargaining agreement.” Caterpillar Inc. v. Williams, 482 U.S. 386, 394, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). But, as the Court has encountered new variations, it has imposed limits that it has never fully integrated into a single body of doctrine. Livadas, 512 U.S. at 124 n. 18, 114 S.Ct. 2068 (noting confusion in the lower courts).

Despite such confusion, plaintiffs' main attack on removal in this case plainly fails, for it rests on the proposition that none of the claims asserted in the complaint are labor-contract claims. But the short answer is the Lueck decision rejected this limitation, explicitly finding a state tort claim for bad faith conduct in relation to a CBA preempted because it depended for its substance at least in part upon interpretation of a CBA; the tort was a distinct claim but its viability depended in some measure on the substance of the CBA. Lueck, 471 U.S. at 219, 220–21, 105 S.Ct. 1904.

Several of plaintiffs' claims under state common law...