Garibaldi v. Lucky Food Stores, Inc.

Decision Date27 February 1984
Docket NumberNo. 83-5686,83-5686
Parties115 L.R.R.M. (BNA) 3089, 100 Lab.Cas. P 10,814, 1 Indiv.Empl.Rts.Cas. 354 John GARIBALDI, Plaintiff-Appellant, v. LUCKY FOOD STORES, INC., Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Eric W. Doney, Donahue, Gallagher, Thomas & Woods, Oakland, Cal., for defendant-appellee.

Fred J. Knez, Banks, Leviton, Kelley, Drass & Kelsey, Inc., Santa Ana, Cal., for plaintiff-appellant.

Appeal from the United States District Court for the Central District of California.

Before FLETCHER and NELSON, Circuit Judges, and PRICE, * District Judge.

FLETCHER, Circuit Judge:

Plaintiff, John Garibaldi, an employee suing for damages in connection with an alleged wrongful discharge, appeals from a summary judgment in favor of his employer, defendant Lucky Food Stores. We reverse on the grounds that the action was improperly removed from state court and that the district court lacked jurisdiction. The case turns on whether plaintiff's claims are preempted.

I FACTUAL BACKGROUND

Garibaldi was employed by Lucky Food Stores beginning in October 1969 as a boxboy. After a three-year leave of absence for military service from 1970 to 1973 he returned as a journeyman clerk. In April, 1977 he was transferred to the position of truck driver, in which position he continued until he was discharged in October 1980.

Garibaldi alleges that his discharge was wrongful and was the culminating act of a pattern of harassment arising out of an incident that occurred on March 27, 1979. Garibaldi noticed that the load of milk he was delivering was spoiled. He reported this to his employer, who instructed him to go ahead and deliver the milk. Instead, he notified the local health department, which condemned the milk and ordered that it not be delivered.

At all times relevant to this action Garibaldi was a member of the International Brotherhood of Teamsters, Warehousemen and Helpers of America, Local 952 (Teamsters Union) and was covered by a collective bargaining agreement. When he was discharged on October 23, 1980, he filed a grievance that was processed through arbitration. The arbitrator found that he was discharged for cause.

On October 2, 1981, Garibaldi filed a complaint in California Superior Court for damages for bad faith, wrongful termination and intentional infliction of emotional distress. He alleged that he was discharged in violation of the public policy of the State of California because of his report to the health authorities.

After the complaint had been filed, but before service, Lucky Food Stores removed the case to federal court. Garibaldi moved to remand the case to state court. The district court held that the removal was timely 1 and that it had jurisdiction over the Lucky Food Stores then filed a motion to dismiss the first cause of action on statute of limitations grounds, which it argued was 100 days, based on its characterization of the suit as an appeal from an arbitrator's award. 3 The district court treated the motion as one for summary judgment, granted judgment on the first cause of action and remanded the second cause of action to state court. Garibaldi appealed.

first cause of action for wrongful termination under 29 U.S.C. Sec. 185 (Sec. 301 of the Labor Management Relations Act (LMRA)), 2 on the basis of Fristoe v. Reynolds Metals Co., 615 F.2d 1209 (9th Cir.1980). The court apparently retained jurisdiction of the second cause of action for intentional infliction of emotional distress under the doctrine of pendent jurisdiction.

II ISSUES PRESENTED

Lucky Food Stores argues that removal was proper and that a state action for wrongful termination is preempted by the LMRA. Garibaldi argues that his claim is not preempted, and, in any event, removal based on preemption is improper. Both concede that the proper statute of limitations is determined by the resolution of the preemption issue. Since we hold that Garibaldi's claim is not preempted we need not decide whether removal based on preemption would be improper. 4

III DISCUSSION
A. Removal Jurisdiction Rests on a Federal Claim Stated in Complaint.

Removal of an action under 28 U.S.C. Sec. 1441(b) (1976) depends solely on the nature of the plaintiff's complaint, and is properly removed only if "a right or immunity created by the Constitution or laws of the United States [constitutes] an element, and an essential one, of the plaintiff's cause of action." Gully v. First National Bank in Meridian, 299 U.S. 109, 112, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936). The plaintiff is the master of his or her own complaint and is free to ignore the federal cause of action and rest the claim solely on a state cause of action. See The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57 L.Ed. 716 (1913); Jones v. General Tire & Rubber Co., 541 F.2d 660, 664 (7th Cir.1976); La Chemise Lacoste v. Alligator Co., 506 F.2d 339, 346 (3d Cir.1974), cert. denied, 421 U.S. 937, 95 S.Ct. 1666, 44 L.Ed.2d 94 (1975). Based on these propositions, it follows that "a suit brought upon a state statute does not arise under an act of Congress or the Constitution of the United States because prohibited thereby." Gully v. First National Bank, 299 U.S. at 116, 57 S.Ct. at 99.

However, where the state claim has been preempted by federal law, it does not follow that the federal court has jurisdiction. This circuit has repeatedly held that preemption, as a defensive allegation, is not grounds for removal. See Nalore v. San Diego Federal Savings and Loan Association, 663 F.2d 841, 842 (9th Cir.1981), cert. denied, sub nom. Great American Federal Savings and Loan Association v. Nalore, 455 U.S. 1021, 102 S.Ct. 1719, 72 L.Ed.2d 140 (1982); Guinasso v. Pacific First Federal Savings & Loan Association, 656 F.2d 1364, 1367 (9th Cir.1981), cert. denied, 455 U.S. 1020, 102 S.Ct. 1716, 72 L.Ed.2d 138 (1982); Washington v. American League of Professional Baseball Clubs, 460 F.2d 654, 660 (9th Cir.1972).

Although ordinarily a preempted claim may not be removed to federal court, the "artful pleading" doctrine provides the rationale for the assertion of federal jurisdiction in some cases. See generally Wright, Miller & Cooper, Federal Practice and Procedure Sec. 3722 (1976). This doctrine allows the removing court to look at the true nature of the plaintiff's complaint when the plaintiff has attempted to avoid a federal cause of action by relying solely on state law in the complaint. See Schroeder v. Trans World Airlines, Inc., 702 F.2d 189, 191 (9th Cir.1983). We have followed this doctrine in allowing removal based on preemption in certain labor cases. See Schroeder v. Trans World Airlines, Inc., 702 F.2d 189; Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1211-12 (9th Cir.1980); Magnuson v. Burlington Northern, Inc., 576 F.2d 1367, 1369 (9th Cir.), cert. denied, 439 U.S. 930, 99 S.Ct. 318, 58 L.Ed.2d 323 (1978); Johnson v. England, 356 F.2d 44 (9th Cir.), cert. denied, 384 U.S. 961, 86 S.Ct. 1587, 16 L.Ed.2d 673 (1966).

Lucky Food Stores asserts that the suit is properly removed under the artful pleading doctrine because Garibaldi's claim is preempted. However, Lucky Food Stores has missed the second step in the analysis. 5

B. A Wrongful Termination Claim Based on State Public Policy is Not Preempted.

The issue of whether a claim for wrongful termination based on violation of state public policy is preempted by the LMRA is one of first impression. 6 In Guinasso v. Pacific First Federal Savings and Loan Association, 656 F.2d 1364 (9th Cir.1981), cert. denied, 455 U.S. 1020, 102 S.Ct. 1716, 72 L.Ed.2d 138 (1982), however, we engaged in the inquiry that we should undertake in this case: Does the federal statute and regulatory scheme leave room for state regulation?

                In Guinasso, the plaintiff brought suit under Oregon common law for breach of contract, breach of trust duties, and unjust enrichment to recover interest on escrow accounts.  The bank argued successfully that regulations of the Federal Home Loan Bank Board preempted the Oregon claims.    See also Nalore v. San Diego Federal Savings and Loan Association, 663 F.2d 841 (9th Cir.1981) cert. denied, sub nom.  Great American Federal Savings and Loan Association v. Nalore, 455 U.S. 1021, 102 S.Ct. 1719, 72 L.Ed.2d 140 (1982).  Here we examine the sweep of the LMRA
                

The district court in the case before us concluded that Fristoe v. Reynolds Metal Co., 615 F.2d 1209 (9th Cir.1980) compelled removal to federal court. Both Fristoe and our case are labor cases. In both, the employee submitted his grievance to arbitration; in both, the plaintiff sought damages for wrongful discharge. But a significant difference exists between this case and Fristoe: Fristoe sought damages for breach of a collective bargaining agreement, while Garibaldi rests his claim for wrongful discharge on violation of state policy. The Fristoe court recharacterized Fristoe's complaint as necessarily an assertion of a violation of section 301 of the LMRA and therefore an assertion of a federal claim. Our task is to decide whether a claim for wrongful termination based on violation of state public policy must also be characterized as a federal claim. Although we have no section 301 case the Supreme Court has provided a great deal of guidance in recent cases dealing with preemption under the National Labor Relations Act (NLRA).

1. The Test for Preemption in The Labor Field.

In New York Telephone Co. v. New York State Dept. of Labor, 440 U.S. 519, 99 S.Ct. 1328, 59 L.Ed.2d 553 (1979), the Supreme Court considered the question of whether the NLRA prohibited the State of New York from paying unemployment compensation to strikers. The Court held that the New York law was not preempted, even though the plurality recognized that the law provided financial support to striking employees and added to the burdens of struck employers. 440 U.S. at 531, 99 S.Ct....

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