National Metalcrafters, Div. of Keystone Consol. Industries v. McNeil

• Decision Date: 26 February 1986
• Docket Number: No. 85-1263,85-1263
• Citation: 784 F.2d 817
• Parties: 121 L.R.R.M. (BNA) 2819, 27 Wage & Hour Cas. (BN 899, 54 USLW 2460, 104 Lab.Cas. P 11,863, 4 Fed.R.Serv.3d 291, 7 Employee Benefits Ca 1198 NATIONAL METALCRAFTERS, a DIVISION OF KEYSTONE CONSOLIDATED INDUSTRIES, Plaintiff, Counterdefendant-Appellant, v. Donald J. McNEIL, Superintendent, Wage Claims Division, Illinois Department of Labor, Defendant-Appellee, and Betty Johnson, on behalf of herself and all others similarly situated, Intervenors-Defendants, Counterplaintiffs-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 817

784 F.2d 817

121 L.R.R.M. (BNA) 2819, 27 Wage & Hour Cas. (BN 899,

54 USLW 2460, 104 Lab.Cas. P 11,863,

4 Fed.R.Serv.3d 291, 7 Employee Benefits Ca 1198

NATIONAL METALCRAFTERS, a DIVISION OF KEYSTONE CONSOLIDATED INDUSTRIES, Plaintiff, Counterdefendant-Appellant, v. Donald J. McNEIL, Superintendent, Wage Claims Division Illinois Department of Labor, Defendant-Appellee and Betty Johnson, on behalf of herself and all others similarly situated, Intervenors-Defendants Counterplaintiffs-Appellees.

No. 85-1263.

United States Court of Appeals Seventh Circuit.

Argued Dec. 2, 1985.

Decided Feb. 26, 1986.

Mark A. Casciari, Sefarth, Shaw, et al., Chicago, Ill., for plaintiff, counterdefendant-appellant.

Richard J. Puchalski, Illinois Atty. Gen., Ann C. Hodges, Katz, Friedman, Schur & Eagle, Chicago, Ill., for defendant-appellee.

Before BAUER and POSNER, Circuit Judges, and GRANT, Senior District Judge. ^*

POSNER, Circuit Judge.

National Metalcrafters sues for a declaration that the Illinois Wage Payment and Collection Act, Ill.Rev.Stat. ch. 48, paragraphs39m-1 et seq., cannot, consistently with federal law, be used to order an employer to pay vacation benefits to which its workers (many of whom are on strike) are allegedly entitled by a collective bargaining agreement. The federal laws alleged to preempt the wage payment act are the Employees Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001 et seq., the National Labor Relations Act, 29 U.S.C. Secs. 151 et seq., and section 301 of the Taft-Hartley Act, 29 U.S.C. Sec. 185. Although virtually every state has a wage payment act of the same general sort as Illinois', and these acts seem rich in potential for conflict with the federal labor and employee financial security laws, few reported cases deal with these acts and none controls the issues in this case.

McNeil, the administrator of the Illinois act, ruled that National Metalcrafters had to pay its workers $115,000 in vacation benefits. Rather than pay, National Metalcrafters brought this suit. The workers intervened as parties defendant and counterclaimed under section 301 of the Taft-Hartley Act--claiming that the company's refusal to pay the vacation benefits violated the collective bargaining contract between their union and the company--and alternatively under ERISA, claiming that by failing to pay them the company had violated fiduciary duties imposed by that statute. The district judge held that the Illinois act was not preempted and entered judgment dismissing the company's suit. 602 F.Supp. 232 (N.D.Ill.1985). The judge certified his judgment for an immediate appeal under Rule 54(b) of the Federal Rules of Civil Procedure, and National Metalcrafters has appealed.

The pendency in the district court of a counterclaim based on the same facts as the claim which the court dismissed would ordinarily preclude an immediate appeal; a judgment disposing of one of several claims is sufficiently final to be appealable immediately under Rule 54(b) only if the claims do not have a significant factual overlap. See, e.g., Exchange Nat'l Bank v. Daniels, 763 F.2d 286, 291, reheard in part, 768 F.2d 140 (7th Cir.1985); Jack Walters & Sons Corp. v. Morton Building, Inc., 737 F.2d 698, 702 (7th Cir.1984). If they do overlap, it is more economical that they be appealed together. National Metalcrafters argues that its dispute with the workers over vacation benefits cannot give rise to liability under the wage payment act because that act is preempted by federal laws; the counterclaim asserts that the dispute gives rise to liability under two of those laws. Thus the legal theories underlying the complaint and counterclaim are different but arise out of the same dispute, the same facts; and two claims are not separate for purposes of Rule 54(b) merely because one is in the complaint and the other in the countercomplaint. See Tenneco Inc. v. Saxony Bar & Tube, Inc., 776 F.2d 1375, 1378-79 (7th Cir.1985). It is true that the complaint raises an issue of law (federal preemption) rather than of fact, but it is an issue whose intelligent disposition requires familiarity with the parties' dispute and hence with the very issues that will come before this court if and when a final decision on the counterclaim is appealed. In effect the company's suit seeks to erect at the threshold a defense to a suit against it by McNeil; and an order dismissing a defense is not an order that Rule 54(b) allows an immediate appeal from.

But there is a separate and adequate ground for the use of Rule 54(b) in this case. An order that disposes finally of a claim against one party to the suit can be certified for an immediate appeal under the rule even if identical claims remain pending between the remaining parties. Walker v. Maccabees Mutual Life Ins. Co., 753 F.2d 599, 601 (7th Cir.1985); Banque Paribas v. Hamilton Industries Int'l, Inc., 767 F.2d 380, 383 (7th Cir.1985). The judge's order in this case disposes, with finality in the district court, of the company's claim against McNeil. He is not a party to the counterclaim. He is out of the case, and the company is entitled to a definitive resolution of its rights against him. This entitlement may benefit McNeil, though that is not a prerequisite to the appeal. He doesn't have to wait till the end of what may be protracted proceedings in the district court to find out for sure whether he is, as the district court found, not violating any rights of the plaintiff.

Another threshold issue is whether the district court should have abstained from deciding the company's case against McNeil under the doctrine of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), which forbids a federal court to enjoin a state criminal or quasi-criminal proceeding and certain other types of state enforcement proceeding. See also Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 102 S.Ct. 2515, 2521, 73 L.Ed.2d 116 (1982); W.C.M. Window Co. v. Bernardi, 730 F.2d 486, 490 (7th Cir.1984). An unresolved question is whether a court can ever order abstention under the Younger doctrine when, as in this case (as, indeed, in Younger itself), the state has not asked for it. See discussion in Sequoia Books, Inc. v. McDonald, 725 F.2d 1091, 1094-95 (7th Cir.1984). We need not decide the question in this case, since in any event we do not think the doctrine is applicable.

The ruling by Superintendent McNeil which precipitated the company's lawsuit is a statement of intentions rather than a coercive order. His opinion says, "A demand for payment will issue, and the Department will take appropriate legal action to enforce said demand, absent voluntary compliance by the Employer." The wage payment act authorizes the state's Department of Labor "to make complaint in any court of competent jurisdiction of violations of this Act." Ill.Rev.Stat. ch. 48, p 39m-11(c). But no such complaint has yet been filed. We may assume without having to decide that if such a complaint had been filed, Younger would have required the district court to stay further proceedings in the present suit, thus forcing National Metalcrafters to make its argument for preemption by way of defense in the state court suit. The tentativeness of "assume without having to decide" is due to uncertainties about the precise range of civil actions to which the doctrine of Younger applies, see W.C.M. Window Co. v. Bernardi, supra, 730 F.2d at 490, and would disappear of course if a criminal action to enforce the wage payment act had been brought against National Metalcrafters; the act provides for criminal sanctions. See Ill.Rev.Stat. ch. 48, p 39m-14. It would not matter whether the criminal action was brought before the federal case or after, provided that substantial proceedings had not yet taken place in the federal case. The application of the Younger doctrine does not depend on who gets to which courthouse first. Hicks v. Miranda, 422 U.S. 332, 348-49, 95 S.Ct. 2281, 2291-92, 45 L.Ed.2d 223 (1975).

But with no state proceeding having been brought, National Metalcrafters has no remedy in state court against the alleged unconstitutional application of the wage payment act (alleged to be unconstitutional under the supremacy clause because in conflict with valid federal law). This clears out Younger as an obstacle to maintaining this suit but creates another obstacle--the possibility that the suit is unripe. If you violate a state law and nothing is done about it, this may indicate that the law is not being enforced and that you have no practical interest therefore in getting the law enjoined. But that is not this case. The state in a formal proceeding has authoritatively declared National Metalcrafters to be in violation of the statute, and while the state seems content to abide the results of National Metalcrafters' suit before bringing a criminal or other enforcement suit against the company, the workers who are the beneficiaries of the statute have by their counterclaim in the present suit demonstrated the practical consequences of Superintendent McNeil's ruling; for although the counterclaim is based on federal law rather than the wage payment act, the workers have cited McNeil's ruling in support of their interpretation of the collective bargaining agreement. The considerations that led us to dismiss as unripe an attempt to enjoin threatened state enforcement proceedings in Nuclear Engineering Co. v. Scott, 660 F.2d 241, 252-53 (7th Cir.1981), are thus absent. See also Illinois v. General Elec. Co., 683 F.2d 206, 210-11 (7th Cir.1982).

Coming to the merits of the appeal, we face first a question of judicial tactics: whether to consider all three of National Metalcrafters' grounds for preemption of the wage payment act or fewer than all three, as we can do if we find at least one to be valid. It might seem that one ground would always be enough, that to go on and discuss others would just dilute...