Baylis v. Marriott Corp.

Decision Date08 April 1988
Docket Number447,D,Nos. 445,s. 445
Citation843 F.2d 658
Parties128 L.R.R.M. (BNA) 2113, 108 Lab.Cas. P 10,461, 10 Fed.R.Serv.3d 1368 James BAYLIS, Antonio Bellezza, Hector Torres, Jorge F. Moncayo, Raul Laredo, Martin Murphy, Attilio DiChiara, Arleigh Hartman, Jose Maldonado, Frances R. Souza, Carlito Fiel and Ortrander Sebastian on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. MARRIOTT CORPORATION and Pan American World Airways, Inc., Defendants, Marriott Corporation, Defendant-Appellant. James BAYLIS, Antonio Bellezza, Hector Torres, Jorge F. Moncayo, Raul Laredo, Martin Murphy, Attilio DiChiara, Arleigh Hartman, Jose Maldonado, Frances R. Souza, Carlito Fiel and Ortrander Sebastian on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. MARRIOTT CORPORATION and Pan American World Airways, Inc., Defendants- Appellees. ockets 87-7575, 87-7615.
CourtU.S. Court of Appeals — Second Circuit

Carole O'Blenes, New York City (Saul G. Kramer, Aaron J. Schindel, Susan B. Singley, Proskauer Rose Goetz & Mendelsohn, New York City, of counsel), for Marriott Corp.

Ronald G. Russo, New York City (Cynthia R. Finn, Budd Larner Gross Picillo Rosenbaum Greenberg & Sade, New York City, of counsel), for Baylis et al.

Richard Schoolman, New York City (Pan Am Legal Dept., New York City, of counsel), for Pan American World Airways, Inc.

Before PIERCE, MINER and DAVIS, * Circuit Judges.

AMENDED OPINION

DAVIS, Circuit Judge:

These appeals involve two suits by former employees of Pan American World Airways (Pan Am), one against Pan Am, the other against the Marriott Corporation (Marriott). In 1985 Pan Am closed its in-house catering operations and replaced them with catering services provided by Marriott. Former Pan Am commissary workers who lost their jobs when the catering facilities were shut down sued Pan Am for breach of their collective bargaining agreements. The District Court for the Eastern District of New York granted Pan Am summary judgment on the merits. We hold that under the Railway Labor Act (RLA), 45 U.S.C. Sec. 151-188, jurisdiction to resolve this contract dispute lies solely with the Adjustment Board created by that statute. Since the district court lacked jurisdiction to entertain this claim, we vacate the summary judgment and remand to the district court to dismiss for lack of subject matter jurisdiction.

The dismissed workers also sued Marriott for tortious inducement of the alleged breach of their contract with Pan Am. The court rejected Marriott's motion to dismiss, but certified an interlocutory appeal to this court pursuant to 28 U.S.C. Sec. 1292(b). The claim against Marriott is solely a pendent state-law claim without any independent basis for federal jurisdiction. With the dismissal of the claim against Pan Am, the pendent claim against Marriott should also be dismissed (unless, on remand, plaintiffs properly amend their complaint against Marriott to invoke diversity jurisdiction).

I. Background

Until 1985 Pan Am maintained an in-house staff of commissary workers who performed catering services such as preparation of food and liquor kits. In 1980 the airline negotiated an agreement with the collective bargaining agent of these commissary workers, the Transport Workers of America (TWU), for the gradual replacement of the in-house catering operations by private vendors. The workers accepted the eventual elimination of catering services, but in return Pan Am agreed not to lay off any workers. As the catering services were phased out the workers were to be given other jobs within Pan Am. This agreement was embodied in a Memorandum of Agreement between Pan Am and the TWU dated November 21, 1980 (the "No Layoff Guarantee"). 1 The No Layoff Guarantee was appended to the general collective bargaining agreement (the "Basic Agreement") between Pan Am and the TWU which covered not only the 700 commissary workers but also 5,000 airline mechanics and ground service employees. The Basic Agreement became effective upon ratification on December 24, 1980 and expired by its express terms on June 30, 1983 (later extended by mutual agreement to December 31, 1984). The No Layoff Guarantee became effective by its terms on December 24, 1980 and did not mention any expiration date.

As the expiration of the collective bargaining agreements between Pan Am and the TWU approached, Pan Am served notice on the TWU on September 7, 1984, of changes that it intended to make when the 1980 agreement expired. One of these proposed changes was to delete the entire Memorandum containing the "No Layoff Guarantee." Pan Am and the TWU then negotiated over this and other matters. Relations between Pan Am and its employees are governed by the RLA, see 45 U.S.C. Sec. 181, which provides detailed procedures for the resolution of disputes between labor and management in the transportation industries. 2 Negotiations and mediation conducted within the framework of the RLA were unsuccessful. 3 After the mandatory waiting period expired at midnight on February 27, 1985, the union struck and Pan Am closed its catering facilities and contracted with Marriott to provide catering services. The changes instituted by Pan Am and the strike by the workers were both forms of self-help that are permissible after all of the procedures for dispute resolution required by the RLA are exhausted. Brotherhood of R.R. Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 378-80, 89 S.Ct. 1109, 1115-16, 22 L.Ed.2d 344 (1969).

After a strike lasting four weeks, the parties reached a tentative agreement. The new collective bargaining agreement eliminated the No Layoff Guarantee. The agreement was ratified by a majority of the TWU members, and became effective on March 27, 1985. Catering employees whose jobs were discontinued were given a choice between accepting termination in exchange for a severance payment, or receiving priority in filling other positions within Pan Am if they could qualify for those jobs. The workers who accepted these options did not sign any releases barring them from future litigation against Pan Am or its agents.

II. The current litigation

On September 3, 1985, a group of former commissary workers who are no longer employed by Pan Am brought an action on behalf of themselves and the class of similarly situated workers. They sued Pan Am in the district court for breach of contract and Marriott for tortious inducement of the alleged breach of contract. The workers initially filed suit only against Marriott in the New York State Supreme Court, Kings County, for tortious interference with their employment agreement with Pan Am. Marriott removed the action to the United States District Court for the Eastern District of New York. The plaintiffs then amended their complaint adding a claim against Pan Am for breach of contract. The Amended Complaint asserted that the district court had jurisdiction under 28 U.S.C. Secs. 1331 and 2201, 45 U.S.C. Sec. 151 et seq., and under the principles of ancillary and pendent jurisdiction. Diversity jurisdiction was not alleged. The position of the plaintiffs was that the No Layoff Guarantee in the 1980 agreement was a contractual guarantee that the commissary workers would be employed by Pan Am in some capacity throughout their working lifetimes, and that the later actions of Pan Am represented a breach of that contract.

Pan Am and Marriott jointly moved for summary judgment on the merits, and also for dismissal for lack of subject matter jurisdiction. Pan Am argued that the No Layoff Guarantee expired when the Basic Agreement to which it was appended ended, and the protections once afforded to the workers by the No Layoff Guarantee no longer existed. Pan Am also argued in the alternative that the district court lacked jurisdiction because jurisdiction to resolve disputes over the interpretation of RLA collective bargaining agreements lies exclusively with arbitration panels, called Adjustment Boards, which are mandated by 45 U.S.C. Sec. 184.

The district court granted Pan Am's motion for summary judgment on the merits, although on grounds different from those urged by Pan Am. The court reasoned that when Pan Am and the TWU negotiated a new collective bargaining agreement which did not contain the No Layoff Guarantee, they effectively modified and replaced the original No Layoff Guarantee. Since the No Layoff Guarantee was found to be subject to renegotiation, and since Pan Am was not in breach of the amended contract, the plaintiffs had no basis for maintaining their action.

The court then denied Marriott's companion motion to dismiss or for summary judgment. The court's opinion was that, although the new agreement between Pan Am and the TWU had replaced the contract that Marriott was said to have interfered with, and accordingly resolved the dispute between Pan Am and the union, this did not relieve Marriott of liability for any wrongful conduct in inducing a breach of the original contract. The court also rejected Marriott's argument that the plaintiffs' state-law tort claim was preempted by federal labor law. The court then concluded that it was unnecessary to decide whether the plaintiffs' state-law claim was preempted since the plaintiffs had stated a cause of action for tortious interference under federal common law.

Marriott moved for reconsideration. The motion to dismiss was again denied, but on somewhat different grounds. The court rejected Marriott's arguments that the No Layoff Guarantee could not have been breached because Pan Am had followed Railway Labor Act procedures. The court also held that the compulsory dispute resolution mechanisms of that Act did not apply to Marriott since Marriott was not a party to the agreement. This time the court explicitly concluded that the state-law claims against Marriott were not preempted by federal labor laws since they did not necessarily interfere with...

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