Newberry v. Pacific Racing Ass'n

• Decision Date: 10 August 1988
• Docket Number: No. 87-2350,87-2350
• Citation: 854 F.2d 1142
• Parties: 129 L.R.R.M. (BNA) 2047, 57 USLW 2122, 109 Lab.Cas. P 10,676, 3 Indiv.Empl.Rts.Cas. 959 Louise NEWBERRY, Plaintiff-Appellant, v. PACIFIC RACING ASSOCIATION and Tanforan Racing Association; Peter W. Tunney, individually and as Vice President and General Manager, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1142

854 F.2d 1142

129 L.R.R.M. (BNA) 2047, 57 USLW 2122,

109 Lab.Cas. P 10,676,

3 Indiv.Empl.Rts.Cas. 959

Louise NEWBERRY, Plaintiff-Appellant, v. PACIFIC RACING ASSOCIATION and Tanforan Racing Association;

Peter W. Tunney, individually and as Vice

President and General Manager,

Defendants-Appellees.

No. 87-2350.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted June 15, 1988.

Decided Aug. 10, 1988.

Gerard J. Hinckley and Sylvia Courtney, San Francisco, Cal., for plaintiff-appellant.

Gary J. Okey, Cynthia L. Jackson, Michele Modena-Kurpinsky, Heller, Ehrman, White & McAuliffe, San Francisco, Cal., for defendants-appellees.

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

Before ALDISERT, ^* CANBY and BEEZER, Circuit Judges.

ALDISERT, Circuit Judge:

The major question for decision in this appeal from the district court's grant of summary judgment for the defendants is whether plaintiff's state law claims against her employer for breach of an implied covenant of good faith and fair dealing and intentional infliction of emotional distress are preempted under section 301 of the Labor Management Relations Act of 1947 (LMRA), 29 U.S.C. Sec. 185. The district court granted summary judgment to the defendants on Louise Newberry's claims brought under California law, ruling that section 301 preempted them. The court also held that Newberry failed to proffer sufficient evidence creating a genuine issue of material fact on her state law claims of libel and blacklisting. We will affirm the district court's judgment in all respects.

Louise Newberry brought this action in state court against defendants Pacific Racing Association, Tanforan Racing Association, and Peter Tunney. She alleged that the defendants were liable in damages for breach of an implied covenant of good faith and fair dealing, intentional infliction of emotional distress, libel, and blacklisting. The defendants removed the action to federal district court on the basis of federal question jurisdiction. The court subsequently granted defendants' motion for summary judgment on all of plaintiff's claims. On appeal, Newberry argues that the district court erred in granting defendants' motion for summary judgment on her state law claims. She also argues that the district court should have abstained from deciding the case.

For the reasons discussed below, the district court had jurisdiction in this state action, properly removed under 28 U.S.C. Sec. 1441(a), based on 28 U.S.C. Sec. 1331. We have jurisdiction under 28 U.S.C. Sec. 1291. Appellant timely filed her notice of appeal under Rule 4, Fed.R.App.P.

I.

Newberry was employed for 37 years at Golden Gate Fields Race Course in Alameda County, California. Pacific and Tanforan each conduct racing at Golden Gate during certain times of the year. The Golden Gate complex has multiple levels of seating including, from lowest to highest, the grandstand, the grand mezzanine, the clubhouse, and the turf club. Customers gaining admission to the track through the lower levels are required to pay a fee if they desire to move to a higher level of the facility. Newberry was one of two persons operating "exchange booths" on the grandstand mezzanine level of the race track. From this booth, plaintiff sold "crossover" passes to customers who wanted to move from the grandstand to the clubhouse. After receiving the proper fee, Newberry gave crossover patrons a handstamp from a machine designed to count the number of stamps given.

In March 1985, Peter Tunney, the general manager of Pacific and Tanforan, noticed that reported racing revenues were lower than would be expected from the daily attendance figures. He believed that this discrepancy might have been caused by employees misappropriating funds and therefore initiated an investigation. Tunney stated that during the course of his investigation, he discovered that Newberry had keys to her hand stamping machine, a violation of track policy. In addition, an operations officer at Golden Gate discovered that two screws were missing from Newberry's machine and that the counting rod had been disconnected. Analysis of Newberry's sales revealed that on eight of the 17 days preceding the institution of monitoring, there was a discrepancy between her reported and actual unsold reserved seat tickets. After monitoring began, Newberry's sales significantly increased.

As a result of the investigation, Tunney discharged Newberry on June 23, 1985. Pursuant to a grievance procedure under the collective bargaining agreement between Pacific, Tanforan, and Newberry's union, Newberry filed a grievance alleging that she had been terminated without just cause. The grievance proceeded to arbitration and in November 1985, an arbitrator determined that defendants did not have just cause to discharge Newberry and ordered her reinstatement. However, the arbitrator concluded that Newberry was not entitled to back pay, because her accounting procedures "justifiably raised a suspicion on the part of the Associations of misappropriation of funds." CR 37, Ex. 1, at 10.

Newberry did not seek judicial review of the arbitrator's decision, but subsequently filed the present action in state court. After defendants removed the action to federal district court, the court granted defendants' motion for summary judgment on all of plaintiff's claims. Newberry appeals from the court's grant of summary judgment.

II.

Summary judgment may be granted only if no genuine issue of material fact exists. Rule 56(c), Fed.R.Civ.P. An issue is "genuine" only if the evidence is such that a reasonable jury could find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). At the summary judgment stage, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249, 106 S.Ct. at 2511. On review, this court applies the same test that the district court should have adopted. Twentieth Century-Fox Film Corp. v. MCA, Inc., 715 F.2d 1327, 1328 (9th Cir.1983).

III.

We first must decide whether Newberry's state law claim for breach of an implied covenant of good faith and fair dealing is subsumed by section 301 of the LMRA, so that it is in substance a federal claim removable to federal district court. Newberry argues that the district court erred in holding that her cause of action is preempted by section 301. She says that her claim falls outside the scope of federal law because it does not require an analysis of the terms of the collective bargaining agreement.

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 a properly pleaded complaint. Caterpillar Inc. v. Williams, --- U.S. ----, ----, 107 S.Ct. 2425, 2428, 96 L.Ed.2d 318 (1987). 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 both parties concede that it is the only question truly at issue. See Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust, 463 U.S. 1, 12, 103 S.Ct. 2841, 2847, 77 L.Ed.2d 420 (1983). However, under the complete preemption doctrine, which is an independent corollary to the well-pleaded complaint rule, once an area of state law has been completely preempted, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law and is removable. Williams, --- U.S. at ---- - ----, 107 S.Ct. at 2428-2430; Franchise Tax Board, 463 U.S. at 24, 103 S.Ct. at 2854.

Although this court at one time stated that a case could not be removed to federal court on complete preemption grounds unless the federal cause of action relied upon provided the plaintiff with a remedy, see Williams v. Caterpillar Tractor Co., 786 F.2d 928, 932 (9th Cir.1986), aff'd, Caterpillar Inc. v. Williams, supra, this analysis has been squarely rejected by the Supreme Court. Williams, --- U.S. at ---- n. 4, 107 S.Ct. at 2429 n. 4; see Avco Corp. v. Machinists, 390 U.S. 557, 561, 88 S.Ct. 1235, 1237, 20 L.Ed.2d 126 (1968). Accordingly, we need only inquire whether Newberry's claim arose under section 301, thus permitting removal to federal court, although the plaintiff may have sought a remedy available only under state law. See Franchise Tax Board, 463 U.S. at 23, 103 S.Ct. at 2853.

A.

Section 301(a) of the LMRA provides federal jurisdiction over "[s]uits for violation of contracts between an employer and a labor organization." 29 U.S.C. Sec. 185(a). A suit for breach of a collective bargaining agreement is governed exclusively by federal law under section 301. Franchise Tax Board, 463 U.S. at 23, 103 S.Ct. at 2853. The preemptive force of section 301 is so powerful that it displaces entirely any state cause of action for violation of a collective bargaining agreement, id., and any state claim whose outcome depends on analysis of the terms of the agreement. IBEW v. Hechler, --- U.S. ----, ----, 107 S.Ct. 2161, 2165, 95 L.Ed.2d 791 (1987); Stallcop v. Kaiser Foundation Hosps., 820 F.2d 1044, 1048 (9th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 504, 98 L.Ed.2d 502 (1987). When "[t]he heart of the [state law] complaint [is] a ... clause in the collective bargaining agreement," that complaint arises under federal law. Avco Corp., 390 U.S. at 558, 88 S.Ct. at 1236.

The Supreme Court recently analyzed section 301 preemption in Lingle v. Norge Division of Magic Chef, Inc., --- U.S. ----, ----, 108 S.Ct. 1877, 1885, 100 L.Ed.2d 410 (1988): "[W]e hold that an application of state law is preempted by Sec. 301 of the Labor Management Relations Act of 1947 only if such...