Atchley v. Heritage Cable Vision Associates

• Decision Date: 26 November 1996
• Docket Number: No. 96-1526,96-1526
• Citation: 101 F.3d 495
• Parties: 153 L.R.R.M. (BNA) 2908, 65 USLW 2394, 132 Lab.Cas. P 11,711, 3 Wage & Hour Cas.2d (BNA) 1112 Glenn L. ATCHLEY, et al., Plaintiffs-Appellants, v. HERITAGE CABLE VISION ASSOCIATES, a limited partnership, d/b/a TCI of Michiana, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 495

101 F.3d 495

153 L.R.R.M. (BNA) 2908, 65 USLW 2394,

132 Lab.Cas. P 11,711,

3 Wage & Hour Cas.2d (BNA) 1112

Glenn L. ATCHLEY, et al., Plaintiffs-Appellants, v. HERITAGE CABLE VISION ASSOCIATES, a limited partnership d/b/a TCI of Michiana, Defendant-Appellee.

No. 96-1526.

United States Court of Appeals Seventh Circuit.

Argued Sept. 11, 1996.

Decided Nov. 26, 1996.

William R. Groth (argued), Fillenwarth, Dennerline, Groth & Towe, Indianapolis, IN, for Plaintiffs-Appellants.

Timothy W. Woods, Jones, Obenchain, Ford, Pankow, Lewis & Woods, South Bend, IN, Eric P. Simon (argued), Kreitzman, Motensen & Simon, New York City, for Defendant-Appellee.

Before COFFEY, RIPPLE, and EVANS, Circuit Judges.

TERENCE T. EVANS, Circuit Judge.

Heritage Cable Vision Associates, a limited partnership, runs TCI of Michiana, a cable television system in northern Indiana. Local 1393 of the International Brotherhood of Electrical Workers, AFL-CIO, is the exclusive collective bargaining representative for installers and technicians employed by TCI at its Elkhart, Mishawaka, and Rochester, Indiana, facilities. Glenn Atchley and the remaining 67 individual plaintiffs in this case are installers and technicians represented by Local 1393 and employed by TCI at those locations. We'll refer to all the plaintiffs, collectively, as Local 1393.

From August until November 1994, Local 1393 and TCI negotiated over a new collective bargaining agreement. On November 28, 1994, TCI presented Local 1393 with a final offer, which included a wage hike of 40 cents per hour for employees who were members of the bargaining unit on the date of ratification. The offer, eventually memorialized as Article 7(B) in the finalized collective bargaining agreement ("CBA"), read:

All employees in unit as of the date of ratification, shall receive an across-the-board increase of 40cents per hour effective the first payroll period following ratification and on 9/16/95, except that employees hired between 9/16/94 and date of ratification, inclusive, shall receive a 40cents per hour increase upon conclusion of their probationary period and on 9/16/95.

In addition, TCI orally agreed to pay a $100 ratification bonus to each employee who was a member of the bargaining unit on the date of ratification.

The members of Local 1393 ratified TCI's final offer on December 8, 1994, and on the next day Local 1393 informed TCI of the ratification. TCI's counsel sent Local 1393 a draft contract for review, with a cover letter stating that "[a]s soon as the document is finalized and executed by the Union, TCI will process the wage increases and ratification bonus of $100.00, less applicable payroll taxes."

The first pay period following ratification began December 10, 1994. On December 19, 1994, Local 1393 demanded that TCI pay the wage increases and ratification bonuses. Neither were included in the paychecks issued on December 23 for the pay period beginning December 10.

Article 4 of the CBA, as both ratified and signed, contains a three-step grievance procedure: (1) presentation of the grievance to the immediate supervisor; (2) if not satisfactorily resolved in step 1, presentment to the general manager and/or the director of engineering; and (3) if still not satisfactorily resolved, submission within 30 days to the American Arbitration Association for binding arbitration.

On January 9, 1995, union steward Thomas Myers filed a grievance alleging that TCI failed to pay the wage increases and bonuses as agreed between the parties in the ratified proposal. The remedy sought was "10% per day interest on all wages and bonus money not paid as agreed." Although the grievance was denied, TCI decided not to wait for execution of the formal CBA and on January 20, 1995, it paid the wage increases, retroactive to December 10, 1994. Myers advanced the grievance to step 2 of the grievance procedure on January 23, 1995. Again, it was denied. The union did not advance the grievance to the final step, binding arbitration.

TCI signed the final draft of the CBA on January 23, 1995, and Local 1393 executed the agreement on February 6, 1995. The CBA ran from the date of ratification, December 8, 1994, through September 15, 1996.

TCI paid the ratification bonuses on February 10, 1995. The parties agree that the amounts finally paid by TCI for the retroactive wage increases and bonuses were correct. But the matter was not ready to be put to bed as the union had a statute up its sleeve, Indiana Code §§ 22-2-5-1 and 22-2-5-2, the Indiana wage payment law. The statute provides that if an employer fails to pay wages due within 10 days he shall,

as liquidated damages for such failure, pay to such employee for each day that the amount due to him remains unpaid ten percent (10%) of the amount due to him in addition thereto, not exceeding double the amount of wages due, and said damages may be recovered in any court having jurisdiction of a suit to recover the amount due to such employee, and in any suit so brought to recover said wages or the liquidated damages for nonpayment thereof, or both, the court shall tax and assess as costs in said case a reasonable fee for the plaintiff's attorney or attorneys.

Local 1393 sued TCI in St. Joseph County, Indiana, circuit court, alleging that despite the requirements of the CBA, TCI failed to pay the wage increases within 10 days of the date earned, in violation of the Indiana code. TCI requested double the amounts belatedly paid as liquidated damages plus reasonable attorneys fees and costs.

TCI removed the case to the federal court in northern Indiana, claiming preemption of the issue by § 301(a) of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a). Once in the federal forum, the company filed a motion to dismiss for failure to exhaust the CBA's arbitration remedies. Local 1393 filed a motion to remand, which Judge Robert L. Miller, Jr. denied. Later, Judge Miller denied the local's motion for rehearing and granted TCI's motion to dismiss. The union and its members appeal.

Under 28 U.S.C. § 1441(b), "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States...." One category of cases eligible for removal is "federal question" cases--that is, those cases "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331.

To determine whether federal question jurisdiction exists, we must examine the plaintiff's well-pleaded complaint to see if it raises an issue of federal law. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987); Rice v. Panchal, 65 F.3d 637, 639 (7th Cir.1995). Federal issues that arise solely as a defense to a state law action (sometimes called "conflict preemption") do not confer federal question jurisdiction. Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 2430, 96 L.Ed.2d 318 (1987); Rice, 65 F.3d at 639. Ordinarily, federal preemption is raised as a defense to the allegations in a complaint. Caterpillar, 482 U.S. at 392, 107 S.Ct. at 2430.

The "complete preemption" doctrine is the well-known exception to the well-pleaded complaint and conflict preemption rules, however. See Metropolitan Life, 481 U.S. at 63, 107 S.Ct. at 1546; Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430. Congress may so completely preempt a particular area that any complaint raising claims in that area is necessarily federal in character. Metropolitan Life, 481 U.S. at 63-64, 107 S.Ct. at 1546. To the extent that Congress has completely displaced a state law claim with federal law, a plaintiff's attempt to allege the state law claim properly is characterized from its inception as a complaint arising under the federal law. Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430; Douglas v. American Info. Technologies Corp., 877 F.2d 565, 569 (7th Cir.1989).

Section 301 of the LMRA, which provides that suits for violation of contracts between an employer and a labor organization confer original jurisdiction in federal district courts, has complete preemption force. Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430. To ensure uniform interpretation of collective bargaining agreements, § 301 requires that federal rules of law be applied. Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 403, 108 S.Ct. 1877, 1880, 100 L.Ed.2d 410 (1988); Loewen Group Int'l, Inc. v. Haberichter, 65 F.3d 1417, 1421 (7th Cir.1995). Even if a plaintiff makes no mention of § 301 in a complaint, § 301 nevertheless may displace entirely a state cause of action, allowing removal by the defendant under the complete preemption exception to the well-pleaded complaint rule.

Section 301 preempts claims directly founded on or "substantially dependent on analysis of a collective-bargaining agreement." Caterpillar, 482 U.S. at 394, 107 S.Ct. at 2431 (quoting International Bhd. of Elec. Workers v. Hechler, 481 U.S. 851, 859 n. 3, 107 S.Ct. 2161, 2167 n. 3, 95 L.Ed.2d 791 (1987)); Loewen, 65 F.3d at 1421. When the "heart of the [state law] complaint [is] a ... clause in the collective bargaining agreement, that complaint arises under federal law." Caterpillar, 482 U.S. at 394, 107 S.Ct. at 2430 (quoting Avco Corp. v. Aero Lodge No. 735, Int'l Ass'n of Machinists and Aerospace Workers, 390 U.S. 557, 558, 88 S.Ct. 1235, 1236, 20 L.Ed.2d 126 (1968)). If the resolution of a state law claim depends on the meaning of, or requires the interpretation of, a collective bargaining agreement, the application of state law is preempted and federal labor law principles must be employed to resolve the dispute. Lingle, 486 U.S. at 405-06, 407, 409-10, 413, 108 S.Ct. at 1881, 1882, 1883, 1885; Loewen, 65 F.3d at 1421. Even if explicit terms of the collective bargaining agreement may not be on point, it is a matter of federal contract interpretation...