Baker v. Ibp, Inc.

• Decision Date: 04 February 2004
• Docket Number: No. 02-4065.,No. 02-3967.,02-3967.,02-4065.
• Citation: 357 F.3d 685
• Parties: Deborah BAKER and Richard Enyeart, Plaintiffs-Appellants, Cross-Appellees, v. IBP, INC., Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 685

357 F.3d 685

Deborah BAKER and Richard Enyeart, Plaintiffs-Appellants, Cross-Appellees, v. IBP, INC., Defendant-Appellee, Cross-Appellant.

No. 02-3967.

No. 02-4065.

United States Court of Appeals, Seventh Circuit.

Argued May 30, 2003.

Decided February 4, 2004.

Howard William Foster (argued), Johnson & Bell, Chicago, IL, for Plaintiffs-Appellants.

David B. Johnson (argued), Eric S. Mattson and Emily A. Mily, Sidley, Austin, Brown & Wood, Chicago, IL, for Defendant-Appellee.

Before FLAUM, Chief Judge, and EASTERBROOK and RIPPLE, Circuit Judges.

EASTERBROOK, Circuit Judge.

Plaintiffs want to represent all persons, authorized to work in the United States, who have been or are now employed at IBP's meat-processing plant in Joslin, Illinois. They appeal from the district court's decision that their claim should have been submitted to the National Labor Relations Board rather than a court. Despite Fed. R.Civ.P. 23(c)(1) ("As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained"), the district judge dismissed the suit without mentioning the class aspects of the complaint. The two plaintiffs, as ex-employees at Joslin, likely are poor representatives of its current employees — not just because plaintiffs quit, but because the plant's workers already have a representative: a union certified by the NLRB. The claim in this case is that IBP's wages are too low, and that sort of contention must be presented by the union rather than individual members of the labor force. Plaintiffs' request to proceed on behalf of a class of all workers shows that they seek to usurp the union's role. But we are getting ahead of ourselves.

Plaintiffs' complaint alleges, and we must assume given the case's posture, that about half of the employees at IBP's Joslin plant are aliens who cannot lawfully work in the United States — and that IBP not only knows in a statistical sense that many of its non-citizen employees lack the sort of visas that authorize working here but also can identify which ones they are, yet winks at obviously fake green cards and other spurious credentials. IBP alerts its unauthorized employees to stay away the days when immigration officials conduct inspections. (The complaint leaves it to the imagination how IBP learns these dates.) When immigration officials do manage to catch and remove aliens not allowed to work (or be) in the United States, IBP pays "recruiters" to smuggle them back into the country and immediately re-employs them under new aliases and new bogus identification. Moreover, the complaint alleges, IBP has arrangements with immigrant-welfare organizations, such as the Chinese Mutual Aid Association based in Chicago, under which these groups refer known illegals to IBP for employment. The upshot, plaintiffs believe, is that wages at the Joslin plant are depressed by about $4 per hour compared with what IBP would have to pay if the labor force included only U.S. citizens plus aliens holding green cards.

If the allegations are true, managers at IBP have committed hundreds of felonies. We have no idea whether any of the plaintiffs' allegations is accurate, though we do know that the United States has not commenced a criminal prosecution. Still, the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68, permits private actions for three times the loss caused by a pattern of racketeering activity. See 18 U.S.C. § 1964(c). Since 1996, RICO has included among its predicate offenses "any act which is indictable under the Immigration and Nationality Act, section 274 [8 U.S.C. § 1324] (relating to bringing in and harboring certain aliens)... if the act indictable under such section of such Act was committed for the purpose of financial gain". 18 U.S.C. § 1961(1)(F). Plaintiffs contend that, for financial gain (a reduction in the wages it must pay), IBP brings in and employs illegal aliens, violating 8 U.S.C. § 1324(a)(3)(A) and thus, derivatively, RICO. (Section 274(a)(3)(A) makes it a crime to hire more than 10 persons in any 12-month period "with actual knowledge that the individuals are aliens described in subparagraph (B)". Subparagraph (B) reads: "An alien described in this subparagraph is an alien who (i) is an unauthorized alien (as defined in section 1324a(h)(3) of this title), and (ii) has been brought into the United States in violation of this subsection.")

Two courts of appeals have held that similar allegations present claims that must be resolved on the merits. See Commercial Cleaning Services, L.L.C. v. Colin Service Systems, Inc., 271 F.3d 374 (2d Cir.2001); Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 (9th Cir.2002). Without citing either decision, the district court nonetheless dismissed the suit for want of subject-matter jurisdiction, see Fed.R.Civ.P. 12(b)(1), on the ground that it is a labor dispute in disguise and must be presented to the NLRB. See 2002 WL 31696701, 2002 U.S. Dist. LEXIS 24669, 171 L.R.R.M. 2355 (C.D.Ill. Oct.21, 2002). The district court relied principally on San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959). Because Commercial Cleaning Services was commenced by a competitor rather than an employee, Garmon was not relevant to its disposition. But the plaintiffs in Mendoza were employees; that decision cannot be distinguished so easily — though for reasons that we discuss later it matters that the labor force in Mendoza was not unionized, while IBP's staff not only has an exclusive bargaining representative but also works under a collective bargaining agreement.

Subject-matter jurisdiction is the first question, as it must be in all suits filed in federal court. The district judge described Garmon as creating a rule of preemption and held that, because the labor laws preempt RICO, there is no federal jurisdiction. This reasoning is hard to follow. Federal statutes do not "preempt" other federal statutes, and, though one may repeal another implicitly if they are irreconcilable, RICO was enacted after the National Labor Relations Act. Federal laws do preempt state laws, but preemption is a defense and thus does not affect subject-matter jurisdiction. Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); Gully v. First National Bank, 299 U.S. 109, 116, 57 S.Ct. 96, 81 L.Ed. 70 (1936).

Garmon held that state law may not regulate conduct arguably protected or arguably forbidden by federal labor laws. That is a genuine doctrine of preemption, with a jurisdictional overlay: federal labor law so occupies the field of labor relations that it is impossible to formulate a claim under state law. See Avco Corp. v. Machinists Workers, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968). This misleadingly named doctrine of "complete preemption" has jurisdictional significance in the sense that federal law's dominance allows removal under 28 U.S.C. § 1441(b) without regard to diversity of citizenship. See Beneficial National Bank v. Anderson, 539 U.S. 1, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003). Yet plaintiffs filed their case in federal court, exactly where the doctrine of "complete preemption" directs litigants. Federal courts are authorized to hear many labor-relations disputes by 29 U.S.C. § 185, and others by the federal-question jurisdiction. See Teamsters v. Troha, 328 F.3d 325 (7th Cir.2003). RICO is a federal statute, and a claim based on it therefore arises under federal law for purposes of 28 U.S.C. § 1331.

Applied to claims in federal court, and arising under federal law, Garmon has nothing to do with either preemption or subject-matter jurisdiction. It is a rule of primary jurisdiction, allocating to an administrative agency the first crack at certain matters. See, e.g., Marquez v. Screen Actors Guild, Inc., 525 U.S. 33, 49-50, 119 S.Ct. 292, 142 L.Ed.2d 242 (1998). And the doctrine of primary jurisdiction is implemented by abstention — which means by staying rather than dismissing the litigation. See, e.g., Arsberry v. Illinois, 244 F.3d 558, 563-64 (7th Cir.2001). Once the agency has completed its work, the parties return to court for the resolution of any remaining issues. Here, for example, if the dispute were referred to the NLRB, and the Board determined that labor law neither protected nor prohibited IBP's conduct, the litigation could resume. Dismissal for want of subject-matter jurisdiction was inappropriate.

IBP has filed a cross-appeal, arguing that the district court's decision should be one on the merits (and thus with prejudice to renewal later) rather than for lack of jurisdiction. Yet although dismissal under Rule 12(b)(1) was inappropriate, it does not follow that decision should have been rendered on the merits; abstention in favor of the Labor Board's primary jurisdiction remains an option that must be considered.

Garmon and its successors are principally about the relation between state and federal policy, but the doctrine applies even in federal-question cases that include issues within the Labor Board's charge. See Laborers Health & Welfare Trust v. Advanced Lightweight Concrete Co., 484 U.S. 539, 552, 108 S.Ct. 830, 98 L.Ed.2d 936 (1988). We applied this principle in Talbot v. Robert Matthews Distributing Co., 961 F.2d 654, 662 (7th Cir.1992), to hold that a RICO action based on predicate acts that also violate federal labor law is incompatible with the NLRB's role in implementing labor policy. But it was vital in Talbot that "the underlying conduct of the plaintiffs' RICO claim [was] wrongful only by virtue of the labor laws" (ibid.; emphasis in original), something that cannot be said of plaintiffs' claim here. Section 274 of the Immigration and Nationality Act is not one of the federal labor laws; it post-dates the National Labor Relations Act and is in some respects incompatible with it. Although aliens may be "employees" for...