Continental Oil Co. v. State of Okl. ex rel. Oklahoma Employment Sec. Commission, 76-1649

• Decision Date: 05 April 1978
• Docket Number: No. 76-1649,76-1649
• Citation: 574 F.2d 1016
• Parties: CONTINENTAL OIL CO., Plaintiff-Appellant, v. STATE OF OKLAHOMA ex rel. the OKLAHOMA EMPLOYMENT SECURITY COMMISSION and David Boren, Governor, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1016

574 F.2d 1016

CONTINENTAL OIL CO., Plaintiff-Appellant, v. STATE OF OKLAHOMA ex rel. the OKLAHOMA EMPLOYMENT SECURITY

COMMISSION and David Boren, Governor, Defendants-Appellees.

No. 76-1649.

United States Court of Appeals, Tenth Circuit.

Argued and Submitted Nov. 14, 1977.

Decided April 5, 1978.

Allen Butler, Dallas, Tex. (William L. Keller, Clark, West, Keller, Sanders & Butler, Dallas, Tex., Guy Clark, Clark & Hron, Ponca City, Okl., Coleman H. Hayes, Monnet, Hayes, Bullis, Thompson & Edwards, Oklahoma City, Okl., and Thomas D. Montgomery, Houston, Tex., on the brief), for plaintiff-appellant.

Victor Law Ellis, Tulsa, Okl. (Milton R. Elliott, Chief Atty. for Oklahoma Employment Security Commission and James H. Gray, Asst. Atty. Gen., Oklahoma City, Okl., on the brief), for defendants-appellees.

Before McWILLIAMS, BREITENSTEIN and DOYLE, Circuit Judges.

McWILLIAMS, Circuit Judge.

The existing collective bargaining agreement between Continental Oil Company and the Oil, Chemical & Atomic Workers International Union, AFL-CIO, Local 5-87 expired on March 1, 1975, without a new agreement having been entered into by the parties. It is this event which triggers the present controversy. Shortly after March 1, 1975, employees represented by the Union either struck, or were locked out, and did not thereafter return to work for 106 days. During the period of time when they were not working, the employees, or certain of them, filed claims with the Oklahoma Employment Security Commission for benefits payable under the Oklahoma Employment Security Act. After four separate hearings, the Appeals Tribunal of the Security Commission ruled that 834 claimants were entitled to compensation benefits in accordance with the Security Act because they had been "locked out" by Continental. Payments aggregating several hundred thousand dollars were thereupon made to the 834 claimants. Continental appealed this ruling to the Board of Review of the Security Commission, and this appeal was pending when the present action was commenced.

Thereafter, on March 29, 1976, although no final determination had been made by the Board of Review of the Security Commission as to the claimants' entitlement to unemployment compensation benefits, the Security Commission sent Continental a notice that its contribution rate to the fund, which was based on a percentage of current total wages paid to employees, would be increased from 1.2% To 2.7%. This increase was attributable to the amounts paid in benefits to Continental employees whom the Appeals Tribunal found had been "locked out." Continental appealed this assessment to the state court in Kay County, Oklahoma. That appeal was also pending when the present action was initiated by Continental.

The present action was commenced by Continental Oil Company on April 26, 1976, in the United States District Court for the Western District of Oklahoma. The defendants were the State of Oklahoma, ex rel. the Oklahoma Employment Security Commission, and the Honorable David Boren, Governor of Oklahoma. In its complaint, Continental asked for a declaratory judgment that Okl.Stat., tit. 40, § 215(e)(3) (Supp.1974), conferring unemployment benefits to "locked out" employees, is in irreconcilable conflict with federally protected bargaining rights guaranteed by the National Labor Relations (Wagner) Act, as amended by the Labor Management Relations (Taft-Hartley) Act, 1947, 29 U.S.C. § 141, et seq., and that consequently the statute in question was void under the doctrine of federal pre-emption and the Supremacy Clause of Article VI of the Constitution of the United States. Continental also sought to enjoin the Security Commission from assessing and collecting additional unemployment compensation contributions to reimburse the state for benefits paid to Continental's employees allegedly "locked out" during the course of contract negotiations in 1975.

On April 27, 1976, Continental filed a "Reservation of Federal Claims" with the state court reserving its federal claims for determination by a federal court in accordance with the guidelines of England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964).

On April 29, 1976, the trial court dismissed the complaint with prejudice to the right of Continental to refile the same or a similar complaint in the federal court, though the dismissal was without prejudice to the right of Continental to pursue any and all of its remedies in state proceedings. The basis for the trial court's dismissal was two-fold: (1) that 28 U.S.C. § 1341 limiting federal injunctive relief with respect to state taxing statutes barred the trial court from entertaining Continental's application for injunctive relief from the increased assessment; and (2) that the judicially developed "abstention doctrine" made consideration of Continental's federal claims inappropriate in view of the appeals pending in the Oklahoma tribunals.

On May 10, 1976, Continental filed a motion to alter or amend the judgment of dismissal previously entered on April 29, 1976. In this motion, Continental pointed out that the portion of its complaint seeking a declaratory judgment was not barred by 28 U.S.C. § 1341 and that the trial court's dismissal with prejudice of Continental's claim for declaratory judgment should be vacated and the matter either: (1) should remain on the court's docket pending a consideration of its merits, or (2) that the trial court should abstain from any consideration of Continental's federal claims as alleged in the complaint until the Oklahoma state courts have had an opportunity to pass on matters then pending in those...