Curtis v. Irwin Indus., Inc.

• Decision Date: 25 January 2019
• Docket Number: No. 16-56515,16-56515
• Citation: 913 F.3d 1146
• Parties: Carl CURTIS, an Individual; Arthur Williams, Plaintiffs-Appellants, v. IRWIN INDUSTRIES, INC., a California Corporation; Does, 1 through 100, inclusive, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

913 F.3d 1146

Carl CURTIS, an Individual; Arthur Williams, Plaintiffs-Appellants,

v.IRWIN INDUSTRIES, INC., a California Corporation; Does, 1 through 100, inclusive, Defendants-Appellees.

No. 16-56515

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 9, 2018 Pasadena, California

Filed January 25, 2019

Michael A. Strauss (argued) and Aris E. Karakalos, Strauss & Strauss APC, Ventura, California, for Plaintiffs-Appellants.

Ronald J. Holland (argued), Ellen M. Bronchetti, and Christopher M. Foster, DLA Piper LLP, San Francisco, California, for Defendant-Appellee.

Before: Sandra S. Ikuta and John B. Owens, Circuit Judges, and Haywood S. Gilliam, Jr.,^* District Judge.

IKUTA, Circuit Judge:

Carl Curtis brought a putative class action lawsuit against his former employer, Irwin Industries (Irwin), alleging that Irwin denied him overtime pay, failed to give him meal and rest periods, and failed to pay him minimum wage for the 12 hours he was off duty.¹ Curtis’s claim for overtime pay is preempted under § 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, because California overtime law does not apply to an employee working under a qualifying collective bargaining agreement, Cal. Lab. Code § 514, and Curtis worked under such an agreement. We remand Curtis’s remaining claims to the district court to address in the first instance.

I

Curtis is a former employee of Irwin, a company that conducts operations on oil platforms located off the coast of California, on the Outer Continental Shelf.² While working for Irwin, Curtis was regularly scheduled to work seven 12-hour shifts in a seven-day period, with twelve hours on duty, followed by twelve hours off duty.

As a member of United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 1945 (Union), Curtis was subject to two collective bargaining agreements (CBAs) between the Union and Irwin: the National Master Agreement by and between Irwin’s Operations Group and the Union, and the National Master Agreement by and between Irwin’s Maintenance and Construction Group and the Union. Both agreements include detailed provisions regarding wages, overtime, and hours, as well as provisions requiring employees to grieve and arbitrate disputes concerning the application and terms of the CBAs.

Without using the dispute-resolution provisions of the CBAs, Curtis filed a putative class action complaint against Irwin in California state court. The complaint was based on Curtis’s theory that his 12 off-duty hours counted as "hours worked" for purposes of California labor laws, see Cal. Lab. Code § 510, because, as a practical matter, he was unable to leave the oil platform during that time. Curtis relied on a recent California Supreme Court case holding that security guards were "entitled to compensation for all on-call hours spent at their assigned worksites under their employer’s control." Mendiola v. CPS Sec. Sols., Inc. , 60 Cal. 4th 833, 836, 182 Cal.Rptr.3d 124, 340 P.3d 355 (2015). Extending Mendiola ’s reasoning from on-call hours to off-duty hours, Curtis argues that Irwin violated various California wage and hour laws by failing to recognize his 12 hours of off-duty time as "hours worked." Specifically, the complaint alleges that Irwin denied him overtime pay for the 12 hours he was off duty, see Cal. Lab. Code § 510, failed to give him meal and rest periods for that period, see Cal. Lab. Code §§ 226.7, 512, and failed to pay him minimum wage for that period, see Cal. Lab. Code §§ 1194, 1197. The complaint also raised four claims that are derivative of his overtime, meal and rest period, and minimum wage claims.³

Irwin removed the action to district court, relying on § 301 of the LMRA, 29 U.S.C. § 185, and the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. § 1331 – 1356b, as the basis for federal jurisdiction.

Once in federal court, Irwin filed a motion to dismiss on the ground that Curtis’s claims are preempted by § 301 of the LMRA. In his opposition, Curtis raised a number of arguments, including his contentions that the CBAs did not apply at all because their scope does not extend to work conducted on the Outer Continental Shelf; California’s minimum wage and hour standards are not preempted by § 301 of the LMRA under binding state and federal precedents; Curtis’s overtime and meal break claims were not precluded by section 514 of the California Labor Code ; and California law applied to the Outer Continental Shelf.

The district court granted Irwin’s motion to dismiss. The court based this conclusion solely on the ground that there was a need to interpret the CBAs in order to resolve the parties’ dispute regarding their applicability, and therefore the state law claims were preempted by § 301 of the LMRA. Additionally, the district court ordered the parties to proceed to arbitration under the terms of the applicable CBAs.

Curtis filed a motion for reconsideration, arguing that his claims were founded on non-negotiable state-law rights that are independent of the CBAs. In his reply to Irwin’s opposition, Curtis stated, for the first time: "Plaintiffs are willing to concede that the CBAs are generally applicable to Plaintiffs because such a concession has zero effect on their ultimate rights to pursue their statutorily-guaranteed rights in court—a right that exists independently of these CBAs."

Given the timing and minimal nature of this concession, it is not surprising that the district court missed it. Accordingly, the district court affirmed its dismissal of Curtis’s claims as preempted under § 301 on the ground that Curtis disputed the applicability of the CBAs, and it would be necessary to give the CBAs "more than merely a cursory reading to determine whether they actually apply to [Curtis’s] claims." The court did not address any other basis for preemption. However, the district court retracted the order to arbitrate.

Curtis timely appealed. The district court had jurisdiction under 29 U.S.C. § 185(c),⁴ and we have jurisdiction under 28 U.S.C. § 1291. We review de novo a district court’s dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Puri v. Khalsa , 844 F.3d 1152, 1157 (9th Cir. 2017). We accept "all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party." Rowe v. Educ. Credit Mgmt. Corp ., 559 F.3d 1028, 1029–30 (9th Cir. 2009) (internal quotations marks and citation omitted).

II

The central dispute on appeal is whether Curtis’s claims, which he styles as state law claims, are preempted by § 301 of the LMRA. Section 301 provides that "[s]uits for violation of contracts between an employer and a labor organization ... may be brought in any district court of the United States." 29 U.S.C. § 185(a). Although § 301 contains no express language of preemption, the Supreme Court has long interpreted the LMRA as authorizing federal courts to create a uniform body of federal common law to adjudicate disputes that arise out of labor contracts. See Allis-Chalmers Corp. v. Lueck , 471 U.S. 202, 210, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985) ; Teamsters v. Lucas Flour Co. , 369 U.S. 95, 103–04, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962). Thus, any suit "alleging a violation of a provision of a labor contract must be brought under § 301 and be resolved by reference to federal law." Lueck , 471 U.S. at 210, 105 S.Ct. 1904. "A state rule that purports to define the meaning or scope of a term in a contract suit therefore is pre-empted by federal labor law." Id. Although normally federal preemption is a defense that does not authorize removal to federal court, § 301 has such "extraordinary pre-emptive power" that it "converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." Metro. Life Ins. v. Taylor , 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). In other words, a civil complaint raising claims preempted by § 301 raises a federal question that can be removed to a federal court. See id.

As explained in Alaska Airlines Inc. v. Schurke , federal preemption under § 301 "is an essential component of federal labor policy" for three reasons. 898 F.3d 904, 917–18 (9th Cir. 2018) (en banc). First, "a collective bargaining agreement is more than just a contract; it is an effort to erect a system of industrial self-government." Id. at 918 (internal quotation marks and citations omitted). Thus, a CBA is part of the "continuous collective bargaining process." United Steelworkers v. Enter. Wheel & Car Corp. (Steelworkers III) , 363 U.S. 593, 596, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960). Second, because the CBA is designed to govern the entire employment relationship, including disputes which the drafters may not have anticipated, it "calls into being a new common law—the common law of a particular industry or of a particular plant." United Steelworkers v. Warrior & Gulf Navigation Co. (Steelworkers II) , 363 U.S. 574, 579, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). Accordingly, the labor arbitrator is usually the appropriate adjudicator for CBA disputes because he was chosen due to the "parties’ confidence in his knowledge of the common law of the shop and their trust in his personal judgment to bring to bear considerations which are not expressed in the contract as criteria for judgment." Id. at 582, 80 S.Ct. 1347. Third, grievance and arbitration procedures "provide certain procedural benefits, including a more prompt and orderly settlement of CBA disputes than that offered by the ordinary judicial process." Schurke , 898 F.3d at 918 (internal quotation marks and citations omitted).

While § 301 preemption furthers important interests, the Supreme Court has stressed that "§ 301 cannot be read broadly to pre-empt nonnegotiable rights conferred on individual employees as a matter of state law." Livadas v. Bradshaw , 512 U.S. 107, 123, 114 S.Ct. 2068...