Derrico v. Sheehan Emergency Hosp.

Decision Date05 April 1988
Docket NumberD,No. 246,246
Citation844 F.2d 22
Parties127 L.R.R.M. (BNA) 3201, 56 USLW 2602, 108 Lab.Cas. P 10,438, 3 Indiv.Empl.Rts.Cas. 161 Ralph DERRICO, Plaintiff-Appellant, v. SHEEHAN EMERGENCY HOSPITAL, Defendant-Appellee. ocket 87-7415.
CourtU.S. Court of Appeals — Second Circuit

Richard Lipsitz, Buffalo, N.Y. (Richard P. Weisbeck, Jr., Lipsitz, Green, Fahringer, Roll, Schuller & James, Buffalo, N.Y., of counsel), for plaintiff-appellant.

James N. Schmit, Buffalo, N.Y. (Melinda G. Disare, Damon & Morey, Buffalo, N.Y., of counsel), for defendant-appellee.

Before MESKILL, PRATT and ALTIMARI, Circuit Judges.

MESKILL, Circuit Judge:

Plaintiff-appellant Ralph Derrico sued in New York state court for breach of what he called a state law contract of employment. The obligation he sought to enforce was identical to a term in an expired collective bargaining agreement providing that he could only be fired for just cause. He argues that this term was transformed after expiration into an independent contract under state law because federal law maintains terms of expired collective bargaining agreements in effect for some purposes after expiration, and because the relationship of employer and employee continued after expiration. Derrico contends, in essence, that the "just cause" term was reborn as an implied contract of employment under New York state law despite the extinction of the collectively bargained agreement where it originated. We examine this theory under federal labor law to determine whether the United States District Court for the Western District of New York, Elfvin, J., properly denied the motion to remand and dismissed the action after removal.

For the following reasons, we affirm.

BACKGROUND

Derrico, a registered nurse, worked for defendant-appellee Sheehan Emergency Hospital (Hospital) from December 1980 until about May 6, 1986. For much of that period Derrico's bargaining unit at the Hospital was represented by the New York State Nurses Association (NYSNA). As a result of an election in December 1985, however, NYSNA was replaced as collective bargaining representative by the Communications Workers of America (CWA). The collective bargaining agreement (CBA) negotiated by NYSNA expired on December 31, 1985, and neither side argues that it was expressly or impliedly extended. The Hospital and CWA thereafter negotiated toward a new CBA.

While those negotiations were going on and before a new CBA had been concluded, Derrico ran into trouble at work. He was suspended about May 1, 1986, and fired a few days later. The parties dispute whether the Hospital had cause to fire Derrico. This dispute was significant because under the expired CBA the Hospital could discharge employees "only for just cause." See J.App. at 54.

Based on these events, Derrico filed a pair of charges with the Regional Counsel of the National Labor Relations Board (NLRB). The first, filed May 5, 1986, alleged that the Hospital suspended him "because of his membership [in] and activities After receiving the Acting Regional Counsel's ruling on the first unfair labor practice charge but before filing the second, Derrico opened another front. By Summons and Complaint served on the Hospital on June 23, 1986, he commenced a civil lawsuit in New York Supreme Court, Erie County, alleging that his discharge breached a contract of employment under New York state law. Derrico alleged breach of a contract term derived from the for-cause limitation in the expired CBA. Although the complaint stated this theory somewhat amorphously, later filings below and on appeal comport with Judge Elfvin's interpretation that Derrico alleged an implied contract under state law, see J.App. at 56. Derrico has elaborated on appeal that the implied contract arose by virtue of the parties' conduct in continuing their relationship under the CBA's terms following its expiration. "The individual employees agreed that, when they worked, [their] services would be governed" by the status quo defined by the expired CBA--giving rise to a "completely independent" employment agreement "separate from the expired [CBA]." Reply Br. at 5. Derrico argues that this implied contract is independent of the CBA, see Br. of Appellant at 7; Reply Br. at 5, and is thus separately enforceable under state contract law.

                in behalf of [CWA]," and therefore violated sections 8(a)(1) and (a)(3) of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 158(a)(1), (a)(3) (1982), by interfering with protected activity.  See J.App. at 33.  The second, filed July 22, 1986, claimed that Derrico's discharge constituted both a section 8(a)(1) violation and a breach of the Hospital's duty to bargain in good faith under NLRA section 8(a)(5), 29 U.S.C. Sec. 158(a)(5).  See J.App. at 46.  The Acting Regional Counsel declined to issue a complaint on either charge.  He wrote to CWA on May 29, 1986, that there was "insufficient evidence" to support the first charge and that his investigation disclosed that the Hospital terminated Derrico because of time card violations and "poor job performance."    See J.App. at 34.  He then wrote on August 5, 1986, that the Hospital's conduct did not constitute a failure to bargain in good faith as the second charge alleged.  See J.App. at 52.  Derrico appealed the May 29 ruling to the NLRB but has not sought administrative review of the August 5 ruling
                

The Hospital petitioned the United States District Court for the Western District of New York for removal under 28 U.S.C.A. Sec. 1441 (West 1973 & Supp.1987), arguing that the complaint raised federal issues, either as a section 301 breach of contract action, 29 U.S.C. Sec. 185 (1982), or as a section 8(a)(5) unfair labor practice. See J.App. at 12-13. Derrico moved to remand on the basis that his complaint stated a purely state law claim.

In a Memorandum and Order dated April 11, 1987, the district court denied Derrico's motion to remand and granted the Hospital's motion to dismiss. Derrico v. Sheehan Emergency Hospital, 125 L.R.R.M. 2847 (BNA) (W.D.N.Y. Apr. 11, 1987). The district court held that the expired CBA could not support an exercise of jurisdiction under section 301 and that Derrico's state law claim was accordingly not preempted by section 301. Any state law claim Derrico might state, said the court, would be so intertwined with the terms of the expired CBA that federal interests in uniform interpretation of collectively bargained contracts would be significantly compromised. It concluded without discussion that the suit was properly removed, and dismissed on the ground that the complaint raised issues within the primary jurisdiction of the NLRB.

Derrico filed a timely notice of appeal. He essentially repeats the arguments made below that he seeks only to enforce the terms of an "independent contract" under state law. The Hospital argues for affirmance principally on the section 301 preemption analysis.

DISCUSSION

In analyzing the issues presented by this appeal, it is important to distinguish between two fundamentally different mechanisms by which a party might seek to enforce These mechanisms can be difficult to separate, especially because the "implied" term in this case is identical to its forebear from the CBA. But the differences between the two mechanisms have analytical ramifications crucial to our disposition of this case. Derrico's approach raises novel issues that go to the core of federal labor relations policy and require careful scrutiny.

an expired CBA. First, he or she might attempt to enforce the expired agreement directly, reasoning that, because the bargaining obligation continues the CBA in effect for purposes of defining the status quo, the CBA itself is substantively binding on the parties and suit may be maintained for its breach. The second mechanism, on which Derrico relies, proceeds from the same initial proposition yet is subtly different. Derrico claims that because the bargaining obligation continues the CBA in effect for purposes of defining the status quo, and because the employer and employee continue their relationship according to the terms thus defined, their conduct gives rise to an implied contract of employment under state law. Thus under the second mechanism, this implied contract--not the CBA itself--is substantively binding on the parties and suit may be maintained for its breach.

1. Preemption Under Section 301: The "Independent" Contract and Post-Expiration Effect of the CBA

The Hospital contends that section 301 provides a basis for affirming the district court's disposition of both removal and preemption issues. We disagree. The district court correctly held that section 301 has no application in the absence of a currently effective CBA. Section 301 would of course preempt any attempt to enforce the CBA itself by resort to state law. See Caterpillar Inc. v. Williams, --- U.S. ----, ---- - ----, 107 S.Ct. 2425, 2429-30, 96 L.Ed.2d 318 (1987). We have found cases invoking section 301's sweeping preemptive force, however, only where state law claims coincide with current collective bargaining agreements. See, e.g., International Brotherhood of Electrical Workers v. Hechler, --- U.S. ----, ----, 107 S.Ct. 2161, 2163, 95 L.Ed.2d 791 (1987); Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 203-04, 105 S.Ct. 1904, 1907-08, 85 L.Ed.2d 206 (1985). When a complaint alleges a claim based on events occurring after the expiration of a collective bargaining agreement, courts have held that section 301 cannot provide a basis for jurisdiction. See Office and Professional Employees Insurance Trust Fund v. Laborers Funds Administrative Office, Inc., 783 F.2d 919, 921 (9th Cir.1986); Lumber Production Industrial Workers Local No. 1054 v. West Coast Industrial Relations Ass'n, Inc., 775 F.2d 1042, 1046 (9th Cir.1985); Pattern Makers' Pension Trust Fund v. Badger Pattern Works, Inc., 615 F.Supp. 792, 799 (N.D.Ill.1985); International Ass'n...

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