E.I. Dupont De Nemours & Co. v. Sawyer

• Decision Date: 15 February 2008
• Docket Number: No. 06-20865.,No. 07-40574.,06-20865.,07-40574.
• Citation: 517 F.3d 785
• Parties: E.I. DUPONT DE NEMOURS & CO., Plaintiff-Appellant, v. Gary SAWYER, Defendant-Appellee. Gary Sawyer; Doug Kempf; Peter Barnaba, Sr.; Geoff Rorrev; Tim Gregory; et al., Plaintiffs-Appellees, v. E.I. DuPont de Nemours & Co., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

517 F.3d 785

E.I. DUPONT DE NEMOURS & CO., Plaintiff-Appellant, v. Gary SAWYER, Defendant-Appellee.

Gary Sawyer; Doug Kempf; Peter Barnaba, Sr.; Geoff Rorrev; Tim Gregory; et al., Plaintiffs-Appellees, v. E.I. DuPont de Nemours & Co., Defendant-Appellant.

No. 06-20865.

No. 07-40574.

United States Court of Appeals, Fifth Circuit.

February 15, 2008.

Russell Joe Manning (argued), Tom M. Harrison, Marilyn J. Larsen, Hornblower, Manning & Ward, Corpus Christi, TX, for E.I. DuPont de Nemours & Co.

Wade Thomas Howard and Michael Patrick Cash (argued), Winstead P.C., Houston, TX, for Gary Sawyer.

Appeals from the United States District Court for the Southern District of Texas.

Before KING, BARKSDALE and DENNIS, Circuit Judges.

KING, Circuit Judge:

These appeals arise out of a dispute between E.I. du Pont de Nemours and Company ("DuPont") and former DuPont employees who allege that DuPont fraudulently induced them to terminate their employment and accept employment with a subsidiary that was later sold. In anticipation of a lawsuit from one of the employees, DuPont sought a declaratory judgment under the Employee Retirement Income Security Act ("ERISA"). The district court dismissed for lack of subject matter jurisdiction, concluding that the employee's potential claims could not be read as stating a claim under ERISA. DuPont filed notice of appeal.

A group of the former employees then sued DuPont, asserting state-law fraud and fraudulent inducement claims. DuPont filed two motions to dismiss, arguing that the employees' claims were preempted by the National Labor Relations Act ("NLRA") under the Garmon doctrine or, in the alternative, by ERISA. The district court denied both motions but certified an interlocutory appeal, which we accepted and consolidated with DuPont's appeal from the dismissal of its declaratory judgment action. For the reasons that follow, we conclude that the employees' state-law claims are not preempted by the NLRA or ERISA, and that DuPont's declaratory judgment action was properly dismissed for lack of subject matter jurisdiction. AFFIRMED.

I.

In early 2002, DuPont decided to separate a portion of its operations into a subsidiary, to be known as DuPont Textiles and Interiors, Inc. ("DTI"). Among the operations to be transferred to DTI was DuPont's Terathane Products unit, which was housed at the DuPont manufacturing facility in La Porte, Texas, along with a variety of other units that were not slated to become part of DTI. The employees at the La Porte plant were represented by Local 900C of the International Chemical Workers Union Council, AFL-CIO, and covered by a single collective bargaining agreement (the "La Porte CBA").

In September and October 2002, DuPont and the union engaged in collective bargaining over the effects of the planned DTI separation on the La Porte plant. The most obvious consequence was that the number of DuPont job positions at the La Porte plant would be reduced when the Terathane Products unit was transferred to DTI. Since the La Porte CBA's seniority system gave employees with higher seniority the right to move to different units within the plant, there was the possibility that higher seniority Terathane Products employees might exercise this right in order to remain with DuPont when the Terathane Products unit was transferred to DTI. This would require DuPont to lay off lower seniority employees throughout the plant.

On October 24, 2002, DuPont and the union reached an agreement regarding the La Porte DTI separation. This agreement called for the formation of an independent collective bargaining unit for DTI employees at the La Porte plant. DTI employees would be covered by a separate collective bargaining agreement, which would start out as a "mirror image" of the La Porte CBA. DuPont stated that DTI would operate under DuPont compensation and benefits plans and policies. DuPont and the union also agreed on a plan whereby DuPont employees assigned to the Terathane Products unit would be given the opportunity to voluntarily transfer to DTI. For employees who chose to transfer, there would be a "seamless transition" with regard to all compensation and benefits programs, meaning that credit for things like service time and accrued vacation time would carry over to DTI. The voluntary transfer period was to begin on November 15, 2002, and run through December 16, 2002. During this time, Terathane Products employees could sign a form stating their desire to transfer from the DuPont La Porte bargaining unit to DTI and become members of the independent DTI bargaining unit. Once the transfer period ended, DuPont and the union anticipated conducting another round of bargaining to determine how to deal with the situation created by Terathane Products employees who chose to stay at DuPont.

Ultimately, a high percentage of Terathane Products employees elected to transfer to DTI, and there was no need for a second round of bargaining. On January 23, 2003, DTI and the union signed the collective bargaining agreement (the "DTI CBA") for the separate DTI bargaining unit. In accordance with the earlier agreement of October 24, 2002, between DuPont and the union, the DTI CBA was a mirror image of the La Porte CBA, except for minor "cosmetic" changes reflecting that DTI, not DuPont, was the employer. As DuPont had promised, the compensation and benefits plans and policies for the new DTI employees were the same as they had been at DuPont.

Shortly thereafter, however, DuPont sold DTI to a subsidiary of Koch Industries, Inc. ("Koch"). Once the DTI employees were transferred to Koch, the terms of their employment became less favorable: they experienced losses with regard to wages, overtime, and retirement age, did not receive certain bonuses and stock options, and their benefits were reduced. One of the Terathane Products employees who had elected to transfer to DTI and wound up working for Koch was Gary Sawyer. Seeking to investigate the possibility of a lawsuit against DuPont based on its role in encouraging him to transfer to DTI, Sawyer filed a petition in Texas state court to conduct a deposition in anticipation of suit.¹

DuPont responded to the petition for a pre-suit deposition by filing a declaratory judgment action in federal court against Sawyer. In the Southern District of Texas, DuPont sought a judgment that: (1) DuPont did not violate any fiduciary duties owed to Sawyer as the administrator of an ERISA plan; (2) Sawyer therefore has no right to individual relief under ERISA; (3) any of Sawyer's potential state-law claims are preempted by ERISA to the extent that they relate to an employee benefits plan; and (4) to the extent that Sawyer may allege non-preempted claims, DuPont violated no contractual, legal, or common law duty to Sawyer. The district court dismissed for lack of jurisdiction. It reasoned that Sawyer's potential claims against DuPont did not involve the interpretation of an ERISA policy, but rather focused on alleged misrepresentations by DuPont that induced Sawyer to leave DuPont for DTI, and therefore could not be read as stating a claim under ERISA.

Sawyer and a group of Terathane Products employees then sued DuPont in the Southern District of Texas, asserting fraud and fraudulent inducement. The employees' most recent complaint alleges that during the period of time in which they were employed by DuPont and contemplating the offer to transfer to DTI (i.e., after the October 24, 2002, agreement between DuPont and the union creating the voluntary transfer plan but before the transfer period closed on December 16, 2002), DuPont repeatedly assured them that DTI would not be sold to another entity, even though DuPont knew at the time that the sale of DTI was a possibility. According to the employees, they were assured that DTI would remain a part of the DuPont family. One DuPont manager responded to the employees' questions about the possible sale of DTI by explaining that "we're the whale, and fish don't eat whales." The employees' complaint further alleges that had the more senior employees chosen not to transfer to DTI, DuPont would have had to retrain them for new positions, the Terathane Products unit's operations would have been severely interrupted (presumably making DTI less attractive to Koch), and DuPont would have had to hire and train new employees for the Terathane Products positions.

DuPont filed two motions to dismiss. First, in a motion to dismiss for lack of subject matter jurisdiction, DuPont argued that the employees' claims were based on communications that occurred in the context of collective bargaining, and are therefore preempted under the Garmon doctrine and lie within the exclusive jurisdiction of the National Labor Relations Board ("NLRB"). Next, in a motion to dismiss for failure to state a claim, DuPont argued that the employees' claims allege conduct in violation of certain provisions of ERISA and, consequently, are preempted by that statute. The district court denied both motions to dismiss but certified the case for interlocutory appeal. We accepted the case and consolidated it with DuPont's appeal from the dismissal of its declaratory judgment action.

II.

We have jurisdiction under 28 U.S.C. § 1292(b) to review the interlocutory order of the district court denying DuPont's motions to dismiss the employees' complaint. The dismissal of DuPont's declaratory judgment action is a final judgment that we have jurisdiction to review pursuant to 28 U.S.C. § 1291.

For all of the issues raised in these appeals, our review is de novo. We review a dismissal for lack of subject matter jurisdiction de novo. Krim v. pcOrder.com, Inc., 402 F.3d 489, 494 (5th Cir. 2005). The same is true for interlocutory review of a denial of a motion to dismiss for lack of subject matter jurisdiction, Rico v. Flores, 481 F.3d 234, 238 (5th Cir.2007), or failure to state a claim, In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th...