Lumber Production Indus. Workers Local No. 1054 v. West Coast Indus. Relations Ass'n, Inc.

• Decision Date: 01 November 1985
• Docket Number: No. 84-4218,84-4218
• Citation: 775 F.2d 1042
• Parties: 120 L.R.R.M. (BNA) 3097, 54 USLW 2262, 103 Lab.Cas. P 11,609 LUMBER PRODUCTION INDUSTRIAL WORKERS LOCAL # 1054, et al., Plaintiffs- Appellees, v. WEST COAST INDUSTRIAL RELATIONS ASSOCIATION, INC., a California Corporation; American Executive Services, Inc., a California corporation, Defendants- Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1042

775 F.2d 1042

120 L.R.R.M. (BNA) 3097, 54 USLW 2262,

103 Lab.Cas. P 11,609

LUMBER PRODUCTION INDUSTRIAL WORKERS LOCAL # 1054, et al Plaintiffs- Appellees, v. WEST COAST INDUSTRIAL RELATIONS ASSOCIATION, INC., a California Corporation; American Executive Services, Inc., a California corporation, Defendants- Appellants.

No. 84-4218.

United States Court of Appeals Ninth Circuit.

Argued and Submitted June 26, 1985.

Decided Nov. 1, 1985.

Harlan Bernstein, Portland, Or., Herman L. Wacker, Davies, Roberts, Reid, Anderson, & Wacker, Seattle, Wash., for plaintiffs-appellees.

Garry G. Mathiason, Henry D. Lederman, Jennifer J. Walt, San Francisco, Cal., for defendants-appellants.

Appeal from the United States District Court for the Western District of Washington.

Before WALLACE, FARRIS, and HALL, Circuit Judges.

WALLACE, Circuit Judge:

Lumber Production Industrial Workers (the union) brought suit against two labor consultants, West Coast Industrial Relations Association, Inc. and American Executive Services, Inc., for tortious interference with a prospective contractual relationship. The labor consultants appeal from the district court's order denying their motion to dismiss which was based upon a theory of preemption. We have jurisdiction under 28 U.S.C. Sec. 1292(b), and we reverse and remand.

I

The union has represented employees at the Everett facility of E.A. Nord Company, Inc. (Nord) for over 25 years. During that time, Nord and the union have entered into a number of collective bargaining agreements to govern the terms and conditions of employment. The most recent agreement expired on June 30, 1983, and contained no language indicating that it was to remain in effect after that date during the negotiation for a new contract. Nord retained one of the labor consultants to negotiate a new contract with the union.

The parties held a series of unsuccessful bargaining sessions between June 16 and July 13, 1983, to negotiate the terms and conditions of a new contract. Negotiations broke off on July 13, and the union initiated a strike against Nord. On July 29, the union filed an unfair labor practice claim with the Regional Director of the National Labor Relations Board (the Board), alleging that Nord had engaged in bad faith bargaining in violation of sections 8(a)(5) and (1) of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 158. The Regional Director investigated the union's claim and determined that there was insufficient evidence of bad faith to support the charge and dismissed the complaint. The Board upheld the dismissal on appeal.

On November 14, 1983, the union filed an action in state court against the labor consultants on behalf of itself and its Nord-employee-members. The union alleged that the labor consultants had deliberately and maliciously interfered with the union's prospective contractual relationship by inducing Nord to utilize their services in order to frustrate the union's collective bargaining objectives, to encourage employee dissatisfaction with the union, and to force a strike that would enable Nord to replace its existing work force and to decertify the union. The union sought damages for itself in the amount of lost union dues and for its members in the amount of lost wages and fringe benefits.

The labor consultants removed the action to federal district court under 28 U.S.C. Sec. 1441(a) on the basis of diversity and arguably federal question jurisdiction. 28 U.S.C. Secs. 1331, 1332. They then filed a motion to dismiss pursuant to rule 12, Fed.R.Civ.P., or, in the alternative, for summary judgment under rule 56, Fed.R.Civ.P., claiming that the union's complaint was based on conduct that arguably constituted bad faith bargaining within the exclusive jurisdiction of the Board and that the union's state law claim was preempted by section 301(a) of the Labor Management Relations Act (LMRA), 29 U.S.C. Sec. 185. The district court issued an order denying in part and striking in part the motion of the labor consultants. The district court recharacterized the union's complaint as stating a federal cause of action under section 301(a), which creates an exception to the general rule that the Board possesses exclusive jurisdiction over unfair labor practices.

The labor consultants filed a motion asking for reconsideration and for certification of an interlocutory appeal under 28 U.S.C. Sec. 1292(b). The district court denied the motion for reconsideration but certified the order for interlocutory appeal. The labor consultants timely petitioned for permission to bring an interlocutory appeal, which we granted.

II

The labor consultants contend that the district court erred in assuming subject matter jurisdiction under section 301(a), and that the conduct alleged in the union's complaint is within the exclusive jurisdiction of the Board. We review the district court's determination of subject matter jurisdiction de novo. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).

The Board possesses exclusive jurisdiction over activities that threaten to interfere with national labor policy. See San Diego Building Trades Council v. Garmon, 359 U.S. 236, 242-45, 79 S.Ct. 773, 778-79, 3 L.Ed.2d 775 (1959) (Garmon ). Congress entrusted the administration of labor policy to the Board in order "to avoid conflicting regulation of conduct by various official bodies" and to promote a unified development of labor policy. Amalgamated Association of Street, Electric Railway & Motor Coach Employees v. Lockridge, 403 U.S. 274, 285-86, 91 S.Ct. 1909, 1917, 29 L.Ed.2d 473 (1971) (Motor Coach Employees ); Garmon, 359 U.S. at 242, 79 S.Ct. at 778. Additionally, Congress recognized the need for an administrative agency having the necessary specialized knowledge and cumulative experience to resolve conflicts associated with this nation's industrial relations. Garmon, 359 U.S. at 242, 79 S.Ct. at 778. However, Congress carved out an exception to the general rule of exclusive jurisdiction in section 301(a) of the LMRA, 29 U.S.C. Sec. 185(a), which gives both federal and state courts subject matter jurisdiction over suits alleging a violation of a contract between an employer and a labor organization that represents employees engaged in an industry affecting interstate commerce. Motor Coach Employees, 403 U.S. at 298-99, 91 S.Ct. at 1923-24. If an activity constituting an unfair labor practice also allegedly violates a collective bargaining agreement, then the courts and the Board exercise concurrent jurisdiction. Smith v. Evening News Association, 371 U.S. 195, 197, 83 S.Ct. 267, 268, 9 L.Ed.2d 246 (1962); Orange Belt District Council of Painters No. 48 v. Maloney Specialties, Inc., 639 F.2d 487, 490 (9th Cir.1980).

We have previously determined that to assert jurisdiction under section 301(a), "[a]ll that is required ... is that the suit be based on an alleged breach of contract between an employer and a labor organization and that the resolution of the lawsuit be focused upon and governed by the terms of contract." Painting and Decorating Contractors Association v. Painters and Decorators Joint Committee, 707 F.2d 1067, 1071 (9th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 1709, 80 L.Ed.2d 182 (1984). In Carpenters Southern California Administrative Corp. v. Majestic Housing, 743 F.2d 1341 (9th Cir.1984), we emphasized that the rights and liabilities of the parties to an action under section 301(a) must be a product of the bargaining agreement itself, and not of some other origin. Id. at 1345.

The union does not contend that the district court has section 301(a) jurisdiction to enforce the terms of an existing collective bargaining agreement. Nor can the union assert that an agreement was in force at the time the alleged breach occurred, as the collective bargaining agreement between Nord and the union had expired and contained no continuation clause. Rather, the union suggests that the district court has jurisdiction under section 301(a) because the union possessed a property interest in the form of an implied contract with Nord based on 25 years of past collective bargaining agreements; an implied contract that requires Nord to renew the old contract or enter into a new one.

No case has been cited to us, nor are we aware of any, that has recognized an implied labor contract right based on a past bargaining relationship. Such a position would be a radical departure from long-standing labor policy. Section 8(d) of the NLRA, 29 U.S.C. Sec. 158(d), specifically states that the obligation to bargain collectively "does not compel either party to agree to a proposal or require the making of a concession." The underlying theme of our national labor policy is based on the concept that "free opportunity for negotiation with accredited representatives of employees is likely to promote industrial peace and may bring about the adjustments and agreements which the Act in itself does not attempt to compel." NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45, 57 S.Ct. 615, 628, 81 L.Ed. 893 (1937); see also NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 282-83, 92 S.Ct. 1571, 1579-80, 32 L.Ed.2d 61 (1972) (Congress did not intend the NLRA to compel any agreement); H.K. Porter Co. v. NLRB, 397 U.S. 99, 102, 90 S.Ct. 821, 822-23, 25 L.Ed.2d 146 (1970) (the Board cannot compel an employer to agree to a particular substantive provision). If we were to adopt the union's implied contract theory, we would be rejecting the fundamental principle of free collective bargaining and would impose, under the guise of a common-law principle of implied contract, the very concept Congress refused to include within the NLRA: compulsory acceptance of a collective bargaining agreement. See S.Rep. No. 573, 74th Cong., 1st Sess. 12 (1935). We hold that collective bargaining agreements expire according to their...