Milne Employees Ass'n v. Sun Carriers, No. 89-15837

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtBOOCHEVER
Citation960 F.2d 1401
Parties143 L.R.R.M. (BNA) 2663, 120 Lab.Cas. P 11,016 MILNE EMPLOYEES ASSOCIATION, a non-profit Mutual Benefit Corporation, or in the alternative Steven Bishop, Charles E. Tharp, Debra Bishop and Ella Tharp, as representatives of the class of affected former employees of Milne Truck Lines, Inc., and their spouses, Plaintiff-Appellant, v. SUN CARRIERS, INC.; Albert L. Labinger; Donald E. Mayoras; Milne Truck Lines; Elliott Burnside; Charles N. Pass; Thomas Morton; James Bradford; St. Johnsbury Trucking; Jones Truck Lines; Riordan Freeman & Spogli; Richard J. Riordan; Bradford M. Freeman; Ronald P. Spogli, Defendants-Appellees.
Decision Date04 May 1992
Docket NumberNo. 89-15837

Page 1401

960 F.2d 1401
143 L.R.R.M. (BNA) 2663, 120 Lab.Cas. P 11,016
MILNE EMPLOYEES ASSOCIATION, a non-profit Mutual Benefit
Corporation, or in the alternative Steven Bishop, Charles E.
Tharp, Debra Bishop and Ella Tharp, as representatives of
the class of affected former employees of Milne Truck Lines,
Inc., and their spouses, Plaintiff-Appellant,
v.
SUN CARRIERS, INC.; Albert L. Labinger; Donald E. Mayoras;
Milne Truck Lines; Elliott Burnside; Charles N. Pass;
Thomas Morton; James Bradford; St. Johnsbury Trucking;
Jones Truck Lines; Riordan Freeman & Spogli; Richard J.
Riordan; Bradford M. Freeman; Ronald P. Spogli,
Defendants-Appellees.
No. 89-15837.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted Dec. 11, 1990.
Decided Nov. 20, 1991.
As Amended on Denial of Rehearing and Rehearing En Banc May 4, 1992.

Page 1404

Richard E. Schwartz, James E. Parrot, Richard Schwartz & Associates, Ltd., St. Louis, Mo., for plaintiff-appellant.

Charles G. Bakaly, Jr., O'Melveny & Myers, New York City, for defendants-appellees.

Before: GOODWIN, SKOPIL, and BOOCHEVER, Circuit Judges.

OPINION

BOOCHEVER, Circuit Judge:

Milne Employees Association ("MEA" or "employees") appeals from the district court's summary judgment in favor of Sun Carriers, Inc., Milne Truck Lines, and other defendants. 714 F.Supp. 1028. The district court concluded that MEA's various state law claims were preempted by section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185(a) (1988) ("section 301"), and consequently were barred by the applicable six-month statute of limitations period.

The primary issue in this appeal is whether these state law claims are preempted by section 301. We reverse and remand the dismissal of MEA's claims for fraud, negligent misrepresentation of facts, suppression of facts, and intentional infliction of emotional distress, insofar as the emotional distress claim arises from defendants'

Page 1405

allegedly fraudulent conduct. We affirm the dismissal of MEA's claims for breach of the implied covenant of good faith and fair dealing, interference with contractual relations, and interference with prospective economic advantage. We also affirm the dismissal of defendants' motion for summary judgment as it relates to Garmon preemption.
FACTUAL BACKGROUND

Plaintiff Milne Employees Association is an entity consisting of 566 former employees of defendant Milne Truck Lines, Inc. ("Milne") and their spouses. 1 More than 80 percent of Milne's employees were represented by the International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers ("Teamsters"), and the terms of their employment were governed by two collective bargaining agreements. 2 From approximately 1930 to 1980, Milne operated as an independent trucking company. In 1980, defendant Sun Carriers, Inc. acquired Milne. On September 29, 1986, Sun officers and defendants Riordan, Freeman, and Spogli purchased all of Sun's stock in a leveraged buy-out. At some point between that date and January 1987, MEA claims that all the defendants (collectively "Employer") secretly planned to liquidate Milne's assets to pay the leveraged buy-out debt. After January 1987, although Milne allegedly was reducing its sales and marketing forces, Milne management visited with employees at various Milne terminals in an effort to address industrywide rumors of the company's imminent closing. During these meetings, management allegedly made speeches and presented videotapes promising the employees job security, asking them to have faith in the group controlling defendant Sun, and asking them to refrain from seeking other employment. In August 1987, Employer sold two Milne terminals but represented the sales to employees as a "revamping" or as a "blend[ing]" of operations with other Milne terminals. MEA claims that all of these actions were "efforts to deceive, mislead and conceal" from Milne employees Employer's true intentions to liquidate the company.

On September 8, 1987, Milne requested numerous wage and benefit concessions from the Teamsters and stated that failure to agree to the concessions by September 11 would force Milne to shut down due to financial difficulties. On September 11, 1987, Employer closed all of Milne's 33 locations, liquidated its assets, and began terminating Milne employees.

One year later, MEA filed a complaint in California state court, bringing the following state tort and contract claims 3 based on Milne's alleged promises: fraud, negligent misrepresentation, suppression of facts, breach of the implied covenant of good faith and fair dealing, interference with contractual relations, interference with prospective economic advantage, and intentional infliction of emotional distress. Employer removed the case to federal court, and MEA moved to remand the case back to state court. On January 31, 1989, the district court held, 1) that the defendants other than Milne who were nonsignatories to the collective bargaining agreements, had standing to remove their cases to federal court on the basis of section 301 preemption, and 2) that all claims of the unionized former employees and their spouses were completely preempted by section 301 of the Labor Management Relations Act. On May 15, 1989, the district court finalized its order granting all defendants summary judgment as to all claims of the former unionized employees and their spouses, on the grounds that the claims were preempted by section 301 and

Page 1406

barred by the applicable six-month statute of limitations. The district court also denied defendants' motion for summary judgment on the basis of Garmon preemption and remanded the nonunion employees' claims to state court. The former unionized employees now appeal. We have jurisdiction pursuant to 28 U.S.C. § 1291.
STANDARD OF REVIEW

The propriety of removal of a state action to federal court is a question of federal jurisdiction and is subject to de novo review. Jackson v. Southern Cal. Gas Co., 881 F.2d 638, 641 (9th Cir.1989). We also review de novo both the district court's grant of defendants' summary judgment motion based on section 301 preemption and its denial of that portion of defendants' summary judgment motion relating to Garmon preemption. Shane v. Greyhound Lines, Inc., 868 F.2d 1057, 1060 (9th Cir.1989).

DISCUSSION
I

Removal Jurisdiction

Title 28 U.S.C. § 1441(a) provides that a defendant may remove from state to federal court any civil action over which the district court would have had original jurisdiction. Federal district courts have original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331 (1988). Federal jurisdiction exists only if the federal question appears on the face of the plaintiff's "well-pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429-30, 96 L.Ed.2d 318 (1987); see also Gully v. First Nat'l Bank, 299 U.S. 109, 112-13, 57 S.Ct. 96, 97-98, 81 L.Ed. 70 (1936). Thus, under the well-pleaded complaint rule, a defendant cannot remove a state law claim to federal court even if a defense, including the defense of preemption, is based on federal law. Hunter v. United Van Lines, 746 F.2d 635, 639 (9th Cir.1984), cert. denied, 474 U.S. 863, 106 S.Ct. 180, 88 L.Ed.2d 150 (1985).

The "complete preemption" doctrine, however, stands as an independent corollary or exception to the well-pleaded complaint rule. Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430. Under this doctrine, "[o]nce an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Id. Plaintiffs cannot avoid removal by "artfully pleading" only state law claims that are actually preempted by federal statutes such as section 301 of the Labor Management Relations Act. See Young v. Anthony's Fish Grottos, Inc., 830 F.2d 993, 997 (9th Cir.1987). Thus, if a state law claim is completely preempted by a federal statute such as section 301, the state law cause of action necessarily becomes a federal one and can be removed.

MEA asserts that all of the named defendants except Milne were nonsignatories to the collective bargaining agreements ("CBAs") and therefore did not have standing under section 301 to remove the case from state to federal court. We disagree.

MEA relies primarily on Karo v. San Diego Symphony Orchestra Ass'n, 762 F.2d 819 (9th Cir.1985). There, the issue was whether a nonsignatory had standing to bring a hybrid suit for breach of a collective bargaining agreement and breach of the duty of fair representation. Id. at 820. Because the plaintiff was neither a member of the bargaining unit nor a third party beneficiary of the agreement, we concluded that he lacked standing to enforce a provision in the agreement. MEA asserts that Karo necessarily leads to the conclusion that, first, a nonparty to a CBA whose duties are not defined in the contract cannot be sued for breach of the contract and, second, a party who cannot be sued for breach of a CBA cannot raise a federal labor contract defense to a state tort claim.

Karo, however, did not present an issue of preemption, because that case involved a section 301 suit brought in federal court. The primary issue was merely whether

Page 1407

Karo had rights under the CBA and, thus, had standing to sue for its breach. Assuming that Karo had brought suit in state court and that the question of his standing to enforce the CBA required interpretation of the CBA, his claim might well have been subject to preemption. Contrary to MEA's belief, then, our holding in Karo does not prevent a nonsignatory to an agreement from raising the issue of section 301 preemption to remove a case to federal court.

In resolving this issue, we find controlling our decision in Painting & Decorating Contractors Ass'n v. Painters &...

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106 practice notes
  • McKenna v. Permanente Med. Grp., Inc., Case No. CV F 12–0849 LJO GSA.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 13, 2012
    ...faith and fair dealing cannot be implied “into employment relationships governed by a CBA.” In Milne Employees Ass'n v. Sun Carriers, 960 F.2d 1401, 1411 (9th Cir.1991), cert. denied,508 U.S. 959, 113 S.Ct. 2927, 124 L.Ed.2d 678 (1993), the Ninth Circuit explained absence of implied covenan......
  • McKenna v. Permanente Med. Grp., Inc., CASE NO. CV F 12-0849 LJO GSA
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 9, 2012
    ...faith and fair dealing cannot be implied "into employment relationships governed by a CBA." In Milne Employees Ass'n v. Sun Carriers, 960 F.2d 1401, 1411 (9th Cir. 1991), cert. denied, 508 U.S. 959, 113 S.Ct. 2927 (1993), the Ninth Circuit explained absence of implied covenant claims for un......
  • Greenfield v. Schmidt Baking Co., Inc., No. 23574
    • United States
    • Supreme Court of West Virginia
    • March 19, 1997
    ...405 (1996); Johnson v. Anheuser Busch, Inc., 876 F.2d 620 (8th Cir.1989) (defamation pre-empted); Milne Employees Ass'n. v. Sun Carriers, 960 F.2d 1401 (9th Cir.1991) (one claim for intentional infliction of emotional distress pre-empted; second emotional distress claim not pre-empted), cer......
  • Cavanaugh v. Southern California Permanente Med., No. CV 06-4930-GW (JTLx).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • September 10, 2008
    ...when an employee enjoys comparable job security under a collective bargaining agreement." Milne Employees Ass'n v. Sun Carriers, Inc., 960 F.2d 1401, 1411 (9th Cir.1992). Accordingly, both Plaintiff's state breach of contract and breach of the implied covenant claims are preempted by Sectio......
  • Request a trial to view additional results
106 cases
  • McKenna v. Permanente Med. Grp., Inc., Case No. CV F 12–0849 LJO GSA.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 13, 2012
    ...faith and fair dealing cannot be implied “into employment relationships governed by a CBA.” In Milne Employees Ass'n v. Sun Carriers, 960 F.2d 1401, 1411 (9th Cir.1991), cert. denied,508 U.S. 959, 113 S.Ct. 2927, 124 L.Ed.2d 678 (1993), the Ninth Circuit explained absence of implied covenan......
  • McKenna v. Permanente Med. Grp., Inc., CASE NO. CV F 12-0849 LJO GSA
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 9, 2012
    ...faith and fair dealing cannot be implied "into employment relationships governed by a CBA." In Milne Employees Ass'n v. Sun Carriers, 960 F.2d 1401, 1411 (9th Cir. 1991), cert. denied, 508 U.S. 959, 113 S.Ct. 2927 (1993), the Ninth Circuit explained absence of implied covenant claims for un......
  • Greenfield v. Schmidt Baking Co., Inc., No. 23574
    • United States
    • Supreme Court of West Virginia
    • March 19, 1997
    ...405 (1996); Johnson v. Anheuser Busch, Inc., 876 F.2d 620 (8th Cir.1989) (defamation pre-empted); Milne Employees Ass'n. v. Sun Carriers, 960 F.2d 1401 (9th Cir.1991) (one claim for intentional infliction of emotional distress pre-empted; second emotional distress claim not pre-empted), cer......
  • Cavanaugh v. Southern California Permanente Med., No. CV 06-4930-GW (JTLx).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • September 10, 2008
    ...when an employee enjoys comparable job security under a collective bargaining agreement." Milne Employees Ass'n v. Sun Carriers, Inc., 960 F.2d 1401, 1411 (9th Cir.1992). Accordingly, both Plaintiff's state breach of contract and breach of the implied covenant claims are preempted by Sectio......
  • Request a trial to view additional results

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