Milne Employees Ass'n v. Sun Carriers, Inc., C-88-4028-CAL.

• Decision Date: 31 January 1989
• Docket Number: No. C-88-4028-CAL.,C-88-4028-CAL.
• Citation: 714 F. Supp. 1028
• Parties: MILNE EMPLOYEES ASSOCIATION, et al., Plaintiffs, v. SUN CARRIERS, INC., et al. Defendants.
• Court: U.S. District Court — Northern District of California

714 F. Supp. 1028

MILNE EMPLOYEES ASSOCIATION, et al., Plaintiffs, v. SUN CARRIERS, INC., et al. Defendants.

No. C-88-4028-CAL.

United States District Court, N.D. California.

January 31, 1989.

Ronald A. Clark, Sacramento, Cal., and Richard E. Schwartz, St. Louis, Mo., for plaintiffs.

Charles G. Bakaly, Jr., O'Melveny & Myers, Los Angeles, Cal., for defendants.

OPINION AND ORDER

LEGGE, District Judge.

Plaintiff has moved to remand this case to state court pursuant to 28 U.S.C. § 1447. The question presented is whether plaintiff's state law claims arise under § 301 of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185(a), and are thus removable.

I.

Plaintiff, Milne Employees Association ("MEA"), is a nonprofit mutual benefit corporation which was formed for the purpose of conducting litigation on behalf approximately 800 former employees of defendant Milne Truck Lines ("Milne").¹ The identities of the individual claimants are, for the most part, not disclosed in the pleadings. But it is apparent from the face of the complaint that the assignees to MEA include both union and non-union workers, who were employed by Milne as truck drivers, dock and terminal personnel, clerical and other office personnel, maintenance employees, mechanics, supervisors, sales and marketing personnel and managers, and other lower and mid-level managers. Some but not all of the members of MEA were unionized employees in a collective bargaining unit and covered by collective bargaining agreements ("CBA").²

Plaintiff brought this action in state court against defendants Milne, its former parent company, Sun Carriers, Inc., two other trucking companies that were owned by Sun Carriers, the former owners of Sun Carriers, and several individuals who were directors or officers of Sun Carriers or Milne. The complaint alleges that on September 11, 1987, Milne was closed and its employees were terminated. All of plaintiff's claims appear to arise from and relate to the termination of Milne's trucking operations, resulting in the employees being laid off. Plaintiff avers that beginning in January 1987 and continuing until September 1987, when Milne announced that it was terminating operations, defendants intentionally and fraudulently misrepresented to Milne's employees that Milne would remain in operation and that the employees' jobs were secure. Plaintiff's complaint alleges various state law tort claims and specifically disavows any reliance on the collective bargaining agreements. MEA alleges that the defendants are liable in damages for fraud, misrepresentation, breach of the implied covenant of good faith and fair dealing, interference with both contractual relations and prospective economic advantage, intentional infliction of emotional distress, and loss of consortium claims. In addition, MEA seeks to impose a constructive trust on defendants.

Defendants removed the action to this court on the basis of federal question jurisdiction. Plaintiff now moves to remand.

II.

MEA argues that because no federal question appears on the face of the complaint, removal was improper.

Title 28 U.S.C. § 1441 provides that a defendant may remove a civil action "brought in a State court of which the district courts of the United States have original jurisdiction." The Supreme Court, in Caterpillar v. Williams, 482 U.S. 386, 107 S.Ct. 2425, 2429-30, 96 L.Ed.2d 318 (1987), recently reiterated the jurisdictional framework governing removal of federal question cases from state to federal courts:

"Only state court actions that originally could have been filed in federal court may be removed to federal court by the defendant. Absent diversity of citizenship, federal question jurisdiction is required. The presence or absence of federal-question jurisdiction is governed by the `well-pleaded complaint rule,' which provides that federal question jurisdiction exists only when a federal question is presented on the face of the plaintiff's complaint. The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law."

Id. 107 S.Ct. at 2429 (citations and footnotes omitted) (cited in Hyles v. Mensing, 849 F.2d 1213, 1215 (9th Cir.1988)).

Ordinarily, a case may not be removed on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue. See Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust, 463 U.S. 1, 12, 103 S.Ct. 2841, 2847, 77 L.Ed.2d 420 (1983). However, under the complete preemption doctrine, once an area of state law has been completely preempted by federal law, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law. Caterpillar, 107 S.Ct. at 2428-2430; Newberry v. Pacific Racing Ass'n, 854 F.2d 1142, 1146 (9th Cir.1988).

III.

As a threshhold matter, plaintiff asserts that defendants did not have standing to remove this case based on the complete preemption doctrine, because the defendants other than Milne are not signatories to the collective bargaining agreements.

In Painting & Decorating Contractors Ass'n v. Painters & Decorators Joint Committee, 707 F.2d 1067 (9th Cir.1983), cert. denied, 466 U.S. 927, 104 S.Ct. 1709, 80 L.Ed.2d 182 (1984), the Ninth Circuit addressed an analogous standing issue. In that case, the defendant argued that it was not a proper party to a § 301 claim because the defendant was not a party to the underlying collective bargaining agreement. In rejecting this argument, the court stated:

"The fact that the Joint Committee is not a party to the agreement is immaterial.

Section 301(a) does not contain any requirement that the parties to an action brought thereunder must also be parties to the allegedly breached contract.... All that is required for jurisdiction to be proper under Section 301(a) is that the suit be based on alleged breach of contract between an employer and a labor organization and that resolution must be focused upon and governed by the terms of the contract."

Id. at 1070-71. Accord: Brown v. Keystone Consolidated Industries, Inc., 680 F.Supp. 1212, 1220-22 (N.D.Ill.1988) (fact that plaintiffs cannot prevail on § 301 claim against a nonsignatory to a labor agreement for claims that are substantially dependent on the terms of the labor agreement does not empower the court to legislate an exception to its preemptive effect).

This court concludes that defendants had standing to remove plaintiff's complaint to federal court on the basis of the complete preemption doctrine. A contrary conclusion would permit plaintiffs to circumvent the preemptive effective of § 301 by simply naming individual directors or officers of the employer, rather than the employer itself, and would seriously undermine the Congressional intent behind § 301 that collective bargaining agreements be interpreted under a uniform body of federal labor law. See Allis-Chalmers v. Lueck, 471 U.S. 202, 209-12, 105 S.Ct. 1904, 1910-12, 85 L.Ed.2d 206 (1985); Smith v. Evening News Ass'n, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962); Teamsters v. Lucas Flour Co., 369 U.S. 95, 103, 104, 82 S.Ct. 571, 576, 577, 7 L.Ed.2d 593 (1962).

IV.

Section 301(a) of the LMRA provides federal jurisdiction over "suits for violation of contracts between an employer and a labor organization." 29 U.S.C. § 185(a). A suit for breach of a collective bargaining agreement is governed exclusively by federal law under § 301. Franchise Tax Board, 463 U.S. at 23, 103 S.Ct. at 2853; Newberry, 854 F.2d at 1146. The preemptive force of § 301 is so encompassing that it also displaces entirely any state cause of action whose outcome depends on analysis of the terms of the agreement. IBEW v. Hechler, 481 U.S. 851, 107 S.Ct. 2161, 2165, 95 L.Ed.2d 791 (1987); Stallcop v. Kaiser Foundation Hosps., 820 F.2d 1044, 1048 (9th Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 504, 98 L.Ed.2d 502 (1987). When "the heart of the state law complaint is a ... clause in the collective bargaining agreement," that complaint arises under federal law. Caterpillar, 107 S.Ct. at 2430, citing Avco Corp. v. Aero Lodge 735, 390 U.S. 557, 558, 88 S.Ct. 1235, 1236, 20 L.Ed.2d 126 (1968).

Preemption of state law claims is not appropriate where state causes of action "confer nonnegotiable state-law rights on ... employees independent of any right established by contract."³ Allis-Chalmers, 471 U.S. at 213, 105 S.Ct. at 1912; Utility Workers of America v. Southern Cal. Edison, 852 F.2d 1083, 1085-86 (9th Cir.1988); Hyles, 849 F.2d at 1216. Section 301 does not preempt every employment dispute tangentially involving the labor agreement. Allis-Chalmers, 471 U.S. at 211, 105 S.Ct. at 1911.

The most recent formulation of § 301 preemption test is set forth by the Supreme Court in Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988), where the Court held that "an application of state law is pre-empted by § 301 ... only if such application requires the interpretation of a collective bargaining agreement." Id. 108 S.Ct. at 1885.

It is unclear whether the Lingle decision defines a new test or merely amplifies the similar formulation set forth in Allis-Chalmers v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). In Allis-Chalmers, the Court held that "when resolution of a state-law claim is substantially dependent upon analysis of the terms of an agreement made between the parties in a labor contract, that claim must either be treated as a § 301 claim, or dismissed as pre-empted by federal labor-contract law." Id. at 220, 105 S.Ct. at 1916 (citations omitted) (emphasis added). In Newberry, the Ninth Circuit analyzed the appellant's contentions under both tests "without indicating or suggesting that the...