NE IL Reg'l Commuter RR. Corp. v. Farina & Downes

• Decision Date: 15 May 2000
• Docket Number: No. 99-1588,99-1588
• Citation: 212 F.3d 1010
• Parties: (7th Cir. 2000) Northeast Illinois Regional Commuter Railroad Corporation, d/b/a Metra, Plaintiff-Appellant, v. Hoey Farina & Downes, Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1010

212 F.3d 1010 (7th Cir. 2000)

Northeast Illinois Regional Commuter Railroad Corporation, d/b/a Metra, Plaintiff-Appellant, v. Hoey Farina & Downes, Defendant-Appellee.

No. 99-1588

In the United States Court of Appeals For the Seventh Circuit

Argued February 14, 2000

Decided May 15, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 98 C 1320--Harry D. Leinenweber, Judge. [Copyrighted Material Omitted]

Before Bauer, Flaum, and Evans, Circuit Judges.

Flaum, Circuit Judge.

On March 4, 1998, Northeast Illinois Regional Commuter Railroad Corporation (d/b/a "Metra") filed a complaint for declaratory and injunctive relief against Douglas Baethke and the law firm Hoey Farina & Downes ("Hoey") in the United States District Court for the Northern District of Illinois. Metra alleged that the defendants were interfering with Metra's rights, guaranteed under the federal Railway Labor Act ("RLA"), 45 U.S.C. sec. 151 et seq., to conduct disciplinary hearings according to the terms of a collective bargaining agreement. The district court dismissed for lack of subject matter jurisdiction. For the reasons stated herein, we affirm.

Background

Metra is a corporation that operates commuter passenger trains in the Chicago region, and it is a "carrier" within the meaning of the RLA, which governs labor relations matters within the rail industry. Douglas Baethke was employed by Metra as a locomotive engineer. His employment was governed by a collective bargaining agreement ("CBA") between Metra and the Brotherhood of Locomotive Engineers ("BLE"), his bargaining representative, as well as by the provisions of the RLA. Under the CBA, Metra may only discipline a covered employee after first conducting a fair and impartial disciplinary investigation hearing, at which the employee may be represented by a BLE official, but not by a private attorney.

On May 2, 1996, Baethke allegedly suffered an injury to his leg during the course of his employment, and he was off work until July 21, 1997, and then from October 9, 1997 through the date at which Metra's initial complaint was filed. Baethke retained the Hoey law firm to represent him in his personal injury suit against Metra. Baethke repeatedly told Metra representatives that his injury rendered him unable to return to work, but on December 4, 1997, he was observed engaging in strenuous physical activities. On January 28, 1998, Metra officials sent Baethke a letter informing him that he was medically released to return to work as of January 26, but that he was removed from service pending an investigation hearing, to be conducted under the procedures established in the Metra-BLE CBA, concerning his possible violation of Metra work rules.

Baethke informed Hoey of the disciplinary investigation hearing, then scheduled for February 13, 1998, and on February 5 a Hoey attorney sent Metra a letter threatening to file suit, in the law firm's own name, against Metra if Metra did not agree to grant Baethke certain rights beyond those provided by the CBA. Specifically, the attorney demanded that he be permitted to attend the hearing, that he be able to cross-examine company witnesses, that he receive copies of all relevant medical documents, and that the hearing be postponed to allow him time to assemble his own evidence. The Hoey attorney conceded that the CBA did not permit Baethke any of these rights but he insisted that if Metra adhered to the CBA's terms Metra would be tortiously interfering with the attorney's relationship with Baethke.¹ The Hoey attorney threatened to sue for injunctive relief, and Metra responded with a letter stating that Metra would not grant Baethke the additional rights demanded by the Hoey attorney. The Hoey attorney then sent Metra another letter threatening to sue if Metra continued to refuse.

On March 4, 1998, Metra filed a complaint in federal district court for declaratory and injunctive relief against Baethke and Hoey. The RLA prescribes mandatory procedures that must be followed with respect to certain types of employment disputes. Metra asserted that Baethke and Hoey understood that any direct assertion by Baethke or Hoey that Metra's decision to hold the disciplinary hearing would violate Baethke's rights would be subject to the exclusive dispute resolution procedures prescribed by the RLA, under which Metra would be entitled to proceed with the hearing pending resolution of the dispute over the application of the CBA. Therefore, Metra alleged, Baethke and Hoey concocted a scheme to prevent Metra's holding of the disciplinary hearing by demanding terms different from those prescribed by the CBA and the RLA based on the law firm's supposed rights under Illinois law. Hoey's warnings that Metra's exercise of the railroad's RLA-based rights would tortiously interfere with the law firm's rights, Metra claimed, was part of Hoey and Baethke's scheme to obtain for Baethke different terms than those prescribed by the CBA

Metra requested declaratory and injunctive relief against both Baethke and Hoey to prevent them from interfering with Metra's right to conduct the Baethke disciplinary hearing and any future disciplinary hearings pursuant to the provisions of its CBA and the RLA. Metra sought declarations that it enjoyed the legally protected right to conduct the Baethke disciplinary hearing and future disciplinary hearings involving Hoey clients according to terms of the CBA and that this right, as a matter of federal law, supersedes any legally cognizable rights that the firm may have. Metra also sought declarations that Hoey could not enjoin such hearings because Metra's conduct either did not violate any legally cognizable rights belonging to Hoey or was privileged as a matter of Illinois common law. Finally, Metra sought injunctive relief preventing Hoey from interfering with Metra's federally protected rights, such as by commencing a lawsuit to prevent Metra from conducting its hearings.

On March 5, 1998, one day after Metra filed its complaint, Hoey carried out its threat and filed a lawsuit against Metra in the Circuit Court of Cook County, Illinois, alleging that Metra's conduct of the Baethke disciplinary proceeding under the procedures prescribed in the CBA would tortiously interfere with the law firm's relationship with its client. Metra responded by filing a motion to dismiss Hoey's state lawsuit on the ground that it was barred by the pendency of Metra's earlier-filed federal action.

In response to Metra's federal lawsuit and its motion to dismiss Hoey's later-filed state court suit, Hoey sent a letter to Metra stating that it was withdrawing its demand to be present at the pending investigation of Baethke or to assert any other rights the law firm might have under state law to enjoin the investigation. The letter concluded: "I trust this renders all issues in the above-referenced matters moot and both cases can be dismissed." Hoey then voluntarily dismissed its lawsuit in state court, and on March 24, 1998, it moved to dismiss on mootness grounds the present, federal action on behalf itself and Baethke.

On June 2, the district court granted the motion to dismiss Metra's claims against Baethke and Metra's claims against Hoey that related specifically to the Baethke hearing. The court denied Hoey's motion to dismiss Metra's claim seeking relief to prevent Hoey from commencing future lawsuits to interfere with Metra's federally protected rights, the court having concluded that these claims were not moot because there exists a present threat that Hoey, which represents other Metra employees, might disrupt future proceedings.

In November 1998, Metra filed a motion for summary judgment with respect to its claims for declaratory relief only, asserting that it was entitled as a matter of law to such relief. Hoey argued that the district court lacked subject matter jurisdiction because Metra's claims for declaratory and injunctive relief did not "arise under" federal law, since Metra's RLA-based preemption claims were ones that the railroad could raise as a defense in...