Sarauer v. Int'l Ass'n of Machinists & Aerospace Workers

• Citation: 966 F.3d 661
• Decision Date: 20 July 2020
• Docket Number: No. 19-3142,19-3142
• Parties: Daniel SARAUER, et al., Plaintiffs-Appellants, v. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, DISTRICT NO. 10, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

966 F.3d 661

Daniel SARAUER, et al., Plaintiffs-Appellants,

v.INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, DISTRICT NO. 10, et al., Defendants-Appellees.

No. 19-3142

United States Court of Appeals, Seventh Circuit.

Argued April 15, 2020

Decided July 20, 2020

Milton L. Chappell, Matthew B. Gilliam, Attorneys, National Right To Work Legal Defense Foundation, Springfield, VA, for Plaintiffs-Appellants.

Frederick Perillo, Attorney, Previant Law Firm, S.C., Milwaukee, WI, for Defendants-Appellees.

Before Manion, Hamilton, and Barrett, Circuit Judges.

Hamilton, Circuit Judge.

Private labor relations in this country are governed almost exclusively by federal law. This case is about the "almost." Under federal law, unions and employers may enter into collective bargaining agreements with "union security" clauses, which require employees either to become union members after being hired or, if they do not join, to pay fees to the union for representing them, as federal law requires of the union. Congress has allowed states to take a different view of such clauses, however. More than half the states today have "right to work" laws prohibiting unions and employers from entering into union security agreements.

Wisconsin’s Act 1 enacted in 2015 is a right-to-work law. Plaintiffs are ten Wisconsin employees who contend that Act 1 invalidated the union security clause in the 2015–2018 collective bargaining agreement between their employer and their bargaining unit’s union, both defendants here. Plaintiffs filed this suit in a Wisconsin state court, and defendants removed to federal district court. The district court held that removal was proper because the case arises under federal law, not state law. The court then held as a matter of federal law that defendants’ collective bargaining agreement was formed before Act 1 took effect so that plaintiffs are not entitled to relief. The court granted summary judgment for the defense. We affirm as to both jurisdiction and the merits.

I. Background

The material facts are not disputed. Defendant Maysteel Industries is a sheet metal fabricator in Wisconsin. Maysteel employees are represented by defendant Machinists Union. Plaintiffs are ten employees of Maysteel who do not want to join the union and pay dues or even make fair-share payments. From March 2012 to March 2015, the company and the union were parties to a collective bargaining agreement that contained a union security clause. It required Maysteel employees as a condition of employment either to become union members or to pay a "service fee for representation" to the union. Under the agreement’s dues check-off provision, Maysteel, with an employee’s authorization, deducted the union’s dues or fees from the employee’s paycheck and sent the money to the union.

In January 2015, the company and the union began negotiating a new collective bargaining agreement. Working from the 2012–2015 agreement as a baseline, the parties kept a written tally of proposed changes as they were agreed upon. By February 27 the new agreement had been fully negotiated except for the timing of breaks, a point on which the old agreement had been silent and which the new agreement provided would be settled by the parties by April without further contracting. On February 28 the new agreement (that is, the old agreement plus all agreed upon changes) was presented to the union membership for ratification. The membership ratified the new agreement the same day. The new agreement was to take effect on March 5, the day after the old agreement expired, but the parties agreed to implement it on March 2 to line up its new wage rates with the start of a new pay period. The new agreement was actually signed on March 18, a point that is at the heart of plaintiffs’ claims, which depend on when the new agreement took effect.

On March 11, Wisconsin’s Act 1 took effect. It applied "to a collective bargaining agreement containing provisions inconsistent with this act upon renewal, modification, or extension of the agreement occurring on or after" that date. 2015 Wis. Act 1 § 13. Three plaintiffs began objecting to the fee deductions and demanded that Maysteel stop them. These plaintiffs also demanded copies of their signed check-off authorizations. Neither the company nor the union was forthcoming. The three plaintiffs filed charges with the National Labor Relations Board complaining of unfair labor practices. The Board negotiated a settlement of the charges that did not require reimbursement of the deductions or invalidation of the union security clause.

In 2016, plaintiffs then filed this lawsuit in a Wisconsin state court. The complaint alleged two claims for unfair labor practices under state law as amended by Act 1. It alleged that plaintiffs had been unlawfully required to pay union fair-share fees as a condition of employment in violation of Wis. Stat. § 111.04(3)(a). The complaint added a third claim for violation of the state wage payment statute, alleging on behalf of those plaintiffs whose written check-off authorizations could not be found (six at the time of filing, five after discovery in this case) that Maysteel had unlawfully withheld their wages without authorization.

Defendants removed the case to federal court. Plaintiffs moved to remand, arguing that they had pleaded only state law claims and could not be forced into the federal forum. Defendants countered that plaintiffs themselves had raised an issue of federal labor law (specifically, of labor contract formation) by alleging that defendants had "backdated" the new collective bargaining agreement to evade the new requirements of Act 1.

The parties consented to the jurisdiction of the magistrate judge under 28 U.S.C. § 636(c). The judge denied remand and later granted defendants’ motion for summary judgment. The court held that as a matter of federal law, the new collective bargaining agreement had not been renewed, modified, or extended on or after the effective date of Act 1. The union security clause of the new agreement was therefore valid. The district court held further that plaintiffs’ wage payment claims were within the exclusive jurisdiction of the National Labor Relations Board. We have jurisdiction over plaintiffs’ appeal from that final judgment. 28 U.S.C. § 1291.

II. Analysis

Plaintiffs appeal both the district court’s denial of their motion to remand to state court and the grant of summary judgment to defendants. Plaintiffs also ask us to certify questions of Wisconsin law to the Wisconsin Supreme Court under Circuit Rule 52. We conclude that the district court correctly denied remand and granted summary judgment. Also, there is no controlling issue of state law to certify.

A. Federal Jurisdiction

We review de novo the district court’s denial of a motion to remand. Schur v. L.A. Weight Loss Centers , 577 F.3d 752, 758 (7th Cir. 2009). A motion to remand must be granted if the case removed from state court could not have been brought in federal court originally for lack of subject-matter jurisdiction. 28 U.S.C. §§ 1441(a), 1447(c). Jurisdiction in this case is based on the district court’s jurisdiction over actions "arising under" federal law. § 1331. Plaintiffs argue that they assert rights only under state law, but two paths may support "arising under" federal jurisdiction over such claims here: so-called "complete" preemption and an "embedded" federal question. The district court took the complete preemption path, holding principally that this case necessarily arises under § 301 of the Labor Management Relations (Taft–Hartley) Act of 1947, 29 U.S.C. § 185. We agree with the district court’s ultimate conclusion that it had jurisdiction and with much of its reasoning. We do not follow the significant expansion of § 301 arguably implied by the district court’s ruling and instead follow the "embedded question" path.¹

1. Complete Preemption?

For purposes of 28 U.S.C. § 1331, a case generally "arises under" the law that creates the plaintiff’s cause of action. Franchise Tax Board v. Constr. Laborers Vacation Trust for S. Cal. , 463 U.S. 1, 8–9, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). As a result, a state law claim ordinarily cannot be removed, even if it is necessarily defeated by a federal defense, because the federal question supporting jurisdiction must appear on the face of the plaintiff’s properly or "well-pleaded" complaint. Caterpillar Inc. v. Williams , 482 U.S. 386, 392–93, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Congressional intent to prohibit a state law cause of action is thus not sufficient to create federal subject-matter jurisdiction. Franchise Tax Board , 463 U.S. at 12, 103 S.Ct. 2841. But congressional intent to displace a state law cause of action—such that there is "no such thing as a state-law claim" for violation of the right asserted, Beneficial Nat’l Bank v. Anderson , 539 U.S. 1, 11, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003), only a federal one—is sufficient to create jurisdiction. Franchise Tax Board , 463 U.S. at 23, 103 S.Ct. 2841. The state law claim is then said to be "completely pre-empted" and "is considered, from its inception, a federal claim." Williams , 482 U.S. at 393, 107 S.Ct. 2425.

Only a small number of federal statutes have completely preemptive effect. See Retail Property Trust v. United Brotherhood of Carpenters and Joiners of Am. , 768 F.3d 938, 946–49 & n.5 (9th Cir. 2014). First among them is § 301 of the Taft–Hartley Act. Williams , 482 U.S. at 393–94, 107 S.Ct. 2425 (complete preemption was first recognized and "applied primarily" in context of § 301); Avco Corp. v. Aero Lodge No. 735 , 390 U.S. 557, 560, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968) (first recognizing complete preemption under § 301). That statute supplies the exclusive cause of action for all claims, no matter how denominated, having a sufficiently close connection to a collective bargaining agreement governed by federal law. Williams , 482 U.S. at 393–94, 107 S.Ct. 2425 ; Baker v....