Valles v. Ivy Hill Corp.

• Decision Date: 06 June 2005
• Docket Number: No. 03-55440.,03-55440.
• Citation: 410 F.3d 1071
• Parties: David VALLES; John Breslin, and members of the general public similarly situated, Plaintiffs-Appellants, v. IVY HILL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

410 F.3d 1071

David VALLES; John Breslin, and members of the general public similarly situated, Plaintiffs-Appellants, v. IVY HILL CORPORATION, Defendant-Appellee.

No. 03-55440.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 7, 2004.

Filed June 6, 2005.

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Howard Z. Rosen & Lazaro Cuevas, Posner & Rosen LLP, Los Angeles, CA, for the appellants.

Jamie J. Johnson, Bryan Cave LLP, Santa Monica, CA, for the appellee.

Appeal from the United States District Court for the Central District of California; Manuel L. Real, District Judge, Presiding. D.C. No. CV-02-08528-MLR.

Before: REINHARDT, HALL, and WARDLAW, Circuit Judges.

REINHARDT, Circuit Judge:

David Valles and John Breslin sued their employer, the Ivy Hill Corporation, for failing to provide them and other unionized employees with adequate meal periods and rest breaks in violation of California's Labor Code and wage regulations. Ivy Hill removed the action to federal court on the ground that the meal period claims were "completely preempted" by federal labor law. The district court denied the employees' motion to remand to state court and granted summary judgment in favor of Ivy Hill. Valles and Breslin appeal. We reverse.

I. BACKGROUND

Ivy Hill has been operating a Los Angeles printing facility since 1966. Since that time, its employees have been represented by the Graphic Communications International Union, Local 404 (or a predecessor union). The terms and conditions of employment are governed by a collective bargaining agreement, which does not address rest breaks but includes two provisions regarding meal periods: One mandates non-working meal periods and the other provides for time and a half payment in the event an employee must work during a regularly scheduled meal period.¹ Despite this contract language, from the time that the printing facility opened until June 2002, employees who worked on the first shift were not afforded lunch periods. Instead, they worked through lunch and were paid at their normal hourly rate for their working lunches. No employee filed a grievance about this practice. In June 2002, Ivy Hill instituted non-working, unpaid lunch periods.

Three months later, employees Valles and Breslin brought a class action lawsuit in state court, alleging that until June 2002 Ivy Hill had failed to provide them with uninterrupted thirty minute meal periods and ten minute rest breaks. The employees based their claims entirely on the provisions of state law and not on any terms contained in their collective bargaining agreement. They sought penalties back to October 1, 2000, the date upon which they contend that the state's meal period and rest break penalty provisions became applicable. Ivy Hill removed the case to federal court on the ground that the employees' meal period claims were completely pre-empted by Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185 (2005). The employees moved the district court to remand the matter to state court, while Ivy Hill moved for summary judgment on the ground of preemption. The district court denied the employees' motion to remand and granted summary judgment in favor of Ivy Hill. The employees appealed.²

We have jurisdiction under 28 U.S.C. § 1291 and review the district court's finding of preemption under § 301 de novo. Cramer v. Consolidated Freightways, 255 F.3d 683, 689 (9th Cir.2001) (en banc) (as amended).

II. DISCUSSION

A. Complete Preemption Doctrine

Federal jurisdiction typically exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1106 (9th Cir.2000) (citing Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)). A federal law defense to a state-law claim does not confer jurisdiction on a federal court, even if the defense is that of federal preemption and is anticipated in the plaintiff's complaint. Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 14, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). This rule makes a plaintiff the "master of his complaint": He may generally avoid federal jurisdiction by pleading solely state-law claims. Balcorta, 208 F.3d at 1106.

An exception to the general rule exists, however, when the preemptive force of a statute is so strong that it "completely preempt[s]" an area of state law. Id. at 1107; see also Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). In such circumstances, federal law displaces a plaintiff's state-law claim, no matter how carefully pleaded. Gregory v. SCIE, LLC, 317 F.3d 1050, 1052 (9th Cir.2003). This is because the "claim purportedly based on ... [a] preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Balcorta, 208 F.3d at 1107 (citing Franchise Tax Bd., 463 U.S. at 24, 103 S.Ct. 2841).

The complete preemption exception to the well-pleaded complaint rule is applied primarily under § 301 of the LMRA. Id. That section vests jurisdiction in federal courts over "[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce." 29 U.S.C. § 185(a). Although the text of § 301 contains only a jurisdictional grant, the Supreme Court has interpreted it to compel the complete preemption of state law claims brought to enforce collective bargaining agreements. Avco Corp. v. Aero Lodge No. 735, Int'l Ass'n of Machinists & Aerospace Workers, 390 U.S. 557, 560, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968). In addition, although the language of § 301 is limited to "[s]uits for violation of contracts," the Supreme Court has expanded § 301 preemption to include cases the resolution of which "is substantially dependent upon analysis of the terms of [a collective bargaining agreement]." Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 220, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985); see also Franchise Tax Bd., 463 U.S. at 23, 103 S.Ct. 2841; see also Balcorta, 208 F.3d at 1107-08 (discussing development of Supreme Court precedent on complete preemption); Cramer, 255 F.3d at 689-90 (same).

One reason for expanding complete preemption beyond the textual confines of § 301 is to promote uniformity in the interpretation of collective bargaining agreements and to generate and preserve a body of consistent federal labor law. See Lingle v. Norge Div. of Magic Chef, Inc. 486 U.S. 399, 405-06, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988); Livadas v. Bradshaw, 512 U.S. 107, 121-23, 114 S.Ct. 2068, 129 L.Ed.2d 93 (1994). Another is to promote the federal policy favoring arbitration and to prevent litigants from using state law litigation to side-step or alter the negotiated provisions of a collective bargaining agreement, including the dispute resolution procedures. See Lueck, 471 U.S. at 211, 105 S.Ct. 1904; Livadas, 512 U.S. at 123, 114 S.Ct. 2068; see also Humble v Boeing Co., 305 F.3d 1004, 1007 (9th Cir. 2002); Balcorta, 208 F.3d at 1108.

Nonetheless, "the Supreme Court has repeatedly admonished that § 301 preemption is not designed to trump substantive and mandatory state law regulation of the employee-employer relationship; § 301 has not become a `mighty oak' that might supply cover to employers from all substantive aspects of state law." Humble, 305 F.3d at 1007 (citing Lingle, 486 U.S. at 408-09, 108 S.Ct. 1877; Livadas, 512 U.S. at 122, 114 S.Ct. 2068). Thus, "not every claim which requires a court to refer to the language of a labor-management agreement is necessarily preempted." Associated Builders & Contractors, Inc. v. Local 302 Int'l Bhd. of Elec. Workers, 109 F.3d 1353, 1357 (9th Cir.1997) (as amended). In particular, the Court has sought to preserve state authority in areas involving minimum labor standards. As the Court wrote in Livadas, "§ 301 cannot be read broadly to pre-empt nonnegotiable rights conferred on individual employees as a matter of state law." 512 U.S. at 123, 114 S.Ct. 2068. A claim brought in state court on the basis of a state-law right that is "independent of rights under the collective-bargaining agreement," will not be preempted, even if "a grievance arising from `precisely the same set of facts' could be pursued." Id. (internal citations omitted). In addition, "when the meaning of contract terms is not the subject of dispute, the bare fact that a collective-bargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished." Id. at 124, 114 S.Ct. 2068 (citing Lingle, 486 U.S. at 413, n. 12, 108 S.Ct. 1877). Thus, in order for complete preemption to apply, "the need to interpret the CBA must inhere in the nature of the plaintiff's claim. If the claim is plainly based on state law, § 301 pre-emption is not mandated simply because the defendant refers to the CBA in mounting a defense." Cramer, 255 F.3d at 691; see also Gregory, 317 F.3d at 1052; Humble, 305 F.3d at 1008.

Finally, we have held that "§ 301 does not permit parties to waive, in a collective bargaining agreement, nonnegotiable state rights" conferred on individual employees. Balcorta, 208 F.3d at 1111.³ As the Supreme Court has repeatedly emphasized, "Congress is understood to have legislated against a backdrop of generally applicable[state] labor standards." Livadas, 512 U.S. at 123 n. 17, 114 S.Ct. 2068. Section 301 must not be construed to give employers and unions the power to displace state regulatory laws. See Cramer, 255 F.3d at 697; Humble, 305 F.3d at 1009; Associated Builders & Contractors, 109 F.3d at 1357-58. Where, however, under state law waiver of state rights may be permissible, "the CBA must include `clear and unmistakable' language waiving the covered employee's state right `for a court even to consider whether it could be given effect.'" See Cramer, 255 F.3d at...