Volkswagen de Puerto Rico, Inc. v. Puerto Rico Lab. Rel. Bd.

• Decision Date: 11 January 1972
• Docket Number: No. 71-1059.,71-1059.
• Citation: 454 F.2d 38
• Parties: VOLKSWAGEN DE PUERTO RICO, INC., Plaintiff-Appellant, v. PUERTO RICO LABOR RELATIONS BOARD et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — First Circuit

454 F.2d 38 (1972)

VOLKSWAGEN DE PUERTO RICO, INC., Plaintiff-Appellant, v. PUERTO RICO LABOR RELATIONS BOARD et al., Defendants-Appellees.

No. 71-1059.

United States Court of Appeals, First Circuit.

Heard November 18, 1971.

Decided January 11, 1972.

Donald M. Hall, San Juan, P. R., with whom Radames A. Torruella and McConnell, Valdes, Kelley & Sifre, San Juan, P. R., were on brief, for plaintiff-appellant.

Jose E. Rodriguez Rosaly, Counsel, Puerto Rico Labor Relations Bd., with whom Gilberto Gierbolini-Ortiz, Sol. Gen. for Com. of P. R., Peter Ortiz, Asst. Sol. Gen., and Miguel A. Rivera-Arroyo, Counsel, Puerto Rico Labor Relations Bd., were on brief for defendants-appellees.

Before COFFIN, Circuit Judge, VAN OOSTERHOUT^*, Senior Circuit Judge, and STEPHENSON^*, Circuit Judge.

COFFIN, Circuit Judge.

This is an appeal from the dismissal of an action for a declaratory judgment under 28 U.S.C. § 2201.¹ It requires us to plot the intersection of the federal labor policy embodied in § 301 of the National Labor Relations Act, 29 U.S.C. § 185, with the federal removal statute, 28 U.S.C. § 1441. The factual background is relatively uncomplicated. On the basis of a charge by defendant Asociation Insular de Guardianes de Puerto Rico, Independiente ("Asociation"), alleging that plaintiff Volkswagen de Puerto Rico, Inc. had breached its collective bargaining agreement with the union by refusing to discuss a particular decision with the Grievance Committee created by the agreement, defendant Puerto Rico Labor Relations Board issued an unfair labor practice complaint (querella).² Without answering the complaint, Volkswagen filed this action in the court below. By agreement of the parties, proceedings before the Board were suspended pending the outcome of this litigation. Accepting the decision in Star Publishing Corp. v. Puerto Rico Newspaper Guild, 303 F. Supp. 760 (D.P.R.1969) that an action may not be removed from the Puerto Rico Board to federal court, Volkswagen maintains that to vindicate federal labor policy we must hold the Puerto Rico Board to be without jurisdiction over a dispute involving the breach of a collective bargaining agreement.

I.

Preliminarily, defendants challenge the jurisdiction of the district court on two grounds. The first claim, that the Declaratory Judgment Act, 28 U.S.C. § 2201, does not confer jurisdiction where it is otherwise lacking, is accurate, Schilling v. Rogers, 363 U.S. 666, 677, 80 S.Ct. 1288, 4 L.Ed.2d 1478 (1960), but irrelevant, since subject matter jurisdiction is conferred by § 301(a). Textile Workers' Union v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957).

Defendants' second claim is that exhaustion of administrative remedies is a prerequisite to the jurisdiction of the district court. While it is not altogether clear that exhaustion is, strictly, a jurisdictional doctrine, we agree that we should proceed no further if exhaustion is appropriate. We begin by noting that Volkswagen is not asking us to review for errors of statutory construction or lack of substantial evidence an anticipated agency decision on the merits of the union's claim. The issue is, rather, whether § 301 permits the Board to take jurisdiction, a question manifestly beyond the Board's special expertise. The Board has asserted jurisdiction in the present case by issuing a complaint in response to an alleged breach of the agreement, and has done so numerous times in the past. This jurisdiction has consistently been affirmed by the Puerto Rico Supreme Court, most recently in F. Utier v. Puerto Rico Labor Relations Board (P.R. Dec. 30, 1970); we have no doubt that that court would continue its practice in the present case. Clearly, then, Volkswagen will not be able successfully to challenge the Board's jurisdiction except in federal court, and to that extent federal labor policy will be frustrated by the agency proceedings if jurisdiction was improperly seized.

While the case law relating to exhaustion is at best confusing,³ the most closely analogous cases are those involving challenges to the jurisdiction of state agencies on the grounds of repugnancy to a federal regulatory scheme. In Public Utilities Comm'n v. United Fuel Gas Co., 317 U.S. 456, 63 S.Ct. 369, 87 L.Ed. 396 (1943), the Supreme Court held exhaustion unnecessary in the face of an allegation that a state agency had asserted jurisdiction over the interstate transportation of natural gas and thus interfered with the Congressional scheme expressed in the Natural Gas Act. See also Public Utilities Comm'n v. United States, 355 U.S. 534, 78 S.Ct. 446, 2 L.Ed.2d 470 (1958) (affirming the grant of a declaratory judgment); L. Jaffe, Judicial Control of Administrative Action 437-38 (1965). We conclude that Volkswagen was not required to exhaust its administrative remedies, patently ineffective to reach its jurisdictional claim, before invoking the jurisdiction of the federal courts to determine whether the Board's assertion of jurisdiction was proper.

II.

The Supreme Court's expansive interpretation of § 301 is the starting point for Volkswagen's claims.⁴ In Lincoln Mills, supra, the Court held that § 301 not only conferred jurisdiction on federal courts in cases involving breaches of collective bargaining agreements but mandated that federal substantive law be applied. Subsequently, in the same term in which it held that state courts retained concurrent jurisdiction, Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483 (1962), the Court held that they must nevertheless apply federal substantive law. Local 174, Teamsters, etc., Helpers of America v. Lucas Flour Co., 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962). "In enacting § 301 Congress intended doctrines of federal labor law uniformly to prevail over inconsistent local rules." 369 U.S. at 104, 82 S.Ct. at 577. From this history clearly emerges a strong federal interest in uniform substantive labor law.

The residual state interest, after Dowd Box, was an as yet roughly-defined interest in providing an alternative forum. The practical significance of the alternative forum was that, in some states, the courts were empowered to enjoin strikes, a power denied the federal courts by the then-prevailing interpretation of the Norris-LaGuardia Act. Sinclair Refining Co. v. Atkinson, 370 U.S. 195, 82 S.Ct. 1328, 8 L.Ed.2d 440 (1962).

The next development of present significance was the Court's first interpretation of the federal removal statute, 28 U.S.C. § 1441, in the context of § 301, Avco Corp. v. Aero Lodge 735, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968). There, in holding that § 301 actions brought in state courts were removable to federal district courts, the Court further narrowed the state interest in that state court injunctions could now be dissolved upon removal. The Court spoke in appropriate terms: "Removal is but one aspect of `the primacy of the federal judiciary in deciding questions of federal law.'" footnote omitted 390 U.S. at 560, 88 S.Ct. at 1237. In sum Avco made clear that Dowd Box was not a repudiation of the general doctrine that a defendant has the right to have a federal question decided in a federal forum even if, in removing, he deprives the plaintiff of a procedural or remedial advantage. A party who is sued in a Puerto Rico court for breach of a collective bargaining agreement may thus remove to federal court. Espino v. Volkswagen de Puerto Rico, Inc., 289 F.Supp. 979 (D. P.R.1968).

The difficulty in the case before us is that the proceeding is before the Board rather than a court. Three federal district courts have addressed the question whether a proceeding before a state agency for violation of a collective bargaining agreement is removable as a "civil action brought in a State court". 28 U.S.C. § 1441.⁵ One held that such an action was removable, Tool and Die Makers, etc., Assoc. of Machinists v. General Electric, 170 F.Supp. 945 (E.D. Wis.1959), and two that it was not. California Packing Corp. v. I. L. W. U. Local 142, 253 F.Supp. 597 (D.Hawaii 1966); Star Publishing, supra. Volkswagen accepts the latter conclusion, as for the moment do we, in order to explore its implications.

Were a decision of the Board final and binding under Puerto Rican law and non-removable under federal law, we would doubtless hold the Board to be without jurisdiction, lest a defendant be deprived of his right to a federal forum. The putative distinction between private remedies (damages), enforced at the behest of a party, and public remedies (injunctions), enforced by the Board,⁶ would offer no adequate basis for a surviving jurisdiction, just as it was inadequate to defeat removal. Avco, supra. The question posed here, however, is whether that conclusion is shaken by the fact that the Board may not enforce its own orders but must petition for enforcement in the Puerto Rico Supreme Court. 29 L.P.R.A. § 70(2) (a), (c). At that stage the action would presumably be one "in a state court" and removable at Volkswagen's behest. The deprivation of a federal forum would thus be incomplete.

In recognizing the interest in a federal forum, the Supreme Court in Avco, supra, 390 U.S. at 560, 88 S.Ct. 1235, relied upon England v. Louisiana State Bd. of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964), which contained a fuller exposition of the role of federal courts in the course of a discussion of the abstention doctrine. Conceding that a litigant can always appeal a state court determination of a federal question to the United States Supreme Court, the Court in England turned to pragmatic concerns, characterizing such rights of appeal as an "inadequate substitute" for a full hearing in federal court. "This is true as to issues of law; it is especially true as to issues of fact." 375 U.S. at 416, 84 S.Ct. at 465. To the extent that the federal district court would treat a case removed from the Puerto Rico Supreme Court...