Warner v. Atkinson Freight Lines Corp.

Decision Date01 November 2004
Docket NumberNo. 04-CV-123-P-S.,04-CV-123-P-S.
PartiesDavid O. WARNER, et al., Plaintiffs, v. ATKINSON FREIGHT LINES CORP., Defendant.
CourtU.S. District Court — District of Maine

Charles W. March, Reben, Benjamin, & March, Portland, OR, for David O. Warner, William D. Freeman, Daniel S. McLaughlin, Roger L. Lehouillier.

Paul McDonald, Bernstein, Shur, Sawyer, & Nelson, Portland, OR, for Atkinson Freight Lines Corporation.

ORDER ON PLAINTIFFS' MOTION TO REMAND AND DEFENDANT'S MOTION TO DISMISS

SINGAL, Chief Judge.

Before the Court is Plaintiffs' Motion to Remand (Docket # 7) for lack of federal subject matter jurisdiction and Defendant's Motion to Dismiss (Docket # 5) for failure to state a claim for which relief can be granted. These motions require the Court to consider first whether Plaintiffs' state law claims against their former employer for failure to pay wages, conversion, breach of fiduciary duty, and fraud must be recharacterized as stating a federal question under either section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, or section 502(a) of the Employee Retirement and Income Security Act ("ERISA"), 29 U.S.C. § 1132(a). If the Court finds such a federal question, it must go on to determine whether these claims are in fact preempted by either section 301 of the LMRA, 29 U.S.C. § 185, or section 502(a) of ERISA, 29 U.S.C. § 1132(a). Finally, the Court must determine whether Plaintiffs' fraud claim is pled "with particularity" as required by Fed.R.Civ.P. 9(b).

For the reasons set forth below, the Court DENIES Plaintiffs' Motion to Remand and GRANTS IN PART and DENIES IN PART Defendant's Motion to Dismiss.

I. FACTUAL BACKGROUND

In order to lay out the factual background below, the Court has reviewed and considered the allegations contained in Plaintiffs' Complaint (Ex. 2 to Docket # 1). In addition, the Court has considered the Collective Bargaining Agreement ("CBA") submitted by Defendants for purposes of deciding both the Motion to Dismiss and the Motion to Remand as a document integral to Plaintiffs' Complaint. See Clorox Co. v. Proctor & Gamble Commer. Co., 228 F.3d 24, 32 (1st Cir.2000) (holding that, in considering a motion to dismiss, a court "may properly consider the relevant entirety of a document integral to or explicitly relied upon in the complaint, even though not attached to the complaint"). Finally, the Court notes that in connection with the pending motions both Plaintiffs and Defendant have filed additional affidavits and other supporting exhibits. The Court has considered these affidavits in the course of determining whether removal was proper. See Davis v. Cluet, Peabody & Co., 667 F.2d 1371, 1373 (11th Cir.1982) (holding that the Court may consider the entire record before it in determining whether removal was proper); see also Parker v. County of Oxford, 224 F.Supp.2d 292, 294 (D.Me.2002) (noting that affidavits, among other papers, can provide a party with grounds for removal under 28 U.S.C. § 1446(b)). However, in connection with Defendant's Motion to Dismiss, the Court has limited itself to the facts that may be drawn from Plaintiffs' Complaint and the CBA. See Fed.R.Civ.P. 12(b) (requiring the Court to exclude materials outside the pleadings unless the motion is converted to a motion for summary judgment).

Plaintiffs are four former employees of defendant Atkinson Freight Lines ("AFL"). They are suing AFL for conversion, fraud, breach of fiduciary duty, and failure to pay wages under the Maine Wage Payment Statutes, 26 M.R.S.A § 626-A. Their claims arise from AFL's aborted attempt to create an Employee Stock Ownership Plan ("ESOP") for its employees during Plaintiffs' employment. According to Plaintiffs' submissions, AFL and Plaintiffs' union, Teamsters Union Local No. 340 ("the Union"), agreed to create an ESOP in "about 1999." (Turkewitz Aff. (Ex. 2 to Docket # 7) ¶ 3.) On August 9, 2000 the President of AFL "delivered a proposal" for the ESOP "whereby the company's employees could buy into the stock plan by contributing 4% of their weekly pay, which would go towards funding the plan" (Compl.¶ 8.) AFL also began withholding four percent of Plaintiffs' weekly earnings around this time, which it placed in an escrow account pending the creation of the ESOP. (Compl.¶ 10.) It is not clear from the parties' submissions why AFL began collecting money from the employees before the plan itself was established.

On November 16, 2000 the Union agreed to a CBA that called for the creation of the ESOP. (McDonald Aff. (Docket # 6), Ex. A, at 18.) Specifically, Article 43 of the CBA states:

The Employer and the Union will enter in to an agreement to establish and implement the Atkinson Freight Lines Stock Plan that will enable all employees to receive a majority equity interest in the company.

(Id.) The only other reference to the ESOP in the CBA is in the Grievance and Arbitration Procedure. Article 20 of the CBA states that "[a]ny dispute concerning the Atkinson Freight Lines Stock Plan are [sic] not subject to resolution through [the arbitration] procedure. Such disputes are to be resolved in accordance with the procedures of that plan." (McDonald Aff., Ex. A at 7.)

AFL continued withholding four percent of its employees' earnings until December of 2002, although "[t]he ESOP was never finalized or created as a matter of law." (Compl.¶¶ 11-12.) Indeed, the company announced in June of 2002 that the ESOP had been "cancelled" and that "the company would return to the employees all monies that they had paid in as of December 31, 2002." (Compl.¶ 12.) The company followed through on its promise in June 2003, reimbursing its current employees. (Compl.¶ 13.) However, Plaintiffs, who were no longer actively employed by Defendant in June 2003, received nothing from AFL. (Id.) According to the Business Agent for the Union, "AFL management and the Union could not resolve the matter of refunding wages due to those truck drivers who were not actively employed at that time, including the Plaintiffs,... because these people were no longer employed at AFL.... [T]he Union had no authority to grieve or arbitrate [Plaintiffs'] claims." (Turkewitz Aff. ¶ 7, 8.)

Plaintiffs' counsel wrote to Defendant, "attempting to invoke terms of the ESOP's proposed language to secure the wages that were not refunded to the Plaintiff." (March Aff. (Ex. 1 to Docket # 7) ¶ 7.) Defendant's counsel wrote back stating that AFL never adopted an ESOP or an associated Employee Stock Ownership Trust.... There is, therefore, "no plan `governed by ERISA,' and there are no `plan participants.'" (March Aff., Ex. B.)

Plaintiffs subsequently brought this suit alleging failure to pay wages, conversion, breach of fiduciary duties, and fraud. They request an accounting in order to determine the amount of wages withheld and damages pursuant to Maine law.

II. DISCUSSION

Shortly after removing the present action from state court, Defendant filed the pending Motion to Dismiss, which argues that Plaintiffs' claims are in fact preempted by federal law. It also argues that Plaintiffs' claim for fraud was not plead "with particularity" as required by Fed.R.Civ.P. 9(b). For their part, Plaintiffs responded to Defendant's Notice of Removal by filing a timely motion to remand challenging this Court's subject matter jurisdiction.

A. Motion to Remand

Subject matter jurisdiction is a threshold issue where removal from state court is contested. Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir.1999). Hence, the Court must first address Plaintiffs' Motion to Remand. In defending against a motion to remand, the removing party must show that "the federal district court would have had original jurisdiction of the case had it been filed in that court." BIW Deceived v. Local S6, 132 F.3d 824, 830 (1st Cir.1997) (citing Grubbs v. General Elec. Credit Corp., 405 U.S. 699, 702, 92 S.Ct. 1344, 31 L.Ed.2d 612 (1972)). To meet its burden of proof, the removing party must make a "colorable" showing of the underlying jurisdictional basis for removal. Danca, 185 F.3d at 4.

Defendant removed this case to federal court on the basis of both federal question and diversity jurisdiction. (Notice of Removal (Docket # 1) ¶ 16.) As Defendant acknowledges, federal question jurisdiction can only be established by recharacterizing Plaintiff's claims as falling under either section 301 of the LMRA or section 514(a) of ERISA. Below, the Court discusses whether it is appropriate to undertake such a recharacterization of the Plaintiff's claims.1

1. Complete Preemption and the Artful Pleading Doctrine

"The gates of federal question jurisdiction are customarily patrolled by a steely-eyed sentry — the `well-pleaded complaint rule.'" BIW Deceived, 132 F.3d at 831. Under this rule, federal question jurisdiction "must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose." Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). Thus, "a federal defense does not confer [federal question] jurisdiction, ... even where the asserted defense is the preemptive effect of a federal statute." Ten Taxpayer Citizens Group v. Cape Wind Assocs., 373 F.3d 183, 191 (1st Cir.2004).

While a defendant cannot "inject[ ] a federal question into an action that asserts what is plainly a state-law claim" in order to establish federal jurisdiction, Caterpillar v. Williams, 482 U.S. 386, 399, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987), the well-pleaded complaint rule is not without its exceptions. The complete preemption doctrine, an "independent corollary" to the well-pleaded complaint rule, can "convert[ ] an ordinary state common law complaint...

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