Wisconsin Cent., Ltd. v. Shannon

Decision Date26 August 2008
Docket NumberNo. 07-3554.,07-3554.
PartiesWISCONSIN CENTRAL, LTD., Plaintiff-Appellee, v. Catherine SHANNON and Nancy McDonald, Defendants-Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

James S. Whitehead (argued), Sidley Austin, Chicago, IL, for Plaintiff-Appellee.

Rachel A. Hoover (argued), Office of the Attorney General, Chicago, IL, for Defendants-Appellants.

Before BAUER, FLAUM, and MANION, Circuit Judges.

FLAUM, Circuit Judge.

Wisconsin Central, LTD. ("WCL"), an interstate railroad company, brought a suit seeking declaratory and injunctive relief in federal court after the Illinois Department of Labor ("the IDOL") began investigating claims that WCL had violated overtime regulations under the Illinois Minimum Wage Law, 820 ILL. COMP. STAT. 105/4a. The basis for WCL's suit was that the State's overtime provisions were preempted by federal law. This preemption argument was based on two separate grounds: (1) that enforcing the Illinois law would require interpreting provisions in WCL's collective bargaining agreements ("CBAs") and was thus preempted by the federal Railway Labor Act ("RLA"), 45 U.S.C. §§ 151-188, which required that all CBA disputes be resolved in arbitration; and (2) that Congress's regulation of the railways was so vast that field preemption applied. On cross-motions for summary judgment, the district court found for WCL on the first preemption claim, and thus did not address the field preemption issue. For the following reasons, we find that the issue of preemption under the RLA was not ripe for consideration, but that Congress has so occupied the field of railway regulation that Illinois's overtime law is preempted as applied to the railways.

I. Background

WCL is a railroad that operates in Wisconsin, Minnesota, Michigan, and Illinois. In 2005, the IDOL received complaints from five WCL "signal maintainers" claiming they had been denied overtime wages owed under Illinois law. See 820 ILL. COMP. STAT. 105/4a. As signal maintainers, these employees fell within one of the four categories of WCL employees (which includes communications and signal employees, conductors, locomotive engineers, and maintenance-of-way employees) that work in Illinois and have entered into CBAs with the railway concerning the terms and conditions of employment.

Defendant Nancy McDonald, an IDOL compliance officer, was assigned to investigate these claims. McDonald sought to verify and corroborate the claimants' allegations. After speaking with some of the claimants, McDonald sent a letter to WCL's Illinois office on August 22, 2006, requesting the company's payroll records from September 2003 to the present for all signal maintainers. On September 5, WCL replied by letter, explaining its position that, because the signal maintainers were employed pursuant to a CBA entered into under the RLA, 45 U.S.C. § 151 et seq., that Act preempted the State's overtime law. WCL received a response to this letter on January 29, 2007, in which McDonald explained that she was proceeding with her investigation since there was currently no Chief Counsel at the IDOL able to review WCL's preemption claim. McDonald also stated that if WCL did not voluntarily comply with her records request, she would subpoena the railway to compel the payroll records' production. See 820 ILL. COMP. STAT. 105/7(c). Moreover, McDonald noted that the IDOL would bring enforcement proceedings against WCL under 820 ILL. COMP. STAT. 105/12 if, after her investigation, it was determined that the Illinois Minimum Wage Law's overtime provisions had been violated.

This prompted WCL to file, on February 21, 2007, a two-count suit in federal court seeking declaratory and injunctive relief. The suit, brought against McDonald and Catherine Shannon, the then-Acting Director and now Director of the IDOL, in their official capacities, claimed that enforcement of the State's overtime law against WCL was preempted by federal law. Five days later, on February 26, the IDOL issued a subpoena to WCL, seeking the time and payroll records not only for the signal maintainers, but for every WCL employee at the company from September 1, 2003 to February 28, 2007. The IDOL subsequently agreed to extend the deadline for responding to the subpoena until after the resolution of WCL's lawsuit.

On March 29, 2007, WCL amended its complaint to its present version. Count 1 sought declaratory relief, claiming that based on Congress's vast regulation of the railway industry, field preemption applied, thus barring the Illinois Minimum Wage Law's applicability to WCL. Count 2 sought to enjoin the IDOL from enforcing the Illinois Minimum Wage Law against WCL on the same grounds. Counts 3 and 4 sought the same relief as Counts 1 and 2, but on the basis that the RLA preempted Illinois's overtime law from being enforced with respect to those workers employed pursuant to a CBA.

The IDOL filed a motion to dismiss WCL's complaint on April 23, 2007. The district court converted the motion to dismiss to a motion for summary judgment, which WCL responded to with a crossmotion for summary judgment. On September 21, 2007, the district court issued a memorandum opinion and order, granting summary judgment for WCL and denying it for the IDOL. The district court found for WCL on the basis of the RLA's preemptive force, reasoning that determining whether WCL had violated Illinois's overtime provisions would require interpreting the applicable CBAs, something which the RLA mandates occur through an arbitration process outside the state or federal courts. See Hawaiian Airlines v. Norris, 512 U.S. 246, 252-53, 114 S.Ct. 2239, 129 L.Ed.2d 203 (1994). Having found for WCL on this ground, the district court did not need to determine whether field preemption also precluded the IDOL from enforcing the Illinois Minimum Wage Law against the railway. The IDOL then brought this appeal, with WCL, in its response brief, contending that this Court, if reversing the district court, could still find for the railway on the basis of field preemption.

II. Discussion

This appeal raises two preemption issues: (1) whether the IDOL's investigation and enforcement of Illinois's overtime law is preempted by the RLA; and (2) whether field preemption precludes the State's overtime provision's applicability to the railway, on the basis of Congress's comprehensive regulation of the rail industry. Because this appeal comes to this Court from cross-motions for summary judgment, we review the district court's findings de novo, Aux Sable Liquid Prods. v. Murphy, 526 F.3d 1028, 1032 (7th Cir. 2008). As with any summary judgment motion, this Court reviews these cross-motions "construing all facts, and drawing all reasonable inferences from those facts, in favor of ... the non-moving party." Automobile Mechanics Local 701 Welfare & Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740, 748 (7th Cir.2007) (quoting Hall v. Bodine Elec. Co., 276 F.3d 345, 352 (7th Cir.2002)). Here, however, because there are no genuine issue of material fact, "we need decide only whether either party `is entitled to a judgment as a matter of law.'" Id. (quoting FED.R.CIV.P. 56(c)).

A. Preemption Under the Railway Labor Act

The IDOL's appeal focuses upon the district court's finding that, "because the overtime claims being investigated by the [I]DOL involve interpretation and application of various provisions of the CBAs, the claims are preempted by the Railway [Labor] Act." Wis. Cent. Ltd. v. Shannon, 516 F.Supp.2d 917, 925 (N.D.Ill.2007). The Supreme Court addressed the RLA's preemptive scope most recently in Hawaiian Airlines v. Norris, 512 U.S. 246, 114 S.Ct. 2239, 129 L.Ed.2d 203 (1994),1 where the Court explained the Act in the following manner:

Congress' purpose in passing the RLA was to promote stability in labor-management relations by providing a comprehensive framework for resolving labor disputes. To realize this goal, the RLA establishes a mandatory arbitral mechanism for "the prompt and orderly settlement" of two classes of disputes. The first class, those concerning "rates of pay, rules or working conditions," are deemed "major" disputes.... The second class of disputes, known as "minor" disputes, "grow out of grievances or out of the interpretation or application of agreements covering rates of pay, rules, or working conditions." Minor disputes involve "controversies over the meaning of an existing collective bargaining agreement in a particular fact situation." Thus, "major disputes seek to create contractual rights, minor disputes to enforce them."

512 U.S. at 252-53, 114 S.Ct. 2239 (internal citations omitted). Accordingly, because the RLA requires that all "minor" disputes be resolved through "a mandatory arbitral mechanism," if the alleged overtime violations under Illinois law are in essence a "minor" dispute involving the CBAs, then the IDOL's state overtime claims are preempted. Id. at 253, 114 S.Ct. 2239. Despite this mandatory arbitration process, however, the Court made clear in Hawaiian Airlines that "substantive protections provided by state law, independent of whatever labor agreement might govern, are not pre-empted under the RLA." Id. at 257, 114 S.Ct. 2239. Instead, the Court reaffirmed its prior decision in Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988), reiterating that "where the resolution of a state-law claim depends on an interpretation of the CBA, the claim is preempted," but explaining that certain claims may involve "`purely factual questions' ... [that] do not `require a court to interpret any term of a collective-bargaining agreement,'" and thus are not preempted. Id. at 261-62, 114 S.Ct. 2239 (quoting Lingle, 486 U.S. at 407, 108 S.Ct. 1877).

In keeping with Hawaiian Airlines, this Court has affirmed, on a number of occasions, that preemption (or "preclusion" if a federal claim is brought)2 under the...

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