Phillips v. International Union of Operating Engineers

DARRYL PHILLIPS, Plaintiff, v. INTERNATIONAL UNION OF OPERATING ENGINEERS, AFL-CIO, INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL UNION No. 3 and DOES 1-20, Defendants. No. C-96-0363-VRW United States District Court Northern District of California Filed August 7, 1996
        Plaintiff's complaint alleges that he was struck by a truck while picketing during a strike organized by defendants. Plaintiff alleges that after the incident he intended to file a workers' compensation claim against defendants, but was prevented from doing so by defendants' fraudulent assertions that he was not their employee. On the basis of these allegations, plaintiff filed a complaint in Contra Costa County Superior Court alleging fraud and negligence. Defendants timely removed plaintiff's complaint, claiming that (1) plaintiff had raised issues of federal law in his complaint when he adverted to defendants "fiduciary" duty of fair representation and (2) plaintiff's claims were completely preempted by the duty of fair representation.
        At a case management conference held on May 24, 1996, the court ordered defendants to show cause why this action should not be remanded to Superior Court as improvidently removed. Defendants have now filed a return to this order. For the reasons stated below, this action is REMANDED to Contra Costa County Superior Court.

I         Since diversity jurisdiction does not exist in this case, defendants must establish that at least one claim "arises under" federal law. See 28 USC § 1441(b); Ultramar America. Ltd v Dwelle, 900 F2d 1412 (9th Cir 1990). Defendants, as the parties seeking removal, bear the burden of establishing federal jurisdiction. See Ultramar, 900 F2d at 1414. The removal statute is strictly construed against removal jurisdiction. Ethridge v Harbor House Restaurant, 861 F2d 1389, 1393 (9th Cir 1988).
        The existence of federal jurisdiction is determined from the face of the complaint. Whether the complaint states a claim "arising under" federal law must "be ascertained by the legal construction of the plaintiff's allegations," not by the possible effect of those allegations. Ultramar, 900 F2d at 1414. The plaintiff is the master of his complaint; where he may pursue both federal and state claims, he is free to pursue either or both as long as fraud is not involved. Id.
        The existence of federal jurisdiction is determined by reference to the "well-pleaded complaint." Id. Claims brought under state law may "arise under" federal law if vindication of the state right necessarily turns upon construction of a substantial question of federal law. Id. Thus, if federal law is a necessary element of a well-pleaded state law claim, federal jurisdiction exists. Id. On the other hand, if state law provides alternative theories of relief for every claim in a complaint, so that construction of federal law is not necessary for disposition of the complaint, federal question jurisdiction does not exist. Id.
        When removal jurisdiction is based on the existence of a federal question, the federal question generally must appear on the face of the complaint; interjection of a federal defense, including the defense of preemption, is insufficient to support removal. Galvez v Kuhn, 933 F2d 773, 773 (9th Cir 1991).
        An exception to the above rule is the complete preemption doctrine. Under this doctrine, "[o]nce an area of state law has been completely preempted, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Id at 775-776. Controversies involving collective bargaining agreements are one example of completely preempted claims. Id at 776.

II         Defendants first argue that removal was made proper by the existence of an "embedded" federal question in plaintiff's prima facie fraud case. In California, justifiable reliance is one element of the prima facie case for fraud. See 5 Witkin, Summary of California Law, Torts § 676. In paragraph 11 of the complaint, plaintiff alleges that

        At the time the defendants performed the [fraudulent] acts herein alleged, a fiduciary relationship existed between the plaintiff and the defendants in that the defendants owed this         plaintiff a duty to fairly represent his interests in         connection with his relationship with the         defendants and with other employers, such as         KAISER.

In paragraph 12 of the complaint, plaintiff alleges that he

did not discover the [alleged] fraud and deceit practiced upon him by defendants until December, 1992, when plaintiff accidentally learned from an attorney knowledgeable in such matters that, legally, he was an employee of the UNION, while         he was picketing on the line, and should be         entitled to Workers' Compensation from the         UNION. Given the fiduciary relationship with and         his own trust in the integrity of these defendants, plaintiff could not with reasonable diligence have         discovered this said deceit prior to [this] time * * *.

        Defendants claim that plaintiff's sole allegations why his reliance on the alleged misrepresentations was reasonable are the above allegations of defendants' fiduciary duty, which duty allegedly grew out of defendants' duty fairly to represent plaintiff's interests "in connection with his relationship with the defendants and with * * * KAISER." Defendants claim that this alleged fiduciary duty "is clearly nothing other than the duty of fair representation * * * that a union owes to its members under federal law." Defendants argue that the court will therefore have to construe the scope of the federal duty of fair representation in order to determine whether a fiduciary relationship existed between plaintiff and defendants and, thus, whether plaintiff's reliance on defendants' statements were justified. Defendants thus claim that plaintiff's fraud claim contains a "substantial" federal question which supports removal.
        Defendants' argument misreads plaintiff's complaint. Plaintiff is not relying solely on defendants' alleged status as his fiduciary to justify his reliance; he has alleged that his trust in defendants justified his reliance as well. See Complaint at ¶ 12; P1 Response to Order to Show Cause at 12 ("Here, plaintiff trusted defendants with his dues and gave them his personal efforts and allegiances with the expectancy that he would receive the support and benefits that were promised by the various programs of these Unions. These elements unquestionably impose a trust responsibility on the defendants, over and above their strict fiduciary duty as statutory representatives, and explain why plaintiff unquestioningly followed defendants' directions"). Such a trust relationship may make reliance justifiable under California law. See 5 Witkin, Summary of California Law, Torts at § 682 ("Where the defendant is a fiduciary, such as a trustee or agent, reliance upon his opinion is of course justifiable; and this theory has been extended to other confidential relationships resulting from friendly social or business dealings over a period of time, such as to induce the plaintiff to place confidence in the integrity of the defendant"). Plaintiff has thus set forth a theory of justifiable reliance which does not depend on the construction of federal law for its resolution. Because it is not necessary to construe federal law in order to resolve plaintiff's fraud cause of action, that cause of action does not support removal in this case. See Ultramar, 900 F2d at 1414.

III         Defendants next argue that removal was proper because plaintiff's negligence claim has been completely preempted by the federal duty of fair representation. As noted above, the inquiry for removal purposes is not whether plaintiff's claims are preempted; preemption is an affirmative defense and, as such, cannot create federal question jurisdiction. For this reason, defendants' argument that plaintiff's claims are preempted by federal law is largely irrelevant to the question whether removal was proper; defendants could not base removal on simple preemption. Rather, in order to support removal defendants must show that Congress has completely preempted plaintiff's California negligence claim with the federal duty of fair representation. See Galvez, 933 F2d at 775-76.
        Complete preemption "is a narrow exception to the 'well-pleaded complaint rule' which makes the plaintiff the master of his or her complaint." Holman v Laulo-Rowe Agency, 994 F2d 666, 668 (9th Cir 1993). The test for complete preemption is "whether Congress clearly manifested an intent to convert state law claims into federal question claims." Id. Moreover, in the Ninth Circuit complete preemption will be found only when federal law supplants state law with a federal claim. Ethridge v Harbor House Restaurant, 861 F2d 1389, 1395 (9th Cir 1988). The Supreme Court has found complete preemption in only two federal acts: the Labor Management Relations Act (LMRA) and the Employee Retirement Income Security Act (ERISA). Holman, 994 F2d at 668.
        Defendants argue that § 9 of the National Labor Relations Act (NLRA), from which courts have crafted the federal duty of fair representation, should be added to the list of federal acts which completely preempt state law. Defendants' argument is incorrect. In order to understand why this is so and why some of the cases cited by defendants are inapposite, it is necessary to understand the difference between DFR preemption and LMRA § 301 preemption.

A         It is well established that LMRA § 301 preempts state law claims which are either founded on rights created by a collective bargaining agreement or are substantially dependant on analysis of such an agreement. See, for example, United Steelworkers of America v Rawson, 495 US 362 (1990); Hayden v Reickerd, 957 F2d 1506 (9th Cir 1991); Stikes v Chevron USA, Inc, 914 F2d 1265 (9th Cir 1990). Moreover, it is well established that this preemption is complete: "[the] preemptive force [of § 301] is so powerful that it displaces entirely any state cause of action for violation of a collective bargaining agreement." Stikes, 914 F2d at 1267. Thus, courts have held that state law claims which are not for breach of a collective bargaining agreement are nonetheless preempted by § 301 when their resolution implicates the construction or scope of such an agreement. See, for example, Rawson, 495 US at 371 (claim that union negligently carried out mine inspections preempted when union's duty to carry out such inspections was imposed by the collective bargaining agreement); Stikes, 914 F2d at 1269-70 (California right to privacy claim preempted when "the district court could not ascertain [plaintiff's] expectations of privacy without considering the conditions of his employment enumerated in the collective bargaining agreement").
        Plaintiff's claim in this case clearly is not preempted by § 301. The union was not enforcing the terms of a CBA when it allegedly defrauded plaintiff; indeed, there apparently was no CBA in effect at the time of the fraud. Defendants' preemption argument must therefore stand or fall based on the existence of DFR preemption.
        Moreover, defendants' claim that the distinction between § 301 preemption and DFR preemption is one without a difference, see Def Reply at 7, n 5, must be rejected. The complete preemption of § 301 is based on the perceived need for uniform federal construction of collective bargaining agreements. See Rawson, 495 US at 361. This policy judgment has no application to DFR preemption, which to the extent it exists is based on the perceived need to limit union members to federal remedies when they seek recovery from their unions for discriminatory or otherwise unfair treatment during the course of the union's representation. Thus, defendants' reliance on Rawson is misplaced.

B         The duty of fair representation is a corollary of the union's status as the exclusive representative of all employees in a bargaining unit. Vaca v Sipes, 386 US 171, 182 (1967). It is judicially created from § 9(a) of the NLRA, which requires a union "to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct." Id at 177.
        Defendants have not even attempted to demonstrate that Congress intended to preempt completely state law governing member/union relations when it enacted § 9(a), the showing which is required to establish complete preemption in this case. See Ethridge, 861 F2d at 1396. This is perhaps not surprising, since the fact that the federal duty of fair representation is a judicial creation tends to undermine the argument that Congress intended § 9(a) to supplant state law with a federal cause of action. See id at 1395 (test for complete preemption is whether Congress supplanted state law with a federal claim). Rather, defendants have cited several cases which they claim stand for the proposition that § 9(a) and the duty of fair representation completely preempt state law. See Maynard v Revere Copper Products, Inc, 773 F2d 733, 735 (6th Cir 1985); Peterson v Air Lines Pilots Ass'n Int'l, 759 F2d 1161, 1169-71 (4th Cir), cert denied, 474 US 946 (1985); Williams v Pacific Maritime Ass'n, 421 F2d 1287, 1288-89 (9th Cir 1970); Reiss v Bd of Railway and Airline Clerks, 629 F Supp 1029, 1030 (ED Pa 1986). None of these cases supports defendants' position.
        In Maynard, for example, the plaintiff claimed that his union violated both its duty of fair representation and a provision of the Michigan Handicappers' Civil Rights Act which provided "a labor organization shall not: * * * fail to fairly and adequately represent a member in a grievance process because of a member's handicap" when the union forced plaintiff to return to work after an injury. 773 F2d at 734-35, citing Mich Consol Laws § 37.1204(d). The Sixth Circuit concluded that this state law claim was preempted by the duty of fair representation because the state law claim "relat[ed] to an area of labor law which has been so fully occupied by Congress as to foreclose state regulation. Whether union conduct constitutes a breach of the duty of fair representation is a question of federal law." Id. While the Maynard court used broad language in concluding that the duty of fair representation preempted the state law claim, review of the facts in Maynard reveals that the case stands only for the proposition that state-created duties of fair representation are preempted by the federal duty. Maynard does not speak to the issue of how far that preemption extends to causes of action only tangentially related to the duty of fair representation. Nor does Maynard hold, as defendants argue, that the federal duty of fair representation has completely preempted the field of union/member relations.
        Similarly, in Peterson the plaintiff attempted to bring state law claims against his union for civil conspiracy, unlawful blacklisting and interference with a contractual relationship. 759 F2d at 1168. These claims were based on plaintiff's allegation that the union blacklisted him after it learned that plaintiff had crossed a picket line at an earlier job, an allegation which clearly stated a claim for breach of the federal duty of fair representation. Id at 1162, 1168. Rather than concluding or even suggesting that the federal duty had completely preempted the area of member/union relations, the Fourth Circuit understood its preemption inquiry to require a "sensitive balancing of the potential harm to the federal scheme against the importance of the state's interest in protecting its citizens." Id at 1168, quoting Farmer v United Brotherhood of Carpenters & Joiners, 430 US 290, 296-97 (1977). Conducting this "sensitive balancing," the court concluded that plaintiff's state law claims "add[ed] nothing by way of relief" and were "in both substance and relief identical to [plaintiff's] federal claim" for breach of the duty of fair representation. Id at 1169. The court noted that plaintiff's allegations of union blackballing "can hardly be called a peripheral concern to federal labor law." Id. The court also noted that plaintiff's "state law claims not only focus on conduct prohibited by federal law, [but] are essentially identical to the duty of fair representation." Id at 1170. The court therefore held that plaintiff's state law claims were preempted by that federal duty. Id. Again, Peterson did not conclude that "peripheral concerns" of federal labor law, such as negligence claims, are completely preempted by the federal duty of fair representation.
        In Williams, the Ninth Circuit held that a union member could not recover punitive damages from his union for allegations of civil conspiracy, even if state law authorized such damages. 421 F2d at 1288-89. The court concluded that federal law was meant to be controlling "on these matters" and that federal law therefore preempted contrary state law. Id. The Williams court did not mention the duty of fair representation and, indeed, appeared to be referring to § 301 when it spoke of "federal law." Id. Nor did the Williams court discuss complete preemption. Its application to this case is therefore difficult to understand.
        Finally, in Reiss the court was faced with a state law claim for negligence based on the union's alleged negligence in failing to invoke labor mediation. 629 F Supp at 1029. The court concluded, rather summarily, that this negligence claim arose solely out of the union's conduct as a collective bargaining representative and therefore was preempted. Id at 1030. Again, the Reiss court appeared to be relying on the preemptive effect of § 301, not the duty of fair representation. Nor did the Reiss court discuss complete preemption.
        None of the above cases stands for the proposition that the federal duty of fair representation has completely preempted the field of member/union relations. Moreover, rulings of the Supreme Court suggest otherwise. See, for example, Farmer, 430 US 290 (holding that NLRA does not preempt member's claim for intentional infliction of emotional distress against his union, even though such claims might interfere with federal prohibitions against union discrimination, i e, the duty of fair representation). Farmer makes clear the fact that union members may, in certain situations which do not strongly implicate federal labor law interests, maintain state law actions against their unions. See also Rawson, 495 US at 377, 381-84 (Kennedy, dissenting) (noting that majority did not reach the issue of DFR preemption and concluding that "nothing in the NLRA" supported such preemption in that case, since nothing in the NLRA supports the "conclusion that Congress desired to grant unions an immunity from all state tort law"). Given these cases, and given defendants' failure to cite any authority for the proposition that the federal duty of fair representation has completely preempted plaintiff's state law claims, the court concludes that defendants have failed to carry their burden of establishing federal jurisdiction. This case is therefore REMANDED to Superior Court of the State of California in and for the County of Contra Costa.
        The court notes that the "jurisdictional issue of whether complete preemption exists * * * is very different from the substantive inquiry whether a 'preemption defense' may be established." Holman, 994 F2d at 669. The court accordingly expresses no opinion on the merits of defendant's preemption defense, and nothing in this order should be construed as estopping the Superior Court from considering such a defense on its merits.

IV         Plaintiff has requested the attorney fees which he has incurred as a result of defendants' improvident removal. Title 28 USC § 1447(c) provides for payment to the non-removing party "of just costs and any actual expenses, including attorneys' fees, incurred as a result of the removal." This section provides for recovery only of those fees which are closely related to the removal; fees incurred as a result of the non-removing party's actions and fees which would have been incur-ed in state court absent removal may not be recovered. Baddie v. Berkely Farms, Inc, 64 F2d 487, 490 (9th Cir 1995). Moreover, the fee award is not mandatory, but is left to the discretion of the court. Moore v Permanente Medical Group, Inc, 981 F2d 443, 447 (9th Cir 1992).
        Plaintiff has requested $9,652.50 in attorney fees, which represents all of the fees which he has incurred in participating in motion practice in this court and complying with this court's case management procedures since removal of this case in January, 1996. This request is too broad. Given plaintiff's failure to request that this case be remanded, the court concludes that only those fees incurred by plaintiff in responding to the court's order to show cause were "incurred as a result of the removal." The court therefore awards $3,862.50, which represents the fees incurred by plaintiff in responding to the court's order to show cause. Defendants shall pay this amount to plaintiff no later than 30 days after entry of this order.
        IT IS SO ORDERED.