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Barr v. Ross Island Sand & Gravel Co.

United States District Court, D. Oregon, Portland Division

December 4, 2017

ROSS ISLAND SAND & GRAVEL CO., an Oregon corporation, Defendant.


          MICHAEL W. MOSMAN, Chief United States District Judge

         This mater comes before the Court on Plaintiffs' Motion to Remand to State Court [7]. For the reasons that follow, the Court DENIES Plaintiffs' Motion.


         Plaintiffs, current or former truck drivers employed by Defendant Ross Island Sand and Gravel Company (“RISG”), bring this action against Defendant in which they allege RISG failed to remit withholdings from Plaintiffs' paychecks to the Oregon Teamsters Employers Trust Fund (“OTETF”) for the purpose of paying Plaintiffs' health insurance premiums. Plaintiffs allege they lost their health insurance as a result of Defendant's failure to send the withholdings to the OTETF.

         Under the terms of a collective bargaining agreement (“CBA”) negotiated between Defendant and Plaintiffs' union, the General Teamsters Local Union No. 162 (“the Teamsters”), Defendant and its employees were both to contribute to the costs of the employees' health insurance benefits. Under the CBA Defendant was to pay 90% of the cost of benefits while withholding the other 10% from the employees' paychecks. Defendant was required to remit both the deducted employee contributions and Defendant's contributions to the OTETF, which managed the health insurance plan. After Defendant allegedly failed to remit the withholdings, the Teamsters filed grievances against Defendant on behalf of Plaintiffs that were settled after this litigation began. Plaintiffs, nonetheless, maintained this litigation on the basis that they were not yet fully compensated for their economic damages, noneconomic damages, potential punitive damages, and attorney fees and costs.


         Plaintiffs originally instituted this litigation against Defendant in Multnomah County Circuit Court in 2012 (hereinafter referred to as “the 2012 action”). In the 2012 action, Plaintiffs brought three claims against Defendant on the same factual premise: (1) a claim under Oregon Revised Statute § 652.610(3) for failure to timely remit the withholdings; (2) a claim for common-law money had and received; and (3) a claim for breach of fiduciary duty. See Barr et al. v. Ross Island Sand & Gravel Co., 3:12-cv-00683-MO.

         Defendant removed the 2012 action to this Court. Plaintiffs filed a Motion to Remand [15] that Defendant opposed on the basis that Plaintiffs' claims were preempted by the Labor Management Relations Act (“LMRA”) and the Employee Retirement Income Security Act (“ERISA”). The Court found Plaintiffs' claims were preempted by LMRA, but not by ERISA and, therefore, denied Plaintiffs' Motion.

         On June 5, 2013, the Court granted summary judgment to Defendant. Plaintiffs appealed, in particular contending the Court erred when it denied Plaintiffs' Motion to Remand. In a published decision on three consolidated cases including the 2012 action, the Ninth Circuit reversed and remanded. Kobold v. Good Samaritan Reg'l Med. Ctr., 832 F.3d 1024 (9th Cir. 2016). The Ninth Circuit held Claims One (§ 652.610) and Three (breach of fiduciary duty) were not preempted by LMRA, but that Claim Two (money had and received) was preempted and the Ninth Circuit affirmed the Court's grant of summary judgment to Defendant on that claim. Id. at 1037-42. The Ninth Circuit, therefore, remanded to this Court to determine whether this Court should retain supplemental jurisdiction over Claims One and Three notwithstanding the grant of summary judgment to Defendant on Claim Two. After oral argument on remand, the Court concluded it would not exercise supplemental jurisdiction over the remaining claims and, therefore, on April 21, 2017, the Court remanded the case back to Multnomah County Circuit Court.

         After remand, however, Plaintiffs moved to amend their Complaint in the Multnomah County Circuit Court. That court granted Plaintiffs' Motion. Plaintiffs' First Amended Complaint (which is attached as Exhibit 3 to the Declaration of Benjamin Rosenthal [9]) retains the claims under Oregon Revised Statute § 652.610 (Claim One) and breach of fiduciary duty (Claim Two), but also adds claims for common-law conversion (Claim Three) and intentional interference with contractual relationship (Claim Four).[1] In response to Plaintiffs' amendment of their Complaint, Defendant again removed the case to this Court. Plaintiffs, in turn, filed their Motion to Remand to State Court [7].


         Plaintiffs move to again remand this action to the Multnomah County Circuit Court on the basis that they only raise state-law causes of action in their First Amended Complaint and, therefore, there is not any basis for subject-matter jurisdiction in this Court. Plaintiffs also seek an award of attorneys' fees and costs associated with this most recent removal pursuant to 28 U.S.C. § 1447(c) on the basis that Defendant's removal of this action lacks any objectively reasonable basis.

         Defendant, on the other hand, contends removal is appropriate because Plaintiffs' new claims are completely preempted by LMRA and ERISA and, therefore, this Court has subject-matter jurisdiction over this matter.

         I. Complete Preemption Doctrine

         “As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim.” Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003); see also Retail Prop. Tr. v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 947 (9th Cir. 2014). “The well-pleaded complaint rule means that ‘a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue.'” Retail Prop. Tr., 768 F.3d at 947 (emphasis omitted) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987)).

         “The Supreme Court has recognized, however, an ‘independent corollary to the well-pleaded complaint rule known as the complete pre-emption doctrine.'” Id. (quoting Caterpillar, 482 U.S. at 393). Under the complete preemption doctrine, “some federal statutes . . . have such ‘extraordinary pre-emptive power' that they ‘convert[ ] an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.'” Id. (alteration in original) (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)). Complete preemption, therefore, is “'really a jurisdictional rather than a preemption doctrine, [as it] confers exclusive federal jurisdiction in certain instances where Congress intended the scope of a federal law to be so broad as to entirely replace any state-law claim.'” Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 945 (9th Cir. 2009) (alteration in original) (quoting Franciscan Skemp Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare Trust Fund, 538 F.3d 594, 596 (7th Cir. 2008)).

         II. LMRA Preemption

         Defendant contends Plaintiff's new claims for conversion and intentional interference with contractual relationship are preempted by LMRA.

         As noted, the Ninth Circuit extensively discussed complete preemption under LMRA in Kobold. The Ninth Circuit explained LMRA “should be ‘understood . . . as a congressional mandate to the federal courts to fashion a body of federal common law to be used to address disputes arising out of labor contracts.'” Kobold, 832 F.3d at 1032 (quoting Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 209 (1985)). “‘The Court subsequently held that this federal common law preempts the use of state contract law in CBA interpretation and enforcement.'” Id. (quoting Cramer v. Consol. Freightways, Inc., 255 F.3d 683, 689 (9th Cir. 2001) (en banc)). “In addition to promoting the development of a uniform federal labor law, § 301 preemption doctrine is designed ‘in large part to assure that agreements to arbitrate grievances would be enforced, regardless of the vagaries of state law and lingering hostility toward extrajudicial dispute resolution.'” Id. (quoting Livadas v. Bradshaw, 512 U.S. 107, 122 (1994)). “Critically, ‘not every dispute concerning employment, or tangentially involving a provision of a collective-bargaining agreement, is pre-empted by § 301.'” Id. (quoting Lueck, 471 U.S. at 211).

         The Ninth Circuit, therefore, set out a two-prong test for determining when claims are preempted by LMRA in Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th Cir. 2007). “First, a court must determine ‘whether the asserted cause of action involves a right conferred upon an employee by virtue of state law, not by a CBA. If the right exists solely as a result of the CBA, then the claim is preempted, and [the] analysis ends there.'” Kobold, 832 F.3d at 1032 (alteration in original) (quoting Burnside, 491 F.3d at 1059). “To determine whether a right is independent of a CBA . . . a court must focus its inquiry on ‘the legal character of a claim, as “independent” of rights under the collective-bargaining agreement [ ]and not whether a grievance arising from “precisely the same set of facts” could be pursued.'” Id. at 1033 (quoting Livadas ...

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