Ninth Circuit Clarifies Parameters for Preemption Analysis Under Section 301 of LMRA | Practical Law

Ninth Circuit Clarifies Parameters for Preemption Analysis Under Section 301 of LMRA | Practical Law

In Kobold v. Good Samaritan Reg'l Med. Ctr., the US Court of Appeals for the Ninth Circuit held that the federal Labor Management Relations Act (LMRA) preempts a state law claim if the claim involves a right that an employee is granted solely based on a collective bargaining agreement (CBA) or a right that is "substantially dependent" on a CBA.

Ninth Circuit Clarifies Parameters for Preemption Analysis Under Section 301 of LMRA

Practical Law Legal Update w-002-9947 (Approx. 6 pages)

Ninth Circuit Clarifies Parameters for Preemption Analysis Under Section 301 of LMRA

by Practical Law Labor & Employment
Published on 16 Aug 2016 • USA (National/Federal)
In Kobold v. Good Samaritan Reg'l Med. Ctr., the US Court of Appeals for the Ninth Circuit held that the federal Labor Management Relations Act (LMRA) preempts a state law claim if the claim involves a right that an employee is granted solely based on a collective bargaining agreement (CBA) or a right that is "substantially dependent" on a CBA.
On August 9, 2016, in Kobold v. Good Samaritan Reg'l Med. Ctr., a case involving three consolidated appeals, the US Court of Appeals for the Ninth Circuit clarified the standard for whether state law claims are preempted by the Labor Management Relations Act (LMRA), holding that the LMRA:
  • Preempts a state law claim if the state law claim involves a right that:
    • an employee is granted solely based on a collective bargaining agreement (CBA); or
    • is "substantially dependent" on a CBA in that a court must interpret a CBA to resolve the claim.
  • Does not preempt a state law claim if the state law claim:
    • involves a right that is conferred by statute and therefore exists independently of a CBA; and
    • requires a court to merely look at or refer to the CBA, instead of interpreting the CBA.
( (9th Cir. Aug. 9, 2016).)

Background

Susan Kobold, Larry Barr, and Ona Allen brought lawsuits against their employers, Good Samaritan (GS), Ross Island Sand and Gravel (RISG), and Northwest Permanente (NWP).
The parties in the three separate cases were all different and involved different facts but shared several common features. In each of the three cases:
  • The employee was represented by a union.
  • There was a CBA between the union and the employer providing for a grievance and arbitration procedure for any disputes arising under the CBA.
  • The employee filed a grievance but the grievance did not provide the employee full relief, leading the employee to sue the employer in state court.
  • The employee's lawsuit was removed to US district court based on the preemption provision (Section 301) of the LMRA.
  • The district court held that the employee's state law claims were preempted by the LMRA.
  • The employee appealed to the Ninth Circuit.
The Ninth Circuit consolidated the three cases to address the standard for whether a state law claim is preempted by Section 301 of the LMRA.

Outcome

The Ninth Circuit held that:
  • A state law claim is preempted by Section 301 of the LMRA if the claim involves a right that:
    • an employee is granted solely based on a CBA; or
    • is "substantially dependent" on a CBA in that a court must interpret a CBA to resolve the claim.
  • A state law claim is not preempted by Section 301 of the LMRA if the claim involves:
    • a right that exists independently of a CBA; and
    • merely looking to or referring to the CBA, instead of actually interpreting the CBA.
The Ninth Circuit noted that:
  • Section 301 of the LMRA states that lawsuits involving alleged contractual violations between an employer and a union may be brought in US district court (29 U.S.C. § 185(a).)
  • The US Supreme Court held that Section 301 requires federal courts to create "a body of federal common law" to address disputes arising out of CBAs (Textile Workers v. Lincoln Mills of Ala., 353 U.S. 448, 451 (1957); AllisChalmers Corp. v. Lueck, 471 U.S. 202, 209 (1985)).
  • If a state law claim is preempted by Section 301, the claim effectively becomes a federal claim to which federal law is applied (Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th Cir. 2007)).
  • The Ninth Circuit (following US Supreme Court precedent) determines whether an employee's state law claim is preempted by Section 301 through a two-step analysis. First, the court determines whether the employee's claim involves a right conferred by state law and not by a CBA. If the state law claim involves a right that solely exists because of the CBA, then the claim is preempted and the analysis ends. If the state law claim involves a right that is independent of the CBA, then the court moves to the second step of the analysis and must determine if that right is "substantially dependent" on analyzing the CBA (Burnside, 491 F.3d at 1059; Caterpillar, Inc. v. Williams, 482 U.S. 386, 393 (1987).)
  • Determining whether a right is independent of the CBA involves focusing on the claim's "legal character" and not the specific facts involved in the employee's grievance (Livadas v. Bradshaw, 512 U.S. 107, 123 (1994)).
  • Determining whether a right is substantially dependent on analyzing the CBA depends on whether the claim can be resolved by "looking to" the CBA instead of interpreting the CBA. If the claim involves interpreting the CBA, then the claim is preempted. If the claim involves looking to the CBA, then the claim is not preempted (Burnside, 491 F.3d at 1060.)
The Ninth Circuit found that:
  • Kobold's state law claims against Good Samaritan for failing to pay all wages due and for making unlawful deductions to her pay in violation of Oregon law is preempted by Section 301 because:
    • Oregon wage law does not itself provide a way to determine if wages were due to Kobold;
    • the court would have to actually interpret Good Samaritan's CBA with the union to determine whether wages were due to Kobold; and
    • Kobold's right to receive premium pay for extra shifts she worked is therefore substantially dependent on analyzing the CBA.
  • Barr's claim that RISG violated a specific Oregon statute by failing to timely contribute money deducted from his paycheck to the fund administering the health insurance plan for RISG employees is not preempted because:
    • the statute, not RISG's CBA with the union, provides the basis for determining whether RISG violated the statute and therefore Barr's claim is independent of his rights under the CBA; and
    • resolving the claim did not require the court to interpret the CBA and therefore the claim was not substantially dependent on analyzing the CBA.
  • Barr's claim that RISG breached a fiduciary duty arising under Oregon statute by failing to contribute the money to the health insurance plan is not preempted because:
    • the fiduciary duty was created by statute and therefore was independent of RISG's CBA; and
    • resolving the claim involves looking to how RISG handled the funds and for what purpose, and does not require a court to do anything more than look at or refer to the CBA.
  • Barr's "money had and received claim" (that RISG was unjustly enriched by holding to the funds for the health insurance plan and should be required to make restitution) is preempted because the claim relates to Barr's contractual (and not statutory) right to have the funds applied to his health insurance premium. Therefore the claim is not independent of Barr's rights under the CBA.
  • Allen's claim against NWP for intentional interference with economic relations (based on an allegation that NWP engaged in misconduct in the process of denying Allen's application for re-credentialing as a nurse practitioner) is preempted by Section 301 because:
    • although the CBA did not specifically address the credentialing process, an arbitrator had applied the CBA's "just cause" standard to evaluating Allen's claim, effectively determining that the claim arose out of the CBA and did not exist independently of the CBA; and
    • the Ninth Circuit was unwilling to overturn the arbitrator's interpretation of the CBA.

Practical Implications

The Ninth Circuit's decision in Kobold clarifies the applicable standard in determining whether an employee's state law claim is preempted by LMRA Section 301. The two-step process used in this case was identified and validated previously by the US Supreme Court in Caterpillar and by the Ninth Circuit in Burnside. Nevertheless, this case is helpful because it shows the preemption analysis at work with various different claims involving disparate fact patterns. The analysis proceeds as follows:
  • Step 1 – Does the state law claim involve a right that is conferred by a statute or by the CBA? If the right is conferred by the CBA, then the analysis is complete and the claim is preempted. If the right is conferred by the statute and therefore exists independently of the CBA, then the court moves to Step 2.
  • Step 2 – Is the right substantially dependent on the CBA? Can the claim be resolved by looking to or referring to the CBA, or must the claim be resolved by interpreting the CBA. If the claim involves interpreting the CBA, then the claim is preempted. If the claim involves looking to or referring to the CBA, then the claim is not preempted.