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Section 301 of the LMRA Can Preempt CBA-Rooted RICO Claims: Ninth Circuit
Practical Law Legal Update w-031-7169 (Approx. 4 pages)
Section 301 of the LMRA Can Preempt CBA-Rooted RICO Claims: Ninth Circuit
by Practical Law Labor & Employment
| Law stated as of 05 Jan 2022 • USA (National/Federal) |
In Columbia Export Terminal, LLC v. International Longshore & Warehouse Union, the Ninth Circuit held that Section 301 of the Labor Management Relations Act (LMRA) can preclude a Racketeer Influenced and Corrupt Organizations Act (RICO) claim.
On June 28, 2021, in Columbia Export Terminal, LLC v. International Longshore & Warehouse Union, the Ninth Circuit held that:
- Section 301 of the Labor Management Relations Act (LMRA) precludes a Racketeer Influenced and Corrupt Organizations Act (RICO) claim when either:
- the right or duty on which the claim is based is created by a collective bargaining agreement (CBA); or
- resolution of the claim substantially depends on analysis of a CBA.
- A reviewing court must consider the scope of a CBA's arbitration provision to determine if the RICO claims are arbitrable and resolve doubts concerning the scope of issues subject to labor arbitration in favor of arbitration (see Granite Rock Co. v. Teamsters, 561 U.S. 287, 300 (2010)).
The Ninth Circuit noted that:
- It and the Seventh Circuit have held that the Railway Labor Act preempted an airline employee's RICO claim because the claim was founded on an obligation under a CBA (Hubbard v. United Airlines, Inc., 927 F.2d 1094 (9th Cir. 1991); see Westbrook v. Sky Chefs, Inc., 35 F.3d 316, 317-18 (7th Cir. 1994) (RLA precludes RICO claims unless causes of action are independent of the CBA)).
- Other circuits apply this two-part "preemption" or "preclusion" test when considering federal claims arising from labor disputes, without referencing when the respective federal laws were passed (Vadino v. A. Valey Eng'rs, 903 F.2d 253 (3d Cir. 1990); Martin v. Lake Cnty. Sewer Co., Inc., 269 F.3d 673 (6th Cir. 2001) (LMRA precluded FLSA rooted in CBA rights)).
The practical impact of this case is that the Ninth Circuit, like the Third and Sixth Circuits, expanded the preclusive effect of Section 301 of the LMRA to federal claims. The Ninth Circuit also held that courts must presume that the parties have agreed to arbitrate state or federal claims based on CBA rights or obligations or requiring CBA interpretation to be resolved.
UPDATE
The Ninth Circuit withdrew its June 28, 2021 decision in this case and replaced it with a January 5, 2022 decision when denying a rehearing en banc. The superseding decision principally restates the former decision. However, the new decision also:
- Acknowledges that a conflict between two federal laws implicates different considerations than a conflict between a state and a federal law.
- Distinguishes the claim in Watts v. United Parcel Service, Inc., a case where the Sixth Circuit held that a unionized employee's ADA claim was not preempted by the LMRA, as a claim not turning on interpretations of CBA provisions (701 F.3d 188, 191 (6th Cir. 2012)).
- Clarifies that the majority of the panel concluded that the LMRA precludes the employer's RICO claims and requires specific performance of CBA's promises to arbitrate grievances.
- Includes a dissenting opinion to the court's denial of a rehearing en banc.