Charles Alongi v. Ford Motor Co. Environ, Inc.

Citations: 386 F.3d 716; 175 L.R.R.M. (BNA) 3025; 2004 U.S. App. LEXIS 21276; 2004 WL 2300413Docket: 02-2514

Court: Court of Appeals for the Sixth Circuit; October 13, 2004; Federal Appellate Court

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In the case of Alongi v. Ford Motor Co., the Sixth Circuit Court of Appeals addressed whether the plaintiffs' amended complaint, asserting state-law causes of action, was pre-empted by federal labor laws, specifically the Labor-Management Relations Act (29 U.S.C. 185) and the National Labor Relations Act (29 U.S.C. 158). The district court found that two of the claims were pre-empted and dismissed them, believing that the National Labor Relations Board (NLRB) had primary jurisdiction. However, it determined that the other two claims were not pre-empted and remanded them to Michigan state courts. The defendants appealed, arguing that all claims were pre-empted and untimely under federal statute limitations, seeking complete dismissal of the complaint.

The appellate court affirmed the district court's ruling on the two challenged claims but found that none of the claims in the original complaint were completely pre-empted by federal law, indicating a lack of removal jurisdiction from the start. The court recognized its duty to address the jurisdictional defect, leading to the vacating of the district court's prior rulings and remanding the case for dismissal of all claims without prejudice, returning the matter to state court.

The plaintiffs, ex-employees of Environ, Inc. (a subsidiary of Ford), alleged wrongful practices regarding the resale of recalled Firestone tires and unapproved vehicle parts. They claimed retaliation for protesting these illegal activities during their employment, which coincided with the negotiation of a new collective bargaining agreement by the Union and Environ.

The agreement reached during negotiations did not guarantee job security for Environ employees in the event of plant closure. Plaintiffs claim that Cygan assured them during the original collective bargaining agreement (CBA) negotiations that Environ would remain operational for at least six more years and that all employees would retain their jobs, asserting the company was financially secure. These representations were purportedly communicated by the Union's bargaining committee, leading employees to rely on them. After federal court preemption of some claims, the plaintiffs amended their complaint, alleging that Cygan made similar assurances post-CBA ratification, despite knowing about the impending plant closure, partially due to employee complaints regarding the use of recalled Firestone tires. On August 2, 2000, Environ announced the plant's closure, followed by a "plant closing agreement" that offered certain severance benefits but lacked job security guarantees. Official termination occurred on November 30, 2000. Following closure, Ford sold Environ to DST Industries, which opened a new plant at the site and hired a few former employees, including Lenart, the union negotiator, but not the plaintiffs.

On December 12, 2001, plaintiffs filed suit in the Circuit Court of Wayne County, Michigan, asserting four state law claims: (1) Violation of Michigan public policy based on anti-bribery statutes, alleging Lenart received a supervisory role at DST in exchange for facilitating a CBA that neglected employee protections; (2) Common law fraud, claiming Cygan knowingly misrepresented Environ's stability and longevity; (3) Civil conspiracy, arguing that the agreement between Lenart and Environ management constituted a conspiracy to violate public policy; and (4) Discharge in violation of public policy, alleging Environ retaliated against plaintiffs for complaints about illegal practices by not rehiring them after the plant closure, violating federal safety standards.

Defendants removed the case to federal district court, claiming the complaint involved federal labor law issues, asserting that plaintiffs' state-law claims were pre-empted by federal law due to the need for interpreting the Collective Bargaining Agreement (CBA). The district court denied plaintiffs' motion to remand, determining that federal subject-matter jurisdiction existed over the fraud claim (Count 2), as it required examining the CBA and its negotiation process, thus allowing for federal removal. The court indicated it would exercise supplemental jurisdiction over any non-pre-empted claims.

Defendants subsequently moved to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(6) and 12(c), arguing all claims were federal in nature and subject to dismissal as untimely under the six-month statute of limitations for National Labor Relations Act (NLRA) claims. Plaintiffs acknowledged that if any claims were pre-empted by federal labor law, they would be considered untimely under this limitation.

In response, plaintiffs filed an amended complaint, maintaining four counts: (I) Violation of Michigan public policy, alleging that Lenart's involvement in the Union's CBA bargaining led to violations of public policy. (II) Fraud, claiming Cygan made false promises regarding job security and the longevity of the Environ plant, which influenced plaintiffs to ratify the CBA without negotiating for re-employment assurances. (III) Civil conspiracy, asserting that defendants' actions in Counts I and II constituted a conspiracy that harmed plaintiffs. (IV) Discharge in violation of public policy, reiterating claims about Environ's illegal practices and retaliation against plaintiffs for complaints regarding safety violations.

The district court considered the motion to dismiss as directed at the amended complaint, which retained the core allegations from the original filing.

On November 19, 2002, the court determined that amended Counts I (benefit violation of public policy) and III (civil conspiracy) were pre-empted and dismissed, while Counts II (fraud) and IV (retaliatory discharge against public policy) were not. Count I was pre-empted by § 8 of the NLRA due to its relation to employer good faith in collective bargaining, referencing San Diego Bldg. Trades Council v. Garmon. The court dismissed the defendants' claim that Count I was pre-empted by § 301 of the LMRA, as it required interpretation of the collective bargaining agreement (CBA). Count III was similarly pre-empted because it related to the same conduct as Count I. 

Count II was not pre-empted as it concerned misrepresentations made post-CBA negotiation, which did not involve collective bargaining processes. Count IV also survived pre-emption because it did not require interpreting the CBA; plaintiffs did not claim violations of the CBA regarding employment recommendations. The court held that Counts I and III fell under NLRB jurisdiction and dismissed them without prejudice, while remanding Counts II and IV to state court. 

Neither party appealed the dismissal of Counts I and III, but defendants appealed the ruling on Counts II and IV, seeking to have them dismissed as pre-empted by NLRA and LMRA and time-barred under federal law. The review of state-law claims' pre-emption by federal law is de novo. Both § 7 and § 8 of the NLRA, along with § 301 of the LMRA, pre-empt state law tort claims within their scopes, with differing standards and effects of pre-emption. Section 7 affirms the right of employees to engage with labor organizations and bargain collectively, while § 8 prohibits unfair labor practices affecting that right, requiring good faith bargaining regarding employment terms.

A plaintiff's claim involving activities potentially subject to sections 7 or 8 of the National Labor Relations Act (NLRA) necessitates that both state and federal courts defer to the National Labor Relations Board (NLRB) to prevent state interference with national policy. This principle, known as the Garmon doctrine, requires courts to use a balancing approach to determine if a state-law claim is pre-empted when the activity is only "arguably" covered by the NLRA. If the conduct is only marginally related to the Act or involves deeply local interests, courts may allow state regulation. 

Garmon pre-emption mandates that state courts retain jurisdiction over such claims, and cannot be removed to federal court despite the original forum. Section 301(a) of the Labor-Management Relations Act (LMRA) grants federal district courts broad jurisdiction over contracts between employers and labor organizations, noted for its strong pre-emptive effect that allows removal of state law actions. This pre-emption applies to state claims that significantly depend on collective bargaining agreement (CBA) analysis, but not to those that only tangentially involve CBA provisions.

A two-step test is used to assess § 301 complete pre-emption: first, determining if the state law claim requires interpretation of CBA terms, and second, ascertaining if the claimed right arises from state law or the CBA. If the right arises from state law without needing contract interpretation, pre-emption does not apply. In instances where both NLRA and LMRA apply, federal courts retain concurrent jurisdiction alongside the NLRB, allowing for simultaneous consideration of unfair labor practice charges and CBA breach claims.

Complete pre-emption under § 301 is the central issue in determining jurisdiction over the dispute involving non-diverse parties. The defendants argue for complete pre-emption based on the precedent set in Adkins v. General Motors Corp., where plaintiffs claimed fraud due to misrepresentations made by their union regarding the effects of a new collective bargaining agreement (CBA) on their rights under a prior agreement. In Adkins, the plaintiffs were union members who transferred to a different plant under a "bridge agreement," which was later abrogated by a new CBA negotiated by the union. When the plaintiffs sought to rejoin their original plant, they discovered their rights had been eliminated, leading to their fraud claim.

The court in Adkins held that the fraud claim was pre-empted by § 301, as resolving it required interpretation of collective bargaining agreements, thus involving federal jurisdiction. However, the later Supreme Court case, Textron Lycoming Reciprocating Engine Div. AVCO Corp. v. UAW, clarified that claims of fraudulent inducement to sign a labor contract, without additional substantial elements, do not constitute a "suit for violation of contracts" and are not pre-empted by § 301. This distinction is crucial for determining whether the plaintiffs' claims in the current case are completely pre-empted and if the court has jurisdiction to proceed.

Plaintiffs in Textron alleged that management misrepresented job security to persuade them into signing a collective bargaining agreement (CBA) that included a no-strike clause, subsequently seeking a declaratory judgment to invalidate the CBA. However, they did not claim any violations of the CBA, leading the Supreme Court to rule that their claim failed to establish federal subject-matter jurisdiction under § 301. Similarly, in Caterpillar, Inc. v. Williams, the Court found that claims of breach of individual employment promises did not warrant complete preemption under § 301, even with the plaintiffs being unionized under a CBA, affirming that removal to federal court was improper. The Court respected the plaintiffs' choice not to pursue a suit under § 301, as their claims did not substantially depend on the CBA's interpretation.

In the current case, the plaintiffs' amended Count II for fraud mirrors the non-preempted claims in Caterpillar and Textron, focusing on allegations that Cygan made individual job security promises separate from the CBA. These assertions do not necessitate interpreting the CBA but rather assessing the validity of the alleged statements and the plaintiffs' reliance on them. Additionally, Count IV for retaliatory discharge based on public policy is not preempted by § 301. Plaintiffs assert they were not rehired due to retaliation for opposing the use of unapproved auto parts, which falls outside the collective bargaining context. This claim is rooted in Michigan public policy, not federal law, and requires demonstrating protected activity, an adverse employment action, and a causal connection to that activity, without reference to the CBA's terms. The claim also alleges violations of federal auto safety regulations related to the resale of recalled tires and parts.

Plaintiffs allege retaliation by Ford for refusing to participate in illegal activities, claiming Ford did not recommend them for jobs after the plant closure. These allegations do not relate to the primary collective bargaining agreement (CBA) with Environ, as the CBA could not authorize participation in federal law violations. Count IV's analysis is guided by the Supreme Court's ruling in *Lingle v. Norge Div. of Magic Chef, Inc.*, which found that a state-law claim for retaliatory discharge was not preempted by § 301 because it did not require interpreting a CBA. The defendants argue that Count IV is preempted due to a separate "plant closing agreement," which they claim allows the alleged failure to rehire the plaintiffs. However, even if such provisions exist, this does not establish complete preemption. The defendants' argument relies on the notion that the interpretation of a CBA would be necessary for their defense, which the Supreme Court has rejected. While a state claim may involve a CBA, this does not convert it into a federal claim. The complaint's content and the plaintiff's choice to frame the claim as state-law based are paramount, meaning the presence of a federal question in the defense does not alter the claim’s nature or the forum for litigation. The Supreme Court has indicated that merely consulting a CBA in state-law claims does not extinguish those claims.

Count IV of the amended complaint is not completely pre-empted under § 301 of the Labor Management Relations Act (LMRA), affirming the district court's ruling that removal to federal court was improper. The court lacks jurisdiction to assess potential preemption by the National Labor Relations Act (NLRA), leaving such determinations to state courts. The district court erroneously analyzed preemption issues in prior rulings, particularly regarding the original complaint's Count 2 for fraud. The court initially deemed this count completely preempted based on allegations of misleading representations related to a collective bargaining agreement (CBA). However, claims of fraudulent inducement do not usually lead to complete preemption under § 301, as established in Textron. The fraud allegations in Count 2 do not substantially depend on the CBA, so they were not completely preempted. Similarly, Count 1, which alleges a violation of Michigan's public policy through bribery, is not subject to complete preemption, as it does not require a determination of the CBA's terms. Consequently, Count 3, asserting a tortious conspiracy linked to Count 1, is also not preempted.

Original Count 4, alleging discharge in violation of public policy, is found to be materially identical to amended Count IV. The analysis provided for amended Count IV indicates that Count 4 was not completely pre-empted, leading to the conclusion that the district court lacked subject-matter jurisdiction over both the original and amended complaints. Consequently, prior rulings by the district court are vacated. Plaintiffs may re-file their original complaint in state court without the risk of it being removed to federal court. The decision focuses solely on the issue of complete preemption, with no opinion expressed on the merits of the claims or their potential preemption under the NLRA or the Garmon doctrine. The district court's order is affirmed regarding Counts II and IV of the amended complaint, which are not completely pre-empted, and those counts are remanded to the circuit court of Wayne County, Michigan. Conversely, the dismissal of Counts I and III is reversed and remanded for further action. Additionally, other legal rulings by the district court in this case are vacated.