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Kobold v. Good Samaritan Regional Medical Center

United States Court of Appeals, Ninth Circuit

August 9, 2016

Susan Kobold, Plaintiff-Appellant,
v.
Good Samaritan Regional Medical Center, Defendant-Appellee. Larry Barr; Anthony Barton; Stephen Busch; Brian Carlson; Peter Dennis; Dan Dorr; Clark Goble; Warren Martin; Billy Pierce; Jesse Robinson; David Shatto; Douglas Toelkes, Plaintiffs-Appellants,
v.
Ross Island Sand & Gravel Co., Defendant-Third-Party-Plaintiff-Appellee,
v.
Oregon Teamsters Employers Trust; General Teamsters Local Union No. 162, Third-Party-Defendant. Ona C. Allen, Plaintiff-Appellant,
v.
Northwest Permanente, P.C., an Oregon corporation, Defendant-Appellee.

          Argued and Submitted November 6, 2015 Portland, Oregon

         Appeal from the United States District Court for the District of Oregon, D.C. Nos. 6:12-cv-02082-TC, 3:12-cv-00683-MO, 3:12-cv-00402-ST Thomas M. Coffin, Magistrate Judge, Presiding, Michael W. Mosman, District Judge, Presiding, Janice M. Stewart, Magistrate Judge, Presiding

          Thomas K. Doyle (argued), Bennett, Hartman, Morris & Kaplan, Portland, Oregon, for Plaintiff-Appellant Susan Kobold.

          Kirk Peterson (argued), Bullard Law, Portland, Oregon, for Defendant-Appellee Good Samaritan Regional Medical Center.

          Elizabeth Farrell Oberlin (argued), Portland, Oregon; Benjamin Rosenthal, Portland, Oregon; for Plaintiffs-Appellants Larry Barr, et al.

          Ankur H. Doshi (argued) and Kamyavathana Sivanesan, Portland, Oregon; Sheeba Suhaskumar, law student; Northwestern School of Law of Lewis & Clark College, Portland, Oregon; for Defendant-Third-Party-Plaintiff-Appellee Ross Island Sand & Gravel Co.

          Matthew Caruso Ellis (argued), Portland, Oregon; George P. Fisher, Portland, Oregon; for Plaintiff-Appellant Ona C. Allen.

          Chris Kitchel (argued), James N. Westwood, and Brenda K. Baumgart; Stoel Rives LLP, Portland, Oregon; for Defendant-Appellee Northwest Permanente, P.C.

          Before: Marsha S. Berzon and Paul J. Watford, Circuit Judges, and James Alan Soto, [*] District Judge.

         SUMMARY [**]

         Labor Law

         The panel ordered consolidated three appeals involving employees represented by labor unions who sought remedies under state law against their employers; affirmed the district court's grant of summary judgment to the employer in the first appeal; affirmed in part and reversed and remanded in part in the second appeal; and affirmed in the third appeal.

         In all three cases, there was a collective bargaining agreement ("CBA") between the union and the employer setting out a grievance and arbitration procedure to govern disputes arising under the agreement. And in all three, a grievance was filed but did not provide full relief, prompting the employee to turn to the courts. All the employees initially filed their cases in state court, but the cases were removed to federal court on the basis of preemption under § 301 of the Labor Management Relations Act. In all the cases, the district court denied a motion to remand and held the state law claims preempted.

         A state law claim is preempted if it either involves a right conferred upon an employee solely by virtue of a CBA or is substantially dependent on analysis of a CBA.

         In the first case, the panel held that assuming Or. Rev. Stat. §§ 652.120 and 652.615 conferred upon a nurse the right to receive premium pay for extra shifts worked, that right was substantially dependent on an analysis of the terms of a CBA in order to determine which shifts qualified for premium pay. Accordingly, the state law claims were preempted by § 301. The plaintiff could not pursue her claims under § 301 because she did not exhaust her remedies under the CBA and did not allege that her union breached its duty of fair representation. In the second case, the panel reversed in part, holding that claims for violation of Or. Rev. Stat. § 652.610(4) (establishing time limits regarding CBA-authorized paycheck deductions) and breach of fiduciary duty were not preempted. The panel affirmed as to a claim for money received. The panel concluded that § 652.610(4) conferred a right independent of the plaintiffs' rights under a CBA, and this right was not substantially dependent on analysis of the CBA. The breach of fiduciary duty claim also was not preempted, but the claim for money received was not independent of the CBA and therefore was preempted. The panel remanded for the district court to decide whether to exercise supplemental jurisdiction over the non-preempted claims.

         In the third case, the panel affirmed the district court's denial of the plaintiff's motion to remand and its grant of summary judgment in favor of the defendant. The panel held that judicial estoppel did not bar the plaintiff, a nurse practitioner, from arguing for remand to state court on the ground that a CBA did not govern a credentialing decision because the contrary position had been taken by the plaintiff's union, not the plaintiff herself, during arbitration. The panel held that in light of the arbitrator's decision that the credentialing decision must be evaluated under the CBA, the plaintiff's claim for intentional interference with economic relations arose out of the CBA, and thus was preempted. Affirming the district court's summary judgment on a non- preempted defamation claim, the panel held that the claim was time-barred.

          OPINION

          BERZON, Circuit Judge:

         The three cases in this consolidated appeal-Kobold v. Good Samaritan Regional Medical Center, Barr v. Ross Island Sand & Gravel Co., and Allen v. Northwest Permanente-involve different parties and facts, but are similar in important ways. All three involve employees represented by labor unions who seek remedies under state law against their employers. In all three, there is a collective bargaining agreement ("CBA") between the union and the employer setting out a grievance and arbitration procedure to govern disputes arising under the agreement. And in all three, a grievance was filed but did not provide full relief, prompting the employee to turn to the courts. All the employees initially filed their cases in state court, but the cases were removed to federal court on the basis of preemption under § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a). In all the cases, the district court denied a motion to remand and held the state law claims preempted. We consider the § 301 preemption questions on appeal.

         As this court has observed more than once, although § 301 preemption questions arise fairly frequently, "[f]amiliarity . . . has not bred facility." Cramer v. Consol. Freightways, Inc., 255 F.3d 683, 689 (9th Cir. 2001) (en banc) (alteration in original) (quoting Galvez v. Kuhn, 933 F.2d 773, 774 (9th Cir. 1991)). In the hope that doing so will illuminate the parameters of § 301 preemption analysis, and so help "[breed] facility, " id., we have consolidated the three cases for consideration and resolve them in this single opinion. We begin with a review of § 301 preemption doctrine and then proceed to discuss each case.

         I. Section 301 Preemption

         Section 301 of the LMRA states: "Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . may be brought in any district court of the United States having jurisdiction of the parties." 29 U.S.C. § 185(a).

         On its face, § 301 reads as a jurisdictional statute. But not long after its passage, the Supreme Court held, in Textile Workers v. Lincoln Mills of Ala., 353 U.S. 448, 451 (1957), that § 301 is not simply jurisdictional. Instead, it 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." 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." Cramer, 255 F.3d at 689 (citing Local 174, Teamsters of Am. v. Lucas Flour Co., 369 U.S. 95, 103-04 (1962)). "Once preempted, 'any claim purportedly based on [a] . . . state law is considered, from its inception, a federal claim, and therefore arises under federal law.'" Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th Cir. 2007) (alteration in original) (quoting Caterpillar, Inc. v. Williams, 482 U.S. 386, 393 (1987)).

         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." Livadas v. Bradshaw, 512 U.S. 107, 122 (1994). To give "the policies that animate § 301 . . . their proper range, " the Supreme Court has expanded "the pre-emptive effect of § 301 . . . beyond suits alleging contract violations" to state law claims grounded in the provisions of a CBA or requiring interpretation of a CBA. Lueck, 471 U.S. at 210-11.

         Critically, "not every dispute concerning employment, or tangentially involving a provision of a collective-bargaining agreement, is pre-empted by § 301." Id. at 211. Drawing on Supreme Court precedent, this court has articulated a two-step inquiry to analyze § 301 preemption of state law claims. 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." Burnside, 491 F.3d at 1059. If the court determines that the right underlying the plaintiff's state law claim(s) "exists independently of the CBA, " it moves to the second step, asking whether the right "is nevertheless 'substantially dependent on analysis of a collective-bargaining agreement.'" Id. (quoting Caterpillar, 482 U.S. at 394). Where there is such substantial dependence, the state law claim is preempted by § 301.[1] If there is not, then the claim can proceed under state law. Id. at 1059-60.

         To determine whether a right is independent of a CBA-the first Burnside factor-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." Livadas, 512 U.S. at 123 (emphasis added) (internal citation omitted). Only if the claim is "founded directly on rights created by [a] collective-bargaining agreement[]" does § 301 preempt it. Caterpillar, 482 U.S. at 394.

         The second Burnside factor-whether a plaintiff's state law right is "substantially dependent on analysis of [the CBA], " Burnside, 491 F.3d at 1059-turns on "whether the claim can be resolved by 'look[ing] to' versus interpreting the CBA. If the latter, the claim is preempted; if the former, it is not." Id. at 1060 (quoting Livadas, 512 U.S. at 125) (alteration in original). This court has previously "stressed that, in the context of § 301 complete preemption, the term 'interpret' is defined narrowly-it means something more than 'consider, ' 'refer to, ' or 'apply.'" Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1108 (9th Cir. 2000). And, notably, "a defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law." Caterpillar, 482 U.S. at 399. In other words, "[i]f the claim is plainly based on state law, § 301 preemption is not mandated simply because the defendant refers to the CBA in mounting a defense." Cramer, 255 F.3d at 691 (emphasis added).

         The Burnside factors reflect two driving concerns of preemption doctrine: first, preventing "parties' efforts to renege on their arbitration promises by 'relabeling' as tort suits actions simply alleging breaches of duties assumed in collective-bargaining agreements, " Livadas, 512 U.S. at 123 (citation omitted), and second, preserving "a central tenet of federal labor-contract law . . . that it is the arbitrator, not the court, who has the responsibility to interpret the labor contract in the first instance, " Lueck, 471, U.S. at 220.

         Notably, there is no basis for scuttling the state law cause of action if any necessary CBA interpretation can in some fashion be conducted via the appropriate grievance/arbitration forum. To allow such scuttling disadvantages employees covered by CBAs, as they lose state law protections because of an embedded CBA issue possibly peripheral to their core cause of action. The interest in sending substantial CBA issues through grievance/arbitration does not justify creating this disadvantage unless the interest cannot be otherwise accommodated. There are, accordingly, circumstances in which preemption can be avoided by accepting an arbitrator's interpretation of the CBA.[2] In some instances, for example, an arbitrator's interpretation of the CBA may determine whether an employee's otherwise independent state law claim in fact asserts a right created by the CBA. See Section IV.C, infra.

         Still, once a state law claim has been found substantially dependent upon analysis of a CBA under the second prong of Burnside, most often "that claim must either be treated as a § 301 claim, or dismissed as pre-empted by federal labor-contract law." Lueck, 471 U.S. at 220 (internal citation omitted). Under a collective bargaining agreement like the ones in these cases, an employee usually cannot succeed in a suit under § 301 to vindicate personal contract-based rights unless the contractual grievance-arbitration procedure is invoked on her behalf or on behalf of a group of employees of which she is part. If the dispute is not ultimately resolved by an arbitration, the employee must establish that the union violated its duty of fair representation by failing to pursue the grievance to arbitration, or pursuing it arbitrarily. See Air Line Pilots Ass'n, Int'l v. O'Neill, 499 U.S. 65, 67 (1991); Vaca v. Sipes, 386 U.S. 171, 190-91 (1967). And, where the remedies provided in the CBA have been exhausted, judicial review is extremely limited. See United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 36 (1987); Sw. Reg'l Council of Carpenters v. Drywall Dynamics, Inc., 823 F.3d 524, 530 (9th Cir 2016) (noting that "courts reviewing labor arbitration awards afford a 'nearly unparalleled degree of deference' to the arbitrator's decision" (quoting Stead Motors of Walnut Creek v. Auto. Machinists Lodge No. 1173, Int'l Ass'n of Machinists & Aerospace Workers, 886 F.2d 1200, 1205 (9th Cir. 1989) (en banc))).

         Against this doctrinal backdrop, we proceed to the specifics of each case.

         II. Kobold v. Good Samaritan Regional Medical Center

         A. Factual and Procedural History

         Plaintiff-Appellant Sue Kobold worked as an operating room nurse for Defendant-Appellee Good Samaritan Regional Medical Center ("Good Samaritan") beginning in 1996. Nurses at Good Samaritan, including Kobold, are represented by a union, the Oregon Nurses Association ("ONA"). Their terms and conditions of employment are negotiated between Good Samaritan and ONA and spelled out in a collective bargaining agreement ("GS CBA").

         The GS CBA provides that nurses who work extra shifts receive premium pay at one and one-half times the regular rate. In early 2010, Kobold learned that for more than one year Good Samaritan had not paid her the premium rate for extra shifts worked. It appears, although the record is not clear, that Kobold discovered the problem when the operating room manager informed her that Good Samaritan would only pay the regular rate, not the premium rate, to nurses who signed up to work a surgical technician's "orphan" shifts-that is, vacant shifts that cannot be covered by staff members within the same team. Kobold believed that nurses who signed up to work these orphan shifts should be paid the premium rate.

         The GS CBA prescribes a mandatory five-step grievance and arbitration procedure for "[p]roblems arising in connection with the application or interpretation of the Agreement." ONA submitted a grievance regarding extra shift premium pay, and Good Samaritan agreed prospectively to change its practice and pay the premium rate for extra operating room shifts. Good Samaritan refused, however, to issue retroactive pay for extra shifts already worked. It claimed that those shifts had been marked as regular pay in the electronic scheduling software, so the nurses knew the pay rate before signing up to work the shifts. After ONA requested arbitration, the union and Good Samaritan settled the grievance.

         As part of the settlement, Good Samaritan paid Kobold $2, 216.68, the equivalent of 45 days of premium pay. That payment was the full amount to which Kobold was entitled under the GS CBA, which authorizes grievances to be filed up to 45 days following the occurrence of the matter being grieved. Because Kobold believed she was entitled to more than 45 days of back pay, she filed an action in state court.

         Kobold asserted two causes of action in her complaint. First, she alleged that Good Samaritan failed to pay all wages owed her at each pay period, in violation of Or. Rev. Stat. § 652.120. Or. Rev. Stat. § 652.120(1) requires that "[e]very employer shall establish and maintain a regular payday, at which date the employer shall pay all employees the wages due and owing to them." Second, she alleged that Good Samaritan unlawfully deducted from her paycheck amounts due and owing, in violation of Or. Rev. Stat. § 652.615. Or. Rev. Stat. § 652.615 creates a private right of action for a violation of § 652.610(3), which provides that "[a]n employer may not withhold, deduct or divert any portion of an employee's wages unless" an exception applies, one of which is that "[t]he deduction is authorized by a collective bargaining agreement to which the employer is a party." Or. Rev. Stat. § 652.610(3)(d). Kobold sought $24, 000 in unpaid wages, as well as attorney's fees, costs, and disbursements.

         After Kobold filed her state court suit, Good Samaritan filed a notice of removal, alleging that Kobold's state law claims are preempted by § 301 of the LMRA. On the same ground, Good Samaritan filed in federal court a motion to dismiss or, in the alternative, a motion for summary judgment. The magistrate judge determined that Kobold's state law claims were preempted under § 301. He then concluded that because Kobold failed to allege and could not prove that she had exhausted her contractual remedies, and also did not allege that ONA had breached its duty of fair representation, she could not succeed on a claim under § 301. He thus recommended that Good Samaritan's motion for summary judgment be granted. The district court adopted the magistrate's findings and recommendation, granted Good Samaritan's motion for summary judgment, and dismissed the case. We affirm.

         B. Kobold's State Law Claims Are Preempted by § 301

         Assuming without deciding that ORS § 652.120 and § 652.615 independently confer upon Kobold the right to receive premium pay for extra shifts worked, that right is substantially dependent on an analysis of the terms of the GS CBA. Before a court could calculate the total amount Kobold is owed, it must determine which of the shifts she worked qualified for premium pay. The Oregon statutes under which Kobold seeks relief provide only that an employee be paid "the wages due and owing to them." Or. Rev. Stat. § 652.120(1). They do not provide any means with which to assess whether wages are "due and owing." To answer that question, a court must consult the GS CBA. In this case, because of a particular provision of the GS CBA that is in dispute, a court must interpret, not just refer to or look at, the GS CBA. See Burnside, 491 F.3d at 1060.

         The GS CBA provides that nurses are to be paid one and one-half times their regular pay rate for all hours worked above their regularly scheduled full-time equivalent shifts "except when there is a change of schedule agreed upon by the Medical Center and nurse."[3] Thus, for Kobold to succeed on her state law claim that she was not paid the premium rate for extra shifts, a court must determine whether Kobold and Good Samaritan agreed to a change of schedule.

         Whether or not there was an agreed upon change of schedule is exactly what is in dispute between the parties. Good Samaritan argues that Kobold is not entitled to premium pay because she agreed to work the extra shifts "despite conspicuous notice that the shifts would be paid at a regular rate." Kobold contends that this reading of the agreement exception "would undermine the purpose of ...


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