Baikuntha Khanal v. San Francisco Hilton, Inc.
681 F. App'x 624
| 9th Cir. | 2017Background
- Plaintiffs are food and beverage service employees who first sued in state court, asserting claims that effectively sought to enforce a collective-bargaining agreement (CBA) and whose original complaint was removed as preempted by § 301 of the LMRA.
- Plaintiffs amended their complaint to abandon the CBA-based claims and instead allege a California Labor Code § 351 claim that Hilton failed to remit gratuities/service charges to service employees.
- The district court concluded the amended claim was preempted by § 301 LMRA, dismissed it, and held Plaintiffs must exhaust CBA grievance procedures or allege a union duty-of-fair-representation breach.
- Plaintiffs appealed; the Ninth Circuit reviews whether the § 351 claim is preempted under the two-part test from Burnside/Caterpillar/Kobold.
- The Ninth Circuit determined the § 351 claim arises under state law and can be resolved without interpreting the CBA (at most the CBA might be referred to), so it is not § 301-preempted.
- The Ninth Circuit reversed and remanded for the district court to decide in the first instance whether to exercise supplemental jurisdiction over the state-law claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the California Labor Code § 351 claim is preempted by § 301 LMRA | § 351 creates rights independent of the CBA and can be resolved under state law | Resolution requires interpretation of the CBA (classification of events, distribution rules), so § 301 preempts state claim | Not preempted — claim can be resolved by state-law analysis without interpreting the CBA |
| Whether Plaintiffs must exhaust CBA grievance procedures or allege union breach | No — state-law claim need not invoke CBA grievance exhaustion or DFRR allegations | Yes — if claim relates to CBA terms, exhaustion and duty-of-fair-representation issues apply | Not required — grievance procedures apply only to disputes about interpretation/application of CBA terms; § 351 claim stands independent |
| Whether merely referring to the CBA in adjudication triggers § 301 preemption | Referring to CBA provisions for context does not convert claim into federal | Any reliance on CBA interpretation converts the claim into a § 301 action | Mere reference or defense invoking CBA does not trigger preemption |
| Proper jurisdictional path after reversal | Plaintiff seeks remand of state-law claim to state court | Defendant previously removed based on preemption; district court treated claim as federal | Court remanded to allow district court to decide whether to exercise supplemental jurisdiction |
Key Cases Cited
- Burnside v. Kiewit Pac. Corp., 491 F.3d 1053 (9th Cir. 2007) (articulates two-part test for § 301 preemption)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (U.S. 1987) (state-law claims preempted when resolution requires interpretation of CBA)
- Kobold v. Good Samaritan Reg’l Med. Ctr., 832 F.3d 1024 (9th Cir. 2016) (distinguishes looking to versus interpreting a CBA for preemption analysis)
- Livadas v. Bradshaw, 512 U.S. 107 (U.S. 1994) (referring to uncontested CBA provisions does not mandate § 301 preemption)
- Cramer v. Consol. Freightways, Inc., 255 F.3d 683 (9th Cir. 2001) (defendant’s reference to a CBA in defense does not automatically create § 301 preemption)