Independent Sports & Entertainment LLC v. Daniel Fegan
2:17-cv-02397
C.D. Cal.May 30, 2017Background
- ISE (sports management company) bought Fegan’s basketball business via an Asset Purchase Agreement (APA) in 2013; the APA included non‑competition and non‑solicitation covenants and made Fegan an ISE employee.
- ISE alleges Fegan breached the APA by operating a competing side business, soliciting ISE personnel/players, and otherwise failing to perform; ISE terminated Fegan for cause on March 10, 2017.
- On March 10, 2017 ISE filed two arbitrations under the APA and filed a state‑court complaint seeking only injunctive relief (preliminary and permanent injunctions) to preserve the status quo pending arbitration.
- State court granted a TRO on March 17, 2017; Fegan removed the state action to federal court asserting complete preemption under § 301 of the LMRA as the basis for federal jurisdiction, and moved to dismiss.
- ISE moved to remand, arguing its contract‑based state claim for breach of the APA (and equitable injunctive relief) is not completely preempted by § 301. The court heard argument and took the motions under submission.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ISE’s state‑law injunctive claim is completely preempted by § 301 of the LMRA so as to create federal jurisdiction | ISE: Claim arises from the APA (state contract) and can be resolved without interpreting a CBA; therefore not § 301 preempted | Fegan: Enforcement of the APA non‑compete would necessarily interfere with his rights/authority as an NBPA‑certified agent under the CBA, invoking § 301 complete preemption | Court: Claim not completely preempted; remand to state court granted |
| Whether resolution of ISE’s claim requires interpretation of the CBA (Kobold/Burnside test, step 2) | ISE: Determination involves only the APA terms and factual inquiry into Fegan’s conduct, not CBA interpretation | Fegan: The injunction would impact his duties under the CBA and thus requires CBA analysis | Court: No CBA interpretation is necessary to decide breach of the APA; claim not substantially dependent on CBA |
| Whether the right ISE asserts is created by a CBA (Kobold/Burnside test, step 1) | ISE: The right to enforce the non‑compete derives from the APA, not any CBA rights | Fegan: Practical effect on agent status ties enforcement to the CBA | Court: The legal character of the claim is contractual (APA); it does not arise solely from a CBA |
| Whether § 301 preemption would further § 301’s purpose of creating uniform federal labor law | ISE: This is not a labor/CBA dispute and preemption would not further § 301’s aims | Fegan: (Implied) uniformity over agent/CBA matters supports preemption | Court: Preempting the state contract claim would not advance § 301’s objectives; federal law not required |
Key Cases Cited
- Caterpillar Inc. v. Williams, 482 U.S. 386 (Sup. Ct. 1987) (well‑pleaded complaint rule and limits on federal defenses as basis for removal)
- Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (Sup. Ct. 1987) (complete preemption doctrine converts certain state claims into federal claims)
- Beneficial Nat. Bank v. Anderson, 539 U.S. 1 (Sup. Ct. 2003) (recognizing unusually powerful preemptive force of certain statutes permitting removal)
- Allis‑Chalmers Corp. v. Lueck, 471 U.S. 202 (Sup. Ct. 1985) (§ 301 preemption extends to state claims substantially dependent on CBA interpretation)
- Lucas Flour Co. v. Local 174, Teamsters, 369 U.S. 95 (Sup. Ct. 1962) (purpose of § 301 to ensure uniform federal law governing labor contracts)
- Livadas v. Bradshaw, 512 U.S. 107 (Sup. Ct. 1994) (§ 301 preemption ensures enforcement of arbitration/grievance agreements)
- Kobold v. Good Samaritan Reg’l Med. Ctr., 832 F.3d 1024 (9th Cir. 2016) (two‑step test for § 301 preemption analysis)
- Cramer v. Consolidated Freightways, Inc., 255 F.3d 683 (9th Cir. 2001) (§ 301 preemption requires CBA interpretation be necessary to resolve dispute)
- Burnside v. Kiewit Pacific Corp., 491 F.3d 1053 (9th Cir. 2007) (formulation of stepwise inquiry whether a right exists independently of a CBA)
- Milne Employees Ass’n v. Sun Carriers, 960 F.2d 1401 (9th Cir. 1991) (§ 301 complete preemption supports removal when state claim is federal in substance)