DANIEL SARAUER, еt al., Plaintiffs-Appellants, v. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, DISTRICT NO. 10, et al., Defendants-Appellees.
No. 19-3142
United States Court of Appeals For the Seventh Circuit
Argued April 15, 2020 — Decided July 20, 2020
Before MANION, HAMILTON, and BARRETT, Circuit Judges.
Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:16-cv-00361-DEJ — David E. Jones, Magistrate Judge.
HAMILTON,
Wisconsin’s Act 1 enacted in 2015 is a right-to-work law. Plaintiffs are ten Wisconsin employees who contend that Act 1 invalidated the union security clause in the 2015–2018 collective bargaining agreement between their employer and their bargaining unit’s union, both defendants here. Plaintiffs filed this suit in a Wisconsin state court, and defendants removed to federal district court. The district court held that removal was proper because the case arises under federal law, not state law. The court then held as a matter of federal law that defendants’ collective bargaining agreement was formed before Act 1 took effeсt so that plaintiffs are not entitled to relief. The court granted summary judgment for the defense. We affirm as to both jurisdiction and the merits.
I. Background
The material facts are not disputed. Defendant Maysteel Industries is a sheet metal fabricator in Wisconsin. Maysteel employees are represented by defendant Machinists Union. Plaintiffs are ten employees of Maysteel who do not want to join the union and pay dues or even make fair-share payments. From March 2012 to March 2015, the company and the union were parties to a collective bargaining agreement that contained a union security clause. It required Maysteel employees as a condition of employment either to become union members or to pay a “service fee for representation” to the union. Under the agreement’s dues check-off provision, Maysteel, with an employee’s authorization, deducted the union’s dues or fees from the employee’s paycheck and sent the money to the union.
In January 2015, the company and the union began negotiating a new collective bargaining agreement. Working from the 2012–2015 agreement as a baseline, the parties kept a written tally of proposed changes as they were agreed upon. By February 27 the new agreement had been fully negotiated except for the timing of breaks, a point on which the old agreement had been silent and which the nеw agreement provided would be settled by the parties by April without further contracting. On February 28 the new agreement (that is, the old agreement plus all agreed upon changes) was presented to the union membership for ratification. The membership ratified the new agreement the same day. The new agreement was to take effect on March 5, the day after the old agreement expired, but the parties agreed to implement it on March 2 to line up its new
On March 11, Wisconsin’s Act 1 tоok effect. It applied “to a collective bargaining agreement containing provisions inconsistent with this act upon renewal, modification, or extension of the agreement occurring on or after” that date. 2015 Wis. Act 1 § 13. Three plaintiffs began objecting to the fee deductions and demanded that Maysteel stop them. These plaintiffs also demanded copies of their signed check-off authorizations. Neither the company nor the union was forthcoming. The three plaintiffs filed charges with the National Labor Relations Board complaining of unfair labor practices. The Board negotiated a settlement of the charges that did not require reimbursement of the deductions or invаlidation of the union security clause.
In 2016, plaintiffs then filed this lawsuit in a Wisconsin state court. The complaint alleged two claims for unfair labor practices under state law as amended by Act 1. It alleged that plaintiffs had been unlawfully required to pay union fair-share fees as a condition of employment in violation of
Defendants removed the case to federal court. Plaintiffs moved to remand, arguing that they had pleaded only state law claims and could not be forced into the federal forum. Defendants countered that plaintiffs themselves had raised an issue of federal labor law (specifically, of labor contract formation) by alleging that defendants had “backdated” the new collective bargaining agreement to evade the new requirements of Act 1.
The parties consented to the jurisdiction of the magistrate judge under
II. Analysis
Plaintiffs appeal both the district court’s denial of their motion to remand to state court and the grant of summary judgment to defendants. Plaintiffs also ask us to certify questions of Wisconsin law to the Wisconsin Supreme Court under Circuit Rule 52. We conclude that the district court correctly denied remand and granted summary judgment. Also, there is no controlling issue of state law to certify.
A. Federal Jurisdiction
We review de novo the district court’s denial of a motion to remand. Schur v. L.A. Weight Loss Centers, 577 F.3d 752, 758 (7th Cir. 2009). A motion to remand must be granted if the case removed from statе court could not have been brought in federal court originally for lack of subject-matter jurisdiction.
1. Complete Preemption?
For purposes of
Only a small number of federal statutes have completely preemptive effect. See Retail Property Trust v. United Brotherhood of Carpenters and Joiners of Am., 768 F.3d 938, 946–49 & n.5 (9th Cir. 2014). First among them is § 301 of the Taft–Hartley Act. Williams, 482 U.S. at 393–94 (complete preemption was first recognized and “applied primarily”
a. § 301 of the Taft–Hartley Act
Section 301 is a multifaceted instrument of federal labor policy. Complete preemption is only one of its three faces. First, § 301 contains a narrow grant of subject-matter jurisdiction to district courts over suits “for violation” of collective bargaining agreements. Textron Lycoming Reciprocating Engine Div. v. United Auto Workers, 523 U.S. 653, 657 (1998) (“a suit ‘for violation of a contract’ ... is one filed because a contract has been violated“). Second, as a consequence of the first, § 301 broadly authorizes federal courts to develop a common law of labor contracts to be applied exclusively in both state and federal court. Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 209 (1985) (§ 301 is “a congressional mandate to the fеderal courts to fashion a body of federal common law“); Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 103 (1962) (“substantive principles of federal labor law must be paramount in the area covered by” § 301). Third, as a consequence of the second, § 301 completely preempts state law claims “founded directly on rights created by collective-bargaining agreements, and also claims substantially dependent on analysis of a collective-bargaining agreement.” Williams, 482 U.S. at 394 (quotation marks omitted). In fewer words, “When the ‘heart of the state law complaint is a clause in the collective bargaining agreement,‘” the complaint necessarily arises under § 301. Atchley v. Heritage Cable Vision Assocs., 101 F.3d 495, 499 (7th Cir. 1996) (brackets and ellipsis omitted), quoting Williams, 482 U.S. at 394.
The capacity of § 301 to displace state law claims dependent on сollective bargaining agreements flows from the complete predominance of federal law in interpreting and enforcing those agreements. The “negotiation and administration” of labor contracts would be substantially impeded absent the certainty that is derived from exclusive application of uniform federal rules, Lucas Flour, 369 U.S. at 103–04, and that is protected by parties’ ability to remove such cases to federal court. Avco Corp., 390 U.S. at 560; see also Baker, 387 F.3d at 657 (“the federal statute will displace the state-law claim to ensure uniform interpretation of collective bargaining agreements“), citing Atchley, 101 F.3d at 498. But there is precisely one point of labor contract law that is by congressional design not subject to a mandate of national unifоrmity: the enforceability of union security agreements under § 14(b) of the National Labor Relations or Wagner Act of 1935, as amended by the Taft–Hartley Act,
b. § 14(b) of the Wagner Act
Section 8(a)(3) of the Wagner Act permits unions and employers to negotiate for “union shop” and “agency shop” agreements under specified conditions while prohibiting “closed shop” agreements as an unfair labor practice. See
Nothing in this subchapter shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.
We have construed “agreements requiring membership in a labor organization” to mean agreements requiring the payment of money to a labor organization, encompassing all forms of union security agreements. Sweeney v. Pence, 767 F.3d 654, 661 (7th Cir. 2014). As to all such agreements, therefore, Congress “chose to abandon any search for uniformity” and “decided to suffer a medley of attitudes and philosophies on the subject.” Retail Clerks Int’l Ass’n, Local 1625 v. Schermerhorn, 375 U.S. 96, 104–05 (1963).
As the federal interest served by complete preemption wanes over state laws within § 14(b), the state interest subordinatеd by it waxes. Schermerhorn held that an action to enforce Florida’s right-to-work law did not allege an arguable unfair labor practice within the exclusive jurisdiction of the National Labor Relations Board under the broad and distinct preemption doctrine called Garmon preemption. Schermerhorn, 375 U.S. at 103–04, declining to apply San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959). On the Supreme Court’s reading of § 14(b), Congress could not have intended to grant the states “overriding authority” to pass laws prohibiting union security agreements while withholding from them “the power to enforce those laws.” Id. at 102–03.
c. Interpreting Defendants’ Union Security Clause
In this case, plaintiffs alleged that the company and the union subjected them to unfair labor practices and wrongfully withheld their wages in violation of Wisconsin law. The heart of plaintiffs’ complaint was a clause in thе collective bargaining agreement: the union security clause. If that clause required Maysteel employees to “Pay any dues, fees, assessments, or other charges or expenses of any kind or amount, or provide anything of value, to a labor organization” as a condition of employment,
did not, they did not. In recognition of this fact, plaintiffs three times pleaded a “real, actual and justiciable controversy ... as to the Plaintiffs’ and the Defendants’ rights and obligations under” defendants’ collective bargaining agreement. In any other context, these allegations about the collective bargaining agreement would establish complete preemption under § 301.
But this context is different. First, uniquely when applying state right-to-work laws, there is no federal reason why even identical union security clauses need to be interpreted uniformly in different states. States are free to prohibit as much or as little as they will when it comes
d. Determining the Time Defendants’ Agreement Was Formed
Defendants counter that the heart of plaintiffs’ complaint depends on the law of § 301 in a second sense. They argue the complaint depends not so much on the meaning of a clause in a collective bargaining agreement as on the agreement’s existence at a given point in time—the effective date of the Wisconsin Act 1. Specifically, if defendants’ 2015−2018 collective bargaining agreement was not “renewed, modified, or extended” after March 10, 2015, the prohibitions of Act 1 did not apply to it. See 2015 Wis. Act 1 § 13 (“upon the renewal, modification, or extension of the agreement“). So plaintiffs’ claim depends on a question that, as it happens, has long been recognized as being governed by a uniform rule of federal law. Deciding whether and when a collective bargaining agreement is formed and binding calls for a uniform federal rule. Mohr v. Metro East Mfg. Co., 711 F.2d 69, 71 (7th Cir. 1983) (“the Supreme Court has opted for uniform rules for questions of [labor] contract formation“).
Whether the federal interest in uniform contract formation rules under § 301 is enough, under the doctrine of complete preemption, to displace entirely Wisconsin’s interest in enforcing the right-to-work provisions of Act 1 by the remedial scheme of its choice is a difficult question. We do not need to decide it here. We follow instead the district court’s insight that appears in its opinion as an alternative or additional ground for removal and federal arising-under jurisdiction. The controlling importance of the contract formation question embedded in plaintiffs’ claims evokes the “embedded federal question” doctrine recognized by Grable & Sons Metal Prods., Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005), among other cases.
Before turning to Grable, we note that Oil Workers, relied on by defendants, does not compel a different preemption analysis. In that case, the employer sued the union in federal court “under § 301” for a declaratory judgment that the union security provision in thе parties’ collective bargaining agreement violated Texas’s right-to-work law. Oil Workers, 426 U.S. at 410. The district court’s jurisdiction went unquestioned in the Supreme Court’s opinion. The Court has taught that such unquestioned assumptions of jurisdiction “have no precedential effect.” Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 91 (1998). Further, jurisdiction in Oil Workers could be explained equally well by the rule that the natural defendant to a hypothetical coercive suit may bring an action in federal court for declaratory relief if the natural plaintiff’s suit would arise under federal law, see NewPage Wis. Sys. Inc v. United Steel Workers, 651 F.3d 775, 777–78 (7th Cir. 2011)—assuming it was imminent that the employer would be sued by the union in a coercive suit arising under § 301 for the employer’s breach of the union security provision. Cf. Textron, 523 U.S. at 661. Either way, the silent assumption of jurisdiction in Oil Workers tells us nothing about complete preemption in this case. Oil Workers is not controlling.
2. Embedded Federal Question
The “creation test” first articulated in American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916) (“A suit arises under the law that creates the cause of action“), “aсcounts for the vast bulk of suits that arise under federal law.” Gunn v. Minton, 568 U.S. 251, 257 (2013), citing Franchise Tax Board, 463 U.S. at 9. For nearly a century, however, the Supreme Court has decided a “special and small category” of cases allowing jurisdiction where the plaintiff’s claim arises under state law but depends upon an embedded question of federal law. Gunn, 568 U.S. at 258. See, e.g., Grable; Smith v. Kansas City Title & Trust Co., 225 U.S. 180 (1921). One of the enduring challenges in the law of federal jurisdiction is to navigate the boundary between this line of cases and the more general standards of arising-under law.
State law claims that are not displaced by federal law may still arise under federal law for purposes of
a. Federal Issue
The federal question at the heart of plaintiffs’ complaint was, as they twice pleaded, whether “the Defendants’ 2012 CBA was renewed, modified, [or] extended on or after March 11, 2015.” This language was taken from Wisconsin’s Act 1, leading plaintiffs to argue that it raises a question of only state law: whether the state statute applies to defendants’ 2015–2018 collective bargaining agreement. The problem for plaintiffs is that that question necessarily asks when defendants’ agreement became binding in all other respects, in whole (by renewal or extension) or in part (by modification). That is a question of federal labor law. Application of the state statute must depend on this question of federal law if the state statutory language is to serve its apparent purpose of avoiding an unconstitutional impairment of contracts. See Sweeney, 767 F.3d at 666–67.
Wisconsin is not entitled to give an independent answer to this question, different from federal law. Mohr, 711 F.2d at 71 (“the Supreme Court has opted for uniform rules for questions of [labor] contract formation“);
b. Necessarily Raised
We proceed to Grable‘s four-part test. First, the federal issue in this case is necessarily raised on the face of plaintiffs’ complaint. Plaintiffs’ claims for unfair labor practices and wrongful wage withholding could succeed only if Act 1 invalidated defendants’ union security clause.3 And Act 1 invalidated defendants’ union security clause only if defendants’ collective bargaining agreement was renewed, modified, or extended after March 10, 2015. See Gunn, 568 U.S. at 259 (“To prevail on his legal malpractice claim ... Minton must show that he would have prevailed in his federal patent infringement case“).
c. Actually Disputed
Second, the federal issue is actually disputed. “[I]ndeed, оn the merits, it is the central point of dispute.” Gunn, 568 U.S. at 259. Plaintiffs said a collective bargaining agreement is renewed, modified, or extended (that is, formed) upon execution; defendants said it can be formed upon ratification. In fact, this is the only disputed question.
d. Substantial
Third, the federal issue is substantial “in the relevant sense.” Gunn, 568 U.S. at 260. The relevant sense of substantiality is not the importance of the federal issue to the lawsuit. “The substantiality inquiry under Grable looks instead to the importance of the issue to the federal system as a whole.” Id. In Grable, the substantial federal issue in a state action to quiet title was whether a federal agency’s sale of the contested property had been valid under federal law. “The Government’s ‘direct interest in the availability of a federal forum to vindicate its own administrative action’ made the question ‘an important issue of federal law that sensibly belonged in a federal court.‘” Id. at 260–61 (brackets omitted), quoting Grable, 545 U.S. at 315. In Smith v. Kansas City Title & Trust Co., the substantial federal issue in a state shareholder suit was whether certain classes of federal bonds were void because issued under an unconstitutional federal statute. Smith, 225 U.S. at 195, discussed in Gunn, 568 U.S. at 261.
In this case, the importance of the contract formation issue to the federal system as a whole is the very reason federal law applies to begin with: the “negotiation and administration” of collective bargaining agreements would be substantially impeded, contrary to federal labor policy, if employers doing business in Wisconsin could not be certain when their collective bargaining agreements become enforceable because two different legal regimes might apply. Lucas Flour, 369 U.S. at 103.
e. Capable of Resolution Without Disruption
Fourth and finally, the federal issue can be resolved in federal courts
3. Conclusion on Jurisdiction
Plaintiffs’ complaint was not completely preempted under § 301 only because it required interpretation of defendants’ union security clause. Without deciding whether it was completely preempted because it required determining when defendants’ collective bargaining agreement was formed, we conclude this federal issue was sufficient to support arising-under jurisdiction and removal under the embedded question theory in the Grable line of cases. The district court properly denied remand to state court.
B. Motion for Summary Judgment
On the merits, we review de novo the district сourt’s determination that there were no genuine disputes of material fact and defendants were entitled to judgment as a matter of law. Riley v. City of Kokomo, 909 F.3d 182, 187–88 (7th Cir. 2018); see
1. Unfair Labor Practice Claims
Federal law allows a collective bargaining agreement to take effect before the pаrties have formally executed a written document. “All that is required” to make a collective bargaining agreement binding is “conduct manifesting an intention to abide and be bound by the terms of [the] agreement.” Bricklayers Local 21 of Ill. Apprenticeship and Training Program v. Banner Restoration, Inc., 385 F.3d 761, 766 (7th Cir. 2004) (alteration omitted), quoting Gariup v. Birchler Ceiling & Interior Co., 777 F.2d 370, 373 (7th Cir. 1985), and citing Gustafson Constr. Corp., 258 F.3d at 650, and Atchley, 101 F.3d at 500 n.2, among others. This rule is implicit in, if not mandated by, § 8(d) of the Wagner Act. See
We agree with the district court that plaintiffs’ heavy reliance on Appalachian Shale Products Co., 121 N.L.R.B. 1160 (1958), is not persuasive. The National Labor Relations Board held in that case that an unsigned collective bargaining agreement did not bar a competing union’s petition to represent the employer’s employees. Id. at 1161–62. This was a specific application of the “contract bar rule,” a discretionary procedure adopted by the Board for reconciling the Wagner Act’s “goals of promoting industrial stability and employee freedom of choice” in the context of representation petitions. NLRB v. Dominick’s Finer Foods, Inc., 28 F.3d 678, 683 (7th Cir. 1994).
The Appalachian Shale rulе represents the Board’s judgment of how best to serve “the effectiveness of its contract bar policies.” 121 N.L.R.B. at 1161. It says nothing about when a collective bargaining agreement begins to bind the parties to it.
We agree as well with the district court that plaintiffs do no better to rely on Board decisions applying the rule against retroactively enforcing union security clauses, see Namm’s Inc., 102 N.L.R.B. 466, 469 (1953), overruled on other grounds, Kaiser Steel Corp., 125 N.L.R.B. 1039, 1041 n.2 (1959), or the exemption from the prohibition on closed shops for any collective bargaining agreement “entered into” before the Taft–Hartley Act’s effective date unless “renewed or extended” afterward. See United Hoisting Co., 92 N.L.R.B. 1642, 1643 n.2 (1951).
None of these decisions required execution of a written document to make a collеctive bargaining agreement binding. Decisions in the latter line proceeded from the unremarkable and uncontested assumption that execution is often a reliable marker of contract formation, but they did not hold that execution is required. See Id. at 1644; Spiegel, Inc., 91 N.L.R.B. 647, 662 (1950); Salant & Salant, Inc., 87 N.L.R.B. 215, 216–218 (1949).
Decisions in the retroactivity line prohibited unions from retroactively demanding dues or fees for any period before the collective bargaining agreement was formed even if new wage rates were made effective as of an earlier date. Plaintiffs note the Board’s use of “execution” in International Chemical Workers: “It also is well established that the date of execution, not the effective date, of a collective-bargaining agreement governs the validity of such a [union security] clause.” International Chemical Workers, Local No. 112, 237 N.L.R.B. 864, 865 (1978), citing Local No. 25, Teamsters, 220 N.L.R.B. 76, 77 (1975). The Board in that case referred to “execution” in distinguishing between contract formation and retroactive effective dates where no collective bargaining agreement had been in place for a time. The Board was not distinguishing between formation by ratification on one hand and formation by written execution on the other. The same was true in the cited Local No. 25, Teamsters. These retroactivity decisions
Applying established law on contract formation, defendants’ collective bargaining agreement here was thus formed upon ratification on February 28, 2015. Neither execution on March 18 nor any contractual event before or after disturbed its terms. Because defendants’ agreement was thus not renewed, modified, or extended after March 10, Act 1 did not invalidate its union security clause. Defendants were entitled to judgment as a matter of law.
2. Wage Payment Claim
We noted above that the correct characterization of plaintiffs’ wage payment claim is contested. See nn. 2–3, supra. The Wisconsin wage payment statute generally requires employers every month to pay “all wages earned by the employee to a day not more than 31 days prior to the date of payment.”
In this case, plaintiffs complained that Maysteel wrongfully withheld the union’s dues or fair share fees from their paychecks “without authorization.” If that claim depended on holding invalid the union security term of the collective bargaining agreement—as the district cоurt thought it did, at least in part—it failed because the union security clause was valid for the reasons explained above.
Any other framing of the claim is self-defeating, since it assumes the union was entitled to the fees deducted from plaintiffs’ paychecks and leaves no room to recover wages that were “due” but “unpaid.” Contra
But we agree with the district court that the assertion of supplemental jurisdiction was redundant. Plaintiffs were “covered under a valid сollective bargaining agreement establishing a different frequency for wage payments, including deferred payments exercised at the option of employees.”
C. Motion to Certify
Under Circuit Rule 52, plaintiffs filed a motion asking us to certify two questions to the Wisconsin Supreme Court: whether Act 1 applies to defendants’ collective bargaining agreement and whether Maysteel’s dues check-offs without written records of authorization violated the Wisconsin wage payment statute. As explained above, state law does not control either question here. States are not authorized to regulate the formation of a collective bargaining agreement simply because it is alleged to contain a prohibited union security clause. Schermerhorn, 375 U.S. at 105 (state power under § 14(b) “begins only with actual negotiation and execution of the type of agreement described by § 14(b)“). And whether Maysteel’s dues check-offs were “without authorization” is a matter for either the arbitrator under § 301 or the National Labor Relations Board under Garmon. The motion to certify is denied.
Accordingly, the district court correctly held that plaintiffs’ claims arose under federal law and that plaintiffs were not entitled to a judicial remedy on the merits. The court’s judgment of dismissal is AFFIRMED.