Sullivan v. American Airlines, Inc.Sullivan v. American Airlines, Inc.
1 The plaintiffs in this case, union members and employees of American Airlines, were mostly on the losing side of a hard-fought union election. They blame the loss, at least in part, on American, which suspended them during the campaign and then fired them for allegedly posting racist campaign fliers. Although American later reinstated them, the plaintiffs also want their names cleared of the taint of racism flowing from American‘s conclusion that they posted racist fliers. The plaintiffs also object to campaign fliers posted by their opponents in the election. To clear their names and recover for their loss of reputation, the plaintiffs filed a state-law defamation suit in New York state court against American, two of its managers, and three union members who ran against them.
2 American removed the case to federal court, arguing that (1) because the plaintiffs’ state-law defamation claims were so-called minor disputes under the Railway Labor Act (RLA),
3 Unlike the district court, we do not reach the question whether the plaintiffs’ state-law claims are the type of so-called minor disputes that, under the RLA, are within the exclusive primary jurisdiction of arbitral panels established pursuant to the RLA. Instead, we hold that even if state-law claims qualify as minor disputes under the RLA, the RLA does not completely preempt those claims and therefore does not provide federal courts with original jurisdiction over them. The district court therefore lacked subject-matter jurisdiction over this case. Accordingly, we vacate the district court‘s judgment and remand with instructions that the case be remanded to state court.
I. BACKGROUND
4 In the spring of 2002, plaintiffs John Sullivan, David Virella, and Vincent Argentina, American Airlines employees, ran for reelection to their positions as officers of Air Transport Local 501 of the Transport Workers Union of America. Defendants and fellow employees Michael Chiofalo, Albert Gil, and Peter Perez ran on an opposing slate. According to the plaintiffs, during the campaign, the defendants posted in the workplace fliers disparaging Sullivan, Virella, and Argentina.1
5 Meanwhile, someone posted a flier accusing defendant Gil of having lied about his ethnicity. American Airlines has strict rules about racial harassment in the workplace, and defendants Stan Roberts and Edwin Argonza, managers at American, investigated the posting of this flier. In the course of the investigation, American suspended with pay plaintiffs Sullivan, Virella, Argentina, and John Kennedy (a fellow employee but not a candidate). Voting in the union elections took place while the plaintiffs were suspended; Sullivan and Virella lost their elections.
7 Not satisfied with just returning to work, the plaintiffs filed suit in New York state court alleging three counts of defamation. Count 1 accused opposing candidates Chiofalo, Gil, and Perez of defaming plaintiffs Sullivan, Virella, and Argentina under state law by posting “libelous” fliers about the plaintiffs; Count 1 also alleged that American was liable for the defamation because it allowed the fliers to remain on a company bulletin board. Count 2 accused American and its managers Roberts and Argonza of defaming all four plaintiffs by, inter alia, issuing the “final advisories” that asserted that the plaintiffs had posted the flier about Gil. Count 3 accused Chiofalo alone of defaming all four plaintiffs by asserting, at a union meeting, that the plaintiffs had posted the flier about Gil.
8 American responded by removing the case to federal court on the basis that Counts 1 and 2 asserted claims governed by the Railway Labor Act (RLA),
9 On its face, the plaintiffs’ complaint raises only state-law defamation claims. The Supreme Court has explained, however, that “where the resolution of a state-law claim depends on an interpretation of [a collective-bargaining agreement], the claim is preempted” by the RLA and must be brought before one of the arbitral panels established pursuant to the RLA. Hawaiian Airlines v. Norris, 512 U.S. 246, 261 (1994). American argued before the district court that because resolution of the state-law defamation claims against it (Counts 1 and 2 of the complaint) would require the district court to interpret the collective-bargaining agreement, the claims were preempted and could not be heard in state or federal court.
10 As to Count 1, the district court disagreed. It found that the state-law defamation claim based on American‘s alleged endorsement of defamatory fliers posted by Chiofalo, Gil, and Perez could be evaluated without reference to the CBA and thus was not preempted by the RLA. As to Count 2, however, the district court agreed with American that resolving it would require interpreting the CBA and that it was preempted. It is from the dismissal of Count 2 alone that the plaintiffs appeal to this court.
II. DISCUSSION
11 Because the district court dismissed Count 2 on the pleadings, we review the district court‘s decision de novo, taking the allegations in the complaint as true and making all reasonable inferences in the plaintiffs’ favor. Ziemba v. Wezner, 366 F.3d 161, 163 (2d Cir. 2004) (per curiam). The plaintiffs raised only state-law claims in their complaint, and the district court understandably, though mistakenly, accepted the premise of American‘s notice of removal that if the state-law claims in Counts 1 and 2 were preempted by the RLA, the district court had subject-matter jurisdiction over the case to decide the preemption question.3 That premise, though it found some support in our case law when the district court made its ruling, was mistaken. To understand why, we must examine the law of federal preemption in general and RLA preemption in particular as well as the difference between “complete” preemption, which can be the basis for federal subject-matter jurisdiction, and “ordinary” preemption, which cannot.
A. Preemption and federal subject-matter jurisdiction
13 Federal courts are courts of limited jurisdiction.
14 The plaintiffs, however, raised only state-law claims in their state-court complaint. As a general rule, a suit seeking recovery under state law is not transformed into a suit “arising under” federal law merely because, to resolve it, the court may need to interpret federal law. See Gully v. First Nat‘l Bank, 299 U.S. 109, 115 (1936) (“Not every question of federal law emerging in a suit is proof that a federal law is the basis of the suit.“). This principle underlies the well-pleaded-complaint rule, which dictates that federal subject-matter jurisdiction can be founded only on those allegations in a complaint that are “well pleaded.” See Rivet v. Regions Bank of La., 522 U.S. 470, 475 (1998); Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). The well-pleaded-complaint rule mandates that in assessing subject-matter jurisdiction, a federal court must disregard allegations that a well-pleaded complaint would not include — e.g., allegations about anticipated defenses. Rivet, 522 U.S. at 475 (“A defense is not part of a plaintiff‘s properly pleaded statement of his or her claim.“). Thus, a plaintiff may not create federal subject-matter jurisdiction by alleging in his complaint that the defendant‘s (anticipated) federal defense should fail. See Franchise Tax Bd. v. Constr. Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 14 (1983).
15 While the well-pleaded-complaint rule directs federal courts to disregard certain elements of a complaint in assessing federal subject-matter jurisdiction, federal courts sometimes do the inverse: read into a complaint elements that the plaintiff omitted. The artful-pleading doctrine, a corollary to the well-pleaded-complaint rule, rests on the principle that a plaintiff may not defeat federal subject-matter jurisdiction by “artfully pleading” his complaint as if it arises under state law where the plaintiff‘s suit is, in essence, based on federal law. See Rivet, 522 U.S. at 475-76; see also Franchise Tax Bd., 463 U.S. at 22 (“[I]t is an independent corollary of the well-pleaded complaint rule that a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint.“); cf. Marcus v. AT & T Corp., 138 F.3d 46, 53-54 (2d Cir. 1998). Faced with such an artfully (i.e., misleadingly) pleaded complaint, the federal court may construe the complaint as if it raised the federal claim that actually underlies the plaintiff‘s suit. Rivet, 522 U.S. at 475.
16 The artful-pleading doctrine includes within it the doctrine of complete preemption.4 Id. (“The artful pleading doctrine allows removal where federal law completely preempts a plaintiff‘s state-law claim.“). Under the complete-preemption doctrine, certain federal statutes are construed to have such “extraordinary” preemptive force that state-law claims coming within the scope of the federal statute are transformed, for jurisdictional purposes, into federal claims — i.e., completely preempted. See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987). When a plaintiff raises such a completely preempted state-law claim in his complaint, a court is obligated to construe the complaint as raising a federal claim and therefore “arising under” federal law.5 The Supreme Court has only found three statutes to have the requisite extraordinary preemptive force to support complete preemption: § 301 of the Labor-Management Relations Act (LMRA),
B. Preemption under the RLA
18 Ordinary preemption is plainly a viable defense under the RLA: pursuant to
19 The key question, however, is whether the analogy drawn by the Court between RLA and LMRA preemption as to ordinary preemption also extends to complete preemption. Hawaiian Airlines came to the Supreme Court from the Hawaii Supreme Court, not from the lower federal courts, id. at 251, so the Court had no occasion to consider whether the RLA, as does § 301 of the LMRA, supports federal subject-matter jurisdiction by completely preempting state-law claims within its scope. The district court in this case assumed that the RLA supports complete preemption of minor disputes and therefore focused on determining whether the plaintiffs’ state-law defamation claims were such disputes, which are subject to ordinary preemption and can only be heard initially before RLA-mandated arbitral panels. In their briefs before this court the parties take a similar approach, assuming that the RLA supports complete preemption and fighting over whether the complaint in this case meets the standards for RLA/LMRA ordinary preemption outlined in Hawaiian Airlines.
21 American argues that complete preemption under the RLA is not an open question in this circuit and directs our attention to Shafii v. British Airways, PLC, 83 F.3d 566 (2d Cir. 1996). A panel of this court in Shafii stated that where a complaint raises state-law claims that are “in fact preempted by the RLA, the action may properly be removed to the federal courts, even when the plaintiff‘s complaint does not itself include a federal cause of action.” Id. at 569. This circuit‘s prior-panel rule directs us generally to follow the decisions of prior panels until they are overruled either by this court sitting en banc or by the Supreme Court. Gelman v. Ashcroft, 372 F.3d 495, 499 (2d Cir. 2004). A subsequent panel may, however, reconsider a prior panel‘s holding that would otherwise be binding precedent not only when it has been directly overruled, but also “where there has been an intervening Supreme Court decision that casts doubt on our controlling precedent.” Union of Needletrades, Indus. & Textile Employees v. INS, 336 F.3d 200, 210 (2d Cir. 2003).
22 It appears that the panel in Shafii assumed that Hawaiian Airlines was a complete-preemption case and that the analogy between LMRA and RLA preemption established by that case was total. Because the Court‘s more recent decision in Beneficial National Bank, the Court‘s latest complete-preemption opinion, entirely undermines this assumption about the RLA, we must reconsider Shafii‘s conclusions about RLA preemption without hearing this case en banc.
23 The conflation of ordinary and complete preemption under the RLA reflected in Shafii‘s reading of Hawaiian Airlines, and in the briefs of the parties in this case, is unsurprising, for under § 301 of the LMRA, establishing ordinary preemption also establishes removability. See
24 As the Court explained in Franchise Tax Board, 463 U.S. at 23, the Court‘s earlier holding in Avco that state-law claims preempted by § 301 of the LMRA arise under federal law and are thus removable to federal court depended upon the “powerful” preemptive force of the LMRA itself. Once Avco established that the preemptive force of § 301 of the LMRA dictates that state-law claims within the statute‘s scope arise under federal law and are removable to federal court, subsequent courts have been obligated only to look at particular state-law claims to determine whether § 301, which provides for original federal jurisdiction of LMRA claims, comprehends those state-law claims. That is, once we know that a federal statute supports complete preemption, providing original jurisdiction in the federal courts over claims arising under the federal statute, in any particular case the complete— and ordinary-preemption inquiries merge. Thus when the Court in Hawaiian Airlines analogized ordinary RLA preemption to ordinary LMRA preemption, it was natural for the Shafii court to assume that the analogy went even further — if the analogy were total, then because establishing ordinary preemption under the LMRA also establishes removability (because § 301 supports complete preemption), so too would establishing ordinary preemption under the RLA establish removability.
26 In Beneficial National Bank, the Court held that sections 85 and 86 of the National Bank Act,
27 Once we recognize that a state-law-based RLA minor dispute cannot be brought within the original jurisdiction of the federal courts and is thus not removable under § 1441, it becomes clear that the RLA does not completely preempt state-law claims that come within its scope. By its terms, § 1441 allows removal only of suits “of which the district courts of the United States have original jurisdiction....”
28 Minor disputes under the RLA cannot be filed in the first instance in federal court; they are therefore not removable to federal court. Instead, primary jurisdiction over minor disputes under the RLA — the type of claim American asserts that Sullivan has raised — exists solely in the adjustment boards established pursuant to
29 As this case illustrates, allowing removal to federal court on complete-preemption grounds of state-law claims that also qualify as minor disputes under the RLA is internally inconsistent: the district court must have jurisdiction for removal to be proper, but the court must then dismiss the removed case because only adjustment boards, not federal courts, have primary jurisdiction over claims arising under the RLA. The latter negates the former. None of the three statutes that the Supreme Court has found to completely preempt covered state-law claims suffers from this inconsistency. When a state-law claim is removed to federal court because a section of the LMRA, ERISA, or the National Bank Act preempts it, the district court may then adjudicate the claim on the merits under the relevant preemptive statute. See Avco, 390 U.S. at 560-62 (establishing complete preemption under § 301 of the LMRA; upholding the district court‘s exercise of jurisdiction to dissolve an injunction granted by a state court before removal); Metro. Life, 481 U.S. at 61-62, 65-67 (establishing complete preemption under § 502(a) of ERISA; upholding district court‘s grant of summary judgment on the merits after case was removed from state court); Beneficial Nat‘l Bank, 539 U.S. at 5, 10 (establishing that state-law usury claims are completely preempted by §§ 85-86 of the National Bank Act; upholding district court‘s jurisdiction to adjudicate claims once they are recharacterized as claims under the National Bank Act).
31 Our conclusion about the lack of complete preemption under the RLA is buttressed by comparison to another type of labor-law preemption, Garmon preemption. The National Labor Relations Board (NLRB) has primary jurisdiction, by virtue of
32 In holding that there is no complete preemption under the RLA, we align ourselves on one side of a circuit split and follow what seems to be an emerging trend.9 Because it follows from our holding that the district court lacked subject-matter jurisdiction over this case, we have no occasion to consider the merits of American‘s argument that the plaintiffs’ defamation claims are minor disputes under the RLA that are subject to ordinary preemption. American is free to make this argument in state court and, ultimately, to seek federal-court review by petitioning the Supreme Court for certiorari if American loses in the state courts. See Franchise Tax Bd., 463 U.S. at 12 n. 12 (“[T]he absence of original jurisdiction does not mean that there is no federal forum in which a pre-emption defense may be heard.“).
III. CONCLUSION
33 The RLA commits to arbitral panels, not to federal courts, disputes between airlines and their employees that “grow[] out of grievances, or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions....”