Free Order on Motion to Remand - District Court of California - California

Case 3:07-cv-04829-SC

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA HIPOLITO ACOSTA, JESUS ACOSTA, FILEMON GARCIA, ENRIQUE JAUREGUI, SAUL LOZANO, RICARDO MUNGUIA, JUAN M. NAVARRO, JUAN RODRIQUEZ, EVERARDO VILLA, ) ) ) ) ) ) Plaintiffs, ) ) v. ) ) AJW CONSTRUCTION, a California ) Corporation; and Does I through XX,) ) Defendants. ) ) ) Case No. 07-4829 SC ORDER GRANTING PLAINTIFFS' MOTION TO REMAND

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I.

INTRODUCTION On August 17, 2007, the plaintiffs Acostas, Garcia, Jauregui,

Lozano, Munguia, Navarro, Rodriguez and Villa ("Plaintiffs") filed a Complaint in the Alameda Superior Court of California. Notice of Removal, Docket No. 1, Ex. A. See

The defendant AJW

Construction ("Defendant") filed a Notice of Removal ("Notice") with this Court on September 20, 2007. Id. Plaintiffs then filed

a Motion to Remand Removed Action and For Attorney Fees and Costs ("Motion") on October 12, 2007. See Docket No. 6. Defendant See Docket

submitted an Opposition and Plaintiffs filed a Reply. Nos. 10, 15.

For the following reasons, the Court GRANTS Plaintiffs' Motion. ///

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II.

BACKGROUND Plaintiffs' Complaint alleges two causes of action: recovery

of unpaid wages and statutory penalties pursuant to California Labor Code sections 203 and 226.3, and unfair business practices pursuant to California Business and Professions Code section 17200 et seq. Defendants have asserted in their Notice that the terms

and conditions of Plaintiffs' employment were subject to a collective bargaining agreement. Opp'n at 2. Defendant removed Although

to this Court pursuant to 28 U.S.C. § 1441(b).

Plaintiffs only raise California state-law claims, Defendant asserts that the action is removable to federal court because the claims arise under the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 301 et seq., and under the Employment Retirement and Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. Plaintiffs argue that their claims are premised wholly on California state law and, as such, create no federal jurisdiction.

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III. DISCUSSION "The burden of establishing federal jurisdiction is upon the party seeking removal . . . and the removal statute is strictly construed against removal jurisdiction." Emrich v. Touche Ross &

Co., 846 F.2d 1190, 1194-95 (9th Cir. 1988) (internal citations omitted). "Federal jurisdiction must be rejected if there is any Gaus v.

doubt as to the right of removal in the first instance." Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

Ordinarily, "federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly 2

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pleaded complaint." 392 (1987).

Caterpillar Inc. v. Williams, 482 U.S. 386,

Thus, "the plaintiff [is] the master of the claim; he

or she may avoid federal jurisdiction by exclusive reliance on state law." Id.

One exception to this, however, is the doctrine of complete preemption. Id. at 393. According to complete preemption, the

force of certain federal statutes, including the LMRA and ERISA, is "so extraordinary that it converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." omitted); Id. (internal quotation marks

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see also Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, In the present case, Defendant argues that federal

64-67 (1987).

jurisdiction is created by preemption under both the LMRA and ERISA. A. Preemption Under the LMRA

Section 301 of the LMRA provides, in part: 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). "Section 301 governs claims founded directly on rights created by collective-bargaining agreements, and also claims 'substantially dependent on analysis of a collective-bargaining agreement.'" Caterpillar, 482 U.S. at 394 (citing Elec. Workers Where a state-law

v. Hechler, 481 U.S. 851, 859 n.3 (1987)).

claim requires interpretation of a collective bargaining 3

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agreement, such a claim will be preempted by § 301.

See Lingle v.

Norge Div. of Magic Chef, Inc., 486 U.S. 399, 413 (1988) (stating "an application of state law is pre-empted by § 301 of the Labor Management Relations Act of 1947 only if such application requires the interpretation of a collective bargaining agreement"). Where

the dispute hinges on a "purely factual inquiry [which] does not turn on the meaning of any provision of a collective-bargaining agreement," id., however, the "state law remedy . . . is 'independent' of the collective-bargaining agreement . . . ." In addition, "§ 301 cannot be read broadly to pre-empt nonnegotiable rights conferred on individual employees as a matter of state law." Livadas v. Bradshaw, 512 U.S. 107, 123 (1994). Id.

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"[W]hen the meaning of contract terms is not the subject of dispute, the bare fact that a collective-bargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished." Id. at 124.

Plaintiffs' first cause of action is for unpaid wages.1 Defendant argues that regardless of Plaintiffs' theory for recovery of unpaid wages, Plaintiffs' claims will require the interpretation of the collective bargaining agreement that governs the terms of Plaintiffs' employment. Therefore, according to

Defendant, the state-law claim is preempted by the LMRA. Contrary to Defendant's assertion, however, Plaintiffs' claims do not appear to require any meaningful interpretation of

Although Plaintiffs also assert a cause of action under California's Business and Professions Code § 17200, only the unpaid wages claim is relevant to the present motion. 4

1

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the collective bargaining agreement.

The dispute does not hinge Plaintiffs

on the calculation of each Plaintiff's hourly wages.

have specified the individual hourly wage that each is owed and Defendant has not contested these hourly rates. Instead, the

claims will hinge on the number of hours Plaintiffs worked for which they were not paid. Such calculations, while perhaps

requiring some consultation with the collective bargaining agreement, do not, according to Defendant's Opposition, require the interpretation of the contract terms themselves. See Livadas,

512 U.S. at 123 (stating that "when the meaning of contract terms is not the subject of dispute, the bare fact that a collectivebargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished"). Ultimately, Defendant has not demonstrated that Plaintiffs' unpaid wages claims are "substantially dependent on an analysis of a collective bargaining agreement." Firestone v. S. Cal. Gas Co.,

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219 F.3d 1063, 1065 (9th Cir. 2000) (internal quotation marks omitted). Instead, from all appearances, the dispute requires

little, if any, interpretation of the collective bargaining agreement. The dispute does not hinge on whether Plaintiffs were

paid at the appropriate hourly rates but rather on whether Plaintiffs were paid for all of the time they worked. Such a

dispute is more analogous to the facts of Livadas, where "the primary text for deciding whether [the plaintiff] was entitled to a penalty was not [the collective bargaining agreement], but a calender." 512 U.S. at 124. For these reasons, the Court finds 5

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that Plaintiffs' state-law claims are not preempted by § 301 of the LMRA. B. Preemption Under ERISA

Defendant also argues that Plaintiffs' claims for unpaid wages are preempted by ERISA. Specifically, Defendant asserts

that because "Plaintiffs are seeking accrued vacation time pursuant to Labor Code Section 227.3," and Defendant "only offers paid vacation to its Union employees pursuant to the employee benefit plan," ERISA preempts Plaintiffs' state law claim. at 5. ERISA defines an employee benefit plan as any plan, fund, or program maintained by an employer or employee organization for the purpose of providing various benefits, including medical and vacation. 29 U.S.C. § 1002. Whether a certain benefit plan falls Opp'n

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within the coverage of ERISA is often a complicated question and requires a case-by-case analysis. For example, the Supreme Court

has held that a "multiemployer fund created to provide vacation benefits for union members who typically work for several employers during the course of a year . . . . falls within the scope" of ERISA. Mass. v. Morash, 490 U.S. 107, 114 (1989). "In

addition, the creation of a separate fund to pay employees vacation benefits would subject a single employer to the regulatory provisions of ERISA." Id. Certain policies, however,

that pay employees for unused vacation time do not constitute employee welfare benefit plans. Id.

In another example of the analysis required to determine whether a vacation benefit plan falls under ERISA, a court in this 6

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district, after thoroughly examining the plan, found that where vacation benefits "must be used by the employee during the calender year in which they accrue, or else they are forfeited," the plan is not covered by ERISA. Czechowski v. Tandy Corp., 731 The court held that because

F. Supp. 406, 408 (N.D. Cal. 1990).

the employer disbursed vacation benefits directly to the employees and was then reimbursed by the vacation benefit plan, the "trust [did] not implicate any concerns over mismanagement since no funds are accumulated in it." Id. In addition, because "the risk an

employee [bore was] precisely the same as his employment risk," the principles justifying the protections provided by ERISA were not implicated.2 Id.

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Defendant offers the declaration of Alfonso Quintor, president of AJW Construction, as proof that the vacation plan at issue is covered under ERISA. Quintor Decl. ¶ 3. Quintor,

however, provides no explanation for this other than the conclusory statement that "[t]he collective bargaining agreement governing Plaintiffs' employment with AJW establishes several employee benefits . . . pursuant to a jointly administered multiemployer employee benefit plan regulated by the Employment [sic] Retirement and Income Security Act of 1974." Id. As noted above,

however, determination of whether a vacation benefit plan is in fact covered by ERISA turns on the terms and conditions of the individual plan. The Supreme Court has stated: "In enacting ERISA, Congress' primary concern was with the mismanagement of funds accumulated to finance employee benefits and the failure to pay employees benefits from accumulated funds." Morash, 490 U.S. at 109. 7
2

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Recognizing this, Defendant also cites to Section 28A of the collective bargaining agreement to support the ERISA preemption argument. Section 28A, however, merely establishes a payment

schedule for employer contributions to various funds, including health, pension and vacation. See Quintor Decl., Ex. A at 22.

The Court cannot glean, from the less than two pages that comprise Section 28A, sufficient details regarding the vacation plan to determine whether it falls under ERISA. Nor has Defendant

provided the Court with any other information regarding the terms of the vacation plan, how it is administered, or even the benefits that employees receive under it. Ultimately, Defendant, having

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the burden to demonstrate federal jurisdiction, has failed to provide the Court with the support necessary to determine whether the vacation plan at issue is covered by ERISA. Finally, even assuming, arguendo, that the vacation plan was covered by ERISA, Plaintiffs' claims for unpaid wages accrued during paid time off appear to require little more than cursory consultation with the collective bargaining agreement. Livadas, 512 U.S. at 123. See

Plaintiffs' allegations that they have

accrued paid time off is not, in and of itself, enough to create ERISA preemption. For these reasons, the Court finds that

Plaintiffs' action is not preempted by ERISA. C. Attorneys' Fees

In addition to remanding the case, Plaintiffs also seek attorneys' fees and costs in the amount of $900.00 for the filing of the instant motion. Although 28 U.S.C. § 1447(c) authorizes

the imposition of attorneys' fees when a case is remanded, the 8

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Court declines to do so. IV. CONCLUSION For the reasons discussed herein, the Court GRANTS Plaintiffs' Motion to Remand. the Alameda Superior Court. Fees is DENIED. The case is therefore REMANDED to

Plaintiffs' Motion for Attorneys'

IT IS SO ORDERED. Dated: November 30, 2007

For the Northern District of California

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