Opinion
03 Civ. 8603 (SAS)
May 12, 2004
Michael Mantell, Esq., New York, NY, for Plaintiff
Vincent F. Pitta, Esq., Jane Lauer Barker, Esq., PRYOR CASHMAN SHERMAN FLYNN LLP, New York, NY, for Defendant
OPINION AND ORDER
I. INTRODUCTION
Thomas Cespuglio, an employee of the New York Hotel Trades Council Associated Benefit Funds, is suing Peter Ward, a trustee and co-chair of the Funds, for tortious interference with contract. The contract in question is a collective bargaining agreement between the Funds and Cespuglio's union, the Office and Professional Employee International Union Local 153. Ward now moves to dismiss the complaint, arguing that Cespuglio's tort claim is preempted by the Labor Management Relations Act (LMRA), and that Cespuglio has failed to exhaust his remedies as required by that Act. Cespuglio cross-moves for remand back to the New York state court.
II. BACKGROUND
A. Procedural History
Cespuglio filed this suit on October 10, 2003, in New York State Supreme Court, New York County. The original complaint named three defendants: Ward, the "Hotel Association of New York City, Inc.," and Local 153. It alleged that the Hotel Association breached its employment contract with Cespuglio, that Ward induced the breach, and that Local 153 failed to adequately represent Cespuglio in his grievance against the Hotel Association. (Cespuglio had contacted his union delegate to grieve the suspension as early as June 2003).
The Hotel Association was identified in the original complaint as Cespuglio's employer, and appears to be identical to the Funds.
On October 31, 2003, Ward (joined by the other defendants) removed the action to federal court, asserting preemption under the LMRA. At the initial conference before this court, Cespuglio stated that he wished to discontinue the action against Local 153 and the Hotel Association; an order was entered to that effect on December 17, 2003. I also granted leave for Cespuglio to file an amended complaint.
B. The Complaint
On December 31, 2003, Cespuglio filed his amended complaint. It reads, in its entirety, as follows:
1. Jurisdiction of this Court is pursuant to a notice of removal, dated October 31, 2003, by the attorneys for defendant Peter Ward, a copy of which (without attachments) is attached as Exhibit A and incorporated herein.
2. At all times referred to herein the defendant was an officer of the New York Hotel Trade Council and Association Benefit Funds, referred to herein as "Funds".
3. At all times referred to herein the plaintiff was a member of the Office of [ sic] Professional Employees International Union, Local 153, AFL-CIO, referred to herein as "Local 153".
4. At all times referred to herein there was a contract between Funds and Local 153, referred to herein as "the contract".
5. On or about the 12th day of June, 2003, Funds did breach the contract by suspending plaintiff from his employment and relocating plaintiff to a substantially worse location and position for his employment, notwithstanding plaintiff's seniority.
6. Defendant Peter Ward was fully aware of the contract.
7. Defendant Peter Ward did intentionally procure the breach [of] the contract as alleged in paragraph 5 hereof.
8. Such inducement of breach by Peter Ward was an abuse of his authority, and of his position of trust.
9. The actions of Peter Ward in inducing said breach of contract were malicious, and were motivated by animosity towards the plaintiff, and were such as to justify the award of punitive damages.
WHEREFORE, plaintiff requests judgment against defendant for $250,000.00 compensatory damages and $1,000,000.00 punitive damages together with interest, costs and disbursements thereon, and any other relief which the Court may find to be fair, just and equitable.
Cespuglio alleges in his brief that Ward had him transferred from Brooklyn to a less desirable post in upper Manhattan because Cespuglio refused to give enough playing time to Ward's nephew, who was on a baseball team coached by Cespuglio.
III. LEGAL STANDARD
A. Removal and Remand
When a party files a motion to remand challenging the removal of an action from state court, "the burden falls squarely upon the removing party to establish its right to a federal forum by 'competent proof.'" "Out of respect for the independence of state courts, and in order to control the federal docket, 'federal courts construe the removal statute narrowly, resolving any doubts against removability.'" If the removing party cannot demonstrate federal jurisdiction by "competent proof," the removal was in error and the district court must remand the case to the court in which it was filed.
R.G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 655 (2d Cir. 1979) (quoting McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). See also Carson v. Dunham, 121 U.S. 421, 425-26 (1887); Wilson v. Republic Iron Steel Co., 257 U.S. 92, 97 (1921).
Kings Choice Neckwear, Inc. v. DHL Airways, Inc., No. 02 Civ. 9580, 2003 WL 22283814, at *2 (S.D.N.Y. Oct. 2, 2003) (quoting Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1045-46 (2d Cir. 1991)). See also Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 31 (2002).
See, e.g., Kings Choice Neckwear, 2003 WL 22283814.
It is well-established that "[t]o determine whether the claim arises under federal law, [courts] examine the 'well pleaded' allegations of the complaint and ignore potential defenses: 'a suit arises under the Constitution and laws of the United States only when the plaintiffs statement of his own cause of action shows that it is based upon those laws or that Constitution.'" "As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim."
Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003) (quoting Louisville Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152 (1914)).
Beneficial Nat'l Bank, 539 U.S. at 6.
There are, however, two exceptions to the general rule. First, a state law claim may be removed to federal court when the claim is completely preempted by federal law. "When the federal statute completely pre-empts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law. This claim is then removable under 28 U.S.C. § 1441(b), which authorizes any claim that 'arises under' federal law to be removed to federal court." The Supreme Court has found "complete preemption" in only two types of cases: certain causes of action under the LMRA and the Employee Retirement Income Security Act. Recently, the Second Circuit found complete preemption in a third category of cases: those arising under the Securities Litigation Uniform Standards Act. In so finding, the Court of Appeals emphasized that "the complete preemption doctrine must be applied sparingly and with great restraint." Second, an action may be removed to federal court where Congress so provides. Thus, where a statute specifically gives federal courts jurisdiction over a particular subject matter, and states that actions involving that subject matter may be removed to federal court despite the absence of federal claims, removal is proper even where the "well-pleaded complaint" rule is not satisfied.
See generally City of Rome, N.Y. v. Verizon Communications, Inc., 362 F.3d 168, 176-77 (2d Cir. 2004).
Beneficial Nat'l Bank, 539 U.S. at 7.
See id.
See Spielman v. Merrill Lynch, Pierce, Fenner Smith, Inc., 332 F.3d 116, 124 n. 5 (2d Cir. 2003).
Id.
See, e.g., 42 U.S.C. § 2014 (providing federal courts with jurisdiction over tort actions arising from nuclear accidents expressly allowing removal of such actions even when only state law claims are asserted); see also Beneficial Nat'l Bank, 539 U.S. at 6-7 (discussing statutes that expressly allow removal to federal court even where no federal cause of action is asserted on the face of the complaint).
B. Motion to Dismiss
"Given the Federal Rules' simplified standard for pleading, '[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Thus, a plaintiff need only plead "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Simply put, "Rule 8 pleading is extremely permissive."
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002) (emphasis added) (quoting Hishon v. King Spalding, 467 U.S. 69, 73 (1984)).
Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed.R.Civ.P. 8(a)).
Wynder v. McMahon, 360 F.3d 73, 77 (2d Cir. 2004).
At the motion to dismiss stage, the issue "'is not whether a plaintiff is likely to prevail ultimately, but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleading that a recovery is very remote and unlikely but that is not the test.'"
Phelps v. Kapnolas, 308 F.3d 180, 184-85 (2d Cir. 2002) (per curiam) (quoting Chance v. Armstrong, 143 F.3d 698, 701 (2d Cir. 1998)).
The task of the court in ruling on a Rule 12(b)(6) motion is "'merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.'" When deciding a motion to dismiss pursuant to Rule 12(b)(6), courts must accept all factual allegations in the complaint as true and draw all reasonable inferences in plaintiff's favor.
Pierce v. Marano, No. 01 Civ. 3410, 2002 WL 1858772, at *3 (S.D.N.Y. Aug. 13, 2002) (quoting Saunders v. Coughlin, No. 92 Civ. 4289, 1994 WL 98108, at *2 (S.D.N.Y. Mar. 15, 1994)).
See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002).
IV. DISCUSSION
A. LMRA Preemption
"Section 301 of the LMRA governs actions by an employee against an employer for breach of a collective bargaining agreement." Any such action is within the exclusive jurisdiction of federal courts and subject exclusively to federal law, regardless of where it is brought.
Dougherty v. American Tel. and Tel. Co., 902 F.2d 201, 203 (2d Cir. 1990).
See Textile Workers Union v. Lincoln Mills of Alabama, 353 U.S. 448, 450-51 (1957) ("Section 301 confers exclusive jurisdiction on federal courts to hear disputes arising from collective bargaining agreements."); Avco Corp. v. Aero Lodge No. 735, Intern. Ass'n of Machinists and Aerospace Workers, 390 U.S. 557, 560 (1968) ("An action arising under § 301 is controlled by federal substantive law even though it is brought in a state court.").
Thus, the threshold question in this case is whether Cespuglio's claim is preempted by Section 301, which provides:
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.
Section 301 preemption applies in any case that raises questions about the construction of, or rights and responsibilities under, a collective bargaining agreement, regardless of whether the plaintiffs claims sound in tort or contract. Indeed, suits arising under section 301 "encompass those seeking to vindicate 'uniquely personal' rights of employees such as wages, hours, overtime pay, and wrongful discharge." This is so because of the strong federal interest in the uniform interpretation of collective bargaining agreements.
These policies require that the relationships created by a collective-bargaining agreement be defined by application of an evolving federal common law grounded in national labor policy. The interests in interpretive uniformity and predictability that require that labor-contract disputes be resolved by reference to federal law also require that the meaning given a contract phrase or term be subject to uniform federal interpretation. Thus, questions relating to what the parties to a labor agreement agreed, and what legal consequences were intended to flow from breaches of that agreement, must be resolved by reference to uniform federal law, whether such questions arise in the context of a suit for breach of contract or in a suit alleging liability in tort.
See, e.g., Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985) (holding that Section 301 preempted plaintiffs state-law claim for breach of duty of good faith).
Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 562 (1976).
See Allis-Chalmers, 471 U.S. at 210-11.
Id. at 211 (quotation marks, citations, and alterations omitted).
Accordingly, "[t]he Supreme Court has said that § 301 is not to be given a narrow reading and has directed the courts 'to formulate and apply federal law to suits for violation of collective bargaining contracts.'" Consistent with the broad application of section 301, suits will be preempted even if the defendant is a non-signatory to the collective bargaining agreement, so long as the suit implicates provisions of the agreement.
Ghartey v. Saint John's Queens Hospital, 745 F. Supp.2d 125, 127 (E.D.N.Y. 1990) (quoting Smith v. Evening News Ass'n, 371 U.S. 195, 1999 (1962)).
See Wooddell v. International Brotherhood of Electrical Workers, Local 71, 502 U.S. 93, 100-01 (1991).
It is easy to see why Cespuglio's tortious interference claim falls within the ambit of Section 301. A tortious interference with contract claim, by necessity, presumes a breach of contract. An adjudication of the tort claim therefore requires the court to inquire about that breach — what duties did the contract create? Did the parties to the contract fulfill those duties? If not, was the failure of one side to fulfill its duty caused by the defendant? It is hard to imagine a situation where a claim for tortious interference with a collective bargaining agreement will not implicate the provisions of that agreement. Accordingly, Cespuglio's claim — though framed as a state law claim for tortious interference with contract — is really a claim under section 301, and federal jurisdiction is proper.
See Baylis v. Marriott Corp., 906 F.2d 874, 877 (2d Cir. 1990) ("Under traditional principles of New York law, a party may not recover for tortious inducement of breach of a contract without proving that the underlying contract has been breached"); Ghartey, 745 F. Supp.2d at 127 ("Plaintiff cannot establish the alleged tortious inducement to breach the collective bargaining agreement without establishing the meaning of that agreement and its breach by the Hospital."); Dragone v. M.J. Raynes, Inc., 695 F. Supp. 720, 724 (S.D.N.Y. 1988) (Walker, D.J.) (holding that union member's tortious interference with contract claim for discharge implicated collective bargaining agreement and was therefore preempted because plaintiff "must prove that the Agreement was valid and that the Agreement was breached").
B. Exhaustion of Remedies
Consistent with the policy underlying section 301, the Supreme Court has long required plaintiffs to exhaust whatever dispute-resolution or grievance procedures exist in the collective bargaining agreement before suing in federal court. If employees could sue under section 301 in federal courts in the first instance, mandatory grievance or arbitration procedures would be meaningless.
See, e.g., Hines, 424 U.S. at 562-64; Vaca v. Sipes, 386 U.S. 171, 184 (1967) ("[I]t is settled that the employee must at least attempt to exhaust exclusive grievance and arbitration procedures established by the bargaining agreement.").
Ward argues that Cespuglio has not exhausted his remedies under the collective bargaining agreement. In particular, the Funds/Local 153 collective bargaining agreement provides that any grievance "may be taken to arbitration before the Impartial Chairman of the Hotel Industry or his designated representative. The decision of the Arbitrator shall be final and binding upon the parties hereto." The language of the industry-wide agreement, incorporated by reference into the Funds/Local 153 agreement, is stronger:
9/19/1991 Collective Bargaining Agreement (Article XV — Grievance Proecure), Ex. D to the Affidavit of Jane Lauer Barker, counsel to Ward ("Barker Aff.").
See id. ("Whereas, the parties hereto intend to adopt the terms and conditions contained in the Industry-Wide 'Collective Bargaining Agreement Between Hotel Association of New York City, Inc. and New York Hotel and Motel Trades Council, AFL-CIO' attached hereto and made a part hereof, as the terms and conditions applicable to employees hired on or after the effective date of this Agreement, unless otherwise specifically stated herein. . . .).
All complaints, disputes or grievances arising between the parties hereto involving questions of interpretation or application of any clause of this Agreement . . . shall be referred to a permanent umpire to be known as the Impartial Chairman, and his decision shall be final and binding upon the parties hereto.
Industry-Wide Collective Bargaining Agreement (section 26) (emphasis supplied), Ex. G to Barker Aff.
Interpreting just this language in a predecessor version of the industry-wide agreement, the Second Circuit noted that "[n]o grievance — either specific or general — is excluded from this broad coverage."
Pitta v. Hotel Ass'n of New York City, Inc., 806 F.2d 419, 422 (2d Cir. 1986).
There is no question that Cespuglio has failed to exhaust his remedies under the collective bargaining agreement. Indeed, grievances filed on his behalf by the union are still pending.
See Plaintiff's Affidavit in Opposition to Defendant's Motion to Dismiss ("Cespuglio Aff.") ¶ 11 ("The grievance is now in progress, and it has not yet been resolved.").
C. Hybrid Section 301/Fair Representation Claim
There is an exception to the exhaustion requirement in so-called "hybrid" section 30 I/fair representation claims, which allege "(1) that the employer breached a collective bargaining agreement and (2) that the union breached its duty of fair representation in redressing [the employee's] grievance against the employer." Where the union in bad faith fails to adequately represent its members, the policies of the labor law are undermined and it "works an unacceptable injustice" to require the employee to exhaust her remedies before suing.
White v. White Rose Food, a Division of DiGiorgio Corp., 128 F.3d 110, 113 (2d Cir. 1997) (citing DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 163-64 (1983)).
DelCostello, 462 U.S. at 164.
A breach of the duty of fair representation occurs when a union "arbitrarily ignore[s] a meritorious grievance or process[es] it in perfunctory fashion." In particular, "[t]he Union's conduct must, first, have been arbitrary, discriminatory or in bad faith, and second, it must have seriously undermined the arbitral process." Although such hybrid claims require that certain allegations be made against the union, the union need not be named as a defendant.
Vaca, 386 U.S. at 191.
Barr v. United Parcel Service, Inc., 868 F.2d 36, 43 (2d Cir. 1989) (quotation marks, citations, and alteration omitted).
White, 128 F.3d at 114.
Cespuglio may be alleging a hybrid claim. Certainly, it cannot be said that his pleadings foreclose that possibility. For that reason alone, on a motion to dismiss, I must assume that Cespuglio is asserting a hybrid claim and therefore need not have exhausted his remedies under the collective bargaining agreement.
See Swierkiewicz, 534 U.S. at 514 (permitting dismissal "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations") (emphasis added) (quoting Hishon, 467 U.S. at 73).
Although I cannot and do not rest my decision on a motion to dismiss on material outside of the pleadings, it is worth noting that there is substantial evidentiary support for the conclusion that Cespuglio is asserting a hybrid claim. The initial complaint filed in state court explicitly alleged that "Local 153 breached its duty of fair representation of plaintiff with respect to [his] grievance." And Cespuglio argues in papers submitted in connection with the instant motion that Local 153 breached its duty of fair representation:
Verified Complaint ¶ 9, Ex. A to Barker Aff.
At first I complained to my union delegate, Peter Krippa. I did everything I could to have my union file a grievance, and was frustrated. . . . After this litigation started, and only then, did my union move ahead on my grievance. . . . I believe that my union's initial failure to protect me was because of the influence of the defendant, Peter Ward.
Cespuglio Aff. ¶¶ 9-11.
On balance, it appears that Cespuglio is asserting a hybrid claim.
To be sure, Ward has submitted documentary evidence that seems to undercut the validity of any hybrid claim, including a series of letters from Krippa to the Funds grieving Cespuglio's suspension and subsequent claim of retaliation. Indeed, Krippa demanded arbitration of Cespuglio's grievances in August 2003, two months before the complaint was filed in this action. This evidence is extraneous to the pleadings. However, if Ward moves for summary judgment on this issue, such evidence will be reviewed and considered.
D. Failure to State a Claim
Finally, Ward argues that the complaint fails to state a claim for tortious interference with contract because Ward is an agent of the Funds. In order to prevail on a claim for tortious interference, a plaintiff must prove (1) the existence of a valid contract between plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional procuring of that breach by the third party; (4) actual breach; and (5) damages. An employee may not sue an agent of her employer for tortious interference with an employment contract, however, because the agent, when acting in his official capacity, is not a "third party."
"[A] corporate officer who is charged with inducing the breach of a contract between the corporation and a third party is immune from liability if it appears that he is acting in good faith as an officer . . . [and did not commit] independent torts or predatory acts directed at another."
Ward argues that Cespuglio must plead the elements of tortious interference, citing New York state cases. That is a correct statement of law under New York law, see CPLR § 3013 (McKinney's 2003). In federal court, however, the Federal Rules of Civil Procedure apply, even to state law causes of action. Under the Federal Rules, a plaintiff need not plead the elements of her claim. See Fed.R.Civ.P. 8(a); see also In re Initial Public Offering Sec. Litig., 241 F. Supp.2d 281, 323 (S.D.N.Y. 2003). See generally Stirling Homex Corp. v. Homasote Co., 437 F.2d 87, 88 n. 2 (2d Cir. 1971) (per curiam) ("Because Rule 8(a) specifies the formal requirements of a complaint in a civil suit in the federal court, New York law is not binding."); Astroworks, Inc. v. Astroexhibit, Inc., 257 F. Supp.2d 609, 613 n. 7 (S.D.N.Y. 2003).
See, e.g., Lama Holding, Co. v. Smith Barney Inc., 88 N.Y.2d 413, 424 (1996).
See Murtha v. Yonkers Child Care Ass'n, Inc., 45 N.Y.2d 913, 915 (1978).
Id. (alterations in original) (quoting Buckley v. 112 Cent. Park South, 285 A.D.2d 331, 334 (1st Dep't 1954)).
In this case, however, Cespuglio alleges that Ward was not acting in good faith or in his capacity as an officer of the Funds. Rather, Cespuglio explicitly alleges that the inducement was "an abuse of [Ward's] authority" and was "malicious," and "motivated by animosity." Those allegations are sufficient to bring this case outside of the ordinary rule governing agents of employers.
Amended Complaint ¶ 8.
Id. ¶ 9.
Ward does not otherwise contest that the complaint adequately alleges a claim for tortious interference, nor could he. The complaint puts Ward on notice of the claim against him and the conduct of which Cespuglio complains. That is all that Rule 8(a) requires.
V. CONCLUSION
For the reasons set forth above, the Fund's motion to dismiss and Cespuglio cross-motion to remand are both denied. This action will proceed as a hybrid section 301/fair representation claim. The Clerk is directed to close these motions [11 and 13]. A conference is scheduled for 4:30 p.m. on May 28, 2004, in Courtroom 15C.
SO ORDERED.