Ortega v. New Mexico Legal Aid, Inc. , 643 F. App'x 774 ( 2016 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT March 29, 2016
_________________________________
Elisabeth A. Shumaker
Clerk of Court
MINA ORTEGA,
Plaintiff - Appellant,
v. No. 15-2098
(D.C. No. 1:14-CV-00628-MCA-SCY)
NEW MEXICO LEGAL AID, INC.; ED (D. N.M.)
MARKS, individually and as Director of
New Mexico Legal Aid, Inc.; SIEMPRE
UNIDOS EN PROGRESO, a Unit of
National Organization of Legal Services
Workers (“NOLSW”)/UAW LOCAL 2320
INTERNATIONAL UNITED AUTO
WORKERS, AFL-CIO; DONIS BORKS,
individually and as Union Organizer;
ALICIA CLARK, individually and as
Grievance Chair for Siempre Unidos en
Progreso,
Defendants - Appellees.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before BRISCOE, LUCERO, and McHUGH, Circuit Judges.
_________________________________
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Mina Ortega appeals from the district court’s Fed. R. Civ. P. 12(b)(6)
dismissal of her breach-of-contract suit for failure to exhaust the grievance procedure
in the collective bargaining agreement (CBA) underlying her claims. She also
appeals from the denial of her motion to remand to state court. Exercising
jurisdiction under 28 U.S.C. § 1291, we affirm.
Background
Ms. Ortega worked as a staff attorney at New Mexico Legal Aid, Inc. (the
Employer) from October 2008 until the Executive Director discharged her for gross
misconduct in January 2014. She was a member of the bargaining unit represented
by Siempre Unidos en Progreso, a Unit of National Organization of Legal Services
Workers (NOLSW)/UAW Local 2320 International United Auto Workers, AFL-CIO
(the Union). The Employer and the Union are parties to a CBA.
The CBA provides that disciplinary decisions are subject to a grievance
procedure. Section 6.9 of the CBA states that grievances “shall” proceed according
to a five-step grievance procedure, which starts at Step 2 (a formal written
grievance) for a discharge. The next step is a formal written appeal to the Executive
Director. If the grievance remains unresolved, the Union and the Employer may then
mutually agree to mediation. But if they decline to mediate and the Union wishes to
pursue the grievance, the parties must proceed to binding arbitration.1
1
In § 5.7c, part of the “gross misconduct” section, the CBA provides for an
immediate resort to mediation with regard to a discharge decision by the Executive
Director. Before this court, the Employer appears to have abandoned its earlier
position that § 5.7c provides the only process to challenge Ms. Ortega’s discharge.
2
The Union filed a grievance protesting Ms. Ortega’s discharge. But
Ms. Ortega was not convinced she was required to use the grievance process, because
§ 6.2c of the CBA, also in the grievance section, provides that “[n]othing contained
herein shall limit or otherwise exclude any grievant from seeking redress from any
government agency, regulatory body or court of law.” R. at 407. Further, she was
not satisfied with the Union’s representation. Particularly, the Union rejected a
limited release of information she had drafted, and instead required Ms. Ortega to
sign an unrestricted release permitting the Union complete access to Ms. Ortega’s
employment file under threat of dropping the grievance. And when the process
reached Step 4, the Employer and the Union scheduled the mediation on a day when
she was not available.
Just before the scheduled mediation, Ms. Ortega filed a lawsuit against the
Employer and the Union in New Mexico state court.2 She alleged that the Employer
had wrongfully terminated her employment and breached the CBA, and she sought a
declaratory judgment as to the Employer’s and the Union’s actions during the
grievance proceedings. She also filed a motion to stay the mediation. The Employer
and the Union suspended the mediation pending the suit.
The Employer, with the Union’s consent, removed the suit to federal court.
Ms. Ortega filed an amended complaint, reiterating her claims against the Employer
Ultimately, however, it is immaterial to this appeal which grievance procedure
applies; both involve mediation, which was not completed in this case.
2
The suit also named certain individuals as defendants, but because their
presence does not affect the resolution of this appeal, for ease of discussion we focus
on the Employer and the Union.
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and adding a claim that the Union breached its duty of fair representation. She also
filed a motion to remand the case to state court. Both the Employer and the Union
moved to dismiss under Rule 12(b)(6), which Ms. Ortega opposed. The district court
accepted the defendants’ arguments that Ms. Ortega’s state-law claims were
preempted by § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and
that she was required to exhaust the grievance procedure in the CBA before
proceeding in court. It granted the Rule 12(b)(6) motions, denied the motion to
remand, and denied the motion to stay the mediation.
Ms. Ortega filed a timely Fed. R. Civ. P. 59(e) motion to alter or amend the
judgment, which the district court also denied. Ms. Ortega then filed a timely notice
of appeal.
Discussion
On appeal, Ms. Ortega challenges the denial of her motion to remand and the
Rule 12(b)(6) dismissal of her amended complaint. We review both of these issues
de novo. Garley v. Sandia Corp., 236 F.3d 1200, 1206-07 (10th Cir. 2001).
I. Motion to Remand
For purposes of remand, the relevant pleading is the complaint in effect at the
time of removal. Salzer v. SSM Health Care of Okla. Inc., 762 F.3d 1130, 1133
(10th Cir. 2014). Here that was the original complaint, in which Ms. Ortega pleaded
that the Employer terminated her employment in violation of the CBA.
“Section 301 of the Labor Management Relations Act . . . provides for suits in
the district courts for violation of collective-bargaining contracts between labor
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organizations and employers without regard to the amount in controversy.” Hines v.
Anchor Motor Freight, Inc., 424 U.S. 554, 561 (1976). “Section 301 contemplates
suits by and against individual employees as well as between unions and employers;
and . . . § 301 suits encompass those seeking to vindicate uniquely personal rights of
employees such as . . . wrongful discharge.” Id. at 562 (internal quotation marks
omitted). It is well established that, by virtue of the complete pre-emption doctrine,
claims alleging a breach of a CBA are considered to arise under § 301 even if they
ostensibly are pleaded as state-law claims. See Caterpillar Inc. v. Williams, 482 U.S.
386, 394 (1987) (holding pre-empted “claims founded directly on rights created by
collective-bargaining agreements, and also claims substantially dependent on analysis
of a collective-bargaining agreement” (internal quotation marks omitted)); Cisneros
v. ABC Rail Corp., 217 F.3d 1299, 1304 (10th Cir. 2000) (recognizing that claims
pleaded under state law were “properly characterized” as “founded directly on rights
created by [a] collective-bargaining agreement,” creating jurisdiction under § 301
(brackets and internal quotation marks omitted)).
Under 28 U.S.C. § 1441(a), a defendant may remove to the district court any
civil action over which the district court has original jurisdiction, which includes all
civil actions arising under federal law, see id. § 1331. Because Ms. Ortega’s claims
against the Employer alleged a violation of the CBA and therefore are considered to
arise under § 301, the defendants had the option to remove this suit to federal court.
See Caterpillar, 482 U.S. at 399 (“When a plaintiff invokes a right created by a
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collective-bargaining agreement, the plaintiff has chosen to plead what we have held
must be regarded as a federal claim, and removal is at the defendant’s option.”).
Ms. Ortega argues that § 6.2c of the CBA provides that she may proceed in
any court, and she refers to language from Republic Steel Corp. v. Maddox, 379 U.S.
650, 657-58 (1965), indicating that a state-court suit may proceed if a CBA does not
contain an exclusive grievance procedure. These arguments are misplaced. Even
assuming Ms. Ortega properly filed her lawsuit in state court without exhausting the
CBA’s grievance procedure (a proposition that we reject below), nothing in the CBA
or Maddox requires that the suit remain in state court, notwithstanding defendants’
federal statutory right to remove.
Ms. Ortega also argues that hybrid actions (suits combining a § 301 claim
against an employer and a breach of duty of fair representation (DFR) claim against a
union) are not pre-empted. This contention is irrelevant because Ms. Ortega did not
plead a DFR claim in her original complaint, which is the operative pleading for
purposes of removability. But in any event, it appears that Ms. Ortega is confusing
the doctrines of (1) complete pre-emption of state law by federal law and
(2) pre-emption of judicial jurisdiction where a claim is within the jurisdiction of the
National Labor Relations Board. In Vaca v. Sipes, upon which she relies, the
Supreme Court confirmed that the courts retain jurisdiction over a hybrid suit.
386 U.S. 171, 186-87 (1967). The Court did not hold that a hybrid action cannot be
removed from state court to federal court. Vaca, in fact, recognized that in a hybrid
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suit, the claims against an employer remain § 301 claims. See id. at 187. And as
discussed, § 301 claims create federal jurisdiction.
II. Motion to Dismiss
“[Section] 301 expresses a federal policy that the substantive law to apply in
§ 301 cases is federal law, which the courts must fashion from the policy of our
national labor laws.” Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 209 (1985)
(internal quotation marks omitted). “[I]ssues raised in suits of a kind covered by
§ 301 are to be decided according to the precepts of federal labor policy.” Id.
(brackets and internal quotation marks omitted).
The Supreme Court has explained that a CBA “is more than a contract; it is a
generalized code to govern a myriad of cases which the draftsmen cannot wholly
anticipate” and “an effort to erect a system of industrial self-government.” United
Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578, 580
(1960). CBAs commonly contain grievance procedures, which the Court has
emphasized are “[a] major factor in achieving industrial peace” and lie “at the very
heart of the system of industrial self-government.” Id. at 578, 581.
In Republic Steel Corp. v. Maddox, the Supreme Court recognized that in the
labor context, “Congress has expressly approved contract grievance procedures as a
preferred method for settling disputes and stabilizing the ‘common law’ of the plant.”
379 U.S. at 653. Accordingly, Maddox held:
As a general rule in cases to which federal law applies, federal labor
policy requires that individual employees wishing to assert contract
grievances must attempt use of the contract grievance procedure agreed
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upon by employer and union as the mode of redress. If the union refuses to
press or only perfunctorily presses the individual’s claim, differences may
arise as to the forms of redress then available. But unless the contract
provides otherwise, there can be no doubt that the employee must afford the
union the opportunity to act on his behalf.
Id. at 652-53 (footnotes and citations omitted).
Maddox, however, also held that “[t]he federal rule would not of course
preclude [a] court suit if the parties to the collective bargaining agreement expressly
agreed that arbitration was not the exclusive remedy.” Id. at 657-58. In this regard,
the language must “reveal a clear understanding between the contracting parties that
individual employees, unlike either the union or the employer, are free to avoid the
contract procedure . . . in favor of a judicial suit. Any doubts must be resolved
against such an interpretation.” Id. at 658-59.
Pointing to § 6.2c of the CBA—“[n]othing contained herein shall limit or
otherwise exclude any grievant from seeking redress from any government agency,
regulatory body or court of law”—Ms. Ortega argues that the exhaustion requirement
is inapplicable because the parties have expressly agreed that the grievance procedure
was not her exclusive remedy. The Union counters that § 6.2c is not intended to
provide an alternative remedy for grieveable claims such as wrongful discharge;
instead, it is intended to preserve an employee’s right to bring suit on claims that do
not arise under the CBA, such as discrimination claims. Cf. 14 Penn Plaza LLC v.
Pyett, 556 U.S. 247, 260 (2009) (requiring arbitration of a discrimination claim
expressly made subject to a grievance procedure). The Employer primarily relies on
Maddox’s requirement of an express agreement that particular matters are not subject
8
to the grievance procedure and directive that doubts must be resolved in favor of the
grievance procedure. See Maddox, 379 U.S. at 657-59.
Ms. Ortega’s claim for wrongful discharge lies squarely within those matters
that are “the business of certified or recognized bargaining agents.” Hines, 424 U.S.
at 563. And we cannot read § 6.2c in insolation. See Warrior & Gulf Navigation
Co., 363 U.S. at 579 (“There are too many people, too many problems, too many
unforeseeable contingencies to make the words of the contract the exclusive source
of rights and duties.” (internal quotation marks omitted)). Read as part of the entirety
of Articles 5 and 6 of the CBA and against the backdrop of well-established
principles of federal labor law, at best § 6.2c may create some doubt about the reach
of the CBA’s grievance procedure. But as the Employer urges, if a court has “[a]ny
doubts” about whether a dispute is subject to the grievance procedure, those “doubts
must be resolved against such an interpretation.” Maddox, 379 U.S. at 659; see also
Warrior & Gulf Navigation Co., 363 U.S. at 582-85 (narrowly construing exception
to grievance procedure and stating that “[d]oubts should be resolved in favor of
coverage”). We therefore conclude that § 6.2c does not allow Ms. Ortega to proceed
directly to court with her wrongful-discharge and breach-of-contract claims without
exhausting the CBA’s grievance procedure.
Ms. Ortega alternatively argues that she satisfies an exception to Maddox’s
exhaustion requirement because the union has breached its duty of fair
representation. In the event of such a breach, an employee will not be compelled to
9
exhaust an otherwise applicable grievance procedure. See Vaca, 386 U.S. at 185. As
this court has stated:
If the union is fairly representing the employee, the employee’s interests are
adequately protected. As the ‘fairness’ of the union’s representation
decreases, however, so does the employee’s protection and the justification
for the exhaustion bar. Thus, if the union refuses to press or only
perfunctorily presses the individual’s claim, or otherwise acts arbitrarily,
discriminatorily, or in bad faith, then the union has breached its duty of fair
representation and the employee is entitled to sue under section 301.
United Food & Commercial Workers, Local Union No. 7R v. Safeway Stores, Inc.,
889 F.2d 940, 945 (10th Cir. 1989) (citations and internal quotation marks omitted).
To establish that the Union breached its duty of fair representation, Ms. Ortega
must prove “[s]ome conduct by the worker’s union that breached the duty of fair
representation” and “[a] causal connection showing that the union’s breach affected
the integrity of the arbitration process.” Webb v. ABF Freight Sys., Inc., 155 F.3d
1230, 1239 (10th Cir. 1998). Ms. Ortega complains that the Union “is just going
through the motions” and “only perfunctorily pressing [her] claim,” Aplt. Br. at 18,
which may qualify as a breach, see Webb, 155 F.3d at 1239-40.
But equally important is that the breach must seriously undermine the integrity
of the grievance process. See Hines, 424 U.S. at 567; Webb, 155 F.3d at 1242. As
the district court recognized, at this point Ms. Ortega cannot show this element.
“[W]hen a union represents an employee throughout a grievance procedure, a claim
challenging the adequacy of that union’s representation normally does not accrue
until the dispute resolution process has been completely exhausted.” Lucas v.
Mountain States Tel. & Tel., 909 F.2d 419, 421 (10th Cir. 1990) (per curiam). The
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Union and the Employer were in the midst of the grievance process when
Ms. Ortega’s suit interrupted it. Ms. Ortega cannot complain that the Union
“seriously undermined” the uncompleted mediation or some future arbitration, as the
results are not yet known. Her fears about how the Union might act (or not act)
during the grievance proceeding are insufficient to proceed with a hybrid suit based
on a DFR claim against the Union at this time.
Conclusion
The district court did not err in denying the motion to remand or in granting
the motions to dismiss under Rule 12(b)(6). The judgment is affirmed.
Entered for the Court
Carolyn B. McHugh
Circuit Judge
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