Price v. Goals Coal Company ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BOBBY JUNIOR PRICE,
Plaintiff-Appellant,
v.
GOALS COAL COMPANY,
No. 97-1710
Defendant-Appellee.
WEST VIRGINIA HUMAN RIGHTS
COMMISSION,
Amicus Curiae.
Appeal from the United States District Court
for the Southern District of West Virginia, at Beckley.
Joseph Robert Goodwin, District Judge.
(CA-96-1932-5)
Argued: October 28, 1997
Decided: August 13, 1998
Before RUSSELL* and WIDENER, Circuit Judges, and
TRAXLER, United States District Judge for the
District of South Carolina, sitting by designation.
_________________________________________________________________
Vacated and remanded by unpublished per curiam opinion.
_________________________________________________________________
*Judge Russell heard oral argument in this case but died prior to the
time the decision was filed. The decision is filed by a quorum of the
panel. 28 U.S.C. § 46(d).
COUNSEL
ARGUED: Timothy Richard Conaway, Madison, West Virginia, for
Appellant. Albert F. Sebok, JACKSON & KELLY, Charleston, West
Virginia, for Appellee. ON BRIEF: Daniel L. Stickler, Kelley L.
Mount, JACKSON & KELLY, Charleston, West Virginia, for Appel-
lee. Darrell V. McGraw, Jr., Attorney General, Mary Catherine Buch-
melter, Deputy Attorney General, Paul R. Sheridan, Senior Assistant
Attorney General, Civil Rights Division, Charleston, West Virginia,
for Amicus Curiae.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Bobby Price ("Price") filed suit in West Virginia state court against
Goals Coal Company ("Goals"), alleging that Goals discriminated
against him on the basis of his age in violation of the West Virginia
Human Rights Act (WVHRA). See W.Va. Code§ 5-11-9 (1992).
Goals removed the action to federal court, contending that Price's
WVHRA claim was preempted by § 301 of the Labor Management
Relations Act (LMRA). See 29 U.S.C.A. § 185 (West 1978). Price
denied that his state claim was preempted by the LMRA and moved
to remand the suit to state court. The district court, believing the
underlying state law claim to be clearly untenable, bypassed the pre-
emption analysis and dismissed Price's case. Because we find that
Price's claim involves an issue which is genuinely unsettled under
West Virginia law, we believe the question of preemption must be
decided before the merits of the state law claim can be reached. Upon
examination, we find the claim is not preempted and that it should be
litigated in the state court of West Virginia. Accordingly, we vacate
the district court's order and return the case to the district court with
instructions to remand the case to the West Virginia state court.
2
I.
In 1994, Price, age 61, was employed by Peabody Coal Company
("Peabody") in Raleigh County, West Virginia, as a bulldozer opera-
tor at a coal preparation plant. As a bargaining unit employee at Pea-
body, Price was represented by the United Mine Workers of America
("the Union"), and his employment was covered by the National Bitu-
minous Coal Wage Agreement of 1993, a collective bargaining agree-
ment between Peabody and the Union. In relevant part, the collective
bargaining agreement provides that "[n]either the Employer nor the
Union shall discriminate against any Employee or with regard to the
terms or the availability of classified employment on the basis of race,
creed, national origin, sex, age, political activity, whether intra-Union
or otherwise." J.A. 72. The agreement also provides that "[d]isputes
arising under this Agreement shall be resolved" pursuant to the man-
datory grievance and arbitration procedures set forth in the agreement.
J.A. 66.
In October 1994, all 35 employees of the Peabody plant were laid
off and 34 completed panel recall forms.1 The plant was then sold to
defendant Goals. As part of the purchase, Goals assumed Peabody's
obligations under the collective bargaining agreement and agreed to
consider the former employees of Peabody for employment. On his
recall form, Price indicated that he only wished to be recalled for a
bulldozer operator position. According to Goals, the only available
bulldozer operator position was filled by a 46-year-old former Pea-
body employee. Goals further asserts that Price was not hired because
he failed a performance test of his ability to operate the bulldozer.
When Goals failed to recall Price for the bulldozer operator posi-
tion, Price filed a grievance, claiming he should not have been
required to submit to performance testing and, in any event, that he
should have received a passing grade. Price did not allege or submit
an age discrimination claim at the grievance stage. When the claim
reached arbitration, Price first raised his claim of age discrimination.
However, the arbitrator refused to consider it due to Price's failure to
_________________________________________________________________
1 Under the collective bargaining agreement, employees laid off from
covered operations could complete panel recall forms listing the jobs
they wanted to be considered for in the event of vacancies.
3
assert it in his grievance. The arbitrator ruled that Goals did not vio-
late the collective bargaining agreement by requiring Price to submit
to a performance test or in concluding that Price failed the test.
Price subsequently filed this action in the Circuit Court of Raleigh
County, West Virginia, against Goals, asserting an age discrimination
claim pursuant to the WVHRA. The complaint made no reference to
the collective bargaining agreement. Goals removed the case to the
district court on the ground that Price's age discrimination claim was
subject to mandatory arbitration as provided for in the collective bar-
gaining agreement and, therefore, arose under and was preempted by
§ 301 of the LMRA. Price moved to remand the case to state court,
asserting that his WVHRA claim was not preempted by§ 301 and,
therefore, that there was no federal question jurisdiction.
The district court, relying primarily upon our decision in Austin v.
Owens-Brockway Glass Container, Inc., 78 F.3d 875 (4th Cir. 1996),
entered an order dismissing the complaint, without prejudice, for
Price's failure to present his age discrimination claim through the
mandatory grievance and arbitration procedures called for by the col-
lective bargaining agreement. Having so concluded, the district court
found it lacked subject matter jurisdiction to address the preemption
issue under § 301 of the LMRA. Accordingly, the district court dis-
missed Price's motion to remand as moot.
II.
Price's action was removed to the district court solely on the basis
of purported federal question jurisdiction. In his motion to remand,
Price asserted that his WVHRA claim was not preempted by the
LMRA and, therefore, contended that the case must be remanded for
lack of a federal question.
The presence of federal question jurisdiction is ordinarily deter-
mined by the "well-pleaded complaint" rule, which provides that the
federal question must be "presented on the face of the plaintiff's prop-
erly pleaded complaint" to confer jurisdiction. Caterpillar Inc. v.
Williams, 482 U.S. 386, 392 (1987). Thus, "the plaintiff is the master
of the complaint and may avoid federal jurisdiction by relying exclu-
4
sively on state law." Childers v. Chesapeake & Potomac Tel. Co., 881
F.2d 1259, 1261 (4th Cir. 1989).
"The doctrine of ``complete preemption,' however, serves as an
exception to the well-pleaded complaint rule." Id. This "complete pre-
emption exception to the well-pleaded complaint rule``is applied pri-
marily in cases raising claims preempted by § 301 of the LMRA.'" Id.
at 1261-62 (quoting Caterpillar, 482 U.S. at 393). As this court has
instructed:
State claims which are wholly preempted by § 301 consti-
tute a well-recognized exception to the general rule that a
federal claim must be stated on the face of the complaint. If
[plaintiff's] purported state-law remedy had been com-
pletely preempted by § 301, any claim purportedly based on
that preempted state law is considered, from its inception, a
federal claim.... The district court therefore had jurisdiction
to address [plaintiff's] alleged state cause of action either as
a pendent state claim here or, in a removed § 301 case, as
a means of determining its own jurisdiction.
Washington v. Union Carbide Corp., 870 F.2d 957, 959-60 (4th Cir.
1989) (internal quotation marks and citation omitted); see Childers,
881 F.2d at 1261-62. Accordingly, if Price's WVHRA claim is pre-
empted by the LMRA, a federal question exists and removal to the
district court was appropriate.
Furthermore, federal district courts have discretion, in "appropriate
case[s], to address the state claim on the merits before resolving the
§ 301 preemption inquiry." Washington , 870 F.2d at 958; see
Childers, 881 F.2d at 1262. Specifically, if the removed state claim
is "patently without merit," the district court may dismiss the claim
on the merits without reaching the question of whether § 301 pre-
empts the claim. Childers, 881 F.2d at 1267. This discretion, how-
ever, is limited:
The discretion of district courts to dismiss state claims is
limited to those whose lack of merit is apparent. Where the
plaintiff appears to state a claim under state law, a federal
district court would be well-advised to proceed to the § 301
5
preemption inquiry and, if the state claim is not preempted,
to remand the entire action to state court. Where the com-
plaint, however, plainly fails to state a cause of action under
state law, it is open to the federal court to dismiss it.
Id. at 1262. In addition, if the issue of state law is "genuinely unset-
tled" or "hinge[s] upon disputed facts," the district court "should
resolve the § 301 preemption inquiry at the outset of the litigation."
Washington, 870 F.2d at 961.
In the instant case, the district court did not address the preemption
or well-pleaded complaint issues raised by Price's motion to remand.
Instead, the district court dismissed Price's WVHRA claim, without
prejudice, for his failure to submit the claim to arbitration under the
collective bargaining agreement. Accordingly, we turn to the issue of
whether the district court properly dismissed Price's WVHRA claim
on this basis, and then, if necessary, to the issue of whether his claim
is preempted by § 301 of the LMRA.
A.
Price contends the district court erred in dismissing his WVHRA
claim because West Virginia case law indicates it would not enforce
an arbitration agreement to preclude a WVHRA claim and, at a mini-
mum, that the issue of whether West Virginia would enforce arbitra-
tion provisions in a collective bargaining agreement to preclude a
state law action for violation of its Human Rights Act is "genuinely
unsettled." We agree.
Since the district court relied upon our decision in Austin to dismiss
Price's state law claim, we begin our analysis of this issue with a
review of federal court precedent concerning the effect of compulsory
arbitration agreements on federal anti discrimination lawsuits. In
1974, the United States Supreme Court held that an employee's statu-
tory right to pursue a racial discrimination claim under Title VII was
not foreclosed by his prior submission of the claim to arbitration
under a nondiscrimination clause of a collective bargaining agree-
ment. See Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). In
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), how-
ever, the Supreme Court held that an employee's age discrimination
6
claim under the Age Discrimination in Employment Act (ADEA) was
subject to a compulsory arbitration agreement contained in his securi-
ties registration application. In its motion to compel arbitration, the
employer had relied upon the arbitration agreement and the Federal
Arbitration Act (FAA), 9 U.S.C. § 1 et. seq. Noting federal policy
favoring arbitration in the FAA and its purpose to place arbitration
agreements on the same footing as other contracts, the Supreme Court
held that "statutory claims may be the subject of an arbitration agree-
ment, enforceable pursuant to the FAA." Gilmer, 500 U.S. at 26. The
Court noted that "[a]lthough all statutory claims may not be appropri-
ate for arbitration, [h]aving made the bargain to arbitrate, the party
should be held to it unless Congress itself has evinced an intention to
preclude a waiver of judicial remedies for the statutory rights at
issue." Id. (internal quotation marks omitted). "[T]he burden is on [the
employee] to show that Congress intended to preclude a waiver of a
judicial forum" for the statutory claim. Id. "If such an intention exists,
it will be discoverable in the text of the [statute], its legislative his-
tory, or an ``inherent conflict' between arbitration and the [statute's]
underlying purposes." Id. The Court went on to conclude that there
was no such Congressional intent underlying the ADEA, rendering
the employee's claim pursuant to that federal statute subject to the
compulsory arbitration bargained for in the contract.
In Austin, this court upheld the grant of summary judgment to an
employer for its employee's failure to submit gender and disability
discrimination claims under Title VII and the ADA to mandatory
arbitration under a collective bargaining agreement. See Austin, 78
F.3d at 885-86. Although the FAA was not applicable, we noted that
Gilmer "made clear that agreements to arbitrate [federal] statutory
claims are enforceable," Austin, 78 F.3d at 880, and that, unless Con-
gress intended to prohibit arbitration of a federal statutory claim, the
parties will be held to their agreement, see id . at 880-81. Thus, volun-
tary and valid agreements to arbitrate federal anti-discrimination
claims will be enforced "[w]hether the dispute arises under a contract
of employment growing out of securities registration application, a
simple employment contract, or a collective bargaining agreement...."
Id. at 885.
The instant case, unlike Austin, does not involve the alleged viola-
tion of a federal anti-discrimination statute. Rather, it involves the
7
alleged violation of a state anti-discrimination statute. Nevertheless,
using Austin and its principles as a guide, the district court in this case
considered the text and legislative history of the WVHRA and con-
cluded that the West Virginia legislature did not, in enacting the
WVHRA, intend to preclude arbitration under a collective bargaining
agreement. Thus, the district court concluded that the action must be
dismissed without prejudice for Price's failure to submit his state stat-
utory age discrimination claim to arbitration.
This court, however, is not convinced that the West Virginia courts
would reach the same conclusion. First, Gilmer and Austin involved
instances in which the agreement at issue contained a specific agree-
ment to arbitrate statutory claims, which may not apply to Price's
agreement.2 Second, neither Gilmer nor Austin involved a question of
state claim preemption under § 301 of the LMRA. Rather, both cases
involved claims asserted under federal anti-discrimination statutes
and the federal policy favoring arbitration of employment disputes.
More compelling, however, is the fact that current West Virginia
case law indicates that its legislature may indeed have intended to
preclude mandatory arbitration of claims arising under the WVHRA.
Prior to the decisions in Gilmer and Austin, the West Virginia
Supreme Court addressed the issue of "whether an agreement to arbi-
trate contained in an employment contract can usurp certain statutory
rights given to an individual." Copley v. NCR Corp., 394 S.E.2d 751,
755 (W.Va. 1990). In Copley, the employee alleged he had been the
victim of age and sex discrimination, and the employer moved to
compel arbitration pursuant to the terms in his individual employment
contract. The West Virginia Supreme Court held that"under West
Virginia law, an arbitration clause in an employment contract cannot
defeat a human rights action filed by the claimant pursuant to [the
WVHRA]." Id. at 756.
In so holding, the court relied heavily upon its prior decision in
Davis v. Kitt Energy Corp., 365 S.E.2d 82 (W.Va. 1987). Davis sued
_________________________________________________________________
2 The issue of whether the language contained in the arbitration agree-
ment is, in the first instance, broad enough to encompass mandatory arbi-
tration of state human rights act claims is not before us. Cf. Brown v.
Trans World Airlines, 127 F.3d 337 (4th Cir. 1997).
8
his employer for an alleged violation of a West Virginia anti-
discrimination statute after he was removed from a mine safety com-
mittee for reporting safety hazards. The employer claimed Davis was
precluded from suing by the arbitration provisions of his collective
bargaining agreement. The court rejected the employer's claim, plac-
ing "great reliance" upon the United States Supreme Court decision
in Alexander. See Davis, 365 S.E.2d at 88-90; Copley, 394 S.E.2d at
755-56.
Goals contends Alexander has been effectively overruled by
Gilmer, and that if called upon to address the question today, the West
Virginia Supreme Court would effectively overrule its decisions in
Copley and Davis and follow this court's holding in Austin. Price
argues that under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), fed-
eral courts only have constitutional authority "to rule upon state law
as it presently exists and not to surmise or suggest its expansion."
Washington, 870 F.2d at 962; see also Childers, 881 F.2d at 1265.
This limitation, Price argues, would require reversal of the district
court's interpretation of West Virginia law.3
We need not decide whether the district court correctly interpreted
or predicted West Virginia law, however. Although the district court
had discretion to evaluate the validity of the underlying WVHRA
claim in the course of conducting its preemption analysis, Price's
WVHRA claim is not "patently without merit." Washington, 870 F.2d
at 960. At a minimum, the question of whether West Virginia would
enforce an arbitration agreement to prohibit a judicial remedy for its
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3 Price further contends that the West Virginia Supreme Court evinced
an intent to stand by its decisions in Copley and Davis after Gilmer and
Austin were decided. Specifically, Price references the West Virginia
Supreme Court's decision in Vest v. Board of Educ., 455 S.E.2d 781(W.Va. 1995). In Vest, the court addressed the question of whether a
teacher's WVHRA claim for pregnancy and sex discrimination was pre-
cluded by a prior grievance proceeding conducted by a local school
board. Citing both Davis and Alexander in its opinion, the Vest court ulti-
mately concluded that the WVHRA claim was not precluded by the prior
grievance hearing, noting that "we particularly remain mindful of the pri-
macy that the Legislature has accorded to eliminating invidious discrimi-
nation in this State." Vest, 455 S.E.2d at 787.
9
WVHRA claims is "genuinely unsettled," id. at 961, and the West
Virginia courts should, in the first instance, decide whether it would
overrule its Copley decision and follow the reasoning expounded by
the Supreme Court in Gilmer and this court in Austin. Accordingly,
we conclude that the district court erred in dismissing Price's action
in lieu of addressing the preemption issue raised by Price's motion to
remand.
B.
Where, as here, a state law claim may have merit under state law,
a district court may not summarily dismiss the claim, but must instead
determine whether the claim is preempted by § 301 of the LMRA
and, therefore, whether it was properly removed to federal court.
Turning to the question of preemption, we conclude that Price's
WVHRA claim is not preempted by § 301 of the LMRA and, there-
fore, that removal to the federal court was not appropriate under the
complete preemption exception to the well-pleaded complaint rule.4
Section 301 of the LMRA provides that "[s]uits for violation of
contracts between an employer and a labor organization representing
employees ... may be brought in any district court of the United States
having jurisdiction of the parties...." 29 U.S.C.A. § 185(a). Section
301 is "more than jurisdictional." Textile Workers Union of America
v. Lincoln Mills of Ala., 353 U.S. 448, 451 (1957). "[I]t authorizes
federal courts to fashion a body of federal law for the enforcement of
these collective bargaining agreements and includes within that fed-
eral law specific performance of promises to arbitrate grievances
under collective bargaining agreements." Id. at 451.
In addition, "[t]o ensure uniform interpretation of collective-
bargaining agreements and to protect the power of arbitrators, § 301
has been found to displace entirely any state cause of action for viola-
tion of contracts between an employer and a labor organization.
Accordingly, state law does not exist as an independent source of pri-
vate rights to enforce collective-bargaining contracts." Davis v. Bell
Atlantic -- W.Va., Inc., 110 F.3d 245, 247 (4th Cir. 1997) (internal
_________________________________________________________________
4 Since both parties have briefed the preemption issue, remand to the
district court on this issue is unnecessary.
10
quotation marks omitted). "Moreover, the Supreme Court has refused
to allow artful pleading to circumvent the power of§ 301's preemp-
tive force. Form is not to triumph over substance as employees relabel
contract claims as claims for tortious breach of contract" or other tort
actions arising from contract duties. Id. Under the "complete preemp-
tion corollary to the well-pleaded complaint rule, a purportedly state
law claim, the resolution of which depends substantially upon an
analysis of a collective-bargaining agreement's terms, must either be
treated as a claim under § 301 or be dismissed as preempted under
federal labor law." Id.
However, § 301 does not preempt "nonnegotiable rights conferred
on individual employees as a matter of state law." Livadas v.
Bradshaw, 512 U.S. 107, 123 (1994). Preemption only occurs when
resolution of the state claim "is inextricably intertwined with consid-
eration of the terms of the labor contract," Allis-Chalmers Corp. v.
Lueck, 471 U.S. 202, 213 (1985), or when application of state law to
a dispute "requires the interpretation of a collective bargaining agree-
ment," Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 413
(1988).
We thus examine whether resolution of Price's WVHRA claim is
inextricably intertwined with or requires interpretation of the collec-
tive bargaining agreement with Goals. See McCormick v. AT&T, 934
F.2d 531, 535 (4th Cir. 1991). If "the state-law claim can be resolved
without interpreting the agreement itself, the claim is ``independent'
of the agreement for § 301 pre-emption purposes." Id. (quoting
Lingle, 486 U.S. at 409-10).
In this case, it is clear that resolution of Price's WVHRA claim
does not require interpretation of the collective bargaining agreement
and, instead, is an "independent" state law claim which is not pre-
empted by the LMRA. See, e.g., Lingle, 48 U.S. 399 (§ 301 of the
LMRA did not preempt Illinois tort action for retaliatory discharge
arising out of an employee filing a workers' compensation claim,
although employee could have brought a grievance under the collec-
tive bargaining agreement for termination without just cause for the
same facts, because the state action did not require an interpretation
of any term of the collective bargaining agreement); Jackson v. Kimel,
992 F.2d 1318 (4th Cir. 1993) (state tort claim of intentional infliction
11
of emotional distress was not preempted by § 301 of the LMRA
because reference to the collective bargaining agreement was unnec-
essary to determine the duty of care owed); Martin Marietta Corp. v.
Maryland Comm'n on Human Relations, 38 F.3d 1392 (4th Cir. 1994)
(state law handicap discrimination and retaliation claims were not
preempted by § 301 of the LMRA).
Goals does not seriously contend otherwise. Instead, Goals asserts
that Price's state law claim "arises" under§ 301 solely because Price
agreed to submit discrimination claims to arbitration under the collec-
tive bargaining agreement. In other words, Goals argues that the mere
agreement to arbitrate converts Price's age discrimination claim into
a § 301 claim. Goals further contends that, even if West Virginia
refused to deprive WVHRA claimants of a court remedy where an
arbitration agreement exists, the lawsuit would nevertheless be pre-
empted by § 301 of the LMRA, which governs the enforceability of
arbitration provisions contained in collective bargaining agreements.
In support of this argument, Goals again relies upon this court's
opinion in Austin and, specifically, asserts that although the Austin
opinion did not expressly invoke § 301 preemption, it implicitly did
so in relying expressly on the federal labor law favoring resolution of
labor disputes through arbitration. We find no such support in Austin.
Austin did not involve the issue of whether the LMRA preempted a
state human rights act claim. On the contrary, it dealt exclusively with
the federal policy favoring arbitration and a conclusion that Congress,
in enacting certain federal statutory discrimination provisions, did not
intend to preclude the enforcement of mandatory arbitration provi-
sions in a collective bargaining agreement. Price's action, however,
was brought solely for violation of the WVHRA. It does not include
an action for violation of a federal statutory right or for violation of
a right or obligation created by the collective bargaining agreement.
On its face, Price's complaint does not raise a federal question.
Furthermore, this is not a situation where the LMRA operates as a
"complete preemption" exception to the "well-pleaded complaint"
rule. Goals is not asserting that the age discrimination provisions of
the collective bargaining agreement supersede state statutory claims
for age discrimination, nor is Goals seeking to enforce the arbitration
provision in the collective bargaining agreement by asserting a coun-
12
terclaim or motion to compel arbitration pursuant to§ 301 of the
LMRA. Rather, Goals is asserting the mandatory arbitration provision
as a defense to Price's WVHRA claim.
The "complete preemption exception" to the"well-pleaded com-
plaint" rule does not apply when the employer merely raises the col-
lective bargaining agreement as a defense to the state law claim.
It is true that when a defense to a state claim is based on the
terms of a collective-bargaining agreement, the state court
will have to interpret that agreement to decide whether the
state claim survives. But the presence of a federal question,
even a § 301 question, in a defensive argument does not
overcome the paramount policies embodied in the well-
pleaded complaint rule -- that the plaintiff is the master of
the complaint, that a federal question must appear on the
face of the complaint, and that the plaintiff may, by eschew-
ing claims based on federal law, choose to have the cause
heard in state court.
Caterpillar, 482 U.S. at 398-99. Thus, under Caterpillar, a defense
available as a result of a collective bargaining agreement cannot over-
come the well-pleaded complaint rule where the state law claim itself
is not preempted by § 301 of the LMRA.
Accordingly, this court holds that the arbitration provision in the
collective bargaining agreement does not independently operate to
preempt Price's WVHRA claim or to confer federal question jurisdic-
tion upon the district court. While Goals is free to assert the arbitra-
tion provision as a defense to the state claim, it must do so before the
West Virginia state court. Remand to the West Virginia state court
will also afford that court an opportunity to decide the issue of
whether the arbitration clause contained in the collective bargaining
agreement precludes Price's WVHRA age discrimination claim in
accordance with its own laws and legislative intent.
III.
The order of the district court is accordingly vacated and the case
is remanded to the district court with instructions to grant plaintiff's
13
motion to remand this case to the Circuit Court of Raleigh County,
West Virginia.
VACATED AND REMANDED
14