Stoddart v. Heavy Metal Iron, Inc. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 MICHAEL STODDART, No. 2:22-cv-01532-DAD-DB 12 Plaintiff, 13 v. ORDER GRANTING PLAINTIFF’S MOTION TO REMAND FOR LACK OF SUBJECT 14 HEAVY METAL IRON, INC., et al MATTER JURISDICTION 15 Defendants. (Doc. No. 14) 16 17 This matter is before the court on plaintiff’s motion to remand this action to the Solano 18 County Superior Court. (Doc. No. 14.) On February 27, 2023, plaintiff’s motion was taken 19 under submission on the papers. (Doc. No. 17.) For the reasons set forth below, the court will 20 grant plaintiff’s motion to remand. 21 BACKGROUND 22 On May 13, 2022, plaintiff Michael Stoddart filed a lawsuit against defendants Heavy 23 Metal Iron, Inc. (“HMI”), Daniel Bong, and Does 1 through 50 in the Solano County Superior 24 Court. (Doc. No. 1-2.) In his complaint, plaintiff asserts on his own behalf eight causes of action 25 under state law: (1) failure to provide meal periods or required premiums in violation of 26 California Labor Code §§ 226.7, 512, and 1198; (2) failure to provide rest periods or required 27 premiums in violation of California Labor Code §§ 226.7 and 1198; (3) failure to pay minimum 28 and regular wages in violation of California Labor Code §§ 1194, 1197, and 1198; (4) failure to 1 pay all overtime wages in violation of California Labor Code §§ 510, 1194, and 1198; (5) failure 2 to failure to reimburse employees for required expenses in violation of California Labor Code 3 § 2802; (6) failure to provide accurate itemized wage statements in violation of California Labor 4 Code §§ 226 and 1198; (7) failure to provide all wages due upon separation of employment in 5 violation of California Labor Code §§ 201, 202, and 203; and (8) unfair competition in violation 6 of California Business and Professions Code § 17200, et seq. (Doc. No. 1-2 at 1.) Additionally, 7 plaintiff asserts a ninth cause of action as a representative action pursuant to the Private Attorneys 8 General Act of 2004, California Labor Code §§ 2698–2699 (“PAGA”) on behalf of himself, the 9 Labor Workforce Development Agency (“LWDA”), and “aggrieved employees” employed by 10 defendants, defined as “all other current and former non-exempt employees of [d]efendant who 11 work or have worked in any non-exempt position in California and who have suffered at least one 12 of the wage and hour violated described herein during the applicable time period.” (Id. at ¶ 1.) 13 On August 31, 2022, defendants removed this action to this federal court pursuant to 28 14 U.S.C. § 1441(a) on the basis that federal question jurisdiction exists because plaintiff’s PAGA 15 claim is preempted both under § 301 of the Labor Management Rights Act (“LMRA”), 29 U.S.C. 16 § 185, and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. 17 (Doc. No. 1 at ¶¶ 4.) On January 31, 2023, plaintiff filed the pending motion to remand, asserting 18 that none of his claims are preempted by federal law. (Doc. No. 14.) Defendants filed an 19 opposition on February 14, 2023, and plaintiff filed his reply thereto on February 24, 2023. (Doc. 20 Nos. 15, 16.) 21 LEGAL STANDARD 22 A suit filed in state court may be removed to federal court if the federal court would have 23 had original jurisdiction over the suit. 28 U.S.C. § 1441(a). Removal is proper when a case 24 originally filed in state court presents a federal question or where there is diversity of citizenship 25 among the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. §§ 1331, 26 1332(a). 27 The defendant seeking removal of an action from state court bears the burden of 28 establishing grounds for federal jurisdiction by a preponderance of the evidence. Geographic 1 Expeditions, Inc. v. Est. of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106–07 (9th Cir. 2010); Hunter 2 v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009); Gaus v. Miles, Inc., 980 F.2d 564, 3 566–67 (9th Cir. 1992). “If at any time before final judgment it appears that the district court 4 lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). If there is 5 any doubt as to the right of removal, a federal court must reject jurisdiction and remand the case 6 to state court. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003); 7 see also Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1118 (9th Cir. 2004). 8 A party’s notice of removal must contain “a short and plain statement of the grounds for 9 removal.” 28 U.S.C. § 1446(a). “By design, § 1446(a) tracks the general pleading requirement 10 stated in Rule 8(a) of the Federal Rules of Civil Procedure,” and a “statement ‘short and plain’ 11 need not contain evidentiary submissions.” Dart Cherokee Basin Operating Co., LLC v. Owens, 12 574 U.S. 81, 84, 87 (2014); see also Ramirez-Duenas v. VF Outdoor, LLC, No. 1:17-cv-0161- 13 AWI-SAB, 2017 WL 1437595, at *2 (E.D. Cal. Apr. 41, 2017) (“The notice of removal may rely 14 on the allegations of the complaint and need not be accompanied by any extrinsic evidence.”). 15 “The presence or absence of federal-question jurisdiction is governed by the ‘well-pleaded 16 complaint rule,’ which provides that federal jurisdiction exists only when a federal question is 17 presented on the face of the plaintiff’s properly pleaded complaint.” Caterpillar Inc. v. Williams, 18 482 U.S. 386, 392 (1987); Hansen v. Grp. Health Coop., 902 F.3d 1051, 1057 (9th Cir. 2018) 19 (“Removal based on federal-question jurisdiction is reviewed under the longstanding well- 20 pleaded complaint rule.”). “[T]he presence of a federal question . . . in a defensive argument does 21 not overcome the paramount policies embodied in the well-pleaded complaint rule—that the 22 plaintiff is the master of the complaint, that a federal question must appear on the face of the 23 complaint, and that the plaintiff may, by eschewing claims based on federal law, choose to have 24 the cause heard in state court.” Caterpillar, 482 U.S. at 398–99. 25 ANALYSIS 26 A. Preemption Under § 301 of the LMRA 27 In their notice of removal, defendants assert that this court has federal question 28 jurisdiction over this action because adjudication of plaintiff’s representative PAGA claim 1 includes aggrieved apprentice employees whose rights are conferred by a collective bargaining 2 agreement (“CBA”) and are thus preempted under § 301 of the LMRA. (Doc. No. 1 at ¶ 4.) In 3 his pending motion to remand, plaintiff argues that none of his claims are preempted because his 4 employment is not subject to a CBA (Doc. No. 14-1 at 9–11) and his claims neither rely on a 5 CBA nor depend on interpretation of a CBA’s provisions (id. at 12–14.) The central question 6 presented by the pending motion then is whether, as defendants argue, plaintiff’s PAGA claim is 7 preempted by federal law. Discussion of the relevant legal framework with respect to that issue is 8 therefore necessary. 9 Section 301 of the LMRA, codified at 29 U.S.C. § 185(a), provides federal courts with 10 original jurisdiction, regardless of the amount in controversy or citizenship of the parties, over 11 any lawsuits “for violation of contracts between an employer and a labor organization 12 representing employees in an industry affecting commerce.” 29 U.S.C. § 185(a). In the specific 13 context of preemption under § 301 of the LMRA, the Ninth Circuit has recognized that 14 preemption “has such ‘extraordinary pre-emptive power’ that it ‘converts an ordinary state 15 common law complaint into one stating a federal claim for purposes of the well-pleaded 16 complaint rule.’” Curtis v. Irwin Indus., Inc., 913 F.3d 1146, 1152 (9th Cir. 2019) (quoting 17 Metro. Life Ins. v. Taylor, 481 U.S. 58, 65 (1987)). Section 301 “authoriz[es] federal courts to 18 create a uniform body of federal common law to adjudicate disputes that arise out of labor 19 contracts.” Id. at 1151 (citing Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 210 (1985) and 20 Teamsters v. Lucas Flour Co., 369 U.S. 95, 103–04 (1962)). As the Ninth Circuit has explained, 21 federal preemption under § 301 “is an essential component of federal labor policy” for three reasons. First, “a collective bargaining 22 agreement is more than just a contract; it is an effort to erect a system of industrial self-government.” Thus, a CBA is part of the 23 “continuous collective bargaining process.” Second, because the CBA is designed to govern the entire employment relationship, 24 including disputes which the drafters may not have anticipated, it “calls into being a new common law—the common law of a 25 particular industry or of a particular plant.” Accordingly, the labor arbitrator is usually the appropriate adjudicator for CBA disputes 26 because he was chosen due to the “‘parties’ confidence in his knowledge of the common law of the shop and their trust in his 27 personal judgment to bring to bear considerations which are not expressed in the contract as criteria for judgment.” Third, grievance 28 and arbitration procedures “provide certain procedural benefits, 1 including a more prompt and orderly settlement of CBA disputes than that offered by the ordinary judicial process.” 2 Id. at 1152 (internal citations omitted). 3 The determination of whether a claim is preempted by § 301 is made by way of a two-step 4 inquiry. The first question is “whether the asserted cause of action involves a right conferred 5 upon an employee by virtue of state law,” or if instead the right is conferred by a CBA. Burnside 6 v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th Cir. 2007). This step requires the court to 7 consider “the legal character of a claim, as ‘independent’ of rights under the collective-bargaining 8 agreement [and] not whether a grievance arising from ‘precisely the same set of facts’ could be 9 pursued.” Livadas v. Bradshaw, 512 U.S. 107, 123 (1994) (citation omitted). If the asserted 10 cause of action is conferred solely by the CBA, the claim is preempted. Burnside, 491 F.3d at 11 1059. If not, the court must still decide whether the claim is “‘substantially dependent’ on the 12 terms of a CBA” by determining “whether the claim can be resolved by ‘looking to’ versus 13 interpreting the CBA.” Id. at 1059–60 (citations omitted). “The term ‘interpret’ is defined 14 narrowly—it means something more than ‘consider,’ ‘refer to,’ or ‘apply.’” Balcorta v. 15 Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1108 (9th Cir. 2000). If the claim requires 16 interpretation of the CBA, the claim is preempted; if the claim merely requires “looking to” the 17 CBA, it is not preempted. Burnside, 491 F.3d at 1060. Once preempted, “any claim purportedly 18 based on that pre-empted state law is considered, from its inception, a federal claim, and therefore 19 arises under federal law.” Caterpillar, 482 U.S. at 393. 20 In support of removal here, defendants assert that plaintiff brings the representative PAGA 21 claim on behalf of a group of current and former employees who are subject to a CBA. (Doc. No. 22 1 at 3.) Specifically, defendants contend that some of these employees are apprentices obtained 23 from programs run by the local joint apprenticeship committee who work on certain publicly 24 funded projects and are subject to a CBA that preempt plaintiff’s PAGA claim under California 25 law. (Id.) Attached to their opposition to the pending motion to remand, defendants submit the 26 declaration of Jessica Valentine, the officer manager of HMI, in which she states: 27 ///// 28 1 During the time covered by [p]laintiff’s claims as stated in [p]laintiff’s Complaint, a total of twenty-five individuals at various 2 times worked for HMI on an hourly basis. Six of those individuals were apprentices obtained from either the Ironworkers Local Union 3 118 Joint Apprenticeship and Training program, or the Ironworkers Local Union 378 Joint Apprenticeship and Training program, with 4 workers assigned by Ironworker Local Union 118 or Ironworkers Local 378, respectively. 5 6 (Doc. No. 15-1 at ¶ 5.) 7 The parties do not dispute that plaintiff’s employment was not covered by a CBA. (Doc. 8 Nos. 14-1 at 9–10; 15 at 9). At issue is whether plaintiff’s PAGA claim—which is derivative of 9 his claims asserting various wage-and-hour violations of California’s Labor Code—is 10 nevertheless preempted because, by defendants’ approximations, plaintiff asserts his PAGA claim 11 on behalf of twenty-four other aggrieved employees, six of whom were part of an apprenticeship 12 program subject to a CBA and have claims that the CBA may preempt. (Doc. Nos 14-1 at 9–11; 13 15 at 8–12.) Plaintiff argues that because a CBA did not cover his employment, neither his 14 individual claims nor his PAGA claim can be preempted. (Doc. No. 14-1 at 9–11.) Plaintiff 15 points out that in class actions, “the usual rule . . . is that to establish subject matter jurisdiction 16 one looks only to the named plaintiffs and their claims.” (Doc. No. 14-1 at 9) (citing Gonzalez v. 17 U.S. Immigr. & Customs Enf’t, 975 F.3d 788, 810 (9th Cir. 2020)). Although this case is not a 18 putative class action, plaintiff argues that the court should nonetheless look to his claims as the 19 named plaintiff in determining whether the PAGA claim is preempted and not to the subset of 20 employees within the group of “aggrieved employees” that defendants contend have signed a 21 qualifying CBA. (Doc. No. 14-1 at 9–10.) Defendants, on the other hand, maintain that 22 plaintiff’s PAGA claim may be preempted even if a CBA did not cover him personally because 23 PAGA’s structure is entirely different from class actions, and, thus, the class action principles 24 advanced by plaintiff do not apply. (Doc. No. 15 at 9, 11–12.) Defendants also contend that 25 because PAGA claims involve an aggregation of discrete claims joined together, each claim must 26 be examined in determining whether preemption applies. (Id. at 10–12.) 27 With regard to whether the named plaintiff must be subject to the qualifying CBA for the 28 LMRA to preempt plaintiff’s PAGA claim, both parties rely upon cases in which California 1 district courts have addressed the issue but reached inconsistent results. Plaintiff cites the 2 decision in Rivera v. AHMC Healthcare, Inc., No. 22-cv-104-DMG-AFM, 2022 WL 716094, at 3 *3–4 (C.D. Cal. Mar. 10, 2022) (remanding the case to state court because the plaintiff was not 4 covered by the defendants’ qualifying CBA and therefore the defendants did not meet their 5 burden of showing that the plaintiff’s PAGA claim was preempted). (See Doc. No. 14-1 at 10.) 6 Defendants cite to the decisions in Braswell v. AHMC San Gabriel Valley Med. Ctr. LP, No. 21- 7 cv-09959-MWF-AGR, 2022 WL 707206, at *4 (C.D. Cal. Mar. 8, 2022) (“Even if Plaintiff and 8 the State are not parties to the qualifying CBAs, the Court must still interpret the agreements to 9 determine whether a violation occurred as to the Aggrieved Employees. Indeed, that is the only 10 basis upon which the State of California could recover penalties under the facts of this case.”) and 11 Rodriguez v. USF Reddaway Inc., No. 2:22-CV-00210-TLN-DB, 2022 WL 18012518, at *4 12 (E.D. Cal. Dec. 30, 2022) (relying on Braswell, holding that even if a plaintiff is not a party to the 13 CBA, courts still must interpret the CBA to determine whether a violation occurred as to the 14 aggrieved employees). (See Doc No. 15 at 10.) 1 15 The court finds the decision in Rivera to be persuasive and declines to follow the 16 decisions in Braswell and Rodriguez, finding their logic is at odds with the nature of the PAGA 17 statute. Cf. Cranton v. Grossmont Hosp. Corp., No. 22-cv-443-JLS-MDD, 2022 WL 16572028, 18 at *6 n.1 (S.D. Cal. Nov. 1, 2022) (observing that the district court in Braswell “may have 19 1 Defendants also cite the decision in Viking River Cruises, Inc. v. Moriana, __U.S.__, 142 S. Ct. 20 1906, 1920, reh’g denied, __U.S.__, 143 S. Ct. 60 (2022) in support of their proposition that the plaintiff need not be subject to the CBA for the plaintiff’s PAGA suit to be preempted by § 301 of 21 the LMRA. (Doc. No. 15 at 9–12.) Specifically, defendants argue that Viking River Cruises clarifies that class actions and PAGA suits are different and that PAGA claims involve an 22 aggregation of discrete claims joined together, each of which must be examined for preemption by § 301 of the LMRA. (Id.) While it is true that class actions and PAGA suits are different, 23 those differences do not alter the analysis here. This court’s holding is based not on the class action principles advanced by plaintiff, but on the principle that PAGA claims are derivative of 24 the predicate California Labor Code violations and rise and fall with those underlying claims. See Curtis, 913 F.3d at 1150 n.3. Furthermore, the holding in Viking River Cruises does not support 25 defendants’ argument that if any of the aggrieved employees are subject to a qualifying CBA, the PAGA suit is preempted by § 301 of the LMRA. (Doc. No. 15 at 11.) Viking River Cruises did 26 not contemplate the issue presented by the pending motion. Rather, Viking River Cruises dealt with another issue and statute, holding that the Federal Arbitration Act preempts California law 27 “insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate” and that the plaintiff therefore lacked standing to maintain a 28 representative PAGA claim. 142 S. Ct. at 1924–25. 1 misconstrued and misapplied the relevant law” and to have “miscited California law” on the 2 issue). PAGA does not create any substantive rights nor does it impose any legal obligations. 3 Amalgamated Transit Union, Loc. 1756, AFL-CIO v. Superior Ct., 46 Cal. 4th 993, 1003 (2009). 4 Rather, it is “simply a procedural statute allowing an aggrieved employee to recover civil 5 penalties—for [California] Labor Code violations—that otherwise would be sought by state labor 6 law enforcement agencies.” Id. Here, plaintiff’s PAGA claim does not add any factual 7 allegations; it is entirely derivative of plaintiff’s individual California Labor Code claims. (Doc. 8 No. 1-2 at 22–27.) Thus, whether the court has subject matter jurisdiction over the derivative 9 PAGA claim depends on whether the court has jurisdiction over plaintiff’s underlying predicate 10 California Labor Code violations. See Curtis, 913 F.3d at 1150 n.3 (noting that the PAGA claim 11 depended on the predicate California Labor Code violations); Radcliff v. San Diego Gas & Elec. 12 Co., 519 F. Supp. 3d 743, 748 (S.D. Cal. 2021) (“[I]f [the court] has original jurisdiction over 13 these predicate claims, it also has original jurisdiction over Plaintiff’s PAGA claim.”); Franco v. 14 E-3 Sys., Nos. 19-cv-01453-HSG, 19-cv-02854-HSG, 2019 WL 6358947, at *4 (N.D. Cal. Nov. 15 8, 2019) (“PAGA claims are derivative of the predicate California Labor Code violations, and 16 therefore rise and fall with those underlying claims.”). 17 Because defendants have failed to show that plaintiff is subject to a qualifying CBA, 18 plaintiff’s individual claims for California Labor Code violations do not involve a right that 19 “exists solely as a result of the CBA,” and thus § 301 does not preempt them. See Burnside, 491 20 F.3d at 1059. As a result, the court does not have subject matter jurisdiction over the derivative 21 PAGA claim. See Segismundo v. Rancho Murieta Country Club, No. 2:21-cv-02271-DAD-JDP, 22 2022 WL 11804027, at *4 (E.D. Cal. Oct. 20, 2022) (“Because defendant has failed to show by a 23 preponderance of the evidence that plaintiff’s wage and hour claims triggered preemption under 24 the LMRA in Segismundo I, the court does not have subject matter jurisdiction over the derivative 25 PAGA claim.”); Alexander v. Republic Servs., Inc., No. 2:17-cv-0644-WBS-AC, 2017 WL 26 2189770, at *6 (E.D. Cal. May 18, 2017) (remanding the plaintiff’s PAGA action after finding 27 that none of the underlying California Labor Code violation claims were preempted by § 301 of 28 the LMRA); Wentz v. Taco Bell Corp., No. 12-cv-1813-LJO-DLB, 2012 WL 6021367, at *5, 7 1 (E.D. Cal. Dec. 4, 2012) (remanding PAGA claim to state court because plaintiff’s California 2 Labor Code claims had already been remanded); cf. Franco, 2019 WL 6358947, at *4 3 (concluding that the court had jurisdiction over PAGA claims because it had jurisdiction over the 4 predicate California Labor Code violation claims); Radcliff, 519 F. Supp. 3d at 752 (concluding 5 that the plaintiff’s PAGA action, which was, in part, predicated on the meal period claim, was 6 preempted by § 301 of the LMRA because the meal period claim was preempted). 7 B. Preemption Under ERISA 8 In their notice of removal, defendants also assert that this court has federal question 9 jurisdiction over this action because plaintiff’s PAGA claim, which is derivative of plaintiff’s 10 state law claims, is preempted by § 514(a) of ERISA, codified at 29 U.S.C. § 1144(a) (hereinafter 11 “§ 514(a)”). (Doc. No. 1 at 3–4.) 12 Under ERISA, there are two separate preemption doctrines: (i) complete preemption 13 under § 502(a), codified at 29 U.S.C. § 1132(a) (hereinafter “§ 502(a)”), and (ii) conflict 14 preemption under § 514(a). Marin General Hosp. v. Modesto & Empire Traction Co., 581 F.3d 15 941, 944–46 (9th Cir. 2009). Only the complete preemption doctrine under § 502(a) provides a 16 basis for federal question removal jurisdiction; § 514(a) does not. Id. at 945. Accordingly, on 17 plaintiff’s motion to remand, the relevant question is whether plaintiff’s state law claims are 18 completely preempted under § 502(a), and thus whether defendants properly removed the case 19 from state to this federal court. See Skillin v. Rady Children’s Hosp., No. 14-cv-01057-BAS- 20 BLM, 2015 WL 4715018, at *4 (S.D. Cal. Aug. 7, 2015). 21 A state law claim falls within the scope of ERISA and is completely preempted under § 22 502(a) “if [1] an individual, at some point in time, could have brought his claim under ERISA § 23 502(a)(1)(B), and . . . [2] there is no other independent legal duty that is implicated by a 24 defendant’s actions.” Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004). In regard to 25 Davila’s first prong, which asks whether a plaintiff could have brought his claim under § 26 502(a)(1)(B) of ERISA, such an action can be brought only by a participant or beneficiary. See 27 29 U.S.C. § 1132(a)(1)(B). 28 ///// 1 Here, not only do defendants erroneously rely on § 514(a) to support their complete 2 || preemption argument, but they do not even argue that plaintiff was a participant or beneficiary of 3 | an employee benefit plan. (Doc. No. 15 at 19-23.) Rather, defendants’ ERISA preemption 4 || arguments are based on a joint apprenticeship program’s ERISA-governed employee benefits 5 || plan that is only applicable to six employees, none of whom are the named plaintiff in this case. 6 | QUd.) Defendants further argue that plaintiff's PAGA claim conflicts directly with fundamental 7 || terms of an ERISA-governed joint apprenticeship training committee program. (/d. at 19.) 8 || However, defendants’ arguments are not legally relevant to complete preemption under § 502(a) 9 || because they fail to address how plaintiff—who was not a participant or beneficiary under the 10 || purported employee benefits plan at issue—could have brought his claim under ERISA 11 |} § 502(a)(1)(B). Consequently, the first prong under Davila is not satisfied and the court need not 12 || reach the second prong. See Rosset v. Hunter Eng’g Co., No. 14-cv-01701-LB, 2014 WL 13 || 8623332, at *8—9 (N.D. Cal. Aug. 15, 2014) (remanding the matter after finding that the 14 || defendants could not meet their burden under the first prong of the Davila test because the 15 || plaintiffs were not participants under ERISA). In sum, ERISA does not completely preempt 16 | plaintiff's PAGA claim and therefore does not provide a basis for removal. 17 CONCLUSION 18 For the reasons explained above: 19 1. Plaintiff's motion to remand (Doc. No. 14) is granted; 20 2. This action is remanded to the Solano County Superior Court due to this court’s 21 lack of subject matter jurisdiction; and 22 3. The Clerk of the Court is directed to close the case. 23 IT IS SO ORDERED. | Dated: _March 14, 2023 Dab A. 2, ayel 25 UNITED STATES DISTRICT JUDGE 26 27 28 10