Antol v. Exposto

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
11-20-1996
Antol v. Exposto
Precedential or Non-Precedential:
Docket 95-3714
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 95-3714
____________
GARY L. ANTOL; WAYNE S. BAIR; HUBERT BAKER; TERRY BARZANTI;
GREGORY F. BETCHY; HARRY P. CASTEEL; JOHN A. CETTIN;
ARTHUR J. COLLAND; TEDDY W. CREE; DENNIS J. CUMPSTON; SCOTT E.
CUNNINGHAM; CLYDE J. DAVIS; JOHN DEFRANCESCO; RONALD L. DENNIS;
LOUIS A. DZARA; PAUL S. FARRIER; MARIO FRANCHI; WILLIAM L.
GALLENTINE; ANDREW GARNEK, JR.; BERNARD J. GARNEK; MARVIN H. GARRISON,
JR.; LEONARD GAYDOS, JR.; ABRAHAM M. GEORGE; THOMAS A. GEORGETTI;
ROBERT M. GULLEY; FRED L. GUMP; ED GUTHRIE; SMAUEL E. HALL, JR.;
STEVE HANCHECK; JOHN NELSON HANNA, JR.; DONALD G. HENDERSON;
COLUMBUS J. HENRY; RICK HLATKY; JOHN HOAK; WILLIAM J. HOAK;
WILLIAM J. HOAK; DAVID F. HOLLIS; ANDREW P. HORNICK; FLOYD THOMAS
HORNICK; ROBERT F. HUTCHINSON; WALLY W. JACKSON; EARL C. KETTERING;
WALTER E. KING; JOHN G. KOAST; THOMAS J. KOSS; MACK A. KOVELL;
JOHN J. LESHKO, JR.; RANDY J. LINDICH; RUSSELL K. LOWE; JOSEPH F.
LUCAS; FLOYD MACHESKA; GEROGE J. MARIETTA, SR.; JOHN C. MATTEY, JR.;
LESTER N. MCCUNE; EDWARD D. MACMASTER; CARL JOSEPH METZ; RONADL T.
MILLER; JOE R. MONICA; DONALD P. MOSER; ROBERT W. MYDEN; WILLIAM W.
NIMPFER; JEROME A. NOVAK; LEONARD S. NOVAK; MICHAEL P. OPALENIK;
MARK PHELHAC; PAUL PERUZZI; WAYNE J. PETERSON; JOHN PLISHKA;
RICKIE POLKE; ANDREW G. POPERNACK, JR.; ALBERT J. POPIELARCHECK;
JOHN R. POPILARCHECK; WILFRED P. POPP; PAUL J. REBAR; DUANE RECKARD;
WAYNE RICHARD; GARY A. ROBINSON; GARY E. SABO; JOHN SEVER, IV; JOSEPH R.
SHIMKO;
MICHAEL SHIMKO; EDWARD ALLEN SHIPLEY; TIMOTHY R. SLEASMAN;
JIMMY D. SMITH; SAMUEL A. SMITHLEY; WILLIAM J. STAJNRAJH;
THOMAS R. STASZEL; ROBERT H. STEADMAN; JOHN P. STEPP; LARRY D.
STEVENSON; RONALD B. STULL, SR.; GARY S. SWAROW; ALBERT C. TENCER;
ROBERT L. THOMAS; BERNARD F. TOGGER; ROBET L. VANCE; GERGE W. VARGO;
DONALD W. WALKO; DALE R. WYLES; STEPHEN YANTKOK, JR.; RICHARD ZELINA
vs.
DOMINIC ESPOSTO; JOSEPH ESPOSTO; ORPHIA ESPOSTO; RICHARD ESPOSTO;
M.W. REED; R.W. REED; R.W. REED, JR.; GARNET CORP.; BON DE, INC.
OF SLOVAN; ATLAS FABCO, INC.
Gary L. Antol, Wayne S. Bair; Hubert Baker; Terry Barzanti;
Gregory F. Betchy; Harry P. Casteel; John A. Cettin; Arthur
J. Colland; Thomas E. Connors*; Teddy W. Cree; Dennis J.
Cumpston; Scott E. Cunningham; Clyde J. Davis; Eugene F.
Davis*; Harold T. Davis*; John DeFrancesco; Ronald L. Dennis;
Louis A. Dzara; Paul S. Farrier; Mario Franchi; Thomas A. Galla*;
William L. Gallentine; Andrew Garnek, Jr.; Bernard J. Garnek;
Dennis Grove*; Marvin H. Garrison, Jr.; Leonard Gaydos, Jr.; Abraham M.
George;
Thomas A. Georgetti; Robert M. Gulley; Fred L. Gump; Ed Gutherie;
Christopher V. Hafenbrack*; Samuel E. Hall, Jr.; Steve Hancheck;
John Nelson Hanna, Jr.; Donald G. Henderson; Columbus J. Henry;
Rick Hlatky; John Hoak; William J. Hoak; David F. Hollis;
Andrew P. Hornick; Floyd Thomas Hornick; Robert F. Hutchinson;
Wally W. Jackson; Earl C. Kettering; Walter E. King; John G.
Koast; Thomas J. Koss; Mack A. Kovell; John J. Leshko, Jr.;
Randy J. Lindich; Russell K. Lowe; Joseph F. Lucas; Floyd
Macheska; George J. Marietta, Sr.; John C. Mattey, Jr.;
Lester N. McCune; Edward D. McMaster; Carl Joseph Metz;
Ronald T. Miller; Joe R. Monica; Donald P. Moser; Robert W.
Myden; William W. Nimpfer Jerome A. Novak; Leonard S. Novak;
Michael P. Opalenik; Fred Oravets, Jr.*; Mark Pelehac; Paul
Peruzzi; Wayne J. Peterson; John Plishka; Rickie Polke;
Andrew G. Popernack, Jr.; Albert J. Popielarcheck; John R.
Popielarcheck; Wilfred P. Popp; Paul A. Rebar; Duane
Reckard; Wayne Richard; Gary A. Robinson; Gary E. Sabo; John
Sever, IV; Bernard P. Shimko Joseph R. Shimko; Michael A.
Shimko; Edward Allen Shipley; Timothy R. Slaesman; Jimmy D.
Smith; Warren H. Smith; Samuel A. Smitley; William J.
Stajnrajh; Thomas R. Staszel; Robert H. Steadman; John P.
Stepp; Larry D. Stevenson; Ronald B. Stull, Sr.; Gary S.
Swarow; Albert C. Tencer; Robert L. Thomas; Bernard F.
Togger; Robert L. Vance; George W. Vargo; Henry A. Verna;
Donald W. Walko; Dale R. Wyles; Walter W. White; Stephen
Yantko, Jr.; Richard Zelina,
Appellants (*Per Rule 12(a), FRAP)
____________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
(D. C. No. 95-cv-00951)
____________
Argued August 6, 1996
Before: MANSMANN, SCIRICA, and WEIS, Circuit Judges
Filed November 20, 1996
____________
Claudia Davidson, Esquire (ARGUED)
Healey Davidson & Hornack, P.C.
Fifth Floor
Law & Finance Building
Pittsburgh, PA 15219
Attorney for Appellants
Joseph Mack, III, Esquire (ARGUED)
Kurt A. Miller, Esquire
Thorp, Reed & Armstrong
One Riverfront Center
Pittsburgh, PA 15222
John P. Lacher, Esquire
Robert O. Lampl & Associates
960 Penn Avenue
The Convention Tower
Suite 1200 Pittsburgh, PA 15222
Rene D. Quinlan, Esquire
Plowman, Spiegel & Lewis
310 Grant Street
The Grant Building, 2nd Floor
Pittsburgh, PA 15219-2204
Stanley E. Levine, Esquire
Ronald B. Roteman
Campbell & Levine
3100 Grant Building
Pittsburgh, PA 15219
Attorneys for Appellees
____________
OPINION OF THE COURT
____________
WEIS, Circuit Judge.
In this suit brought under the Pennsylvania Wage Payment and
Collection Law, plaintiffs
assert claims against individual corporate officers and shareholders for
wages due from the
corporate employer. Because the claims are based on a collective
bargaining agreement, we
hold that the Wage Collection Law is preempted by the Labor Management
Relations Act and
the National Labor Relations Act. Accordingly, we affirm the district
court orders granting
summary judgment and dismissing the complaint.
Plaintiffs are 111 employees of the Shannopin Coal Company who were
laid off on July
24, 1992. Defendants are seven individuals and three corporations,
described variously as major
stockholders, owners, operators and agents of the employer. Shannopin had
filed for bankruptcy
protection under Chapter 11 on September 31, 1991, but remained in
operation until July 24,
1992. At that time, plaintiffs were owed various sums for wages actually
earned while the
bankruptcy was proceeding.
In May 1995, plaintiffs filed suit in the Court of Common Pleas of
Greene County,
Pennsylvania for the wages due and, as the complaint stated, for "several
categories of vacation
pay (graduated, regular, floating, and personal days) all of which were
wages guaranteed to and
earned by the plaintiffs as part of their contract of employment with
[Shannopin]."
Plaintiffs based their case on the Pennsylvania Wage Payment and
Collection Law, 43 Pa.
Cons. Stat. Ann. § 260.2, et seq. (1992), and sought liquidated damages
and attorneys' fees, as
well as unpaid wages. Attached to their complaint is a schedule of the
amounts claimed in the
various categories of "wages, regular vacation, graduated vacation,
floating and sick/personal."
Defendants removed the case to federal court, asserting that the
"contract of employment"
referred to in the plaintiffs' complaint was, in fact, a collective
bargaining agreement between the
United Mine Workers and Shannopin and that, therefore, the case was really
an action to enforce
the terms of the agreement under section 301 of the Labor Management
Relations Act, 29 U.S.C.
§ 185(a). After removal, defendants filed Answers asserting various
defenses, including
nonliability under the Wage Act and allegations that Shannopin had
continued in operation after
the bankruptcy at the insistence of the plaintiffs' union representatives.
The case was assigned to a magistrate judge, who concluded that the
plaintiffs' claims
required interpreting the collective bargaining agreement, and, as such,
were pre-empted by
section 301. In addition, the magistrate judge found that plaintiffs had
failed to exhaust their
contractual remedies under the collective bargaining agreement. He
therefore recommended that
summary judgment be granted as to those defendants who had filed
appropriate motions and that
the action be dismissed as to those defendants who had not joined in the
motions. He also denied
the plaintiffs' motion to remand the action to the state court. The
district judge adopted the
recommendations and entered appropriate orders without additional comment.
On appeal, plaintiffs contend that their claims are independent of
the collective
bargaining agreement, that once liability is established under state law,
reference to the collective
bargaining agreement for calculation of damages does not trigger
preemption, and that the
district court's ruling discriminated against union employees. Moreover,
plaintiffs point out that
even if preemption is applicable, removal jurisdiction does not
automatically follow.
Defendants counter that the plaintiffs' claims are based on a breach
of the collective
bargaining agreement and that a determination of wages and benefits due
would require
interpreting that agreement. In their view, federal law preempts the
state statute and the federal
courts have jurisdiction.
I.
Section 301(a) 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." 29 U.S.C. § 185(a).
The matter at hand alleges a violation of a contract to which the
union and the employer
are signatories, but neither is a party to this suit. Thus, the statutory
language does not provide a
ready answer.
Although section 301 refers only to jurisdiction, it has been
interpreted as authorizing
federal courts to fashion a body of common law for the enforcement of
collective bargaining
agreements. Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456
(1957). An underlying
reason for the development of federal law in this area is the need for
uniform interpretation of
contract terms to aid both the negotiation and the administration of
collective bargaining
agreements. See Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95,
103-04 (1962) (differing
interpretations would stimulate and prolong labor disputes). National
policy is particularly
important in the enforcement of arbitration provisions, a common element
of most collective
bargaining agreements. Lingle v. Norge, Div. Of Magic Chef, Inc., 486
U.S. 399, 410-11 (1984)
(federal labor policy fosters uniform, certain adjudications of disputes
over the meaning of
collective bargaining agreements).
These general principles, however, draw no clear lines of demarcation
and, as a
consequence, section 301 pre-emption has been a fruitful source of
litigation over the years. Not
surprisingly, case law has not been completely consistent, particularly
when state law may affect
the outcome. In Franchise Tax Bd. v. Construction Laborers Vacation
Trust, 463 U.S. 1, 23
(1983), the Court observed that, "the preemptive force of § 301 is so
powerful as to displace
entirely any state cause of action ‘for violation of contracts between an
employer and a labor
organization.' Any such suit is purely a creature of federal law,
notwithstanding the fact that
state law would provide a cause of action in the absence of § 301."
However, not all state law is preempted. In Lingle, the Court
concluded that an employee
could enforce a state law banning retaliatory discharge, even though she
was covered by a
collective bargaining agreement that provided for arbitration for claims
of discharge without
cause. Lingle held that courts could resolve matters of state law
involving labor-management
relations, but only if such matters were outside the "arbitral realm" of
collective bargaining
agreements. 486 U.S. at 411. Section 301 preemption "ensures that
federal law will be the basis
for interpreting collective-bargaining agreements." Id. at 409. But that
section does not address
the substantive benefits a state may provide to workers "when adjudication
of those rights does
not depend upon the interpretation of such agreements." Id.
In a footnote, the Lingle Court commented that in some situations,
although federal law
may govern the interpretation of the collective bargaining agreement to
determine proper
damages, the underlying state law claim, not otherwise preempted, would
prevail. Hence,
resolution of a state law claim could depend upon both the interpretation
of the collective
bargaining agreement and a separate state law analysis that does not turn
on the agreement. Id. at
413 n.12.
The "independent" nature of the plaintiffs' claim was the deciding
factor in Caterpillar,
Inc. v. Williams, 482 U.S. 386 (1987). There, employees sued for breach
of contracts that were
outside the scope of the collective bargaining agreement. Thus,
construction of that agreement
was unnecessary to establish the plaintiffs' case. Id. at 396.
An example of a dependent state law remedy occurred in International
Bhd. of Elec.
Workers v. Hechler, 481 U.S. 851 (1987). There, an employee filed a
common law tort suit in
state court against her union, charging that it had failed to fulfill its
duty of providing safe
conditions in the workplace, as it assumed to do in the collective
bargaining agreement. The
Supreme Court concluded that the claim was preempted because courts would
be required to
interpret the collective bargaining agreement to determine if such a duty
had been placed on the
union and if the agreement defined the nature and scope of that duty. Id.
at 861-62. Hence,
"[t]he need for federal uniformity in the interpretation of contract terms
. . . mandates that here,
as in Allis-Chalmers, [plaintiff] is precluded from evading the pre-
emptive force of § 301 by
casting her claim as a state-law tort action." Id. at 862.
In Allis-Chalmers Corp. v. Lueck , 471 U.S. 202 (1985), an employee
brought suit in
state court against his employer and the insurer of a health and
disability plan established by a
collective bargaining agreement. The complaint alleged bad faith in the
handling of the
plaintiff's disability claim. Reversing the state's highest court, the
United States Supreme Court
held that the claim was preempted.
Emphasizing that the meaning given a contract phrase or term must be
subject to uniform
federal law, Lueck explained that "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." 471 U.S. at 211.
That rule applies
"whether such questions arise in the context of a suit for breach of
contract or in a suit alleging
liability in tort." Id. The Court observed: "Any other result would
elevate form over substance
and allow parties to evade the requirements of § 301 by relabeling their
contract claims as claims
for tortious breach of contract." Id.
The Court was especially concerned that if state law were "allowed to
determine the
meaning intended by the parties in adopting a particular contract phrase
or term, all the evils
addressed in Lucas Flour would recur," including the uncertainties over "a
right to collect
benefits under certain circumstances." Lueck, 202 U.S. at 211. The Court
ultimately decided
that because the right asserted derived from the contract, and was defined
by the contractual
obligation of good faith, any attempt to assess liability inevitably
involved contract
interpretation. Even though "the state court may choose to define the
tort as ``independent' of
any contract questions . . . . Congress has mandated that federal law
govern the meaning given
contract terms." Lueck, 471 U.S. at 218-19.
Livadas v. Bradshaw, 512 U.S. 107, 114 S. Ct. 2068 (1994), presented
another variation
on the problem. In that case, the Court concluded that federal labor law
was not in conflict with
a state statute that imposed a monetary penalty for each day that passed
between an employee's
discharge and receipt of payments for wages due. The employee had sued to
recover a sum equal
to the wages for the three days that elapsed between her discharge and her
receipt of a check
from the employer. The Supreme Court emphasized that there was no dispute
over the amount
of the penalty to which the employee was entitled. Thus, "the mere need
``to look' to the
collective-bargaining agreement for damage computation is no reason to
hold the state law claim
defeated by § 301." Id. at 2079.
In those circumstances, the Court concluded that the collective
bargaining agreement was
irrelevant to the dispute between the employer and employee. Nor was
there any "indication that
the parties to the collective-bargaining agreement understood their
arbitration pledge to cover
these state-law claims." Livadas, 114 S. Ct. at 2079. Indeed, the
collective bargaining agreement
provided that a direct wage claim not involving interpretation of the
agreement could be
submitted to any other tribunal or agency that was authorized and
empowered to enforce it. Id. at
2080. The Court also commented that Congress had not intended to present
the plaintiff with the
"unappetizing choice" between having her state law rights enforced or
exercising her right to
enter into a collective bargaining agreement with an arbitration clause.
Id. at 2075.
From this brief glance at some of the many Supreme Court opinions in
this field, certain
observations may be drawn. In general, claims based squarely on a
collective bargaining
agreement or requiring analysis of its terms are preempted by section 301
and are removable to
the federal courts. See Lingle, 486 U.S. at 413; Hechler, 481 U.S at 859;
Lueck, 471 U.S. at 215;Franchise Tax Bd., 463 U.S. at 23. Claims that are
independent of a collective bargaining
agreement, even if they are between employees and employers, are not
removable. See Livadas,
512 U.S. 107, 114 S.Ct. at 2078-79; Lingle, 486 U.S. at 410; Caterpillar,
482 U.S. at 394-95.
II.
We now move to the specific issues presented in this case.
Logically, the first inquiry
must be jurisdiction. Plaintiffs contend that the case was not removable
from the state court.
Cautioning that preemption and removal jurisdiction were separate
concepts, the Court in
Caterpillar concluded that the plaintiffs' suit could not be removed from
the state court. The
Court emphasized that the "complete preemption" doctrine applies to
"claims founded directly
on rights created by collective bargaining agreements, and also claims
that are ``substantially
dependent on analysis of a collective-bargaining agreement.'"
Caterpillar, 482 U.S. at 394.
However, the "well-pleaded complaint" rule prevents removal to federal
court if a plaintiff
chooses to present only a state law claim and preemption is raised solely
as a defense. Id. at 398-
99. Although preemption may be a valid defense, jurisdiction remains with
the state court. Id. at
399.
The complaint here demanded payment for wages based on "contract."
This Court has
held that the Wage Act "does not create a right to compensation. . . .
[r]ather, it provides a
statutory remedy when the employer breaches a contractual obligation to
pay earned wages. The
contract between the parties governs in determining whether specific wages
are earned." Weldon
v. Kraft, Inc., 896 F.2d 793, 801 (3d Cir. 1990).
This suit is based "squarely on the terms of the collective
bargaining agreement."
Wheeler v. Graco Trucking Corp., 985 F.2d 108, 113 (3d Cir. 1993), and the
face of the
complaint states a federal claim. Section 301 of the Labor Management
Relations Act contains
civil enforcement provisions within the scope of which the plaintiffs'
claim falls. Dukes v. U.S.
Healthcare, Inc., 57 F.3d 350, 355 (3d Cir. 1995); Geopel v. National
Postal Mail Handlers
Union, 36 F.3d 306, 311 (3d Cir. 1994). Although the individual
defendants are not signatories
to the collective bargaining agreement, they may be parties to a section
301 suit. Wilkes-Barre
Publishing Co. v. Newspaper Guild of Wilkes-Barre, 647 F.2d 372, 378 (3d
Cir. 1981). In
addition, as the district court properly found "the plaintiffs' alleged
entitlement to compensation
and benefits is disputed and cannot be discerned without analyzing the
terms of the collective
bargaining agreement." Thus, preemption is not raised solely as a
defense. In these
circumstances, we are persuaded that the case was properly removed to the
district court.
III.
As noted earlier, the plaintiffs' suit was brought under the terms of
the Pennsylvania
Wage Collection Law, which provides that any employee or group of
employees may institute
actions for wages payable. 43 Pa. Cons. Stat. Ann. § 260.9a(a) (1992).
If judgment is entered
for the plaintiffs, "the court . . . shall . . . allow costs of
reasonable" attorneys' fees. 43 Pa. Cons.
Stat. Ann. § 260.9a(f). Section 260.2a defines employer as "every person,
firm, partnership,
association, corporation, receiver or other officer of a court of this
Commonwealth, and any
agent or officer of any of the above-mentioned classes employing any
person in this
Commonwealth." Plaintiffs seek to hold defendants personally liable as
agents or officers.
On several occasions, this Court has reviewed the relationship
between this statute and
federal labor law. The first time the issue was raised was in Carpenters
Health & Welfare Fund
v. Kenneth R. Ambrose, Inc., 727 F.2d 279 (3d Cir. 1983). In that case, a
pension fund sued for
unpaid contributions due a health and welfare plan. The complaint cited
both section 301 and the
Pennsylvania Wage Law. The defendants were the corporate employer and its
two sole officers,
who were also the majority stockholders. We determined that the
individual officers were not
liable under section 301 because there was insufficient evidence to
conclude that they were
acting as alter egos of the corporation. Id. at 284.
We rejected the district court's conclusion that the word "employer,"
as used in the Labor
Management Relation Act, "has as broad a meaning as the [Wage Law]
definition would
suggest," and we quoted with approval Combs v. Indyk, 554 F. Supp. 573
(W.D. Pa. 1982).
Ambrose, 727 F.2d at 284. In Combs, the district court stated, "it
appears that insulation of
corporate officers and agents from liability for section 301 violations
was, in part, a basis for the
parallel insulation of officers and members of local unions from liability
for section 301
violations." 554 F. Supp. at 575, citing Atkinson v. Sinclair Refining
Co., 370 U.S. 238, 249
(1962) (union members are exempt from personal liability for judgments
against the union).
Ambrose did, however, hold the individual officers liable under the
Wage Law, even
though "imposing liability for unpaid pension benefits on persons who have
not contractually
agreed to make the payments seems a harsh result." 727 F.2d at 283. In
response to the
defendants' argument that the Wage Law was preempted by the Labor
Management Relations
Act and ERISA, the panel said in a brief footnote that "we find these
contentions to be without
merit." Id. at 282 n.5.
However, in Solomon v. Klein, 770 F.2d 352 (3d Cir. 1985), in an
analogous situation,
we held that individual corporate officers were not liable under ERISA for
delinquent
contributions owed by the corporate employer. The majority of courts in
other jurisdictions have
held likewise. In McMahon v. McDowell, 794 F.2d 100 (3d Cir. 1986), we
held that
Ambrose's statement that the Wage Law was not preempted by ERISA was no
longer valid in
light of the Supreme Court's decisions in Metropolitan Life Ins. Co. v.
Massachusetts, 471 U.S.
724 (1985) and Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983).
The Court of Appeals for the Seventh Circuit in National
Metalcrafters v. McNeil, 784
F.2d 817, 825 (7th Cir. 1986), commenting on the Ambrose footnote, said,
"the particulars of the
contentions and the grounds of the court's action are inscrutable" and
noted further that Lueckhad placed the case "under a shadow." The McNeil
Court concluded that the Illinois Wage
Payment and Collection Act was preempted by section 301. "The only basis
of the state-law
claim in this case is that the company broke its contract to grant
vacation pay of a certain
amount. No state law required that any vacation pay be given or fixed the
rate of such pay if
given." Id. at 824. Consequently, the claim required interpreting the
collective bargaining
agreement.
We had occasion to revisit the Ambrose footnote in Wheeler. There, a
former employee
sued his corporate employer and an officer of the company for wages
alleged to be due. The
action was based on both the Labor Management Relations Act and the
Pennsylvania Wage Law.
We held that the section 301 suit was barred because the plaintiff had
failed to exhaust the
arbitration requirements in the collective bargaining agreement. We also
held that the Wage Law
claim was preempted because its basis was the collective bargaining
agreement and, therefore,
was "governed exclusively by federal law." Wheeler, 985 F.2d at 113.
In a footnote, Wheeler explained that "we think the statement in the
Ambrose footnote is
best understood to mean that the [Wage Law's] definition of an employer
was, as our prior
opinion put it, ``subsumed within the federal common law.'" Id. at 113-14
n.2. (In the first
Ambrose opinion, 665 F.2d 466, 470 (3d Cir. 1981), the panel had remanded
to the district court
to determine if the Wage Law was "subsumed within the federal common
law."). However, as
we have observed here, in the second Ambrose opinion, the panel decided
that the Labor
Management Relations definition of "employer" was not as broad as that in
the Wage Law. It
would seem that despite Wheeler's efforts, the Ambrose footnote remains
inscrutable. In any
event, we believe that Wheeler's holding of preemption is more in keeping
with the Supreme
Court's subsequent opinion in Lueck, which undermined the Ambrose
footnote.
District court opinions within Pennsylvania have differed in their
approach to preemption
in the Wage Law situation. Compare Lawrence v. Regal, 851 F. Supp. 202,
204 (W.D. Pa.
1993), aff'd 19 F.3d 643 (table) (3d Cir. 1994) (section 301 preempts
claim against corporate
officers under the Wage Law), with Tener v. Hoag, 697 F. Supp. 196, 197
(W.D. Pa. 1988)
(Ambrose imposes personal liability on corporate officers (ERISA claim)),
Central Pa. Teamsters
Pension Fund v. Burten, 634 F. Supp. 128, 131 (E.D. Pa. 1986) (non-
resident officers not subject
to personal jurisdiction under Wage Law) and Amalgamated Cotton Garment &
Allied Indus.
Fund. v. J.B.C. Co. of Madera, Inc., 608 F. Supp. 158, 166 (W.D. Pa. 1984)
(personal liability
imposed on corporate officers because of Ambrose footnote). See also In
re Futura Indus. Inc.,
69 B.R. 831, 836 (E.D.Pa. 1987) (Ambrose approved personal liability of
corporate officers
under the Wage Law); In re District 2, United Mine Workers, 67 B.R. 883,
887 (W.D.Pa. 1986)
(National Labor Relations Act preempts Wage Law, but Labor Management
Relations Act's lack
of preemption controlled by Ambrose footnote).
IV.
The plaintiffs' suit is against individual officers and stockholders
of the corporation.
Under the Wage Law, officers become the "employer" and are personally
liable for obligations
of the corporate employer. That definition created by state law, if
applied to the Labor
Management Relations Act, would substantially alter the scope and
enforcement of the typical
collective bargaining agreement.
The extent of the conflict between the two statutes is apparent under
the most
accommodating construction of the Wage Law with federal law, that is, that
a signatory
corporate employer is not deprived of its rights under a collective
bargaining agreement, but its
officers would be individually liable. Under this scenario, a corporation
would be entitled to
invoke the exclusive arbitration provisions of the agreement. That
possibility was not explored
in Ambrose because the corporation did not appeal an adverse decision in
the district court.
However, Wheeler held that the Wage Law was preempted by the Labor
Management
Relations Act. Hence, the corporate employer's right to arbitration
provided by the collective
bargaining agreement remained in effect. Although holding in favor of an
officer in his
individual capacity, Wheeler did not discuss in any detail its reasons for
that decision. On
reflection however, it is clear that the holding was correct.
If the Wage Law were construed to expand the definition of employer
in collective
bargaining agreements to include corporate officers, a number of adverse
effects on federal labor
law would follow. In addition to removing the long-standing insulation of
officers from personal
liability for corporate debts, see Solomon, 770 F.2d at 354, application
of the Wage Law
definition would allow wage claimants to sue corporate officers in state
court. Thus, employees
could bypass the grievance procedures established by a collective
bargaining agreement, as well
as the federal time limits for enforcing section 301. "A contrary rule
which would permit an
individual employee to completely sidestep available grievance procedures
in favor of a lawsuit
has little to commend it." Republic Steel Corp. v. Maddox, 379 U.S. 650,
655 (1965).
Moreover, the application of a collective bargaining agreement
covering the activities of a
corporation doing business in a number of states would be subject to the
vagaries of state law.
For example, although an employee in Pennsylvania covered by a collective
bargaining
agreement would be free to bypass the arbitration provisions by suing the
officers or corporation
under the Wage Law, another employee in a different state, working under
the very same
collective bargaining agreement would be limited to the arbitration
process. This is not the
uniform enforcement contemplated by federal labor law. In effect,
permitting use of the Wage
Law in disputes where collective bargaining agreements are in force,
undermines the uniformity
of federal labor law in a critical area -- enforcing wage agreements, a
mandatory subject for
collective bargaining.
As noted earlier, Lueck emphasized the need to protect and enforce
the provisions of
collective bargaining agreements where the parties had agreed that a
neutral arbitrator would be
responsible, in the first instance, for interpreting the meaning of the
contract. Unless preemption
is given effect, the "federal right to decide who is to resolve contract
disputes will be lost."
Lueck, 202 U.S. at 219. If that occurs, "claims involving vacation or
overtime pay, work
assignments, unfair discharge -- in short, the whole range of disputes
traditionally resolved
through arbitration -- could be brought in the first instance by a
complaint in tort rather than in
contract." Id. at 219-20.
Nor do we accept the plaintiffs' argument that Livadas requires a
different result here.
There, the statutory penalty was fixed by the wages agreed to have been
due on the date of
discharge, multiplied by the number of days before payment. There was no
need to refer to the
collective bargaining agreement to calculate the penalty and no one
asserted that there was an
interference with the arbitral process. Livadas did not present the
situation found in the case at
hand where an employee could bypass arbitration by resorting to the
statute. Moreover, the
employer here insists that there are uncertainties about eligibility for
the types of vacation pay, as
well as the correct amounts due in those instances. Such matters, Lueck
observed, are proper
grist for the arbitration mill. In addition, unlike the Wage Law, the
statute in Livadas did not
impose individual liability on the employer's officers and agents.
Plaintiffs also contend that preemption of the Wage Law amounts to
discrimination
against those covered by collective bargaining agreements because other
employees can pursue
claims under the state statute. See Livadas, 114 S. Ct. at 2075;
Metropolitan Life, 471 U.S. at
756 (Wagner Act did not seek to penalize workers for joining unions).
Although that argument
has some surface appeal, it fails to acknowledge the existence of
compensating factors when
federal law governs employment. See Rebecca Hanner White, Section 301's
Preemption of State
Law Claims: A Model for Analysis, 41 Ala. L. Rev. 377, 392 (1990).
Collective bargaining agreements frequently contain provisions for
favorable working
conditions. A key benefit union status often confers on workers is the
presence of a "just cause"
standard for discharge or discipline. Even more important, the grievance
and arbitration process,
a standard feature of almost all collective bargaining agreements, offers
union members a means
for quick and inexpensive resolution of contract disputes. Permitting
employees to sue in state
courts in order to bypass arbitration not only dilutes its effectiveness,
but calls into question its
very existence. Non-exclusivity of arbitration "would inevitably exert a
disruptive influence
upon both the negotiation and administration of collective agreements."
Republic Steel, 379
U.S. at 653, quoting Lucas Flour Co., 369 U.S. at 103.
Federal law rests on the premise that limitation of certain rights
afforded by the states is
justified by having a uniform labor policy. We are persuaded that
procedures for resolving
claims for wages, vacation and benefits fall within the category of
matters where national policy
controls.
We conclude, therefore, that the Pennsylvania Wage Law is preempted
by the Labor
Management Relations Act and the National Labor Relations Act. The
judgment of the district
court will be affirmed.
Antol v. Esposto, No. 95-3714
MANSMANN, J., dissenting.
This case presents the difficult and close question of whether
section 301 of the Labor
Management Relations Act, 29 U.S.C. § 185(a), preempts the employees'
action against the
owners of the company for unpaid wages, liquidated damages and attorneys
fees, which is
permitted under the Pennsylvania Wage Payment and Collection Law, 43 Pa.
Cons. Stat. Ann. §
260.2, et seq. (1992). We gleaned from the complaint that the former
employees of Shannopin
Mining Company sued the owners and operators, as well as the major
shareholders, of the
company because the company is in bankruptcy and has failed to pay them
what is due and
owing. Because I believe that the employees' WPCL claims are not
preempted, I respectfully
dissent from the majority's opinion. The Supreme Court's decision in
Livadas v. Bradshaw, 512
U.S. 107, 114 S. Ct. 2068 (1994), guides my decision.
In Livadas, the Supreme Court held that an employee's action based
upon a state law right
to receive a penalty payment from her employer was not preempted under the
LMRA even
though the penalty was tacked to her wages, which were governed by a
collective bargaining
agreement. At issue in Livadas was a California law which required
employers to pay all wages
due immediately upon an employee's discharge, Labor Code § 201; imposed a
penalty for refusal
to pay promptly, section 203; and placed responsibility for enforcing
these provisions on the
Commissioner of Labor. After Karen Livadas' employer refused to pay her
the wages owed upon
her discharge, but paid them a few days later, Livadas filed a penalty
claim pursuant to California
Labor Code § 203. The Commissioner of Labor responded to Livadas' request
with a form letter
construing another provision of the California Labor Code, Labor Code §
229, as barring him
from enforcing Livadas' claim because her terms and conditions of
employment were governed
by a collective bargaining agreement containing an arbitration cause. The
provisions of Labor
Code § 229 expressly precluded the Commissioner from adjudicating any
dispute concerning the
interpretation or application of any collective bargaining agreement
containing an arbitration
clause. After the Commissioner refused to enforce Livadas' claim, Livadas
commenced an
action pursuant to 42 U.S.C. § 1983 alleging that the Commissioner's non-
enforcement policy
was preempted by federal law because it abridged her rights under section
7 of the National
Labor Relations Act, 49 Stat. 452, as amended, 29 U.S.C. § 157. The
Commissioner argued that
his non-enforcement policy (and Labor Code § 229) was required by federal
law, namely section
301 of the LMRA, which has been read to preempt state-court resolution of
disputes turning on
the rights of parties under collective bargaining agreements.
Justice Souter, writing for a unanimous court, disagreed. Presented
with the opportunity
to preempt California Labor Code provisions granting protections to
terminated employees and
providing penalties against employers for violation of those protections,
the Court instead held
preempted the California Labor Commissioner's policy of refusing to
enforce those provisions
when the terminated employees were covered by a collective bargaining
agreement containing an
arbitration clause.
Relying upon its prior decisions in Allis-Chalmers v. Lueck, 471 U.S.
200 (1985), and
Lingle v. Norge, Division of Magic Chef, Inc., 486 U.S. 399 (1988), the
Court held that section
301 could not be read broadly to preempt non-negotiable rights conferred
upon individual
employees as a matter of state law and stressed that it is the legal
character of the claim as
"independent" of rights under the collective bargaining agreement that
decides whether a state
cause of action may go forward. The Court reiterated that "[w]hen the
meaning of contract terms
is not the subject of the dispute, the bare fact that a collective
bargaining agreement will be
consulted in the course of state-law litigation plainly does not require
the claim to be
extinguished." Livadas, 512 U.S. at ___, 114 S.Ct. at 2077, citing
Lingle, 486 U.S. at 413, n.12
("A collective bargaining agreement may, of course, contain information
such as rate of pay . . .
that might be helpful in determining the damages to which a worker
prevailing in a state-law suit
is entitled.").
Accordingly, the Supreme Court concluded that these principles
foreclosed even a
colorable argument that Livadas' claim under section 203 of the California
Labor Code was
preempted. The Court observed that beyond the simple need to refer to
bargained for wages rates
in computing the penalty, the collective bargaining agreement was
irrelevant to the dispute
between Livadas and her employer. The Supreme Court distinguished
Livadas' situation from
the situation in Plumbing, Heating and Piping Employers Council of
Northern California v.
Howard, 53 Cal. App. 3d 828, 836 (1975), where an employee sought to have
paid an unpaid
wage claim based upon his interpretation that his collective bargaining
agreement entitled him to
a higher wage. The employee there asserted that under the collective
bargaining agreement, he
was entitled to receive a foreman's rate of pay and not a journeyman's.
The Supreme Court
observed, "that sort of claim, however, derives its existence from the
collective bargaining
agreement, and accordingly, falls within any customary understanding of
arbitral jurisdiction."
Livadas, 512 U.S. at ___ n.6 and 512 U.S. at ___, 114 S.Ct. at 2078-79
n.20.
Interestingly, the Court in Livadas acknowledged that "Courts of
Appeals have not been
entirely uniform in their understanding and application of the principles
set down in Lingle and
Lueck," but found that Livadas, "in which nonpre-emption under § 301 is
clear beyond
preadventure" was "not a fit occasion . . . to resolve disagreements that
have arisen over the
scope of our earlier decisions." Livadas, 512 U.S. at ___ n.18, 114 S.
Ct. at 2078 n.18.
Livadas is dispositive here. In this case, the employees seek wages
allegedly due them
for the two weeks they worked prior to their lay-offs as well as vacation
pay. Recovery of these
wages is expressly provided for by Pennsylvania's Wage Payment and
Collection Law which is
virtually identical to the California law involved in Livadas. Both state
laws grant a right of
compensation for earned wages, including vacation pay. Under the WPCL:
Any employee or group of employees, labor organization or party to
whom any
type of wages is payable may institute actions provided under this
Act.
43 P.A. § 260.9a(a), Adam v. Benjamin, 627 A.2d 1186, 1191 (Pa. Super.
1993), alloc. denied,
642 A.2d 482 (Pa. 1994), cert. denied, 115 S. Ct. 92 (1994). "The right
to recover wages ``earned'
by the plaintiffs'/employees upon separation from employment is a
statutory remedy which
supplements (rather than supplants) a common law cause of action for
breach of contract."
Adam v. Benjamin, 627 A.2d at 1198. This Pennsylvania right is
nonnegotiable and applies to
unionized and nonunionized employees alike.
The majority attempts to distinguish Livadas' case from this case
because the Supreme
Court in Livadas found that there was no dispute between Livadas and her
employer over the
amount of the penalty to which Livadas was entitled. I do not believe,
however, that federal
preemption can turn on whether or not an employer chooses to dispute the
amount of wages an
employee is entitled, under state law, to receive. Thus, I cannot accept
the majority's distinction.
To do so would mean that an employer could utilize section 301 preemption
to avoid liability by
raising a dispute concerning the amount of wages owed in any given case.
Moreover, in this case, although the owner/operators of the mine
contend that the
employees' alleged entitlement to compensation and benefits is in dispute
and cannot be
discerned without interpretation of their collective bargaining agreement,
they have failed to
convince me that specific provisions of the collective bargaining
agreement are actually
implicated here. In order to determine whether a party's state law claim
is preempted per section
301, we look to see whether the resolution of the claim depends on the
meaning, or requires the
interpretation, of a collective bargaining agreement. Lingle, 486 U.S. at
405-406. Here, in order
to determine the amount of wages owed the former employees of Shannopin
Mining Company, a
court need only consult the appendix of the National Bituminous Coal Wage
Agreement,
NBCWA, at the conclusion of the collective bargaining agreement, which
sets forth the
remuneration that employees are to receive on a daily and hourly basis by
job classification.
After consulting the appendix, the calculation of any amount of unpaid
wages will be based upon
a calendar, as well as the employer's records, showing the amount of time
that individual
employees have worked. Since the resolution of these employees' claims
for unpaid wages does
not depend upon the meaning, or require the interpretation, of a
collective bargaining agreement,
their claims should not be preempted here.
One final comment about federal labor policy. It is important to
note that the employees
involved in this case could not receive their duly earned wages from the
company through the
arbitration process because the company was in bankruptcy after July 24,
1992, the last day the
employees performed work. Thus, I am not concerned that allowing
employees to assert their
state right to be paid for their earned wages would interfere with the
arbitration process in the
normal case, or would encourage employees to sidestep available grievance
procedures in favor
of lawsuits. Consequently, a uniform labor policy in favor of arbitration
will not be disturbed by
this Pennsylvania procedure which permits the unfortunate employee of a
bankrupt company to
seek recourse against parties not covered by the collective bargaining
agreement through an
additional means of redress in these unusual circumstances.