Rabe v. United Air Lines, Inc.

In the

United States Court of Appeals
For the Seventh Circuit

No. 09-3300

L AURENCE H. R ABÉ,
Plaintiff-Appellant,
v.

U NITED A IR L INES, INC.,
Defendant-Appellee.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 08 C 6012—Rebecca R. Pallmeyer, Judge.

S UBMITTED M AY 5, 2010 Œ — D ECIDED F EBRUARY 28, 2011

Before E ASTERBROOK, Chief Judge, and C OFFEY and
H AMILTON, Circuit Judges.
H AMILTON, Circuit Judge. This case presents issues
concerning the application of United States employment

Œ
After examining the briefs and the record, we have
concluded that oral argument is unnecessary. Thus, the
appeal is submitted on the briefs and the record. See Fed. R.
App. P. 34(a)(2)(C).
2 No. 09-3300

discrimination laws to an international employment
relationship in which the parties agreed to application
of United States law. Plaintiff-appellant Laurence Rabé,
a French citizen, worked as a flight attendant out of the
Hong Kong and Paris bases of United Air Lines. Rabé’s
employment contract provided that it would be gov-
erned exclusively by “applicable United States law” and
that only courts and administrative bodies of the
United States and Illinois could hear disputes relating
to her terms of employment. When the company fired
her for alleged misconduct, she sued in the United
States District Court claiming that United had discrimi-
nated against her on the basis of her national origin,
age, and sexual orientation in violation of Title VII of the
Civil Rights Act of 1964, 42 U.S.C. § 2000e-2, the Age
Discrimination in Employment Act, 29 U.S.C. § 623, and
the Illinois Human Rights Act, 775 ILCS 5/1-102, 5/2-102.
The district court dismissed the case, concluding that
it lacked subject matter jurisdiction because Rabé is a
foreign national who worked for United abroad.
We reverse the judgment and remand for further pro-
ceedings. First, whether Rabé worked in the United
States is an issue affecting the merits of her claims but
not the district court’s subject matter jurisdiction. We
also conclude that the parties’ employment contract
had the effect of applying the substantive provisions of
United States and Illinois employment discrimination
laws to Rabé as a matter of contract law. Finally, Rabé’s
claims are not precluded or preempted by the Railway
Labor Act. We offer no comment on the merits of Rabé’s
claims except to say that she is entitled to try to prove
them on the merits.
No. 09-3300 3

I. Plaintiff’s Employment with United Air Lines
United hired Rabé in November 1993 to work in
France out of the company’s Paris hub. She signed an
individual employment contract at United’s head-
quarters in Chicago, Illinois. The contract specified that
her work would “be performed on board United’s
aircraft registered in the USA as they operate on routes
throughout the Company’s worldwide system,” and
that the aircraft would “constitute the establishment
where” she performed her employment. The individual
contract also required Rabé to join the Association of
Flight Attendants, the American labor union that repre-
sents United flight attendants.
The contract provided in articles 5 and 6 that “the
terms and conditions” of Rabé’s employment would “be
governed exclusively by applicable United States law,
including the Railway Labor Act and the AFA [collective
bargaining] agreement,” and that jurisdiction over all
employment-related claims would lie exclusively in
courts and administrative bodies of the United States
and Illinois. The individual contract even said that it
would not be valid unless Rabé wrote by hand: “Read
and approved, valid for agreement and in particular
for acceptance of the choice of US law clause (article 5)
and of the jurisdiction clause (article 6).”
United transferred Rabé to its Hong Kong base in
1997. According to her complaint, ninety percent of her
flights were to or from United States destinations until
May 2002, when she took a voluntary furlough from
the company. United recalled Rabé from the furlough
4 No. 09-3300

in August 2005. Still based in Hong Kong, she worked
only flights between Asian airports before things went
sour between her and United in 2007. According to
Rabé, who is a lesbian, her new supervisor once told her
that he believed it is “not right to be gay” and made
comments suggesting that he suspected she is a lesbian.
In September 2007, the supervisor initiated an investiga-
tion of Rabé for allegedly misusing company-issued
travel vouchers. Rabé contends that the investigation
was a pretext for the supervisor to fire her for invidious
reasons. At the end of the investigation in April 2008,
United fired Rabé, who was then 40 years old.

II. Proceedings in the District Court
Rabé filed this lawsuit in October 2008, and United
moved to dismiss for lack of subject matter jurisdic-
tion under Rule 12(b)(1) of the Federal Rules of Civil
Procedure. United argued that Title VII and the ADEA
do not apply to non-citizens working outside the United
States and that the Illinois Human Rights Act does not
apply to work outside Illinois. Alternatively, United
argued that Rabé’s claims are precluded (or preempted
in the case of the state law claim) by the Railway Labor
Act, 45 U.S.C. §§ 151-188. The district court dismissed
Rabé’s complaint for lack of subject matter jurisdiction,
reasoning that United States employment discrimination
laws do not apply to her because she did not spend
significant time working in Illinois or elsewhere in the
United States. The court did not reach United’s argument
that the Railway Labor Act precluded or preempted
plaintiff’s claims.
No. 09-3300 5

III. Subject Matter Jurisdiction
On appeal the parties continue to frame the question
as whether the district court had subject matter juris-
diction over Rabé’s claims. That is not correct. As the
parties agree, the protections of Title VII and the ADEA
do not generally extend to aliens who work outside
the United States. See 42 U.S.C. § 2000e-1(a); Shekoyan v.
Sibley Int’l, 409 F.3d 414, 422 (D.C. Cir. 2005); 29 U.S.C.
§ 630(f); Reyes-Gaona v. North Carolina Growers Ass’n,
250 F.3d 861, 865 (4th Cir. 2001); Denty v. SmithKline
Beecham Corp., 109 F.3d 147, 150 (3d Cir. 1997); see gener-
ally EEOC v. Arabian American Oil Co., 499 U.S. 244, 253-
55 (1991) (discussing alien exemption). But that issue
goes to the merits of a claim rather than the court’s
subject matter jurisdiction. An employee’s status as a
foreign worker may prevent her success on the merits in
a Title VII or ADEA case, but it is not a barrier to the
court’s power to adjudicate her case.
The Supreme Court has held that the closely related
question whether an employer has enough employees to
be subject to Title VII is a matter for the merits rather
than a requirement for subject matter jurisdiction.
Arbaugh v. Y & H Corp., 546 U.S. 500 (2006). The Court
explained that, “when Congress does not rank a statutory
limitation on coverage as jurisdictional, courts should
treat the restriction as nonjurisdictional in character.” Id.
at 516. We see no sound basis for distinguishing be-
tween the treatment of Title VII’s 15-employee require-
ment and the requirements that an alien seeking relief
under the employment discrimination statutes must
6 No. 09-3300

have performed her work within the United States. In
both Title VII and the ADEA, the domestic-work require-
ment appears outside of the statute’s jurisdictional pro-
vision. See 42 U.S.C. §§ 2000e-1 and 2000e-5(f)(3);
29 U.S.C. §§ 630(f) and § 626(c). There is no other reason
to believe that Congress intended to “rank” the restric-
tions as jurisdictional. See Arbaugh, 546 U.S. at 516.1
Rabé alleged and supported with evidence substantial
(i.e., non-frivolous or colorable) claims for coverage
directly under Title VII and the ADEA. Even if those
claims are not successful on the merits because her
work for the last several years of her employment was
not in the United States, they were substantial enough
to give the district court subject matter jurisdiction over
the case, including supplemental jurisdiction over the
state law claim. See, e.g., Greater Chicago Combine and
Center, Inc. v. City of Chicago, 431 F.3d 1065, 1070 (7th
Cir. 2005) (affirming summary judgment on merits of
federal constitutional claims that raised substantial
federal questions); Gammon v. GC Services Ltd. Partnership,
27 F.3d 1254, 1256 (7th Cir. 1994) (reversing dismissal
for lack of subject matter jurisdiction where plaintiff

1
The district court’s treatment of the coverage issue as one of
subject matter jurisdiction was consistent with the Supreme
Court’s approach in EEOC v. Arabian American Oil Co., which
affirmed a dismissal for lack of subject matter jurisdiction
based on the plaintiff’s foreign work location. See 499 U.S. at
259. That case did not carefully distinguish between the
merits and subject matter jurisdiction, however. Arbaugh
addressed the difference definitively, and it controls this issue.
No. 09-3300 7

alleged substantial federal claim); see generally Lauritzen
v. Larsen, 345 U.S. 571, 574-75 (1953) (holding that
federal court had subject matter jurisdiction to consider
Jones Act claim by Danish seaman for injury occurring
on board Danish-registered ship while in Cuban waters;
defense that Danish law governed the claim was issue
on merits, not a bar to subject matter jurisdiction).

IV. The Merits and Choice of Employment Law
Because United’s motion was an attack on the merits
of Rabé’s claims rather than the district court’s jurisdic-
tion to hear her case, the court should have treated it as
a motion to dismiss for failure to state a claim under
Rule 12(b)(6). See Miller v. Herman, 600 F.3d 726, 732-33
(7th Cir. 2010). Before the district court, the parties
spent most of their energy disputing whether Rabé
spent enough time working in and traveling to the
United States at relevant times to qualify as a person
working in the United States for purposes of Title VII
and the ADEA. United emphasized that Rabé had not
worked flights to or from the United States for five
years before her termination. Rabé emphasized that
over the entire course of her employment with United,
most of the flights she worked were to or from the
United States. The choice of the relevant time period is
debatable.
We do not disagree with the district court’s conclusion
that Rabé did not spend sufficient time working in the
United States or traveling to and from the United States
in the last several years before her termination to
8 No. 09-3300

qualify as being employed in the United States for pur-
poses of Title VII and the ADEA. We express no view as
to whether the fact that she worked on aircraft regis-
tered in the United States might be sufficient to apply
United States employment law. We conclude, however,
that the district court should have denied United’s
motion to dismiss on the basis of Rabé’s individual em-
ployment contract, which was attached to her com-
plaint. The contract specifies that “the terms and condi-
tions” of Rabé’s employment would “be governed ex-
clusively by applicable United States law.”
United concedes that the district court was free to
“apply the substantive law of Title VII, the ADEA,
[and] the IHRA.” United insists, nevertheless, that Rabé
cannot prevail because those statutes are not “appli-
cable” to her, precisely because she is a non-citizen who
worked outside the United States. The argument proves
far too much. United demanded that the employment
relationship be governed exclusively by United States
law. Under United’s theory, Rabé would not be pro-
tected by the employment discrimination laws of any
country. We understand the impulse to make an
explicit choice of law in a contract when the parties’
international relationship could result in prolonged
and expensive arguments about choice of law in the
event of a dispute. That is as true for employment
contracts as it is for sophisticated business-to-business
contracts. But we see no reason to interpret a contractual
choice-of-law provision as effectively excluding the
employee from the protection of public laws and
No. 09-3300 9

policies as fundamental as those embodied in employ-
ment discrimination laws.2
Instead, we view this case as more comparable to our
decision in Peters v. Gilead Sciences, Inc., 533 F.3d 594
(7th Cir. 2008). In Peters, we concluded that an em-
ployer could be held to a promise to extend to its
employee the protection of an employment discrimina-
tion law (there, the Family and Medical Leave Act) even
if the employee was not actually covered by the Act
because of a statutory exception. Id. at 598-601. We left
open the question whether the promise in that case

2
Our approach is consistent with that of the Restatement
(Second) of Conflict of Laws § 187(3) (1971), which teaches
that when parties choose the law of a state to govern their
contractual rights and duties, “[i]n the absence of a contrary
indication of intention, the reference is to the local law of the
state of the chosen law,” meaning it does not include the
chosen state’s choice-of-law rules. To interpret such provisions
as including the choice-of-law rules of the chosen state “would
introduce the uncertainties of choice of law into the pro-
ceedings and would serve to defeat the basic objectives,
namely those of certainty and predictability, which the choice-
of-law provision was designed to achieve.” Id., comment (h).
Courts have repeatedly rejected arguments similar to United’s
seeking to confuse application of contractual choice-of-law
provisions by having them refer to the chosen state’s choice-of-
law rules. E.g., Chan v. Society Expeditions, Inc., 123 F.3d 1287,
1297 (9th Cir. 1999); Economu v. Borg-Warner Corp., 652 F. Supp.
1242, 1246-47 (D. Conn. 1987), aff’d, 829 F.2d 311 (2d Cir. 1987);
Hutcherson v. Sears Roebuck & Co., 793 N.E.2d 886, 890-91 (Ill.
App. 2003); McGill v. Hill, 644 P.2d 680, 683 (Wash. App. 1982).
10 No. 09-3300

would be enforceable under contract law or the doctrine
of promissory estoppel. Id. For our purposes in this case,
however, the key point of the Peters decision is that an
employer may agree by contract to extend statutory
legal protections to an employee who might not be
covered by the statute itself.
In this case, the international character of the parties’
employment relationship could pose serious complica-
tions and uncertainties. Litigating the relevant employ-
ment location for employees who work in international
transportation can be complicated and expensive, as
shown by this case and others. See, e.g., Mithani v. Lehman
Bros., Inc., 2002 WL 14359, at *1 (S.D.N.Y. Jan. 4, 2002)
(Title VII did not apply to non-citizen who applied for
position in London office of U.S. employer); Hu v.
Skadden, Arps, Slate, Meagher & Flom LLP, 76 F. Supp. 2d
476, 477-78 (S.D.N.Y. 1999) (dismissing age discrimina-
tion suit brought by non-citizen after employer rejected
his applications to work in the firm’s Beijing and
Hong Kong offices); Gantchar v. United Airlines, Inc., 1995
WL 137053, at *10 (N.D. Ill. Mar. 28, 1995) (holding that
non-citizen members of flight crews based in foreign
country who spent only one-fifth of time working in
United States territory were not covered by Title VII).
United chose to address these complications and uncer-
tainties with a contract that required the employee to
agree to be governed by United States law. Rabé agreed
to the term, as reflected not only by her signature but
also by the required handwritten note saying that she
accepted the choice of United States law and the
No. 09-3300 11

choice of forum. The most reasonable interpretation of
this employment agreement is that United agreed to ap-
plication of the substance of United States law notwith-
standing provisions that would otherwise point against
its coverage because of Rabé’s status as an alien and
the changing locations of her work. Rabé has stated
claims for relief sufficient to withstand United’s motion
to dismiss.3
As we explained above, the district court had subject
matter jurisdiction under its federal question jurisdic-
tion because plaintiff has asserted a colorable claim
for coverage directly under the terms of the federal stat-
utes, and on remand the court will have supplemental
jurisdiction over the implicit state law claims for breach
of contract and/or promissory estoppel. (We recognize
that Rabé’s complaints have not articulated breach of

3
We refer to the substance of applicable law because not
all of the procedures of Title VII and the ADEA could
be required as a matter of contract law. In particular, the re-
quirement that a complaining party exhaust administrative
remedies by filing a charge with the Equal Employment Oppor-
tunity Commission or a parallel state or local agency could not
be imposed as a matter of contract. The parties could not
require the EEOC or other agency to investigate a charge
beyond the scope of its statutory authority. We also do not
address here the possibility that another nation could find
that an employment contract purporting to waive application
of that nation’s laws should not be enforced as a matter of
public policy if the parties had a sufficient relationship with
that nation.
12 No. 09-3300

contract and promissory estoppel theories. A complaint
need not identify legal theories, and specifying an
incorrect theory is not a fatal error. E.g., Williams v. Seniff,
342 F.3d 774, 792 (7th Cir. 2003), following Bartholet
v. Reishauer A.G. (Zürich), 953 F.2d 1073, 1078 (7th Cir.
1992).) Even without an attempt to assert a claim
directly under the federal statutes, the district court
would still have diversity jurisdiction in this particular
case. Rabé herself identified diversity of citizenship as
the basis for jurisdiction when she completed the
civil cover sheet for her original complaint. See 28
U.S.C. § 1332(a)(2) (diversity jurisdiction available when
amount in controversy exceeds $75,000 and case is
between citizen of a state and a citizen of a foreign
state). Under our reasoning, we should clarify, if an
employment discrimination claim in a similar future
case is based solely on the contract’s agreement to be
bound by United States law, subject matter jurisdic-
tion would need to be based on diversity jurisdiction
under 28 U.S.C. § 1332, and not federal question or
civil rights jurisdiction under 28 U.S.C. §§ 1331 and 1343.

V. The Railway Labor Act
Finally, we conclude that the Railway Labor Act is not
an obstacle to Rabé’s claims. The RLA provides, among
other things, a mandatory and exclusive arbitral mecha-
nism for “minor” disputes between air carriers and their
employees. See Hawaiian Airlines, Inc. v. Norris, 512 U.S.
246, 248, 252-53 (1994). “Minor” disputes are those
growing “out of grievances or out of the interpretation or
application of agreements covering rates of pay, rules, or
No. 09-3300 13

working conditions.” 45 U.S.C. § 151a; Hawaiian Airlines,
512 U.S. at 252-53; Brown v. Illinois Central R.R. Co., 254
F.3d 654, 658 (7th Cir. 2001). United argues that Rabé’s
claims fit that description because “they are founded
upon United’s alleged violation of the terms of the col-
lective bargaining agreement that governed Rabé’s em-
ployment.” Def. Br. 28.
If that were an accurate description of Rabé’s claims,
we would agree that her claims are preempted, but it is
not. She asserts rights that are independent of the collec-
tive bargaining agreement. They arise from her indi-
vidual employment contract with United, which we
have discussed above, and in which United and she
agreed that their relationship should be governed by
United States law, including, as we view it, federal em-
ployment discrimination laws.
RLA preemption might still apply if Rabé’s claims
could not be resolved without construing the collective
bargaining agreement and therefore intruding into the
RLA’s federal mechanism for interpreting and enforcing
collective bargaining agreements in the railroad and
airline industries. See Hughes v. United Air Lines,
Inc., No. 10-1129, slip op. at 4-5 (7th Cir. Feb. 8, 2011) (ex-
plaining Lingle v. Norge Division of Magic Chef, Inc., 486
U.S. 399 (1988)); see also Hawaiian Airlines, 512 U.S. at
262. But the mere mention of or reference to a collective
bargaining agreement in the course of a lawsuit does
not mean that the claim is preempted. Just because a
lawsuit concerns an employment dispute or involves
tangentially a provision of a collective bargaining agree-
14 No. 09-3300

ment does not mean that federal law preempts the
state law claims. Allis-Chalmers Corp. v. Lueck, 471 U.S. 202,
220 (1985) (applying similar standard under section 301
of Labor Management Relations Act). A state law claim
is preempted only when it asserts rights or obligations
arising under a collective bargaining agreement or
when its resolution is substantially dependent on the
terms of the collective bargaining agreement. The mere
need to consult a collective bargaining agreement
does not require preemption. When a claim does not
arise under a collective bargaining agreement, the claim
is preempted only when its resolution depends on the
disputed meaning of or requires interpretation of con-
tract terms. Livadas v. Bradshaw, 512 U.S. 107, 124 (1994)
(also applying section 301).
The principal focus here is on United managers’ sub-
jective reasons for terminating Rabé’s employment. Rabé
alleges that she was treated differently than other em-
ployees who were similarly situated in terms of their use
of company travel vouchers. Second Am. Cmplt. ¶ 24.
Given the nature of Rabé’s discrimination claims, their
resolution does not appear likely to require the court
to interpret the collective bargaining agreement “as
a potentially dispositive matter.” See Brown, 254 F.3d at
664 (holding that Americans with Disabilities Act
claim was preempted by the RLA where plaintiff’s
claim “requires a potentially dispositive interpretation
of the CBA’s seniority provisions”). The collective bar-
gaining agreement is relevant to Rabé’s claims because
she alleged that the travel-voucher policy was enforced
against her in a discriminatory manner, but her claims
No. 09-3300 15

do not call the policy itself into dispute. See Carmona v.
Southwest Airlines Co., 536 F.3d 344, 349-50 (5th Cir. 2008)
(reversing dismissal of flight attendant’s claims of sex
and disability discrimination; claims were not preempted
where plaintiff did not challenge collective bargaining
agreements or procedures, but alleged their discriminatory
application); cf. Brown, 254 F.3d at 660-64. Accordingly,
we conclude that Rabé’s claims are not preempted or
precluded by the RLA.
We R EVERSE the judgment of the district court and
R EMAND for further proceedings on the merits of Rabé’s
Title VII, ADEA, and Illinois Human Rights Act claims,
recharacterized as claims for breach of contract and/or
promissory estoppel.

2-28-11