Vargas v. Geologistics Americas, Inc.

United States Court of Appeals
For the First Circuit

No. 01-2058

ISRAEL SOTOMAYOR VARGAS, ET AL.,

Plaintiffs, Appellees,

v.

GEOLOGISTICS AMERICAS, INC., ET AL.,

Defendants, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. José Antonio Fusté, U.S. District Judge]

Before

Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and Lipez, Circuit Judge

Ariadna Alvarez, with whom Francisco Chevere, McConnell
Valdes, Rafael E. Aguilo-Velez, and Schuster, Usera, Aguilo &
Santiago were on brief, for appellants.
Jorge Carazo-Quetglas, with whom Toledo Toledo & Carazo-
Quetglas, P.S.C. was on brief, for appellees.

April 1, 2002
 COFFIN, Senior Circuit Judge. Plaintiffs-appellees are

former employees of Lep Profit International, Inc. (“Lep

Profit”), which had been sold and became Geologistics Americas,

Inc. (“Geologistics”). They brought suit in the Puerto Rico

Court of First Instance charging that Geologistics, Caribbean

Transportation Services, Inc. (“Caribbean”), Federal Express

Corporation (“FedEx”), Teamsters Union of Puerto Rico, Local 901

(“Union”), and José Cádiz, an official of the union, had

terminated their employment in violation of their collective

bargaining agreement ("CBA") and had interfered with their

contractual rights. No law, federal or Puerto Rican, was cited

in the complaint; the only reference was to “the applicable

labor laws.” Defendants were successful in removing the case to

federal district court, the court agreeing that the complaint in

substance alleged violations of Section 301 of the Labor

Management Relations Act, 29 U.S.C. § 185, Section 9 of the

National Labor Relations Act, 29 U.S.C. § 159, the Railway Labor

Act, 45 U.S.C. § 151, and Puerto Rican contract and tort law.

Defendants then moved to dismiss the complaint on

statute of limitations grounds, arguing that the complaint,

which charged the defendant companies with breaching the CBA and

the union defendants with breaching their duty of fair

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representation, constituted a hybrid Section 301/fair

representation suit. Accordingly, the appropriate limitations

period, under DelCostello v. Int’l Bhd. of Teamsters, 462 U.S.

151 (1983), was six months. The CBA had a termination date of

January 7, 1999. Any dismissals in violation of the CBA had to

have occurred prior to that. And, since the complaint had not

been filed until one and three quarters years later, on

September 1, 2000, defendants argued that the suit was untimely.

Plaintiffs responded, not contesting that the complaint

contained a time-barred hybrid claim, but instead urging that

there were several unidentified state causes of action. They

asked the court to retain supplemental jurisdiction or remand

the case to the Puerto Rican court. Defendants opposed both

requests, arguing that the facts alleged in the complaint

described a matter completely preempted by federal law. The

district court dismissed the federal claims as time-barred,

declined to exercise supplemental jurisdiction over the state

law claims, and remanded the case to the Puerto Rico Court of

First Instance without reaching the issue of preemption. It

subsequently denied without comment defendants’ motion to

reconsider. The defendants appealed.

The substantive issue before us on appeal is whether

any state claims contained in the complaint survive the powerful

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preemptive force behind Section 301 and the allied fair

representation provisions of the National Labor Relations Act.

As the Supreme Court has noted:

[T]he pre-emptive 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 absence of § 301.

Caterpillar, Inc. v. Williams, 482 U.S. 386, 393 (1987) (quoting

Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S.

1, 23 (1983)).

In BIW Deceived v. Local S6, 132 F.3d 824, 831 (1st

Cir. 1997), we noted that duty of fair representation

"preemption operates in much the same fashion as section 301

preemption.” And in Magerer v. John Sexton & Co., 912 F.2d 525,

531 (1st Cir. 1990), we applied the same test to state claims of

tortious interference with contractual relations.

The Court has also laid down guidelines for determining

when complete preemption is triggered. In Caterpillar, 482 U.S.

at 394, it said, “Section 301 governs claims founded directly on

rights created by collective bargaining agreements and also

claims substantially dependent on analysis of a collective

bargaining agreement.” Moreover, it held that

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 [o]nce an area of state law has been
completely pre-empted, any claim purportedly
based on that pre-empted state law is
considered, from its inception, a federal
claim, and therefore arises under federal
law. . . . The complete pre-emption
corollary to the well-pleaded complaint rule
is applied primarily in cases raising claims
pre-empted by § 301 of the LMRA.

Id. at 393; see also Beidleman v. The Stroh Brewery Co., 182

F.3d 225, 237 (3d Cir. 1999).

If, then, the state claims are completely preempted by

federal law and no cause of action survives for consideration by

the Commonwealth court, remand to that court would be improper.

See St. John v. Int’l Ass’n of Machinists and Aerospace Workers,

139 F.3d 1214, 1218 (8th Cir. 1998). The task before us is to

review the arguments of plaintiffs-appellees in the light of the

allegations of the complaint to see whether any state law claims

are founded on the CBA or involve interpretation of the CBA.

Appellees advance four propositions. Each deals with

a separate basis for avoidance of preemption. The first

concerns a state claim of tortious interference with contractual

relationships. This claim is leveled at Caribbean and FedEx.

In their brief, appellees describe Caribbean and FedEx as third

parties, not parties to the CBA, who carried out a deliberate

strategy to terminate plaintiffs’ employment so that, after such

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termination, they could accomplish the sale of Lep Profit’s

assets to themselves.

Whatever might be the preemption survival potential of

such a claim, it bears no resemblance to what appears in the

complaint. In the complaint, there is no allegation that

Caribbean and FedEx engaged in any action before they became, as

successors to Lep Profit, parties to the CBA. On the contrary,

paragraphs 40, 41, and 42 link together Geologistics, Caribbean,

and FedEx as having acquired Lep Profit’s assets and liabilities

and as having assumed all of Lep Profit’s contractual

obligations. Furthermore, in paragraph 44 it is specifically

alleged that all three successors violated the CBA at the time

of the termination of plaintiffs’ employment.

At oral argument, appellees’ counsel, confronted with

the allegations of the complaint, said that the complaint must

be read liberally, that there may be other information in the

background, and that there had been no discovery. But this is

not a situation where only minor facts or inferences need be

supplied. A “liberal” reading would in effect substitute

entirely different allegations. As for the absence of

discovery, we note that no Rule 56(f) request for additional

time in which to conduct necessary discovery seems to have been

made.

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 Appellees’ second claim is directed at Geologistics,

alleging the breach of an agreement wholly independent of the

CBA: a letter to employees dated August 27, 1998. In paragraph

34 of the complaint, this letter is alleged to have announced a

name change, from "Lep Profit International" to "Geologistics

Americas, Inc.," and to have added that this was only a change

in the name and that “the continuity of the acquired rights was

guaranteed.” How such a unilateral, gratuitous, unbargained-for

message, confirmatory of and founded on CBA rights, can be

considered an independent agreement sufficient to escape Section

301 preemption escapes us.

Appellees’ third claim is directed at the union.

Paragraphs 35 and 36 allege that on September 15, 1998, it

entered into a “Closing Agreement” with Lep Profit, which “was

meant to leave without effect” the CBA. It seems unarguable to

us that such a claim would necessarily involve ascertaining what

rights the CBA had contained in order to know how the Closing

Agreement had compromised them or rendered them to no effect.

Appellees’ only rejoinder is to cite a Puerto Rico Supreme Court

case, Rivera v. Security Nat. Life Ins. Co., 106 D.P.R. 517

(1977). The issue there was whether Puerto Rico had an

appropriate compensatory remedy in place to supplement the

remedy expressly provided by the federal law. The Rivera court

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merely assumed for argument’s sake the permissibility of such a

state law remedy, but it found no such remedy in place. It

therefore made no decision as to whether federal preemption

would apply in a proper case.

Finally, appellees claim that they are entitled to

severance pay in accordance with Law 80 of May 30, 1976, 29 P.R.

Laws Ann. § 185. This law mandates some compensation in the

event of employment termination "without just cause." But a

determination of just cause presupposes an analysis of the

rights and duties imposed by the CBA. Moreover, even in the

event that a termination found not to be in violation of the CBA

could otherwise be adjudged without just cause under Law 80, the

uncertainty caused by the application of two systems of law

would undermine the policy of uniformity in labor law

administration. See Beidleman, 182 F.3d at 231-32. We

therefore hold that all claims in the complaint are preempted by

federal labor law.

The district court’s order remanding the state law

claims is vacated. The district court shall enter judgment for

the defendants on all claims asserted in the complaint.

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