Danielle Estrada v. Kaiser Foundation Hospitals

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 1 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT

DANIELLE ESTRADA; ROBERT No. 15-15133
HERNANDEZ; ARMANDO SANCHEZ;
STEVEN SPERLING; MARCINELLA D.C. No. 4:14-cv-04465-DMR
CALL; SHIRLEY NELSON,

Plaintiffs-Appellants, MEMORANDUM*

v.

KAISER FOUNDATION HOSPITALS;
THE PERMANENTE MEDICAL GROUP,
INC.; KAISER FOUNDATION HEALTH
PLAN, INC.; SOUTHERN CALIFORNIA
PERMANENTE MEDICAL GROUP,

Defendants-Appellees.

Appeal from the United States District Court
for the Northern District of California
Donna M. Ryu, Magistrate Judge, Presiding

Argued and Submitted December 16, 2016
San Francisco, California

Before: HAWKINS, BERZON, and MURGUIA, Circuit Judges.

*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
 Plaintiffs-Appellants (“Plaintiffs”) appeal the district court’s order denying

Plaintiffs’ motion to remand on the grounds that Plaintiffs’ California state law

claims were preempted by Section 301 of the Labor Management Relations Act, 29

U.S.C. § 185(a) (“Section 301”). We review de novo the denial of a motion to

remand, Or. Bureau of Labor & Indus. v. U.S. W. Commc’ns, Inc., 288 F.3d 414,

417 (9th Cir. 2002), and a district court’s finding of Section 301 preemption,

Cramer v. Consol. Freightways, Inc., 255 F.3d 683, 689 (9th Cir. 2001) (en banc).

We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

Section 301 “preempts the use of state contract law in [collective bargaining

agreement (“CBA”)] interpretation and enforcement.” Kobold v. Good Samaritan

Reg’l Med. Ctr., 832 F.3d 1024, 1032 (9th Cir. 2016) (quoting Cramer, 255 F.3d at

689). If the asserted state law cause of action involves a right that exists

independently of the CBA, which is undisputed in this case, then we consider

whether the state law claim is “substantially dependent on analysis of a collective-

bargaining agreement.” Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th

Cir. 2007) (quoting Caterpiller Inc. v. Williams, 482 U.S. 386, 394 (1987)). To

determine whether a claim is substantially dependent on analysis of a CBA, the

court must analyze “whether the claim can be resolved by looking to versus

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interpreting the CBA. If the latter, the claim is preempted; if the former, it is not.”

Id. at 1060 (emphasis added) (alterations, internal quotation marks, and citation

omitted). We focus on the allegations in the complaint in determining whether a

claim is preempted. See Caterpillar Inc., 482 U.S. at 398–99.

Here, the relevant CBAs relied upon in the complaint are a series of National

Agreements, negotiated and agreed to by Kaiser and a coalition of local labor

unions, which refer to Local Agreements, negotiated and agreed to by Kaiser and

the local union that represents Kaiser’s California employees, including Plaintiffs.

Section 2.A.1 of each of the National Agreements provides across-the-board yearly

wage increases of between 3% and 5%. Section 1.B.3 of the National Agreement,

the so-called “LMP Trust Provision,” states: “[a]n amount equal to nine cents per

hour per employee will be contributed to the [LMP Trust] throughout the term of

this Agreement, consistently across the Program.”1

Plaintiffs filed a class action in California state court against Kaiser, alleging

1
This language reflects the 2012 National Agreement. The 2005 and 2010
versions of the National Agreement read: “An amount equal to nine cents per hour
per employee will continue to be contributed to the Partnership Trust throughout
the term of this Agreement, using the current or jointly acceptable alternative
methodologies.” The relevant Local Agreements, which the complaint does not
specifically mention, contain tables setting forth “[N]egotiated [W]age [R]ates” for
each of Kaiser’s California positions.

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violations of California Labor Code §§ 222 and 226. Plaintiff’s theory is that the

LMP Trust Provision constitutes an unlawful deduction under California Labor

Code § 222, and that the $.09-per-hour contribution was not listed on Plaintiffs’

wage statements, in violation of California Labor Code § 226. Plaintiffs further

allege that this practice constituted a violation of the California Unfair Competition

Law (“UCL”), California Business & Professions Code § 17200, et seq. After

Kaiser removed the case to federal court, the district court denied Plaintiffs’

motion to remand and concluded that Section 301 preempted Plaintiffs’ state law

claims. We affirm.

We conclude that resolving Plaintiffs’ claims as alleged would require a

court to interpret the CBA.

1. California Labor Code § 222 makes it unlawful “in case of any wage

agreement arrived at through collective bargaining, either willfully or unlawfully

or with intent to defraud an employee . . . to withhold from said employee any part

of the wage agreed upon.” Identifying the “wage agreed upon” is therefore a

necessary first step to resolve Plaintiffs’ section 222 claim. Plaintiffs allege that

the “wage agreed upon” can be discerned from the National Agreement. They

claim that “[t]he agreed-upon wage terms of the 2005, 2010 and 2012 National

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Agreements are stated in section 2.A.1 of each agreement as across-the-board wage

increases of a specific percentage” and that the terms of the National Agreements

concerning the LMP Trust Provisions indicate that the employees are responsible

for the $.09-per-hour contribution. Plaintiffs further allege that the National

Agreements “superseded their local collective bargaining agreements,” except

where local agreements provided superior wages or benefits. Kaiser, on the other

hand, argues that the $.09-per-hour contribution was one of several factors used to

calculate the agreed-upon wage, which is set forth in the Local Agreement’s

Negotiated Wage Rates tables.

Because the complaint advances a contested interpretation of the National

Agreement, resolving the parties’ dispute requires the court to interpret how the

National and Local Agreements interact with each other and, more specifically, to

determine what combination of the LMP Trust Provision (National Agreement

Section 1.B.3), across-the-board percentage wage increase provision (National

Agreement Section 2.A.1), and Negotiated Wage Rates table in the Local

Agreement constitutes the wage the parties agreed would be paid. Thus, resolving

the parties’ dispute over whether the agreed-upon wage is set forth in the National

Agreement’s across-the-board wage increases or in the Local Agreement’s

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“Negotiated Wage Rates” would require interpreting the parties’ CBAs. See, e.g.,

Kobold, 832 F.3d at 1035–36 (noting that the state statute at issue requires

employees to be paid “the wages due and owing to them,” but that the statute fails

to “provide any means with which to assess whether wages are ‘due and owing,’”

and concluding that “because of a particular provision of the [] CBA that is in

dispute, a court must interpret, not just refer to or look at, the [] CBA”). Since a

court must interpret the parties’ CBA to resolve Plaintiffs’ section 222 claim,

Section 301 preempts the section 222 claim. Burnside, 491 F.3d at 1059–60.

2. Resolving Plaintiffs’ section 226 claim would also require a court to

determine whether the LMP Trust Provision was a deduction from the agreed-upon

wage or a factor in determining the agreed-upon wage. As described above, this

analysis would require interpretation of the CBA. The section 226 claim is

therefore preempted. See Burnside, 491 F.3d at 1059–60.

3. Finally, since Plaintiffs allege in their complaint that the sections 222 and

226 violations form the basis of Plaintiffs’ UCL claim, the UCL claim is derivative

of the sections 222 and 226 claims. Given that the sections 222 and 226 claims are

preempted, the derivative UCL claim also fails. See, e.g., Alcantar v. Hobart

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Serv., 800 F.3d 1047, 1051 (9th Cir. 2015) (acknowledging UCL claims that derive

from violations of the California Labor Code).

AFFIRMED.

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