Skip to content

Gavel By: Christopher Lowe, Robert T. Szyba, Kaitlyn F. Whiteside

Seyfarth Synopsis: The New Jersey Appellate Division reinstated plaintiff’s state law discrimination and retaliation claims, finding the claims were not pre-empted by Section 301 of the LMRA.

In a published opinion issued on May 9, 2017, the three-judge panel of the New Jersey Appellate Division held that a union member’s Law Against Discrimination (“LAD”) and Workers’ Compensation Law (“WCL”) claims were not preempted by Section 301 of the Labor Management and Relations Act (“LMRA”), despite the presence of an applicable collective bargaining agreement (“CBA”) and potential CBA-based defenses available to the employer.

The plaintiff was employed as a commercial truck driver, and was a member of Teamsters Local Union No. 813.  Following a workplace injury, he was cleared for light duty work, so long as it did not involve commercial driving. The plaintiff then filed a workers’ compensation claim with the New Jersey Department of Labor and Workforce Development, Division of Workers’ Compensation.

Three months after filing the workers’ compensation claim, the company asked plaintiff to leave work, and by letter to the union, indicated that plaintiff would need to be recertified for duty as required by Department of Transportation (“DOT”) regulations before returning to work.  The company scheduled an independent medical examination, but the plaintiff declined to undergo the exam, and therefore, was not returned to work.

The union filed a grievance challenging the company’s failure to reinstate the plaintiff.  The grievance proceeded to arbitration, and was denied by the arbitrator who concluded that reinstatement would require examination and recertification pursuant to the DOT regulations.

The plaintiff then sued in New Jersey Superior Court alleging unlawful discrimination under the LAD and retaliation under the WCL. Concluding that the claims were pre-empted, the trial judge dismissed the complaint for lack of subject matter jurisdiction.  The plaintiff appealed.

The question before the Appellate Division was whether the trial judge correctly concluded that the LAD and WCL claims were pre-empted under Section 301 of the LMRA, which pre-empts claims that require an interpretation of a collective bargaining agreement.

The court first looked to the elements of the plaintiff’s claim that the company retaliated against him based on his workers’ compensation claim, which required showing that (i) he made, or attempted to make, a claim for workers’ compensation, and (ii) he was discharged for making that claim.

According to the court, under U.S. Supreme Court precedent in Lingle v. Norge Div. of Magic Chef, 486 U.S. 399 (1988), each of these is a “purely factual inquiry,” and therefore, requires no interpretation of the CBA.  Plus, plaintiff did not make any mention of any provision of the CBA in his complaint.  So, his WCL claim was not pre-empted under Section 301.

The court then turned to the LAD claim, which proved to be a more difficult question.  To establish a prima facie LAD claim, the plaintiff had to demonstrate (i) he was disabled; (ii) he was objectively qualified for his former position; (ii) he was terminated; and (iv) the company sought a replacement.  Although the court determined that each of these also presented a “purely factual inquiry,” the court recognized that the company may have a CBA-based defense based the CBA’s requirement that employees promptly comply with DOT physicals. Further, whether the plaintiff was “objectively qualified” for the position potentially implicated the CBA.

Ultimately, however, the appellate court determined that neither the requirement that the plaintiff was objectively qualified nor the company’s potential defenses required an interpretation of the CBA that would preempt the claim.  As noted by the New Jersey Supreme Court in Puglia v. Elk Pipeline, Inc., 226 N.J. 258, 279 (2016), “… a CBA-based defense is ordinarily insufficient to preempt an independent state-law action.”

Further, the CBA was not the only source, or even the primary source of the plaintiff’s duty to recertify.  Instead, it was DOT regulations that set forth the requirement and “To the extent an interpretation of them is required, federal law [and not the CBA] must be applied.”

Looking forward, unionized employers in New Jersey who are defending against claims under state law thus face additional hurdles stemming from decisions like Hejda v. Bell Container Corporation. For example, a Section 301 claim, which is a claim under a federal statute, could be removable to federal court.  Without the Section 301 claim, a defendant thus loses a potential basis for removal.  Additionally, where CBAs otherwise provide an administrative process that must be utilized before a Section 301 claim is filed, employers may lose the ability to enforce the administrative remedies provisions, or otherwise have a lawsuit dismissed if the administrative remedies were not exhausted. Last, unionized employees have a greater ability to circumvent Section 301’s limitation to contract-based remedies, and instead seek the full panoply of tort-based remedies that the LAD affords plaintiffs. Accordingly, the dynamics for any employer with an organized workforce that is defending a claim under New Jersey state law have shifted further in the direction of state-law protections, and away from the uniformity and precedent of the LMRA.

Hejda v. Bell Container Corporation, while not a sea change in the law, is representative of the both the trend in New Jersey of courts declining to find Section 301 pre-emption, as well as the courts’ interpretation of the LAD as a wide-reaching, liberally-construed source of employee protections.

By: Skelly Harper, Esq.

Seyfarth Synopsis: Third Circuit rejects market-participant argument, opening the door for preemption challenge to local law tying tax incentives to use of union labor.

The case before the Third Circuit, Associated Builders & Contractors v. City of Jersey City,  involves a Jersey City ordinance providing developers with tax abatements when they build projects in certain areas. Developers are eligible for the tax abatements, however, only if they enter into project labor agreements requiring their contractors and subcontractors to use union labor for the duration of the project. The PLAs required by the ordinance specify, among other things, that “there will be no strikes, lock-outs, or other similar actions,” and that the developer and the union will agree to dispute-resolution procedures. The ordinance covers projects that are funded entirely by private investment.

The legal issue before the Third Circuit was application of the “market participant doctrine.” The plaintiffs in the case argued that the ordinance was preempted by both the NLRA and ERISA. They also argued that the ordinance is barred by the dormant Commerce Clause of the U.S. Constitution. The District Court had ruled that these arguments were not cognizable, because it concluded that Jersey City acted as a market participant — and not a regulator — when enforcing the ordinance. The Third Circuit reversed and remanded.

The Third Circuit held that the market-participant doctrine did not apply because Jersey City did not have a “proprietary interest” in the privately funded projects. The Third Circuit reasoned that providing tax incentives does not transform Jersey City into an investor, owner, or financier of a project. The Third Circuit therefore directed the District Court to decide whether the ordinance was preempted or barred. The decision offered “no comment” on whether the ordinance was in fact preempted the NLRA or ERISA or barred by the dormant Commerce Clause.

The decision sets forth a potential road map for all employers — not just developers — to consider whenever confronted with local tax incentives that are only available to employers with a union contract. While the challenge was brought in this case by the developers, employers outside the construction industry may be able to pursue similar arguments. For example, the Third Circuit’s theory should encompass local laws that require hotels have a union for the hotel developer to receive a tax break

By:  Skelly Harper

An Illinois state appellate court recently confirmed that Railway Labor Act “minor dispute” preemption is alive and well as a potential defense to state-law retaliatory discharge claims. The case, Hughes v. United Airlines, Inc., involved a former flight attendant’s claim that she was fired for filing a worker’s compensation claim.

The flight attendant had taken a medical leave, and the collective bargaining agreement (CBA) between United and the union representing the flight attendant set a three-year limit on medical leaves. The flight attendant said she was ready to return from her medical leave just before the three years was up.  Alas, she came down with another medical condition on the day of her first scheduled flight back from leave, so she didn’t report to work.  Because she did not return to service within three years, United administratively separated her from employment, citing the CBA provision limiting leaves to three years.

The flight attendant filed a contractual grievance, challenging the airline’s interpretation of the contract, but that grievance was denied. The flight attendant then pursued litigation in court, claiming that she was fired for filing claim for worker’s compensation benefits, in violation of Illinois common law. She alleged that United’s stated reason for terminating her employment was a pretext for unlawful retaliation.  Her pretext allegation was based on her dispute with United over the proper interpretation of the medical leave provisions in the CBA.

United moved to dismiss the lawsuit, arguing that the court could not resolve the flight attendant’s state law tort claim without resolving the parties’ dispute about the meaning of the CBA. Consequently, United argued, the state law claim was preempted by the Railway Labor Act, which mandates that contractual disputes be resolved in arbitration.  The trial court agreed and dismissed the case.  The flight attendant appealed.

Despite noting that “claims for retaliatory discharge do not necessarily require a court to interpret a collective bargaining agreement,” the dismissal was affirmed by the Appellate Court of Illinois. In this particular case, the court held that a resolution of the flight attendant’s claim would have required interpretation of the CBA. The court highlighted the fact that the flight attendant’s own allegation of pretext in the complaint — that United had relied on a supposedly unknown, unwritten, and incorrect interpretation of the CBA — brought the meaning of the CBA squarely into issue.

The takeaway for carriers? Even in state court, Railway Labor Act preemption is alive and well as a potential defense to state law retaliation claims.  For unionized employers not covered by the RLA?  The same preemption principles apply to labor agreements negotiated under the National Labor Relations Act.  While many retaliation and discrimination claims by unionized employees   are not preempted (because they require no interpretation of a CBA), never be too quick to overlook the preemption defense.

By: Marc R. Jacobs, Esq.

On January 13, 2015, the U.S. Court of Appeals for the Seventh Circuit rejected the International Union of Operating Engineers Local 150’s bid for the full circuit court to rehear the September 2, 2014 panel decision upholding the Indiana law.  Five of the ten active judges on the Seventh Circuit dissented from the decision not to rehear the case.  Under the court’s rules, because a majority of the active judges did not vote for rehearing, the panel’s decision stands. 

We discussed the panel’s decision and the issues that it raised in a September 4, 2014 post [here], in which the panel (despite a vigorous dissent from Judge Diane Wood) held that the Indiana law was not preempted by the National Labor Relations Act and did not violate the United States Constitution.  As we also reported in a November 7 post [here], the Indiana Supreme Court has upheld the Indiana Right to Work Law, ruling that the law did not violate the Indiana Constitution.  

In light of the January 13 ruling, the union’s sole remaining avenue of judicial redress is to the United States Supreme Court.  Although the union has not formally announced its plans, a petition to the Supreme Court is likely.

By Ashley S. Kircher.

Last week, the United States District Court for the Southern District of Indiana held that state law donning and doffing claims brought by factory workers covered by a collective bargaining agreement were preempted by the Labor Management Relations Act.  See Jones v. C & D Techs. Inc., Case No. 11-cv-1431 (Aug. 28, 2012). The plaintiffs asserted that they were denied pay for time spent donning and doffing protective clothing, and brought claims under both the Fair Labor Standards Act and Indiana’s Wage Payment Act.

The defendant moved to dismiss only the Wage Payment Act claim, arguing that it was preempted by Section 301 of the LMRA, which gives federal courts jurisdiction to enforce collective bargaining agreements. More specifically, Section 301 preempts state law claims that are directly founded on or that substantially depend on analysis of a collective bargaining agreement.

The defendant argued that because the CBA covered the activities that were the subject of the plaintiffs’ claim under the Wage Payment Act (namely, it covered when donning and doffing time was compensable), it would be impossible to consider whether the defendant violated the Wage Payment Act without first deciding whether it had breached the CBA.

The court agreed, holding that any claim that the plaintiffs may have had under the Wage Payment Act was preempted by  Section 301. The court reasoned that it was impossible to evaluate the merits of the plaintiffs’ Wage Payment Act claims without first consulting the CBA.

The court found unavailing the plaintiffs’ argument that they had deliberately chosen to avoid making any claims under the CBA. The court reasoned that the fact that the plaintiffs chose not to assert a violation of the CBA did not preclude preemption. The court also rejected the plaintiffs’ argument that their state law claims derived from the requirements of the FLSA rather than the CBA, reasoning that the FLSA allows employers and unions to negotiate whether donning and doffing will be compensable. The plaintiffs also argued that it would be unfair to find preemption because in their view, the CBA’s grievance procedures would be futile. The court disagreed, noting that the defendant had explicitly stated that the plaintiffs’ Wage Payment Act claims were grievable under the CBA.

Though the plaintiffs’ FLSA claims were unaffected by the ruling, the case provides employers with a potential argument that state law claims brought by current or former employees that implicate collective bargaining agreements are preempted by Section 301.