[00:00:01] Speaker 03: And you may proceed with writing. [00:00:03] Speaker 03: Good morning, and may it please the court. [00:00:05] Speaker 03: I'm Dominic Dre, and with Michael Wertheim, I represent the appellant SunSuite Growers. [00:00:10] Speaker 03: I'll endeavor to reserve three minutes for rebuttal. [00:00:13] Speaker 03: That's good. [00:00:14] Speaker 03: The Teamsters negotiated a collective bargaining agreement on behalf of plaintiff and her coworkers. [00:00:20] Speaker 03: That agreement includes a dispute resolution provision with which plaintiff concededly did not comply. [00:00:28] Speaker 03: As a result, her claims should be dismissed. [00:00:31] Speaker 03: That is, in fact, the conclusion that the district court reached with respect to the one claim over which it retained jurisdiction. [00:00:38] Speaker 03: The easiest disposition of this case is the dispute resolution provision. [00:00:44] Speaker 03: Each of plaintiff's claims is a grievance within the meaning of that provision. [00:00:49] Speaker 03: The district court refused to enforce it because it concluded that waiver was not clear and unmistakable. [00:00:57] Speaker 03: That is not only incorrect, but it is at worst a question of contract interpretation, which itself triggers complete preemption under the LMRA. [00:01:07] Speaker 03: In fact, the district court actually recognized that fact, ER 23, before saying that the complete preemption did not apply because it was raised as a defense, ER 24. [00:01:21] Speaker 03: This court and the Supreme Court have expressly rejected that. [00:01:24] Speaker 03: In Lyons, this court explained that, quote, removal is always permitted, even if the federal issue is raised as a defense and does not appear on the face of the plaintiff's well-pleaded complaint. [00:01:36] Speaker 04: And once this case is removed, the correct resolution is to... But how do you deal with... That's one thing for removal, but that's different with respect to the Supreme Court's reasoning in Caterpillar. [00:01:49] Speaker 04: So how do you deal with Caterpillar? [00:01:51] Speaker 03: Yes. [00:01:52] Speaker 03: So the district court relies on this footnoted comment in Caterpillar, which is, frankly, its use of that quote is incorrect. [00:02:00] Speaker 03: Caterpillar recognizes that complete preemption is a corollary to the well-pleaded complaint rule that allows removal even if the complaint does not itself invoke either the CBA or any federal law. [00:02:17] Speaker 03: So Caterpillar itself actually stands for the opposite proposition that the district court used it for. [00:02:24] Speaker 03: And cases since then have only confirmed Caterpillar's holding in this court and in the Supreme Court. [00:02:34] Speaker 03: Let me find the exact language from Caterpillar. [00:02:35] Speaker 03: The interpretation and application of collective bargaining agreement is completely preempted. [00:02:44] Speaker 03: It is, quote, an independent corollary to the well-plated complaint. [00:02:48] Speaker 04: They're referring to cases in which the plaintiff's claims require interpretation of the collective bargaining agreement. [00:02:56] Speaker 04: And Caterpillar very carefully says that's different when it's a defense. [00:03:02] Speaker 04: And if the defense, the interpretive question only rises as defense, there is no preemption. [00:03:10] Speaker 03: That's not exactly right. [00:03:12] Speaker 03: So Caterpillar involved individual contracts, not a CBA at all. [00:03:15] Speaker 03: So begin with the fact that Caterpillar is not... Right. [00:03:19] Speaker 04: And the argument by the defendants in that case was that the CBA essentially waived or preempted the individual contracts, and the court said even if that's true, that's something for the state court to decide. [00:03:31] Speaker 03: Well, I think that's almost... Unless it's unmistakably clear. [00:03:36] Speaker 03: I think that, so the defendants argued that the subsequent CBA actually governed these folks' employment, and the Supreme Court answered that and said, no, it doesn't. [00:03:47] Speaker 03: they are just individual contract employees. [00:03:49] Speaker 03: So that was actually not for the state court. [00:03:51] Speaker 03: What it left for the state court is the interpretation of that individual agreement, whether or not it conferred the particular benefits. [00:03:57] Speaker 04: And the defendant's argument that the CBA constituted a waiver or an override of the individual contracts. [00:04:05] Speaker 04: And the court said that defense would not result in preemption. [00:04:12] Speaker 03: Yes, that's right, Your Honor. [00:04:13] Speaker 03: But the crucial fact in Caterpillar is that they were governed by individual contracts, and the Supreme Court decided that issue. [00:04:20] Speaker 03: It said the individual contract control. [00:04:22] Speaker 04: Right. [00:04:22] Speaker 04: And here, plaintiffs' claims are statutory. [00:04:25] Speaker 03: Correct. [00:04:26] Speaker 03: So here there's no argument that the CBA controls, that plaintiff is covered by the collective bargaining agreement. [00:04:32] Speaker 03: So we're not in the caterpillar situation. [00:04:34] Speaker 03: We have the normal application of complete preemption. [00:04:39] Speaker 03: And yes, plaintiff does what plaintiffs always do, which is pleads without referencing her CBA in order to keep the case in federal court. [00:04:48] Speaker 03: This is exactly 14 Penn Plaza, by the way. [00:04:52] Speaker 03: I mean, the waiver in this, I don't know if they wrote it with an eye on 14 Penn Plaza or not, but the waiver in this case, the, excuse me, dispute resolution provision in this case, says exactly what it did in 14 Penn. [00:05:07] Speaker 03: That all claims, and it lists the California Labor Code, this is fairly important as well, that it lists the California Labor Code [00:05:14] Speaker 03: and the Private Attorney General Act in this dispute resolution provision and says that all those claims are, quote, exclusively subject to this dispute resolution provision, which shall be the sole and exclusive remedy for such claims. [00:05:29] Speaker 03: That's at ER 223. [00:05:31] Speaker 03: This is exactly the kind of waiver language that exists in contracts that are heavily negotiated. [00:05:40] Speaker 03: The court in 14 Penn, I think it's at page 257, points out that labor organizations get something in exchange for offering a dispute resolution provision. [00:05:51] Speaker 03: That is one of the things of value that the Teamsters in this instance are able to offer to SunSuite, which has a great relationship with its union, thankfully, [00:06:00] Speaker 03: and in exchange they're able to extract other benefits. [00:06:04] Speaker 03: If this court were to say that that waiver is not clear and unmistakable, as the district court said, or that, or I should say moreover, that it's not even a question of contract interpretation that allows you to vindicate your rights in federal court, labor unions lose the ability to negotiate things of value in exchange for dispute resolution provisions. [00:06:26] Speaker 01: But don't the waiver provision, don't the cases speak about clear and unmistakable waiver of, waiver of statutory rights? [00:06:36] Speaker 01: So it's not, it's not just about, because I mean, there's an analog to arbitration type cases, right? [00:06:41] Speaker 01: Yes. [00:06:42] Speaker 01: And in those cases, the waiver is not just that we submitted to a grievance process through collective bargaining, but that you are expressly waiving your statutory rights to recover under state law. [00:06:55] Speaker 03: Thank you for the correction, Your Honor. [00:06:57] Speaker 03: That's exactly right. [00:06:58] Speaker 03: Our case is not a waiver of rights. [00:07:00] Speaker 03: It is a selection of the process of a forum in which to vindicate those rights. [00:07:05] Speaker 03: So plaintiff doesn't give up any of her rights under the dispute resolution provision. [00:07:10] Speaker 03: All she agrees to is to proceed through this four-step process [00:07:15] Speaker 03: in order to vindicate those rights. [00:07:17] Speaker 03: So the first step is meeting with the supervisor who then reports to her and the union. [00:07:22] Speaker 03: The union, by the way, hasn't joined this grievance, which is informative. [00:07:26] Speaker 03: Then the second step, the union rep and the employer meet. [00:07:29] Speaker 03: This is all at 223 through 225 of the excerpts. [00:07:33] Speaker 03: All of these claims could be vindicated through that process. [00:07:37] Speaker 04: That's why the district court dismissed the one claim that they found was governed by the CBA. [00:07:44] Speaker 04: But that is a different question from whether the rest of the district court's decision was correct. [00:07:52] Speaker 04: The plaintiff's claims, the plaintiff's claims are based on California law, do not at most require reference to and not interpretation of the CBA. [00:08:04] Speaker 04: I understand that you've made arguments that the state law claims require interpretation of the CBA, but I don't see any arguments that explain other than that they're sort of involved in the, or [00:08:20] Speaker 04: that they refer to provisions of the CBA, what exactly needs to be interpreted in the CBA to resolve the plaintiff's affirmative claims? [00:08:29] Speaker 03: Yeah, so all of these claims arise under the dispute resolution provision, which steelworkers, through Luke, through... Right, and that binds the union, and it binds the employee with respect to her claims that are preempted under 301. [00:08:49] Speaker 03: No, that suffices to remove all of the claims to federal court as completely preempted. [00:08:53] Speaker 03: Here's the language from Luke at page 219. [00:08:58] Speaker 03: Perhaps the most harmful aspect of the Wisconsin decision is that it would allow essentially the same suit to be brought directly in state court, which is what plaintiff is trying to do, without first exhausting the grievance procedures established in the bargaining agreement. [00:09:12] Speaker 03: That's the Supreme Court, Luke 471 US at 219. [00:09:16] Speaker 03: Since steelworkers in 1960, courts have recognized that if a dispute resolution covers the dispute, that is completely preempted and removable to federal court. [00:09:26] Speaker 03: Now, in this case, it goes incredibly quickly after that point because of the conceded failure, 1ER 25, the conceded failure of plaintiff to comply with, among other things, the timeline in which to register her grievance. [00:09:41] Speaker 03: So in this case, the complete preemption operates, I think, most transparently through this dispute resolution provision and the steelworkers trio of cases that recognize that if it arises under a dispute, if the dispute resolution provision encompasses your claim clearly and unmistakably, which, and actually I think 14 Penn Plaza says it in even more straightforward language, that it's [00:10:05] Speaker 03: it need only be explicitly stated that the dispute resolution covers certain claims, then those are completely preempted. [00:10:13] Speaker 03: They're removable to federal court. [00:10:15] Speaker 03: In this case, it then ends the case because dismissal is appropriate. [00:10:19] Speaker 03: That's also, Luke, and then this court's decision in Albino, which we cite in the reply brief, that says that if you haven't exhausted the contractual dispute resolution provision, then you are out of court, that it is dismissed. [00:10:35] Speaker 03: You know, the argument from well-pleaded complaint opens a ton of loopholes, including the possibility, as this court said in Columbia Export, of evading one's collective bargaining agreement for individual employees to undercut the union and the employer by pleading outside of the collective bargaining agreement, which is very easy to do. [00:10:55] Speaker 03: You could always just cite to state law. [00:10:58] Speaker 03: So to close that loophole, Congress created complete preemption. [00:11:03] Speaker 03: This court is kind of like the lucky draw court, because the two statutes that have that are ERISA and the LMRA, and this morning sitting collected them both. [00:11:12] Speaker 03: But the conceited- I don't know how lucky we are, but go ahead. [00:11:17] Speaker 03: The conceited effect of that is to result in dismissal, which should occur in this case. [00:11:23] Speaker 03: I will hold on to my time for rebuttal. [00:11:25] Speaker 02: We'll round up to four minutes. [00:11:38] Speaker 00: may please the court Glenn Dennis for plaintiff and appellee well I just want to respond to a couple points and then [00:11:47] Speaker 00: explain why I think the order should be affirmed. [00:11:50] Speaker 00: Responding to a couple points that my friend on the other side made would be, number one, that the only real U.S. [00:11:56] Speaker 00: Supreme Court case that's in there that really supports them in any way is Luke, and the Luke case is easily distinguishable based on the fact that there was a tort dressing up a contract claim, and the contract claim was a bad faith claim. [00:12:11] Speaker 00: The court said our resolution today is based on the fact that the duty or the scope of the duty of the defendant is grounded entirely in the contract. [00:12:21] Speaker 00: To put it differently and to put it in the way that this court has held in cases such as the en banc decisions of Shirk or Alaskan Ailerons versus Shirk and Kramer, that claim couldn't go forward without the contract. [00:12:38] Speaker 00: This is a very different situation in this case, which is why cases like Kramer, Shirk, and Burnside have all come out the way that they have. [00:12:48] Speaker 00: The U.S. [00:12:48] Speaker 00: Supreme Court in Levitas and Lingle, and in the Lingle case, I'd like to point out this is Levitas versus Bradshaw and Lingle versus Magic Chef, both California cases dealing with the labor code. [00:13:02] Speaker 00: The U.S. [00:13:02] Speaker 00: Supreme Court in Lingle said, even if dispute resolution pursuant to collective bargaining agreement [00:13:08] Speaker 00: on the one hand and state law on the other would require addressing precisely the same set of facts as long as the state law claim can be resolved without interpreting the agreement itself the claims independent of the agreement for section three oh one purposes [00:13:23] Speaker 00: There has been absolutely no argument. [00:13:25] Speaker 01: So is there then a clear and unmistakable waiver component to this at all? [00:13:32] Speaker 01: Because if you have these parallel claims that are arising under state law, labor code, and a grievance process, is there a situation where someone has submitted to a grievance procedure and despite wanting to bring forward labor code violations, there would still be preemption? [00:13:50] Speaker 00: Well, I'll answer that question in two ways. [00:13:53] Speaker 00: Number one, I think that the other side will certainly have the opportunity to try and compel arbitration under other agreements or under other legal concepts in state court. [00:14:04] Speaker 00: They'll be able to try and compel arbitration. [00:14:06] Speaker 01: But set arbitration aside. [00:14:08] Speaker 00: But if you were, and just so I understand the question correctly, you were asking about the clear and unmistakable waiver having to do with the grievance resolution procedure. [00:14:17] Speaker 00: So I think this court spoke to that best in Dahl versus Albertson's, a case that the other side neglected to mention from 2007. [00:14:26] Speaker 00: Dahl versus Albertson's was based entirely on Justice Brennan's reasoning in the, I'm sorry, [00:14:37] Speaker 00: Uh, uh, Justice Brennan's reasoning where he said that the, uh, the, that the, there's a countervailing policy that the plaintiff is the master of his or her complaint. [00:14:49] Speaker 00: I understand that the other side was saying, well, this allows all sorts of mischief to allow the plaintiff to plead around it. [00:14:55] Speaker 00: And if there were a clear and conspicuous grievance policy, perhaps that would be sufficient. [00:15:01] Speaker 00: And that's what the court was saying in Dow. [00:15:04] Speaker 00: But when you don't have a clear and conspicuous grievance policy or grievance procedure, rather, as there wasn't here, and there's no argument that it wasn't clear and on its face, the other side's argument in its brief [00:15:20] Speaker 00: its only point to respond to the fact that the grievance procedure is muddled and totally ambiguous is the fact that, well, perhaps it could allow for additional rights. [00:15:30] Speaker 00: Perhaps the appeal at step three or at step four is something that was just an extra right. [00:15:37] Speaker 00: Extra rights are not unknown in the law. [00:15:39] Speaker 00: What it is, though, is it makes quite clear, and reading DAL makes quite clear the fact [00:15:47] Speaker 00: If there isn't that sort of clarity, the court is not going to say the plaintiff is the master, the complainant is shoved aside. [00:15:55] Speaker 00: Justice Brennan said that the plaintiff would be master of nothing if the other side as a defense could simply inject federal issues at any time and therefore make the complaint one that sounds in federal law. [00:16:08] Speaker 00: The case, just to make a couple of other points, on the LMRA preemption on the first prong of Burnside here, it has to arise entirely from the CBA. [00:16:22] Speaker 00: And other cases or scenarios where it's not sufficient would be where a claim just refers to a CBA defined right, like Levitas, where claims run parallel. [00:16:33] Speaker 00: to a CBA right, like in Lingle, where claims are based on the same facts as the CBA and Balcorta from this court. [00:16:42] Speaker 00: We already talked about Luke a little bit, and I would just end by saying that the [00:16:49] Speaker 00: There's no interpretation required of the agreement for any of the substantive claims. [00:16:53] Speaker 00: That's something that, uh, the other side essentially, uh, was going, going, uh, going around, uh, Levitas, which says that there has to be an active dispute over contract terms and Shirk from this court that says that there can't simply be a hypothetical connection between the contract terms that are being raised by the defendant and the, and the claims that are actually being brought. [00:17:16] Speaker 00: All we saw here are exactly these sorts of hypothetical connections to things that had nothing to do with the allegations about pyramiding and about whether sick leave was available, which was not at all what the actual claims as alleged were. [00:17:32] Speaker 00: Unless the panel has any other questions, I think having even some additional time, that would be it for me. [00:17:44] Speaker 01: I guess just on the jurisdictional question. [00:17:49] Speaker 01: Since the district court found original jurisdiction over one of the claims, that one of the claims was preempted and then declined to exercise supplemental jurisdiction over the other ones, that should give us leeway to review the entire order under Carlsbad? [00:18:04] Speaker 01: Do you agree or disagree? [00:18:06] Speaker 00: I'd like to disagree, but I don't think I can. [00:18:13] Speaker 00: All I would say is that BP was quite circumspect about Carlsbad and said that Carlsbad has been called into question for a number of different reasons. [00:18:21] Speaker 00: I do think that supplemental jurisdiction under Carlsbad is something that allows you to read the entire order. [00:18:30] Speaker 01: I appreciate your candor. [00:18:32] Speaker 01: Would this have been a different situation had all the claims been found not preempted? [00:18:38] Speaker 01: Would we then not have appellate review over that type of order? [00:18:43] Speaker 00: Absolutely. [00:18:44] Speaker 00: There's a 2001 decision from this court, the name just escapes me, but I was in a deep last night where it talks about the fact that if you're in a supplemental jurisdiction scenario and all of the claims, the federal claims, were dismissed on jurisdictional grounds, that there is then absolutely no discretion for the court to hear or to entertain appeal from the order. [00:19:09] Speaker 00: It would only be if the federal claims were dismissed on their merits. [00:19:15] Speaker 02: Thank you, Council, very much. [00:19:17] Speaker 02: All right, thank you. [00:19:26] Speaker 03: Just a few quick points on rebuttal. [00:19:30] Speaker 03: I'd like to take up the issue about whether or not the terms of the dispute resolution provision are clear and unmistakable or expressly stated in 14 Penn Plaza terms. [00:19:39] Speaker 03: The district court found that it was somehow ambiguous because party is defined to mean [00:19:47] Speaker 03: the parties to the agreement, the teamsters on the one hand and Sunsweet on the other. [00:19:51] Speaker 03: And then at step four of the grievance process, it says, it switches from saying grievance to saying party, meaning only the union has the ability to force arbitration. [00:20:02] Speaker 03: Bingo, that's exactly correct. [00:20:04] Speaker 03: It's unambiguous, he correctly applied it. [00:20:07] Speaker 03: Even if it were though, somehow unclear, there are a couple of problems with that. [00:20:12] Speaker 03: One, that is not the waiver language. [00:20:16] Speaker 03: Where the court is finding an ambiguity about who gets to take the fourth step isn't the waiver language. [00:20:22] Speaker 03: The waiver language is what I read a moment ago that says, all such claims are exclusively subject to this dispute resolution procedure, which will be the sole and exclusive remedy. [00:20:32] Speaker 03: In other words, the district court found an ambiguity wrongly. [00:20:38] Speaker 03: in language that isn't the the language that forecloses going to court instead of pursuing the dispute resolution provision moreover uh... there is nothing ambiguous about that this unlike uh... some of the other cases in which there's a dispute uh... this case actually enumerates the statutes that are covered it is in that way almost like i said this is [00:21:02] Speaker 03: You're deciding 14 Penn Plaza again. [00:21:05] Speaker 03: It goes through and lists the specific statutes, as well as the contract, and says, things arising under these statutes are covered by this, and this is your sole and exclusive, exclusively subject. [00:21:16] Speaker 03: Twice says it. [00:21:17] Speaker 03: So any effort to gin up ambiguity doesn't work on its own terms, but then even if you had an ambiguity. [00:21:25] Speaker 01: Hey, counsel, can I ask? [00:21:26] Speaker 01: Yes. [00:21:26] Speaker 01: If the union had grieved on behalf of the plaintiff, we would be in arbitration land. [00:21:32] Speaker 01: right, at that point? [00:21:34] Speaker 01: Because the grievance process results in arbitration at the end of it, is that right? [00:21:41] Speaker 03: Right, so your Honor's question assumes that all the other prerequisites like timing are satisfied, right? [00:21:45] Speaker 03: So if they had timely filed, yes, exactly, we could be in arbitration right now. [00:21:48] Speaker 01: So the fact that the grievance process is referring to the union and not to an individual employee, why doesn't that make it ambiguous, sufficient to not require preemption? [00:22:01] Speaker 03: Well, grievance includes the employee unambiguously. [00:22:07] Speaker 03: I might have the language at my fingertips. [00:22:12] Speaker 03: Grievance means a claim by an employee or the union, so that unambiguously includes either of them. [00:22:19] Speaker 03: and then it sets forth the procedure. [00:22:21] Speaker 01: But the procedure contemplates the union taking action and not the individual employee or no? [00:22:27] Speaker 04: No, no, no. [00:22:28] Speaker 04: It's a basic tenet of labor law that the union is the party to the collective bargaining agreement, not the individual employee. [00:22:34] Speaker 04: Correct. [00:22:34] Speaker 04: And it's the union that has the right to go to arbitration, not the individual employee. [00:22:39] Speaker 04: An individual employee absent a very different language than is in the standard collective bargaining agreement cannot require the union to go to arbitration. [00:22:48] Speaker 03: Correct. [00:22:49] Speaker 03: So in this case, to apply—thank you, Judge Song. [00:22:52] Speaker 03: To apply that in this case, the union is the party, and it is in the defined terms here as well, but also as a matter of standard labor contract. [00:23:01] Speaker 03: The union is the party. [00:23:02] Speaker 03: The individual can also bring a grievance without the union, which is the circumstance we're in at this very moment. [00:23:09] Speaker 03: Unions can join it at any point in the process and can compel. [00:23:13] Speaker 03: I mean, this is all set forth. [00:23:15] Speaker 03: Again, if there's any question about the clarity of this contractual waiver, please see 223 in the excerpts. [00:23:24] Speaker 03: And then the ensuing two pages go through the process, which you can see for yourself. [00:23:27] Speaker 03: But again, that process, even if the process was a bit murky, we aren't in a situation where we're at step three of the process, and it's not clear who could go to arbitration or not. [00:23:36] Speaker 03: The language that has to be somehow not explicitly stated is the sole and exclusive part, and that's not even what the district court points to. [00:23:45] Speaker 03: So the other side sort of backfills the idea that somehow that was ambiguous, but that wasn't the basis for the decision below. [00:23:52] Speaker 03: It found an ambiguity on this irrelevant point, which was wrong, but on this irrelevant point about who can compel arbitration. [00:23:59] Speaker 03: This is a textbook case to apply the rule from Steelworkers and Luke that says if you are governed by the alternative dispute resolution process, that is subject to complete preemption and removed to federal court. [00:24:15] Speaker 03: And then here, because there's no contest about [00:24:17] Speaker 03: non-compliance with the prerequisites, the case should be dismissed. [00:24:20] Speaker 01: And that would apply even if the claims that were being raised were not arising from the collective bargaining agreement itself. [00:24:27] Speaker 01: So even if the other part of Burnside you don't meet, you claim you'd still get preemption because of the grievance process itself. [00:24:35] Speaker 03: Oh, yes, yes, exactly. [00:24:37] Speaker 03: And I'll rest on our papers on the construction of the other parts. [00:24:40] Speaker 03: If for some reason there were no dispute resolution provision that controlled the case, that's fully briefed in the papers. [00:24:46] Speaker 03: But the easiest and, I think, legally correct way to handle this case is to say, this requires the application of the dispute resolution provision. [00:24:56] Speaker 03: At worst, it's ambiguous, in which case you have an interpretation question, and you are in the second half of Burnside. [00:25:03] Speaker 02: but i think this is actually just a straightforward steelworkers luke case all right thank you very much counsel thank you again well-argued well brief we appreciate it a lot of acronyms today but that's the way it goes uh... so this particular panels done for the day thank you