Opinion
Case No. 3:18-cv-01397-JR
02-05-2019
SPENCER McCLOUD, Plaintiff, v. APPLIED INTEGRATED TECHNOLOGIES, INC., Defendant.
FINDINGS AND RECOMMENDATION :
Plaintiff Spencer McCloud moves to amend his complaint pursuant to Fed. R. Civ. P. 15. For the reasons set forth below, plaintiff's motion should be granted in part and denied in part.
BACKGROUND
Defendant Applied Integrated Technologies, Inc. provides security staffing to federal agencies. Def.'s Resp. to Mot. Amend 2 (doc. 26). In June 2012, plaintiff was hired as a "security officer" by defendant and offered the following benefits "pursuant to a private employment agreement": "$22.03 per hour in wages; [a] fringe benefit allowance for health insurance in the amount of $4.75 per hour (up to 40 hours per week); 10 paid holidays per year; 10 paid vacation days per year; [and] [p]ayment for travel time between work sites." Proposed Am. Compl. ("PAC") ¶ 2 (doc. 22-1).
In May 2016, plaintiff joined the United Government Officers of America, International Union, Local 371 Union ("Union"). Id. at ¶ 3. Pursuant to the underlying collective bargaining agreement ("CBA"), plaintiff was guaranteed the same employment benefits, except that his hourly wage increased to $22.80 as of December 1, 2017. Id.
At all relevant times, plaintiff worked 32 hours per week, which the CBA classified as full-time. Id. at ¶ 4; Redmond Decl. Ex. A, at 7 (doc. 27-1); Redmond Decl. Ex. B, at 8 (doc. 27-2); Redmond Decl. Ex. E, at 8 (doc. 27-5). The CBA also contained mandatory grievance and arbitration procedures. Redmond Decl. Ex. A, at 20-21 (doc. 27-1); Redmond Decl. Ex. B, at 21-22 (doc. 27-2); Redmond Decl. Ex. E, at 22-23 (doc. 27-5).
Defendant produced the CBA between itself and "all armed and unarmed security officers employed by Applied Integrated Technologies" in support of its opposition. Redman Decl. ¶ 7 (doc. 27). As discussed herein, the PAC incorporates the CBA by reference, such that it is properly before the Court. Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006).
In May 2018, plaintiff's employment with defendant ended due to the nonrenewal of defendant's federal government contract. PAC ¶ 6 (doc. 22-1).
In June 2018, plaintiff commenced this action in Multnomah County Circuit Court, alleging claims for breach of contract, negligence, and unpaid wages under Or. Rev. Stat. §§ 652.120, 652.140, and 652.150. See generally Notice of Removal Ex. 1 (doc. 1-1). In July 2018, defendant removed plaintiff's complaint to this Court.
In August 2018, defendant moved to dismiss plaintiff's complaint in its entirety. In December 2018, the Court granted defendant's motion but allowed plaintiff leave to seek amendment in light of plaintiff's representation "he has additional facts in his possession supportive of a claim for breach of contract under state law," as well as his expressed intention "to pursu[e] relief under 29 U.S.C. § 185(a) for claims arising after May 2016." McCloud v. Applied Integrated Techs., Inc., 2018 WL 6496793, *4 (D. Or. Oct. 15), adopted by 2018 WL 6497842 (D. Or. Dec. 7, 2018).
On December 21, 2018, plaintiff filed the present motion to amend. On January 18, 2019, defendant opposed plaintiff's motion on futility grounds.
STANDARDS
Leave to amend pleadings "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). Courts apply Rule 15 with "extreme liberality." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (citations omitted). In determining whether a motion to amend should be granted, courts generally consider four factors: (1) undue delay; (2) bad faith; (3) futility; and (4) prejudice to the opposing party. Forsyth v. Humana, Inc., 114 F.3d 1467, 1482 (9th Cir. 1997) (citation omitted).
These factors are not weighted equally: "futility of amendment alone can justify the denial of a motion [to amend]." Ahlmeyer v. Nev. Sys. of Higher Educ., 555 F.3d 1051, 1055 (9th Cir. 2009). A proposed amendment is futile if it would be immediately "subject to dismissal." Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir. 1998). As such, the proposed complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
DISCUSSION
In the PAC, plaintiff eliminates his negligence and state statutory claims, and instead alleges breach of private contract pursuant to Oregon law (i.e., claims one through three, related to events occurring between June 2012 and April 2016) and breach of the CBA under 29 U.S.C. § 185(a) (i.e., claims four through seven, concerning May 2016 through May 2018). Plaintiff's proposed claims are premised on the fact that defendant did not compensate him for holidays, vacation days, or travel time until May 2017 due to wrongfully classifying him as a part-time employee; and deducted $4.75 per hour from his wages between November 2016 and November 2017 for health insurance that was never provided. PAC ¶¶ 4, 7-12 (doc. 22-1).
Defendant asserts the proposed amendments are futile such that plaintiff's motion should be denied. Regarding plaintiff's state law claims, defendant argues the PAC is preempted under § 301 of the Labor Management Relations Act ("LMRA"), given plaintiff's undisputed membership in the underlying collective bargaining unit. Def.'s Resp. to Mot. Amend 7-12 (doc. 26). Alternatively, defendant contends plaintiff's state law claims fail to adequately identify an independent employment agreement. Id. at 15-16. Regarding plaintiff's federal claims, defendant asserts the PAC is time-barred and neglects "to allege that the Union breached its duty of fair representation." Id. at 12-15.
I. Claims Brought Under State Law
Section 301 of the LMRA states: "Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . may be brought in any district court of the United States having jurisdiction of the parties." 29 U.S.C. § 185(a). The pre-emptive effect of § 301 has been expanded "beyond suits alleging contract violations to state law claims grounded in the provisions of a CBA or requiring interpretation of a CBA." Kobold v. Good Samaritan Reg'l Med. Ctr., 832 F.3d 1024, 1032 (9th Cir. 2016) (citation and internal quotations omitted). Regardless, "not every dispute concerning employment, or tangentially involving a provision of a collective-bargaining agreement, is pre-empted by § 301." Id. (citation and internal quotations omitted). Critically, if "the asserted cause of action involves a right conferred upon an employee by virtue of state law" that is not "substantially dependent on analysis of a collective-bargaining agreement," then the claim may proceed. Id. at 1032-33 (citations and internal quotations omitted).
Here, the CBA at issue applies to "all armed and unarmed security officers employed by Applied Integrated Technologies." Redmond Decl. Ex. A, at 2 (doc. 27-1); Redmond Decl. Ex. B, at 2-3 (doc. 27-2); Redmond Decl. Ex. E, at 2 (doc. 27-5). The CBA further delineates that the Union is the "sole and exclusive bargaining representative" for "armed and unarmed security officers." Id.; see also Redmond Decl. ¶ 7 (doc. 27) (defendant's Director of Human Resources specifying that "the Union is the sole and exclusive bargaining representative for . . . [a]ny employee covered by the Union contract"). In accordance with federal law, the Union is empowered to represent, and collectively bargain for, all security officers - even non-Union members - with respect to wages, hours, and other terms and conditions of employment. Id.; 29 U.S.C. §§ 158(a)(3), 159(a).
Thus, although plaintiff may not have become a member of the Union until May 2016, he was subject to the CBA at all relevant times due to his position as a security officer. Indeed, plaintiff does not allege any change in job classification or duties during his tenure with defendant and he eventually joined the Union. PAC ¶ 2 (doc. 22-1). Moreover, the benefits plaintiff alleges he was denied pursuant to a private contract are identical to those created by the CBA. Compare id. at ¶¶ 2-3, with Redmond Decl. Ex. B, at 5, 8-10, 14, 21 (doc. 27-2).
The Court notes the CBA made Union membership required for all security officers within a prescribed time period (typically within 31 days from the date employment commenced). Redmond Decl. Ex. A, at 2-4 (doc. 27-1); Redmond Decl. Ex. B, at 2-5 (doc. 27-2); Redmond Decl. Ex. E, at 2-4 (doc. 27-5). While plaintiff alleges he worked as a security officer for approximately four years before he joined the Union, defendant maintains "that it did not continuously employ Plaintiff from 2012 through May 2018." Compare PAC ¶¶ 2-3 (doc. 22-1), with Def.'s Resp. to Mot. Amend 2 n.1 (doc. 26). In any event, plaintiff does not dispute defendant's contention that he was a member of the collective bargaining unit for security officers at all relevant times. See generally Pl.'s Reply to Mot. Amend (doc. 28); see also Justice v. Rockwell Collins. Inc., 117 F.Supp.3d 1119, 1134 (D. Or. 2015), aff'd, 720 Fed.Appx. 365 (9th Cir. 2017) ("if a party fails to counter an argument that the opposing party makes . . . the court may treat that argument as conceded") (citation and internal quotations and brackets omitted).
Plaintiff's right to the aforementioned benefits is also derived from the CBA. The PAC alleges only full-time employees were entitled to vacation, holiday, and travel pay, and insurance premium reimbursement; however, plaintiff extracts the definition of full-time employment directly from the CBA. PAC ¶¶ 2, 4 (doc. 22-1); Redmond Decl. Ex. A, at 7 (doc. 27-1); Redmond Decl. Ex. B, at 8 (doc. 27-2); Redmond Decl. Ex. E, at 8 (doc. 27-5).
Significantly, courts within the Ninth Circuit have routinely held that "allegations that an employer breached an individual employment contract that is alleged to be independent of a CBA are preempted if the subject matter of the individual contract concerns a job position covered by the CBA." Ibrahim v. CVS Rx Servs., Inc., 2016 WL 184415, *4 (C.D. Cal. Jan. 15, 2016) (collecting cases). In other words, if the employee's job status falls within the CBA's collective bargaining unit at the time the alleged private employment agreement was breached, § 301 applies irrespective of the employee's membership or non-membership in the underlying union. Young v. Anthony's Fish Grottos, 830 F.2d 993, 997 (9th Cir. 1987); see also Aguilera v. Pirelli Armstrong Tire Corp., 223 F.3d 1010, 1016 (9th Cir. 2000) (breach of contract claims preempted where "[t]he appellants' positions were at all times bargaining unit positions and the appellants, though not covered by a CBA at the time the alleged promise was made, had expressly acceded to the CBA by the time of their own layoff"); Marcus v. United Postal Serv., 2014 WL 3421552, *3 (N.D. Cal. July 14, 2014) (breach of independent employment agreement claim preempted where the "[p]laintiff's job position at UPS was one covered by the CBA . . . the fact that Plaintiff was not a union member at the time he commenced employment is of no moment since he was admittedly a union member at the time he was terminated"). Given these circumstances, the fact that the PAC's first three claims do not expressly reference the CBA is immaterial. See Thibodeaux v. Teamsters Local 853, 2017 WL 878138, *5 (N.D. Cal. Mar. 6, 2017) (courts "may look beyond" efforts "to artfully plead around the existence of the CBA" in determining § 301 preemption) (collecting cases).
Plaintiff cites to Miller v. AT&T Network Sys., 850 F.2d 543 (9th Cir. 1988), and Caterpillar Inc. v. Williams, 482 U.S. 386 (1987), in support of his assertion that a breach of contract claim based on "a separate employment agreement [may proceed] even when that employee would otherwise be subject to a collective bargaining agreement." Pl.'s Reply to Mot. Amend 1-2 (doc. 28). Yet Miller did not involve any state law breach of contract claims and Caterpillar concerned an individual employment agreement negotiated for a position not covered by the CBA, at a time when the employee was not otherwise subject to the CBA. Miller, 850 F.2d 545-46; Caterpillar, 482 U.S. at 388-96. Accordingly, these cases are not instructive concerning whether plaintiff, who undisputedly was a member of the CBA's collective bargaining unit, may assert state law contract claims in federal court. See Beals v. Kiewit Pac. Co., Inc., 114 F.3d 892, 894-95 (9th Cir. 1997) (distinguishing Caterpillar and relying on Young to conclude the plaintiff's state law breach of contract claim was preempted "[s]ince the parties do not dispute that the position [the plaintiff] was hired to fill - that of forklift/pump operator - was covered by the CBA").
In sum, the Court finds plaintiff's state law claims are grounded in the provisions of the CBA and preempted by the LMRA. Plaintiff is barred from asserting these claims in federal court unless he timely filed a grievance concerning his entitlement to benefits accrued between June 2012 and April 2016. Redmond Decl. Ex. A, at 20-21 (doc. 27-1); Redmond Decl. Ex. B, at 21-22 (doc. 27-2); Redmond Decl. Ex. E, at 22-23 (doc. 27-5); see also Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 986 (9th Cir. 2007) ("in the ordinary case, an employee's failure to exhaust contractually mandated procedures precludes judicial relief for breach of the collective bargaining agreement and related claims"). Although not explicit, the PAC's sole allegation regarding the grievance process appears to pertain exclusively to the period of May 2016 through November 2017. PAC ¶¶ 5, 10-13 (doc. 22-1). As a result, the proposed amendments related to claims one through three are futile and plaintiff's motion should be denied in this regard.
II. Claims Brought Under Federal Law
There are two types of breach of CBA claims that may generally be pursued under 29 U.S.C. § 185(a). As the Eastern District of California recently explained:
a plaintiff may bring a straightforward § 301 claim, which alleges a breach of the CBA against the employer without accompanying allegations that a union breached its duty of fair representation. A straightforward § 301 claim is brought directly against an employer and involves the employee's uniquely personal rights including wages, hours, overtime pay, and wrongful discharge.Greer v. Pac. Gas & Elec. Co., 265 F.Supp.3d 1053, 1068-69 (E.D. Cal. 2017) (internal citations, quotations, brackets, ellipses, and explanatory parentheticals omitted); see also DelCostello v. Int'l Bd. of Teamsters, 462 U.S. 151, 162-65 (1983) (distinguishing between straightforward cases, which only involve breach of union labor contract claims, and hybrid cases, which encompass claims for breach of contract by the employer and breach of the duty of fair representation by the union).
With respect to a straightforward § 301 a claim, an employee is required to attempt to exhaust any grievance or arbitration remedies provided in the collective bargaining agreement and subject to very limited judicial review, he will be bound by the result according to the finality provisions of the agreement. However, exceptions exist to this general requirement. [For example,] employees can obtain judicial review of their straightforward section 301 claim without first exhausting the remedies under the CBA when the employer's actions effectively repudiated the grievance procedures of the CBA.
Additionally, plaintiff's may bring a lawsuit alleging breach of a CBA, irrespective of a final and binding dispute resolution process in the CBA, if they also allege that the Union breached its duty of fair representation. This type of claim is referred to as a hybrid section 301 claim . . . Unlike a straightforward section 301 claim, judicial review of a hybrid section 301 claim is not precluded when an employee fails to exhaust the dispute resolution process in the CBA.
Defendant's futility arguments and attendant analysis flow from the premise that plaintiff is seeking federal liability under a hybrid theory. Def.'s Resp. to Mot. Am. 12-15 (doc. 26). However, a plain reading of the PAC evinces that plaintiff is asserting solely straightforward § 301 claims. See generally PAC (doc. 22-1); see also Pl.'s Reply to Mot. Amend 4 (doc. 28) ("[p]laintiff's claim clearly is not a hybrid claim" and "should be considered a straightforward action"). Notably, the PAC alleges plaintiff "timely" exhausted his remedies under the CBA and does not otherwise challenge any Union action. PAC ¶ 5 (doc. 22-1). Rather, plaintiff's proposed claims pursuant to 29 U.S.C. § 185(a) inure exclusively to his personal rights under the CBA for vacation, travel, and holiday pay, and reimbursement of health insurance premiums. Id. at ¶¶ 10-13. Accordingly, given the nature of plaintiff's federal claims, they may proceed absent allegations pertaining to fair representation.
As denoted above, plaintiff's allegations regarding the grievance process are scarce. He does not provide any information concerning when such a grievance was filed or its contents, although it can be reasonably inferred from the PAC that he only attempted to exhaust claims arising between May 2016 and May 2018. Nevertheless, as defendant acknowledges, the Court is required to accept plaintiff's allegations as true, such that litigation surrounding whether plaintiff adequately exhausted the CBA's mandatory grievance process, or whether defendant's actions effectively repudiated that process, must be left to subsequent proceedings. Def.'s Resp. to Mot. Amend 2-3 n.3 (doc. 26). --------
Similarly, defendant's assertion that plaintiff's federal claims are time-barred is unavailing. In particular, unlike a hybrid suit (which are subject to the six-month statute of limitations specified in the National Labor Relations Act), "a straightforward breach-of-contract suit under § 301 [is] governed by the state's statute of limitations for breach of contract." O'Sullivan v. Longview Fibre Co., 993 F.Supp. 743, 748 (E.D. Cal. 1997) (citing DelCostello, 462 U.S. at 162-65). In Oregon, contract actions must be commenced within six years. Or. Rev. Stat. § 12.080. Plaintiff expressly identifies May 2016 as the start date of the purported CBA violations and this lawsuit was initiated approximately two years later, such that the PAC's claims brought under 29 U.S.C. § 185(a) are timely. PAC ¶¶ 10-13 (doc. 22-1). Therefore, defendant has not articulated any viable basis for the Court to reject plaintiff's federal claims as futile. Plaintiff's motion should be granted as to claims four through seven.
RECOMMENDATION
Plaintiff's Motion to Amend (doc. 22) should be granted as to claims four through seven and denied in all other respects. Plaintiff should be allowed to file an amended complaint in accordance with this recommendation within fourteen days of the District Judge's order.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment.
DATED this 5 day of February 2019.
/s/_________
Jolie A. Russo
United States Magistrate Judge