## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 11

- 1955 B EV ERLY K. C OPE LA ND , e tal ., P laint if fs -App el lants , v. P ENS KE L O GISTICS LLC ; P ENS KE L OGI S T I CS, I NC .; an d C HA UF FEU RS, T EAM STERS, W AREHOUS EMEN , AN D H ELP ERS L OC AL U NI ON N UM BER 135, D efend a nts-A pp ellees

.

A pp eal from the United S t ates Di strictC our t fo r the S outhernDi stricto f Indian a, Indian apo lisDiv isi on. No . 1:09- cv-1287- RLY- DM L

—Ric har d L . Y oun g, Chief Ju dge

. A RG UE D S EP TE MBE R 21, 2011

— D ECI DE D A PRI L 6, 2012

Befo re E A S T E RB R OO K, C h i e f Ju dge, a nd T INDERa nd H A MI L T ON, C ircu it Judges . E A S T E RB R OO K, Chi e

f Judg e . Pe nske Logi sti cs pr ovi ded tr anspor tat i on s er vi ces f orthe I nd ian ap ol i s S tarnewspape r b e t we e n 1 9 9 9 a n d 2 0 0 9
. Whe n th e e n d o ft he contr act approached, the S tarput the w or k up f orbi ds, and Penske Logi sti cs l ost
. I t info rm ed the em plo yee s’2 N o. 11

- 1955 unio n ( Team ste rs Local135 ) thati t would ce ase o perat i o ns o n M a y 1 9 , 2 0 0 9
. Th e c o l l e c t i v e b a r g a i ni ng ag re em ent b etween Penske Logi sti cs a nd the U ni on e xpir ed tw o d ay s la te r. A s t h e St ar w as P e n s ke L og ist ics ’ on ly c us t o mer, the b us i ne s s i t s e l fwo ul d b e di s c o nt i nu e d. Em plo yer s a nd uni ons m ust ba rg ai n i n go od faith about the e ff ects of clo sure s, tho ugh em plo yer s nee d not bar gai n ab ou t whether to l eave the busi ness. S ee First N ation al M ai n t e n an c eCo rp. v . NLRB , 452 U
. S. 666 (1981). Pe ns ke L ogistics and the U nion enga ged i n “effects ba rgaining
. ” Th e em p loyer agreed to gi ve th e w orkers ( a) e xt en ded r ec al l r i g ht s, ( b) pr efer entia l t r ea tment sh ou ld t h e y ap p ly for em p loy m en t a t o th er firm s w ith in the Pe n sk e g ro up o fco m panie s, ( c) paym ent f orea rned b utu nu s e d v a c a t i o n a nd h o l i da y t i me, ( d) s e v e r a nce pay equalto o ne w ee k’ s wages ( done by off er i ng an ex tr a w eek ’ s vacat i on ti m e) , and ( e) ass i sta nce in prepar i ng r esum es and secur i ng l ett er s o fr ec om m endati on t o hel p fi nd new j obs

. Diss ati sfi ed w i th thi s pack age o f benefi ts, so m e o f Penske Logi sti cs’ f or m erem plo yee s fi l ed thi s s u it, w hi ch th ey style a hybrid breach -of-c ont ract / du ty-of- fai rr epr es en t a t i o na c t i o nu n d e r§ 3 0 1 o fthe Labo r - M an ag ement Rel ati ons A ct, 29 U
. S. C. §185
. To prev ail in such a sui t, em p loy ees m ust dem onst ra te both that the e m plo yer vi olate d a c o l l ec ti ve b ar g ai ni nga g r ee m en t an d tha t th e uni o n b r ea ch ed i ts duty o ff ai r r epr esenta ti o n i n the cour se off ai l i ng to hol d the e m plo yerto i ts prom i se. S ee, e.g ., V a ca v. Sip es , 3 86 U. S
. 171 (19 67 )
. As a hybr i d a ct i o n, i t i s doo m ed by th e fac t that the pl ai nti ff s do not eve nN o. 11

- 1955 3

co nt e nd th at Pe ns k e Lo g i st i cs f ai l ed to i m pl ement the c o l l e c t i v e b a r g a i ni nga g r e e men t
. T he CB A di d no t prom i se any s eve ra nce be nefi ts shoul d Penske Logi sti cs l ose i ts busi ness w i th the S tarand l ay off its w ork f or ce. Thu s the fi rs t re quir em ent of a hybr i d a cti on i s m i ssi ng, and the d i str i ct c ourtgr anted sum m ar y j ud gm ent f or th e d efe n d an ts . 201 1 U .S. D ist . L EXIS 2 8 3 2 6 ( S. D. I nd

. M ar . 1 8, 2 01 1)
. The j udg e adde d tha t pl ai nt if f s, who never c om pla i ned to the Union orused i ts i nter nal r em ed ialpro cess es about thi s i ssue, ar e i n no pos i ti on t o m ai ntai n that Local13 5 vi ol ate d i ts du ty off ai r re pres e nt a t i o n . ( P l a i n t i ff s d i d p r e s e n tg r i e v a n c e s ab o u ts o me othe r i ssues ; we agree with the di str i ct c ourtthatthey did notes tabl i sh thatthe U ni on’ s r esponse to them vi ol ate d i ts du ty of f ai r re prese ntati on. That subj ect n eed n ot be d isc u ss ed fu rt h er in t h is op in ion .) I n thi s co urt pla i nti ff s a dvance two l i nes o far gum ent. O n e is th at P en sk e L og ist ics fai l ed to giv e t h em all benefi ts avai l abl e under i ts contr act ( the “ l ogi sti cs a gr eem en t” ) with the S tar
. Pl ai nti ff s descr ibe them sel ves as th i r d- par tyb en efi ci ar i es o fthe l o g i st i cs a g r ee m en t. One p ar ag ra p h in t h e log ist ics ag re e m e n t p ro vid es th at, i f Penske L og isti cs a gr ees to pro vi de i ts w or ker s with seve ran ce ben efit s sh ou ld it l ose th e bu siness ( as it did), th e S ta r wi l l c o v e r th e e x p e n s e o fth e s e b e n e fi t s . P l a i nti ff s s ay that, bec ause Penske Logi sti cs c oul d have pro

vi ded m or e gener ous benefi ts and s hi fted the cos t to th e St ar, itwas r equi r ed to do s o . The o th erl i ne o fa r g um ent i s t h at the U ni on di d not ba rg ai n hard e nough with P e n s k e L og ist ics to ac h iev e e x tr a b en efit s a n d sh ou ld b e h e l d l i a b l e o n tha tg r o un d.4 N o. 11

- 1955 The fi rs t l i ne o far gum en t d oes notr el y o n federa l l abor l aw ; i t i s a contr act cl ai m . Bu t w hat’ s th e b as is offedera l j u risdict i on? The s up ple m ental

-j uri sdic ti on st atut e, 2 8 U. S
. C. § 13 67 ( a) , pe r m i ts a c ou r t to e nt er ta i n a cl ai m tha t i s par t o fthe s ame c as e o r c o nt r o versy as th e cl ai m wi th i n a fede r alc o ur t’ s o r i g i na l j ur i sdi ct i o n. Pl ai nti ff s d o no t co nt en d tha t a su ppo se d b r ea cho fthe l o g i st i cs a g r ee m en t be twe enPe ns k e Lo g i st ics a nd the I nd i a n a p o l i s S t a r i s th e s a me “ c o n t r o v e r s y ” a s a s up po se d b r ea cho fthe CBA be twe enPe ns k e L ogist i cs a nd L ocal 135. Jurisd iction therefore w ou ld d e p en d on d iversi tyo fciti zens hi p. 2 8 U. S
. C. § 13 32
. Buta l l o fthe pl ai nti ff s an d atl eas t s om e o fthe defe nd ants appear t o be ci ti zens ofI nd i ana ( a uni on i s a ci ti zen o fal l s tat es of w hi ch any m em beri s a c itizen, se e S t e e l w o rk e rs v . R
. H. Boul igny, Inc . , 38 2 U.S
. 14 5 ( 1965 ) , and a l i m i ted l i abi l i ty co m pan y’s c i ti ze ns hi p i nc l ude s ev er y s ta te o fwhi cha ny unithol der i s a citi zen, se e C osgrove v. B artolot ta , 15 0 F
. 3d 72 9 ( 7th Ci r . 1 99 8) )
. W ha t’ s m o r e, no ne o fthe pl ai ntiffs as se r ts a c laim ex c ee d in g $ 75 ,00 0. E ve n a gr ea tly enhanced s everance packa ge f orany one em plo yee w ou ld be les s t h an $7 5,0 00 , an d th e c lai m s o f m u ltip le pla i nti ff s ca nnot be ag gr ega ted to r each the j uri sdic

ti onalm i ni m um . S ee Snyder v. Harris , 394 U
. S. 332 (1969). The pla i nti ff s’ appel l ate b ri efas ser ts j uri sdic ti on under §1 33 2 b u t d oe s n ot c on ta in an y of th e d et ails

— co nc erni ng ei ther ci ti zenshi p oram ount i n contr ove rs y

— re quir ed to e st ab l i shdi ve r si tyj ur i sdi ct i o n. The r e ’ s a s e p a r a t e j u r i s d i c t i o n a l p r o b l e m wi th the argum en t th atthe Uni o n e ng ag ed i n s upe r fi ci alb ar g ai ni ngabo utthe e ff ec ts of t he s hut do wn. Her e th e probl em i s that f ai l ure to bar gai n i n go od f ai th i s a nN o. 11

- 1955 5 unfai r l aborprac ti ce, and onl y the N ati onalLaborRel atio n s B oa rd is au th or ize d to p ro vid e re m ed ies for u n f a ir l aborprac ti ces co m m i tte d du ri ng the co urse o fco l l ecti ve bar gai ni ng. S ee M ar q uez v. Sc r e e n A ct ors Gui l d, Inc . , 52 5 U .S. 33 , 49– 51 (19 98 ); C om m unicati ons Works v. Beck, 48 7 U. S
. 7 3 5 , 74 2

–4 5 ( 1 9 8 8 )
. A c t i o n b y th e B o a r d d e pe nd s on the Genera l Counsel ’ s deci si on t o iss u e a co m pla i nt. A s fa r as w e c a n s ee , pla in tiffs d id n ot ta ke th eir gr iev an c e t o t h e G en er al C ou n se l, an d th e B oa rd ce rt ain ly has no t i ssued a deci si on fi nd i ng tha t e ither the U ni on o r Pe ns k e Lo g i st ics f ai l ed to b ar g ai n i n g o o d f ai th

. Se cti on 3 01, the sol e sourc e o fautho ri ty f orem plo yee s to prese nt la b or - l aw i ssues di re ctl y t o f edera lco urt, cove rs “[s ]u i ts f orvi ol ati on o fco ntra cts between an em plo y e r a nd a l a b o r o r g a ni z a t i o n” ( § 1 8 5 ( a ) )
. S i nc e bre ach o fa l aborcon tr act al so can be an unf ai r l abor pract i ce, the Board and the f edera l co urts have c on c u rre n t jur isd ict ion to th is e x te n t. Sm i t h v
. E ven ing N e ws Ass oc i at i on , 3 7 1 U. S
. 1 9 5 ( 1 9 6 2 )
. Bu ta c o nt enti on th at a u n ion d id n ot ba rg ain h ar d en ou gh to ob ta in benefi ts b eyond those pro vi ded i n the exi sti ng co l l ecti ve bar gai ni ng ag re em ent i s no t a sui t f ora vi ol ati onof the CB A and so i s o utsi de §30 1. Su c h a c l ai m as ser ts a p ure un fai r l abor p ractice, w ith in the B oard ’s prim ary j ur i sdi ct i o n. Th e p a r t i e s ma y h a v e b e e n c o nfus e d b e t we e n pr e e mpti on a nd l ack ofj uri sdic ti on. W h en a cl ai m ar i ses under s o m e o th e r f e d e r a l s t a t u t e ( th e a n t i t r u s t l a w s , f o r e x a mple ) , the Board’s author i ty ove r unfai r l aborprac ti ces m ays upe r se de ( o r i n the c ase o fs ta te l aw, pr ee m pt) the appli cati on o fthes e o therso urces o fl aw . S ee Sa n D i ego Buil di ng Trad e s Counc i l v. Gar m on , 359 U .S. 23 6 (1 95 9). T h is6 N o. 11

- 1955 doctr i ne usual l y i s a defen se , no t a l i m i t o n subj ectm att erj uris d i cti on. S ee Bakerv. IBP , Inc . , 35 7 F
. 3d 685, 68 8 (7 th C ir. 20 04 )
. Ju ris d ict ion of an an tit ru st su it is secur e e ven when laborl aw di spl aces the Sh er m an A ct. S e e , e .g ., Brown v. Pr o F oot b al l, Inc . , 5 18 U. S
. 2 31 ( 19 96 ). The pr o ble m i n thi s ca se , b y c o nt r as t, i s th atthe pl ai nti ff s’ cl ai m does notar i se und erany f edera l st atute othe r than §3 01, wh i ch i s a t o nce a gran t ofj uri sdic ti on and a so urce ofsubst anti ve ri ghts. S ee Te xt i l e Worke rs v. Linco ln M il ls , 35 3 U.S
. 44 8 ( 1957 )
. S ecti on 3 01 i s l i m i ted to su it on a contra ct; an asse r t e d v io lation ofa un ion’s dut y o ff ai r r epr esentat i o n b y f ai l i ngt o e nf o r ce the c on tr ac t c an be an c illa r y t o t h e c laim th at a p ro m ise in a CBA has been bro ken. S ee M o to r C oac h Em pl oye e s v. Loc kr i dge, 4 03 U
. S. 2 74 , 2 98 –3 01 ( 19 71 )
. Pl ai nt i ff s’ a r g um ent that Loca l 13 5 di d no t ba rg ai n hard e nough to getbene fi ts ex c eedi ng tho se provi ded i n the CB A i s no t a c laim forbr each o fco ntra ct a nd ther ef or e ca n’tbe p urs ue d un d er §30 1 . I t belongs to the L abor B oard al o ne . S e c t i o n 3 0 1 pr o v i de s e nf o r c e men t o f de a l s t hat w er e s tr uck, r atherthan dam age s f ordeal s nev erm ade. To the exte nt the di str i ct c ourtgr anted su m m ary j ud gm e ntt o the de f e nd a nt s o n the h yb r i d c o nt r a ct/ DFR cl ai m , the j udg m en t i s affi r m ed. W i thr es pec t to the pl ai nti ff s’ c l ai m s ba se d o n the l o g i st i cs ag r ee m en t an d th e U nion ’s assert ed f ail ure to bargain h ard er forextra se ve r an ce b en efi ts , the j udg m en t i s va ca te d a nd the case is r em anded with instr ucti ons to dism i ss f orl ack o fs ubj ec t- m at te r j ur i sdi ct i o n.

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