In the

United States Court of Appeals

For the Seventh Circuit

No. 11-1955

BEVERLY K. COPELAND, et al.,

Plaintiffs-Appellants,

v.

PENSKE LOGISTICS LLC; PENSKE LOGISTICS, INC.; and

CHAUFFEURS, TEAMSTERS, WAREHOUSEMEN, AND

HELPERS LOCAL UNION NUMBER 135,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:09-cv-1287-RLY-DML—Richard L. Young, Chief Judge.

ARGUED SEPTEMBER 21, 2011—DECIDED APRIL 6, 2012

Before EASTERBROOK, Chief Judge, and TINDER and

HAMILTON, Circuit Judges.

EASTERBROOK, Chief Judge. Penske Logistics provided

transportation services for the Indianapolis Star newspaper between 1999 and 2009. When the end of the

contract approached, the Star put the work up for bids,

and Penske Logistics lost. It informed the employees’
2 No. 11-1955

union (Teamsters Local 135) that it would cease operations on May 19, 2009. The collective bargaining agreement between Penske Logistics and the Union expired

two days later. As the Star was Penske Logistics’ only

customer, the business itself would be discontinued.

Employers and unions must bargain in good faith

about the effects of closures, though employers need not

bargain about whether to leave the business. See First

National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981).

Penske Logistics and the Union engaged in “effects bargaining.” The employer agreed to give the workers

(a) extended recall rights, (b) preferential treatment

should they apply for employment at other firms within

the Penske group of companies, (c) payment for earned

but unused vacation and holiday time, (d) severance

pay equal to one week’s wages (done by offering an

extra week’s vacation time), and (e) assistance in

preparing resumes and securing letters of recommendation to help find new jobs.

Dissatisfied with this package of benefits, some of

Penske Logistics’ former employees filed this suit, which

they style a hybrid breach-of-contract / duty-of-fairrepresentation action under §301 of the Labor-Management

Relations Act, 29 U.S.C. §185. To prevail in such a suit,

employees must demonstrate both that the employer

violated a collective bargaining agreement and that the

union breached its duty of fair representation in the

course of failing to hold the employer to its promise. See,

e.g., Vaca v. Sipes, 386 U.S. 171 (1967). As a hybrid action,

it is doomed by the fact that the plaintiffs do not even
No. 11-1955 3

contend that Penske Logistics failed to implement

the collective bargaining agreement. The CBA did not

promise any severance benefits should Penske Logistics

lose its business with the Star and lay off its work force.

Thus the first requirement of a hybrid action is missing,

and the district court granted summary judgment for

the defendants. 2011 U.S. Dist. LEXIS 28326 (S.D. Ind.

Mar. 18, 2011). The judge added that plaintiffs, who

never complained to the Union or used its internal remedial processes about this issue, are in no position to

maintain that Local 135 violated its duty of fair representation. (Plaintiffs did present grievances about some

other issues; we agree with the district court that they

did not establish that the Union’s response to them violated its duty of fair representation. That subject need

not be discussed further in this opinion.)

In this court plaintiffs advance two lines of argument.

One is that Penske Logistics failed to give them all

benefits available under its contract (the “logistics agreement”) with the Star. Plaintiffs describe themselves as

third-party beneficiaries of the logistics agreement. One

paragraph in the logistics agreement provides that, if

Penske Logistics agrees to provide its workers with

severance benefits should it lose the business (as it did),

the Star will cover the expense of these benefits. Plaintiffs say that, because Penske Logistics could have provided more generous benefits and shifted the cost to

the Star, it was required to do so. The other line of argument is that the Union did not bargain hard enough with

Penske Logistics to achieve extra benefits and should

be held liable on that ground.
4 No. 11-1955

The first line of argument does not rely on federal

labor law; it is a contract claim. But what’s the basis

of federal jurisdiction? The supplemental-jurisdiction

statute, 28 U.S.C. §1367(a), permits a court to entertain a

claim that is part of the same case or controversy as the

claim within a federal court’s original jurisdiction. Plaintiffs do not contend that a supposed breach of the

logistics agreement between Penske Logistics and the

Indianapolis Star is the same “controversy” as a supposed breach of the CBA between Penske Logistics and

Local 135. Jurisdiction therefore would depend on diversity of citizenship. 28 U.S.C. §1332. But all of the plaintiffs and at least some of the defendants appear to be

citizens of Indiana (a union is a citizen of all states of

which any member is a citizen, see Steelworkers v. R.H.

Bouligny, Inc., 382 U.S. 145 (1965), and a limited liability

company’s citizenship includes every state of which any

unit holder is a citizen, see Cosgrove v. Bartolotta, 150

F.3d 729 (7th Cir. 1998)). What’s more, none of the plaintiffs asserts a claim exceeding $75,000. Even a greatly

enhanced severance package for any one employee

would be less than $75,000, and the claims of multiple

plaintiffs cannot be aggregated to reach the jurisdictional minimum. See Snyder v. Harris, 394 U.S. 332 (1969).

The plaintiffs’ appellate brief asserts jurisdiction under

§1332 but does not contain any of the details—concerning

either citizenship or amount in controversy—required

to establish diversity jurisdiction.

There’s a separate jurisdictional problem with the

argument that the Union engaged in superficial bargaining about the effects of the shutdown. Here the

problem is that failure to bargain in good faith is an
No. 11-1955 5

unfair labor practice, and only the National Labor Relations Board is authorized to provide remedies for unfair

labor practices committed during the course of collective

bargaining. See Marquez v. Screen Actors Guild, Inc., 525

U.S. 33, 49–51 (1998); Communications Works v. Beck, 487

U.S. 735, 742–45 (1988). Action by the Board depends

on the General Counsel’s decision to issue a complaint.

As far as we can see, plaintiffs did not take their

grievance to the General Counsel, and the Board certainly

has not issued a decision finding that either the Union

or Penske Logistics failed to bargain in good faith.

Section 301, the sole source of authority for employees

to present labor-law issues directly to federal court,

covers “[s]uits for violation of contracts between an

employer and a labor organization” (§185(a)). Since

breach of a labor contract also can be an unfair labor

practice, the Board and the federal courts have

concurrent jurisdiction to this extent. Smith v. Evening

News Association, 371 U.S. 195 (1962). But a contention

that a union did not bargain hard enough to obtain

benefits beyond those provided in the existing collective

bargaining agreement is not a suit for a violation of the

CBA and so is outside §301. Such a claim asserts a

pure unfair labor practice, within the Board’s primary

jurisdiction.

The parties may have been confused between preemption and lack of jurisdiction. When a claim arises under

some other federal statute (the antitrust laws, for example), the Board’s authority over unfair labor practices

may supersede (or in the case of state law, preempt) the

application of these other sources of law. See San Diego

Building Trades Council v. Garmon, 359 U.S. 236 (1959). This
6 No. 11-1955

doctrine usually is a defense, not a limit on subjectmatter jurisdiction. See Baker v. IBP, Inc., 357 F.3d 685,

688 (7th Cir. 2004). Jurisdiction of an antitrust suit is

secure even when labor law displaces the Sherman Act.

See, e.g., Brown v. Pro Football, Inc., 518 U.S. 231 (1996).

The problem in this case, by contrast, is that the plaintiffs’ claim does not arise under any federal statute

other than §301, which is at once a grant of jurisdiction

and a source of substantive rights. See Textile Workers v.

Lincoln Mills, 353 U.S. 448 (1957). Section 301 is limited

to suit on a contract; an asserted violation of a union’s

duty of fair representation by failing to enforce the

contract can be ancillary to the claim that a promise in

a CBA has been broken. See Motor Coach Employees v.

Lockridge, 403 U.S. 274, 298–301 (1971). Plaintiffs’ argument that Local 135 did not bargain hard enough to

get benefits exceeding those provided in the CBA is not

a claim for breach of contract and therefore can’t be

pursued under §301. It belongs to the Labor Board

alone. Section 301 provides enforcement of deals that

were struck, rather than damages for deals never made.

To the extent the district court granted summary judgment to the defendants on the hybrid contract/DFR

claim, the judgment is affirmed. With respect to the plaintiffs’ claims based on the logistics agreement and

the Union’s asserted failure to bargain harder for extra

severance benefits, the judgment is vacated and the

case is remanded with instructions to dismiss for lack

of subject-matter jurisdiction.

4-6-12