In the

United States Court of Appeals

For the Seventh Circuit

No. 00-1320

IN RE:

BENTZ METAL PRODUCTS COMPANY, INC.,

Debtor-Appellee,

APPEAL OF:

LARRY FAEHNRICH, et al.,

Plaintiffs-Appellants,

v.

BENTZ METAL PRODUCTS COMPANY, INC., and

BANK ONE, INDIANA, NATIONAL ASSOCIATION,

a national banking association, as

successor to NBD BANK, N.A.,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Indiana, Fort Wayne Division.

No. 99-C-449--William C. Lee, Chief Judge.

Argued April 11, 2001--Decided June 7, 2001

 Before FLAUM, Chief Judge, and BAUER,

POSNER, COFFEY, EASTERBROOK, RIPPLE, MANION,

KANNE, ROVNER, DIANE P. WOOD, EVANS, and

WILLIAMS, Circuit Judges.

 EVANS, Circuit Judge. Indiana law

broadly protects the rights of workers

("mechanics and laborers employed in or

about any shop, mill, wareroom,

storeroom, . . . bridge, reservoir, . . .

drainage ditch . . . or any other earthmoving operation . . . ." in the

charming, though antiquated, language of

the old Hoosier statute) against losing

wages due when an employer encounters

tough economic times. It does so by

moving workers to the front of the

company’s creditor queue with a

mechanic’s lien that trumps the rights of

other creditors to the company’s assets.

Today we consider whether that lien,

established under Indiana Code sec. 32-8-

3-1 et seq., protects unionized workers

to the same extent it undoubtedly

protects the rights of nonunionized
workers. We find that it does, a

determination that compels us to overrule

In re Bluffton Castings Corp., 186 F.3d

857 (7th Cir. 1999).

 The 20 employee-plaintiffs in this suit

are members of the United Automobile,

Aerospace and Agricultural Implement

Workers of America, Local 2298, and as

such they are parties to a collective

bargaining agreement with their employer,

the Bentz Metal Products Company, Inc.,

of Fort Wayne, Indiana.

 In 1996 an involuntary bankruptcy

petition under 11 U.S.C. sec. 303 was

filed against Bentz. While the bankruptcy

was pending, the employees filed liens

under Indiana law seeking to secure

unpaid vacation pay owed to them under

the CBA. Everyone agrees that unpaid

vacation pay, like other employee fringe

benefits, is treated the same as unpaid

wages, and the parties have stipulated

that the amount owed the employees is

$12,700.38. The employees filed an

adversary proceeding in bankruptcy court

to determine the validity and priority of

their liens. They named Bentz and its

secured creditor, now Bank One, as

defendants. Relying on our decision in

Bluffton Castings, which is directly on

point, the bankruptcy court quite

naturally held that sec. 301 of the Labor

Management Relations Act of 1947 (29

U.S.C. sec. 185(a) preempted the liens.

The district court affirmed.

 Graced with astute legal representation,

the employees appealed, candidly

acknowledging that what they were asking

us to do was reconsider a ruling which a

panel of the court recently issued. In

this instance, they have convinced us to

take this unusual step. Unusual, but not

unheard of. It is well-established that

on rehearing en banc, the full court may,

and sometimes does, overrule a decision

reached earlier by a three-judge panel in

a separate case. See Mojica v. Gannett

Co., 7 F.3d 552 (7th Cir. 1993) (en

banc).

 Two intertwined reasons compel the

result we reach today. First, our

examination of the relevant cases shows

that this issue requires case-by-case

factual analysis to determine the extent

to which a state law claim will require

interpretation of a CBA. The second is we
believe that the controlling legal

principle is stated too broadly in

Bluffton Castings.

 In Bluffton Castings the issue was, in

part, whether a claim based on the same

Indiana mechanic’s lien statute at issue

here was preempted under sec. 301. The

panel, relying on language in Lingle v.

Norge Division of Magic Chef, Inc., 486

U.S. 399, 410 n.10 (1988), concluded that

it was. That language is that "[s]ection

301 governs claims founded directly on

rights created by collective-bargaining

agreements, and also claims

’substantially dependent on analysis of a

collective-bargaining agreement.’" From

this, the panel derived two alternative

conditions under which preemption would

result: "either because it depends on

interpretation of a CBA or because the

claim is founded on the CBA." Bluffton

Castings, at 862. In what we conclude was

too broad a reading of the phrase, the

panel held that the mechanic’s lien

claims were "founded on the CBA" and thus

preempted. We now hold, consistent with

Lingle and Livadas v. Bradshaw, 512 U.S.

107 (1994), that a state law claim is not

preempted if it does not require

interpretation of the CBA even if it may

require reference to the CBA.

 Since Textile Workers Union of America

v. Lincoln Mills, 353 U.S. 448 (1957), it

has been clear that sec. 301 expresses a

policy that the substantive law to apply

in sec. 301 cases is federal law, which

courts were directed to fashion from the

policy of national labor laws. The

preemptive effect of sec. 301 was first

explored in Teamsters v. Lucas Flour Co.,

369 U.S. 95 (1962), a case involving a

claim for violating a collective

bargaining agreement. The guiding

principle behind sec. 301 preemption was

that a contract should not have different

meanings under federal law and the laws

of various states. Today, it is wellunderstood that a claim for breach of a

collective bargaining agreement is

preempted. But in other cases, not based

directly on a CBA, the scope of

preemption continues to cause some

bewilderment. The Supreme Court itself

has noted, "We are aware . . . that the

Courts of Appeals have not been entirely

uniform in their understanding and

application of the principles set down in

Lingle and Lueck [Allis Chalmers Corp. v.
Lueck, 471 U.S. 202 (1985)]." Livadas, at

124 n.18. The Court, however, declined,

at that time, to make it clearer.

 So we must do our best. While preemption

is a strong federal policy, Congress has

not exercised authority to occupy the

entire field of labor legislation, and it

did not explicitly declare the extent to

which it intended sec. 301 to preempt

state law. What has become clear is that

preemption can extend beyond contract

disputes to other state law claims if

resolution of those claims is

sufficiently dependent on an

interpretation of a CBA. In Lueck, a

claim based on the Wisconsin tort of bad

faith in the handling of an insurance

claim was preempted because the claim was

substantially dependent on the

interpretation of a CBA. Two years later,

the Court made the statement relied on in

Bluffton Castings: that sec. 301 governs

claims "founded directly on rights

created by collective-bargaining

agreements, and also claims

’substantially dependent on analysis of a

collective-bargaining agreement.’"

Caterpillar Inc. v. Williams, 482 U.S.

386, 394 (1987), (quoting Electrical

Workers v. Hechler, 481 U.S. 851, 859 n.3

(1987)). But the Supreme Court has often

cautioned that "not every dispute

concerning employment, or tangentially

involving a provision of a collectivebargaining agreement, is pre-empted by

sec. 301 or other provisions of the

federal labor law." Lueck, at 211.

 Then in Lingle, a claim based on the

Illinois tort of retaliatory discharge

was found not to be preempted: "[W]e

hold that an application of state law is

pre-empted by sec. 301 of the Labor

Management Relations Act of 1947 only if

such application requires the

interpretation of a collective-bargaining

agreement." At 413. More recently, in

Livadas, the Supreme Court said that a

claim based on a California wage payment

penalty statute should have been allowed

to proceed even though the amount of the

claim might be determined under the

collective bargaining agreement. The mere

need to look to the CBA for damage

computation was said to be no reason to

hold the state-law claim defeated by sec.

301. The issue is whether a state law

conflicts or interferes with federal law.

These principles were applied in a case
under the Railway Labor Act, in which a

state wrongful discharge was allowed to

proceed. Saying the standard under the

RLA was "virtually identical" to that in

LMRA cases, the Supreme Court again

cautioned that sec. 301 cannot be read

broadly to preempt rights conferred on

individual employees as a matter of state

law. Hawaiian Airlines, Inc. v. Norris,

512 U.S. 246 (1994). The principles set

out in these cases, as other courts have

noted, are sometimes easier to mouth than

to apply, see, e.g., Foy v. Pratt &

Whitney Group, 127 F.3d 229 (2nd Cir.

1997), involving as they do, claims

reaching far beyond those clearly founded

on rights created by CBAs--for instance,

those for breach of a collective

bargaining agreement.

 In our case, as in Bluffton Castings,

the employees’ rights to the monies due,

and the precise amount, depend on the

collective bargaining agreement. Here,

that sum is undisputed. Nevertheless, it

remains true that the entitlement to the

money due is laid out in the CBA. If

entitlement or the amount due were

seriously in dispute, as to these

questions interpretation of the CBA would

be necessary and would be resolved in the

appropriate way--arbitration followed by

confirmation, or a direct 301 suit in

federal court if arbitration is not

called for in the CBA. But whether the

amount due is resolved, as here, by

stipulation, or whether it is resolved

through procedures set out in the CBA,

the contract issues are separate from the

claim the employees presented to the

bankruptcy court. Once the contract

issues are resolved, the employees can

present their separate claim in

bankruptcy for priority based on the

Indiana mechanic’s lien statute. The

priority among creditors in a bankruptcy

proceeding is not dependent on a CBA. It

is not something which a collective

bargaining agreement can or does dictate.

No amount of interpretation of a CBA and

no arbitrator’s decision would,

independent of the state law lien, compel

a bankruptcy court to let employees jump

ahead of a bank in the money line, which

brings us to some interesting sidelights.

 One is that the controversy before us is

not between employee and employer, as is

most often the case when sec. 301

preemption is an issue. In reality, this
case does not involve an employee suing

the employer (even though the employer is

a named defendant). Here, a third party--

the bank--is presenting a vigorous

defense of federal labor policy. That

defense, though, turns the policy behind

federal labor laws on its head. What the

bank really is arguing is that the

employees’ collective bargaining

agreement with their employer should be

used to benefit the bank at the

employees’ expense.

 The other issue we consider a sidelight

is whether preemption somehow depends on

whether the state law provides a benefit

which is nonnegotiable or whether it is

negotiable and waivable. The bank makes

the argument that if a right is subject

to negotiation or waiver, it is

preempted. The logic apparently is that

if the parties can negotiate over an

item, then whether, in fact, there was

negotiation or not, the union members do

not retain the benefit of the state law.

According to the bank, the mechanic’s

lien is subject to waiver and therefore

preempted. We do not think it is that

simple, even if this lien is waivable--a

point on which we offer no opinion.

 It is true that there is language in the

cases about negotiability and waiver.

Livadas says that both Lueck and Lingle

say that sec. 301 does not broadly

preempt "nonnegotiable rights conferred

on individual employees as a matter of

state law." At 123. Or, stated a bit more

positively, in Lueck, the Court makes a

reference to waiver: "[S]tate-law rights

and obligations that do not exist

independently of private agreements, and

that as a result can be waived or altered

by agreement of private parties, are preempted by those agreements." At 213.

However, especially in light of later

statements, we do not read this language

as saying starkly that rights which can

be waived are automatically preempted;

rather, we think it is the independent

existence of the rights, not their

waivability, that has significance.

 In fact, in holding that a Maine

severance pay statute was not preempted,

the Supreme Court has said, in effect,

that negotiability enhances the case

against preemption: "[T]hat the parties

are free to devise their own severance

pay arrangements, however, strengthens
the case that the statute works no

intrusion on collective bargaining." Fort

Halifax Packing Co. v. Coyne, 482 U.S. 1,

22 (1987). Finally, in yet another

footnote in Lingle, we find the following

rather confusing statement:

 Petitioner points to the fact that the

Illinois right to be free from

retaliatory discharge is nonnegotiable

and applies to unionized and nonunionized

workers alike. While it may be true that

most state laws that are not pre-empted

by sec. 301 will grant nonnegotiable

rights that are shared by all state

workers, we note that neither condition

ensures nonpre-emption. It is conceivable

that a State could create a remedy that,

although nonnegotiable, nonetheless

turned on the interpretation of a

collective-bargaining agreement for its

application. Such a remedy would be preempted by sec. 301. Similarly, if a law

applied to all state workers but

required, at least in certain instances,

collective-bargaining agreement

interpretation, the application of the

law in those instances would be preempted. Conversely, a law could cover

only unionized workers but remain unpreempted if no collective-bargaining

agreement interpretation was needed to

resolve claims brought thereunder.

Lingle, at 408 n.7. We are not convinced

that whether a right is negotiable or not

provides any sort of bright line between

claims that are preempted and those which

are not. It does not comport with federal

labor policy to have one rule for union

members and another for the rest of the

work force. A state cannot be allowed to

penalize or burden the right to

collective bargaining. In Livadas, the

result did not turn on the parties’

inability to contract around state

statutes, but rather the state’s

neutrality as between unionized and

nonunionized workers.

 Our conclusion that the claim pursuant

to the state law lien is not preempted

is, we think, based on a fair

interpretation of the cases. However,

perhaps we could have saved ourselves the

trouble and rested on dicta in a footnote

in Lingle, which sums up what we are

saying:

 A collective-bargaining agreement may,
of course, contain information such as

rate of pay and other economic benefits

that might be helpful in determining the

damages to which a worker prevailing in a

state-law suit is entitled. Although

federal law would govern the

interpretation of the agreement to

determine the proper damages, the

underlying state-law claim, not otherwise

pre-empted, would stand. Thus, as a

general proposition, a state-law claim

may depend for its resolution upon both

the interpretation of a collectivebargaining agreement and a separate

state-law analysis that does not turn on

the agreement. In such a case, federal

law would govern the interpretation of

the agreement, but the separate state-law

analysis would not be thereby pre-empted.

As we said in Allis-Chalmers Corp. v.

Lueck, 471 U.S., at 211, "not every

dispute . . . tangentially involving a

provision of a collective-bargaining

agreement, is pre-empted by sec. 301 . .

. ."

Lingle, at 413 n.12 (emphasis added)

(citation omitted).

 To require that for preemption to exist,

resolution of a claim must require

interpretation of a CBA, not a mere

glance at it, is consistent with recent

cases in this circuit and in other

circuits. Looking to the facts before us

in Atchley v. Heritage Cable Vision

Associates, 101 F.3d 495, 502 (7th Cir.

1996), we held that the Indiana wage

payment statute was preempted, but we

cautioned:

 Our opinion today does not mean that

whenever a collective bargaining

agreement exists interpretation of that

agreement always will be required in

connection with the Indiana wage payment

statute and that the statute always will

be preempted by sec. 301.

See also United States v. Palumbo Bros.,

145 F.3d 850 (7th Cir. 1998). Other

circuits require the same case-by-case

analysis of the state-law claim as it

relates to the CBA. As one would expect

in case-by-case analysis, in some

situations preemption is found and in

others it is not. A sampling of cases

finding preemption includes Firestone v.

Southern California Gas Co., 219 F.3d

1063 (9th Cir. 2000) (California fair
labor provision preempted because the

claim required interpretation of the

CBA), and Martin v. Shaw’s Supermarkets,

Inc., 105 F.3d 40 (1st Cir. 1997) (

preemption of claims based on a statute

which contained a proviso that if the

rights created by statute were

inconsistent with a CBA, the agreement

would prevail). In other cases, there was

no preemption: Balcorta v. Twentieth

Century-Fox Film Corp., 208 F.3d 1102

(9th Cir. 2000) (California wage law not

preempted); Voilas v. General Motors

Corp., 170 F.3d 367 (3rd Cir. 1999)

(fraud claim not preempted); Owen v.

Carpenters’ Dist. Council, 161 F.3d 767

(4th Cir. 1998) (wrongful discharge claim

survives); Foy v. Pratt & Whitney Group,

127 F.3d 229 (2nd Cir. 1997)

(misrepresentation and unfair trade

practices claims allowed to

proceed);Hernandez v. Conriv Realty

Assoc., 116 F.3d 35 (2nd Cir. 1997)

(state breach of contract claims based on

a contract other than the CBA not

preempted even though CBA would dictate

the rate of pay).

 In summary, the overriding principle is

that for preemption to apply,

interpretation of the CBA and not simply

a reference to it is required. If the

entitlement to wages (or other employee

pay) or the amount due were at issue, the

CBA would control; almost certainly,

interpretation of the agreement would be

necessary and would be subject to the

arbitration procedures in the contract.

So as to that determination, preemption

would apply. The mechanic’s lien,

however, is a benefit provided to workers

based on a state policy protecting

workers; it is a separate claim, not

dependent on interpretation of the

agreement for its existence even though

the amount of the pay is dependent on the

CBA. In this situation, the claim is not

preempted.

 Accordingly, the decision of the

district court is REVERSED. This case is

REMANDED for the entry of judgment in

favor of the plaintiffs.

 Bauer, Circuit Judge, joined by Flaum,

Chief Judge, Coffey, Ripple, and Kanne,

Circuit Judges, dissenting. I

respectfully dissent. Ours is still the
sole Circuit to address whether a state’s

mechanic’s lien law is preempted by sec.

301 of the Labor Management Relations Act

of 1947, 29 U.S.C. sec. 185(a), and

although alone on the matter, we have

given it much attention. Two panels of

this Court and the en banc panel have

eyed it, and this dissent takes one more

look. I agree with the majority that the

applicable legal principles are far

"easier to mouth than to apply," ante at

5, but I disagree with the majority’s

application. I would uphold the vacated

panel opinion in this case and would

decline to reverse In re Bluffton

Castings Corp., 186 F.3d 857 (7th Cir.

1999).

 Lingle v. Norge Div. of Magic Chef, Inc.

instructs that sec. 301 "governs claims

founded on rights created by [CBAs], and

also claims ’substantially dependent on

analysis of a [CBA].’" 486 U.S. 399, 410

n.10 (1988). Our opinion in Bluffton

rephrased the test as follows: "Various

circuits, including this one, have

recognized that a claim may be preempted

under the LMRA either because it depends

on interpretation of the CBA or because

the claim is founded on the CBA." 186

F.3d at 862 (citations omitted). So, pre

emption applies, first, if the right is

created by state law and interpretation

of the CBA is required or, second, if the

claim is founded directly on rights

created by the CBA. I do not believe that

Bluffton stated these legal principles

too broadly.

 I am convinced that preemption applies

because the employees’ claims are founded

on rights created by the CBA. The

interpretation prong has been generally

applied when independent state rights are

implicated, such as tort actions, which

require some interpretation of the CBA to

resolve. When a cause of action is

created by state law, independent of the

CBA, a court must determine whether the

CBA needs to be interpreted or if a quick

look is enough. See Loewen Group Int’l,

Inc. v. Haberichter, 65 F.3d 1417, 1421

(7th Cir. 1995). The employees here seek

unpaid vacation pay owing to them only

under the CBA, which Bentz failed to pay

because it went bankrupt. This means,

simply put, that for whatever reason,

including lack of funds, Bentz breached

its contract with its employees. The

employees seek to enforce the CBA, and
therefore their claims are wholly founded

on rights created by the CBA. This is not

a case in which the employees seek

enforcement of a state right independent

of the CBA. As the majority notes,

federal law preempts a claim for breach

of a CBA. See ante at 4. Since the

employees’ claims are founded on the CBA,

the interpretation prong is not

implicated, and the employees’ state

mechanic’s liens are preempted.

 Section 301 "creates a federal remedy

for the breach of a [CBA]. The remedy is

exclusive; no action to enforce such an

agreement may be based on state law."

National Metalcrafters v. McNeil, 784

F.2d 817, 823 (7th Cir. 1986). A state

mechanic’s lien does not create an

independent right to vacation pay; rather

it is merely a remedial vehicle used to

enforce the underlying claim to vacation

pay. The employees’ claim for vacation

pay is founded on the CBA. Since the

underlying claim to vacation pay is a

federal one, the employees’ attempt to

enforce their rights under the CBA via a

state mechanic’s lien runs full tilt into

the barriers of federal law.

 The majority writes, "[i]f the

entitlement to wages (or other employee

pay) or the amount due were at issue, the

CBA would control; almost certainly

interpretation of the agreement would be

necessary and would be subject to the

arbitration procedures in the contract.

So as to that determination, preemption

would apply." Ante at 10; see ante at 5.

The majority further says that if the

amount owing was disputed the dispute

"would be resolved in the appropriate

way--arbitration followed by

confirmation, or a direct 301 suit in

federal court if arbitration is not

called for in the CBA." Ante at 6. It is

true that the amount of vacation pay

owing to employees here is not disputed;

nevertheless, a state mechanic’s lien is

not the appropriate collection remedy.

Regardless of whether the amount due is

disputed or not, preemption applies

because the employees are seeking to

enforce the CBA. The CBA in this case

calls for disputes to be resolved through

arbitration. 

 The parties have stipulated to the

amount owing to employees. The majority

says that since there is no dispute over
the amount, no interpretation of the CBA

is required, so preemption does not

apply. Whether the CBA needs to be

interpreted is not the question; no

matter how phrased the rights to be

enforced are founded on the CBA. In the

end, the rule adopted by the majority

will encourage employers to avoid

liability by simply disputing the amount

owed under the CBA. Cf. Antol v. Esposto,

100 F.3d 1111, 1123 (3d Cir. 1996)

(Mansmann, J., dissenting). This may well

encourage artificial disputes between

employers and employees, which would buck

the purpose of the labor laws created to

maintain harmony between the parties.

 While it is true that the reasoning and

result urged by this dissent would have

the effect of treating unionized and

nonunionized workers differently, this

treatment should not be legally

offensive; unionized workers have

voluntarily bargained to be treated

differently by entering into the CBA and

agreeing to arbitral remedies to resolve

any breach of the CBA. This means that

secured creditors would maintain their

priority position, which, again, is not

an offensive result. While the employees’

situation is a sympathetic one, both the

case and statutory law require this

result. Side- stepping the law to reach

an equitable result in what is a contract

claim I do find legally offensive. I

would affirm.