Court Opinion

ID: 2977406
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:08:00.513195+00
Date Added: 2024-06-11T11:44:06.598503
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                         File Name: 08a0763n.06
                         Filed: December 16, 2008

                                             No. 08-1192

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

WILLIAM PALUDA, ROBERT HALL,

        Plaintiffs-Appellants,

                v.                                                     On Appeal from the United
                                                                       States District Court for the
THYSSENKRUPP BUDD COMPANY,                                             Eastern District of Michigan
                                                                       at Detroit
        Defendant-Appellee.

                                                                /

Before:         GUY and GRIFFIN, Circuit Judges; and WATSON, District Judge.*

        RALPH B. GUY, Jr., Circuit Judge.                Plaintiffs William Paluda and Robert Hall

appeal from the district court’s decision denying plaintiff’s renewed motion for remand to

state court and granting the defendant ThyssenKrupp Budd Company’s motion to dismiss the

complaint. Both decisions rest on the district court’s determination that the plaintiffs’ state-

law age discrimination claims were preempted by both § 301 of the Labor Management

Relations Act (LMRA), 29 U.S.C. § 185, and the Employee Retirement Security Act

(ERISA), 29 U.S.C. § 1144(a). Concluding that the plaintiffs’ state law claims were

completely preempted by § 301 of the LMRA, we affirm.

                                                    I.

        *
          The Honorable Michael H. Watson, United States District Judge for the Southern District of Ohio,
sitting by designation.
No. 08-1192                                                                                         2

        Paluda and Hall were hourly employees of ThyssenKrupp Budd, an automobile

supplier, at Budd’s facility in Detroit, Michigan. Plaintiffs were represented by the UAW

and Local 306 throughout their employment. The UAW and Budd entered into a collective

bargaining agreement, which expired in October 2005 and was extended by agreement into

January 2006. Pursuant to a letter agreement made part of the Collective Bargaining

Agreement (referred to as Document No. 10), the Pension Plan’s Mutual Consent Early

Retirement Benefit was made available to employees laid off at age 40 or older as a result

of a plant closing. The Mutual Consent Benefit provided for unreduced retirement benefits,

temporary supplemental pension benefits, and healthcare benefits to qualifying employees.

        On May 15, 2006, Budd announced its intention to cease operations at the Detroit

facility.   The UAW and Budd, with involvement of mediators, engaged in “effects”

bargaining that concluded in a Plant Closing Agreement dated October 31, 2006, which

provided varying separation payments and benefits depending on employment status and

eligibility for retirement benefits under the expired CBA. Budd then notified its Detroit

employees that they would be laid off or terminated as of December 4, 2006. The Plant

Closing Agreement identified three main groups of employees: Group A employees, who

were eligible for and chose to take normal or early retirement on or before January 1, 2007;

Group B employees, who were not eligible for normal or early retirement but nonetheless met

certain other criteria; and Group C employees, who did not meet the eligibility requirements

for Group A or B.1

        1
         The Plant Closing Agreement separately addressed various categories of inactive employees and
the few employees who were within 12 months of qualifying for “30 and out” early retirement benefits.
No. 08-1192                                                                              3

      The crux of plaintiffs’ complaint is that they did not qualify as Group B employees

under Paragraph 13 of the Agreement, which provided in pertinent part:

      For those employees actively working on or after May 15, 2006 who will not
      be eligible to retire (either Early or Normal) on or before January 1, 2007– and
      who meet the following criteria, the Company will provide a one-time, lump
      sum payment of $75,000 within 45 days of the Plant Closing Date. The
      criteria are as follows:

            Employee must be of age forty (40) or older on his/her date of layoff or
      termination and must have been actively at work on or after May 15, 2006.

             Employee must have at least ten (10) years of credited service on the
      date of layoff or termination.

             On the date of layoff or termination, the sum of the employee’s age in
      years and months plus the years and months of seniority in the Detroit Plant
      must equal or exceed fifty-five (55) years.

             Employees who qualify for the above payment will receive Hospital
      Medical Surgical & Drug insurance benefits for 18 months after the month of
      the Plant Closing Date; Dental Insurance shall continue through January 31,
      2007.

               Employees who meet criteria a through e above are also eligible for a
      certain enhanced early retirement pension benefits (the “Mutual Consent
      Benefit,” made up of a Special Temporary Benefit for a period of years ending
      at age 62 and unreduced basic retirement benefits) as provided for in Section
      7.1-C of the 2001 Budd – UAW Consolidated Retirement Benefit Plan, as
      modified by Document 10 to the expired 2001 National Contractual
      Bargaining Agreement. The Company will offer a one-time, lump sum
      payment of $50,000 to employees who resign prior to and rather than
      qualifying for the Mutual Consent Benefit. Such a resignation will be referred
      to as a “qualifying resignation.” The employee’s election must be made before
      the Plant Closing Date, and payment will be made within 45 days after the
      Plant Closing Date. Group B employees who do not make a qualifying
      resignation will receive the Mutual Consent Benefit . . . notwithstanding loss
      of seniority under this Plant Closing Agreement and notwithstanding receipt
      of any separation or other benefit under the [Supplemental Unemployment
      Benefit (SUB)] Plan. In addition, the 30 day pension waiting period shall be
      waived for such retirements.
No. 08-1192                                                                                                   4

In short, Group B employees were entitled to a $75,000 lump sum payment, health and dental

benefits for a period of time, and the option to waive the Mutual Consent Early Retirement

Benefit for an additional lump sum payment of $50,000.

        Plaintiffs contend that they met all the criteria for Group B, except that they were a

month or two shy of being 40 years of age on the date of layoff or termination. That is,

plaintiffs each alleged that he was actively working on May 15, 2006, that he had at least 10

years of service, and that the sum of his age and seniority exceeded 55 years. But, Paluda

and Hall did not turn 40 years of age until January 19 and February 2, 2007, respectively.

As a result, they did not qualify for Group B treatment. As Group C employees, plaintiffs

qualified for the same medical and dental benefits as Group B employees and enhanced

Supplemental Unemployment Benefits. But, they were not eligible for any lump sum

payment upon separation. Plaintiffs contend that their exclusion from treatment as Group

B employees was the result of discrimination because they were under 40 years of age.

        In February 2007, after the union refused to accept their grievances, plaintiffs filed

a one-count complaint in state court alleging “reverse” age discrimination under Michigan’s

Elliott-Larsen Civil Rights Act (ELCRA), M.C.L.A. § 37.2202. See Zanni v. Medaphis

Physician Servs. Corp., 612 N.W.2d 845 (Mich. App. 2000) (holding that the ELCRA

prohibition on age discrimination applies to discrimination on the basis of youth). Defendant

filed a timely petition for removal, asserting preemption under the LMRA and ERISA as the

basis for federal jurisdiction. 2 Plaintiffs sought remand on the grounds that removal was

        2
          It appears, given plaintiff’s allegation that Budd is a Michigan corporation with offices in Michigan,
that there was no basis to assert jurisdiction based on diversity of citizenship.
No. 08-1192                                                                                   5

improper.

       The district court denied the motion for remand in an order entered June 28, 2007,

rejecting plaintiffs’ arguments that (1) the state law age discrimination claim was sufficiently

independent of the collective bargaining agreement to avoid preemption under § 301 of the

LMRA; and (2) the Plant Closing Agreement did not constitute an “employee welfare plan”

for purposes of ERISA preemption. That order was promptly followed by defendant’s

motion to dismiss the complaint and plaintiffs’ renewed request for remand. On January 9,

2008, the district court amplified its reasons for denying the motion for remand and

dismissed the complaint because the plaintiffs’ age discrimination claims were preempted

by federal law, and plaintiffs had not asserted claims under § 301. This appeal followed.

                                              II.

       The appeal in this case turns on whether the defendant demonstrated that the district

court had “original jurisdiction founded on a claim or right arising under the Constitution,

treaties or laws of the United States.” 28 U.S.C. § 1441(b). In determining whether a claim

arises under federal law for purposes of removal, we must examine the well-pleaded

allegations on the face of the complaint and ignore any potential defenses. Beneficial Nat’l

Bank v. Anderson, 539 U.S. 1, 6 (2003). One of the few exceptions to the well-pleaded

complaint rule is complete preemption, which “applies in circumstances in which Congress

may intend the preemptive force of a federal statute to be so extraordinary that ‘any claim

purportedly based on that preempted state law is considered, from its inception, a federal

claim, and therefore arises under federal law.’” Mikulski v. Centerior Energy Corp., 501
No. 08-1192                                                                                      6
F.3d 555, 560 and 563 (6th Cir. 2007) (en banc) (quoting Caterpillar Inc. v. Williams, 482
U.S. 386, 393 (1987)), cert. denied, 128 S. Ct. 2426 (2008).

       If the claims in this case are not completely preempted, then we lack jurisdiction over

the nondiverse parties. A decision on subject matter jurisdiction involving a question of law

or the application of law to the facts is reviewed de novo, while any factual findings

underpinning the decision are reviewed for clear error. Mikulski, 501 F.3d at 560.

A.     LMRA

       Section 301 of the LMRA provides that “[s]uits 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,

without respect to the amount in controversy or without regard to the citizenship of the

parties.” 29 U.S.C. § 185(a). The Supreme Court has recognized this as one of only a few

statutes that have complete preemptive force so as to authorize the removal of actions

seeking relief only under state law. Beneficial Nat’l Bank, 539 U.S. at 7. Section 301

governs claims founded directly on rights created by collective bargaining agreements, as

well as claims that are substantially dependent on an analysis of a collective bargaining

agreement. Caterpillar, 482 U.S. at 394; see also Lingle v. Norge Div. of Magic Chef, Inc.,

486 U.S. 399, 405-06 (1988) (holding that state-law claim that discharge was in retaliation

for filing workers’ compensation claim was not preempted by § 301).

       Based on the Supreme Court’s guiding principles, this court has articulated a two-step

inquiry for determining whether a state law claim is sufficiently independent of the collective
No. 08-1192                                                                                  7

bargaining agreement to survive complete preemption under § 301 of the LMRA. Alongi v.

Ford Motor Co., 386 F.3d 716, 724 (6th Cir. 2004) (citing DeCoe v. Gen. Motors Corp., 32
F.3d 212, 216 (6th Cir. 1994)). That is, a state-law claim is preempted by § 301 either: (1)

if “the rights claimed by the plaintiff were created by the collective bargaining agreement

[rather than] state law,” or (2) if “resolving the state-law claim would require interpretation

of the terms of the collective bargaining agreement.” Mattis v. Massman, 355 F.3d 902, 906

(6th Cir. 2004) (citing DeCoe, 32 F.3d at 216-17). With respect to the latter inquiry, we ask

whether a plaintiff can prove the elements of his state-law claim without contract

interpretation. DeCoe, 32 F.3d at 216.

       While the right asserted by plaintiffs to be free from discrimination based on age does

not arise from the contract, defendant argues that resolution of the plaintiffs’ “reverse” age

discrimination claims would require contract interpretation. As noted earlier, Michigan’s

civil rights statute makes it unlawful for an employer to discriminate against an individual

with respect to employment because of age (or youth).              Plaintiffs liken their age

discrimination claims to the retaliatory discharge claim that the Court in Lingle found did not

require interpretation of the collective bargaining agreement, but turned on “purely factual

questions pertain[ing] to the conduct of the employee and the conduct and motivation of the

employer.” 486 U.S. at 407. Typically, the Court explained, a state court can resolve a claim

of discriminatory or retaliatory discharge without interpreting the “just cause” language of

a collective bargaining agreement. Id. at 413; see also Alongi, 386 F.3d at 726-27 (finding

retaliatory discharge claim was not preempted where plaintiffs alleged that they were not
No. 08-1192                                                                                 8

rehired by defendant in retaliation for earlier objections to the use of unapproved parts in

violation of federal standards).

       In contrast to typical claims of retaliatory or discriminatory discharge, however,

plaintiffs have alleged discrimination in the allocation of benefits under the Plant Closing

Agreement. As defendants argue, plaintiffs’ prima facie showing of age discrimination

would require proof that plaintiffs were similarly situated to those employees who qualified

for treatment as Group B employees under the Plant Closing Agreement and, in turn, whether

they were eligible for Mutual Consent Early Retirement Benefits as defined by the Collective

Bargaining Agreement, as modified by letter agreement (Document No. 10). See Smith v.

Goodwill Indus. of W. Mich., Inc., 622 N.W.2d 337, 342-43 (Mich. Ct. App. 2000) (stating

disparate treatment discrimination claim requires proof that plaintiff was treated differently

than other similarly situated employees). Since plaintiffs’ age discrimination claims are

substantially dependent on analysis of a collective bargaining agreement, they are completely

preempted by § 301 of the LMRA. That being the case, the district court did not err either

in denying the plaintiffs’ motion to remand or granting defendant’s motion to dismiss the

preempted state-law claims.

B.     ERISA

       The petition for removal averred that plaintiffs claims were also completely preempted

by the civil enforcement provisions of § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B),

as recognized in Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 66 (1987).

However, defendant then argued, and the district court specifically found, that the state-law
No. 08-1192                                                                                                    9

claims were preempted under § 514(a) of ERISA, 29 U.S.C. § 1144(a), because those claims

“related to” an employee benefit plan. Removal and preemption are distinct concepts,

however, and this court has held that preemption under § 514(a) does not convert the state

law claim into a federal action subject to removal. Wright v. Gen. Motors Corp., 262 F.3d
610, 614 (6th Cir. 2001); Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th Cir. 1995) (en

banc).

         Having concluded that § 301 completely preempts plaintiffs’ state-law claims,

providing grounds for removal of the action to this court, it is not necessary to decide in the

first instance whether plaintiffs’ claims were also preempted either by § 514(a) or § 502(a)

of ERISA. Accordingly, we do not address plaintiffs’ central contention on appeal that it

was clearly erroneous for the district court to find that the Plant Closing Agreement was an

employee welfare benefit plan governed by ERISA. See Kolkowski v. Goodrich Corp., 448
F.3d 843, 848 (6th Cir. 2006); Cassidy v. Akzo Nobel Salt, Inc., 308 F.3d 613, 615-17 (6th

Cir. 2002).3

         3
          Plaintiffs also accuse the district court of misapprehending their claims as alleging violation of the
ADEA, rather than Michigan’s ELCRA, because the order denying the renewed motion for remand
concluded that plaintiffs could not establish a claim for “reverse” age discrimination under the federal statute.
There can be no doubt, however, that the district court understood plaintiffs to be asserting state-law
“reverse” discrimination claims. Although the district court did not fully elaborate, it is clear from the record
that the district court was concerned with whether ERISA preemption under § 514(a) was rendered
ineffective by the “savings” provision in § 514(d), which states that § 514(a) shall not be “construed to alter,
amend, modify, invalidate, impair, or supercede any law of the United States.” 29 U.S.C. § 1144(d). Section
514(a) will not preempt state antidiscrimination laws to the extent they prohibit practices made unlawful by
Title VII; but, federal law would not be impaired by preemption of state laws that prohibit employment
practices that are lawful under Title VII. Shaw v. Delta Air Lines, Inc., 463 U.S, 85 (1983). Since, as the
district court recognized, the ADEA does not afford protection to younger workers, federal law would not
be impaired by preemption of the plaintiffs’ state law claims alleging discrimination based on their youth.
See Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581 (2004).
No. 08-1192       10

      AFFIRMED.