Court Opinion

ID: 771030
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:44:40+00
Date Added: 2024-06-11T13:17:28.483163
License: Public Domain

231 F.3d 1029 (7th Cir. 2000)
In re  Bentz Metal Products Company, Inc., Debtor-Appellee,Appeal of Larry Faehnrich, et al., Plaintiffs-Appellants,v.Bentz Metal Products Company, Inc. and NBD Bank, N.A., Defendants-Appellees.
No. 00-1320
In the  United States Court of Appeals  For the Seventh Circuit
Argued September 7, 2000Decided November 6, 2000

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.[Copyrighted Material Omitted]
Before Bauer, Posner, and Evans, Circuit Judges.
Bauer, Circuit Judge.

1
Plaintiffs-Appellants  ("employees"), former employees of debtor Bentz  Metal Products Company, Inc. ("Bentz"), appeal  from the order of the United States District  Court for the Northern District of Indiana, Fort  Wayne Division, affirming the judgment of the  Bankruptcy Court of the Northern District of  Indiana, Fort Wayne Division, which held that the  employees' mechanic's liens, filed under Indiana  Code sec. 32-8-3-1 et seq., for unpaid vacation  pay were invalid because of the preemptive effect  of sec. 301 of the Labor Management Relations Act  ("LMRA") of 1947, 29 U.S.C. sec. 185(a). For the  foregoing reasons, we affirm the judgment of the  district court.

BACKGROUND

2
The employees were members of the International  Union, United Automobile, Aerospace and  Agricultural Implement Workers of America, Local  2298. The terms and conditions of their  employment with Bentz were governed by a  collective bargaining agreement ("CBA"),  effective between March 11, 1994 and November 17,  1996.

3
On January 17, 1996, an involuntary bankruptcy  petition under 11 U.S.C. sec. 303 was filed  against Bentz. The case was converted to a  Chapter 11 proceeding, and then later reconverted  to a Chapter 7 proceeding. Upon the cessation of  manufacturing by Bentz, the employees timely  filed mechanic's liens seeking unpaid vacation  pay owing to them under the CBA. All parties  stipulated that the amount of vacation pay owed  to the employees, according to a schedule set  forth in the CBA, totals $12,700.38. The  employees then filed an Adversary Proceeding in  Bankruptcy Court to determine the validity,  extent, and priority of the liens, naming Bentz  and NBD Bank, Bentz's secured lender, as  defendants. Relying on In re Bluffton Casting  Corp., 186 F.3d 857 (7th Cir. 1999), the  Bankruptcy Court held that sec. 301 of the LMRA  preempted the employees' mechanic's liens because  "these liens are for monies that stem from the  [CBA]." Summ. J. Hr'g Tr., Sept. 27, 1999, at 2.  The district court affirmed, and we affirm as  well.

DISCUSSION

4
Since the facts are not in dispute, our review  of the lower court's conclusions of law is de  novo. See In re Yonikus, 974 F.2d 901, 903-04  (7th Cir. 1992). This case, like many before it,  arises because there are insufficient assets to  satisfy all creditors. The issue framed by the  parties is whether sec. 301 of the LMRA preempts  the employees' Indiana mechanic's liens for  vacation pay entitlements owed under the CBA. The  consequences of preemption in this case, simply  stated, are: if the employees' liens are valid,  then they are superior to NBD Bank's security  interests; however, if the liens are preempted,  then NBD Bank will apply the $12,700.38 to their  claims against Bentz. Let us follow the trail of  the various laws on the subject and see if we can  resolve the interesting question (always an  interesting question!) of who gets the money.

5
Congress exercised its power under the Supremacy  Clause of the United States Constitution to enact  sec. 301 of the LMRA, which reads

6
Suits for violation of contracts between an  employer and a labor organization representing  employees in an industry affecting commerce as  defined in this chapter, or between any such  labor organizations, 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.

7
29 U.S.C. sec. 185(a). It is axiomatic that this  jurisdictional provision authorizes federal  courts to develop federal common law for the  enforcement of CBAs. See United Steelworkers v.  Rawson, 495 U.S. 362, 368 (1990); Lingle v. Norge  Div. of Magic Chef, Inc., 486 U.S. 399, 403  (1988); Allis-Chalmers Corp. v. Lueck, 471 U.S.  202, 209 (1985); Complete Auto Transit, Inc. v.  Reis, 451 U.S. 401, 405 (1981); Teamsters v.  Lucas Flour Co., 369 U.S. 95, 103-04 (1962);  Textile Workers Union of America v. Lincoln  Mills, 353 U.S. 448, 449-56 (1957); In re Amoco  Petroleum Additives Co., 964 F.2d 706, 709 (7th  Cir. 1992). This promotes uniformity because "any  attempt to interpret, enforce, or question a [CBA  is] necessarily based on national law . . . ."  Amoco, 964 F.2d at 709. A body of uniform law is  particularly important in enforcing arbitration  provisions, a staple of most CBAs. See Lingle,  486 U.S. at 410-11. The Supreme Court, however,  has made clear that state law claims are not  automatically preempted in every case involving  a CBA. Claims independent of or tangentially  involving a CBA are not preempted. See Livadas v.  Bradshaw, 512 U.S. 107, 123 (1994); Lueck, 471  U.S. at 211.

8
Within this rubric, we extract two instances in  which preemption has been held to occur. "Various  circuits, including this one, have recognized  that a claim may be preempted under the LMRA  either because it depends on interpretation of a  CBA or because the claim is founded on the CBA."  Bluffton, 186 F.3d at 862 (citations omitted).  So, preemption occurs, first, if the state claim  is "founded directly on rights created by [the  CBA]." Lingle, 486 U.S. at 410 n.10 (citing  Caterpillar Inc. v. Williams, 482 U.S. at 394-  95). And, second, preemption applies if the right  is created by state law, rather than the CBA, and  application of the law is "substantially  dependent on analysis" of the CBA. Id. When  liability 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).

9
The employees concede that our recent opinion  in Bluffton is controlling. Bluffton held, in  part, that plaintiffs' Indiana mechanic's liens  were preempted by sec. 301 of the LMRA. The  employees, however, respectfully ask us to  reexamine Bluffton. Given their request, we  reiterate the importance of stare decisis.

10
The most complex relationship is between a court  and its own previous decisions. A court must give  considerable weight to those decisions unless and  until they have been overruled or undermined by  the decisions of a higher court, or other  supervening developments, such as a statutory  overruling. But it is not absolutely bound by  them, and must give fair consideration to any  substantial argument that a litigant makes for  overruling a previous decision.

11
Colby v. J.C. Penney Co., Inc., 811 F.2d 1119,  1123 (7th Cir. 1987). We require compelling  reasons to overturn Circuit precedent. See Mid-  America Tablewares, Inc. v. Mogi Trading Co., 100  F.3d 1353, 1364 (7th Cir. 1996). There has been  no higher court or statutory overruling of  Bluffton, and ours is the sole Circuit to address  whether a state's mechanic's lien law is  preempted by sec. 301. Further, no other courts  have discussed Bluffton. With this in mind, we  turn to the employees' arguments.

12
The employees argue that Bluffton failed to  adequately address our prior decisions in Atchley  v. Heritage Cable Vision Assocs., 101 F.3d 495  (7th Cir. 1996) and National Metalcrafters v.  McNeil, 784 F.2d 817 (7th Cir. 1986). They read  these cases as holding that state claims are  preempted only if interpretation of a CBA is  necessary. Therefore, they believe if we  reexamine these decisions, we will find that the  law holds that federal preemption ought not apply  if the claim is merely founded on the CBA, and  correlatively, that preemption ought apply only  if the state claim requires interpretation of the  CBA. Under this view of the law, the employees  contend that while their rights to the vacation  pay are founded on the CBA, the amount owed is  undisputed, and thus, no interpretation of the  CBA is required. Accordingly, since no  interpretation is required, sec. 301 does not  preempt their liens. In essence, they ask  whether, in light of past case law, the "or" in  Bluffton should have been an "and."1 See  Bluffton, 186 F.3d at 862 ("[A] claim may be  preempted under the LMRA either because it  depends on interpretation of a CBA or because the  claim is founded on the CBA.") (citations  omitted).

13
Identical to the employees in this case, the  Bluffton employees conceded that their liens were  founded on the CBA. See 186 F.3d at 862-63 n.5.  They also argued that since their state claims  did not require interpretation of the CBA, their  liens were not preempted. See id. at 862. We,  however, reasoned that since the claims were  "founded on the CBA," it was "not necessary for  us to determine the extent to which the claims  require[d] an analysis of the CBA's terms." Id.  at 862-63 n.5 (emphasis added).

14
The Bluffton employees relied on the "passage  in Lingle that states that 'an application of  state law is preempted by sec. 301 . . . only if  such application requires the interpretation of  a [CBA].'" 186 F.3d at 862 (emphasis added). The  employees in this case rely on the same passage  to argue that preemption should apply only when  an interpretation is necessary. The employees'  strategy seems to be to seek reversal of the  founded on language in Bluffton, and wedge this  case into the interpretation prong, in hopes of  salvaging their liens. We do not agree that the  preemption inquiry should be reduced to the  interpretation prong. We reemphasize

15
We cannot accept the employees' submission that  the sole test for preemption is whether the  claims require analysis of the CBA's terms.  Lingle was not a case in which the CBA formed the  basis for the claim. Therefore, the Court did not  need to emphasize that claims founded on a CBA  are preempted. The Court understandably examined  only whether the claim in that case, retaliatory  discharge for filing a worker's compensation  claim, required an examination of the CBA.

16
Bluffton, 186 F.3d at 862. Therefore, we read the  "or" in Bluffton as an "or."

17
Moreover, we disagree with employees'  interpretation of our prior cases. In Atchley,  the employer delinquently paid wage increases  required by the CBA. See 101 F.3d at 497. An  Indiana wage payment statute created a penalty  for failure to pay wages within 10 days of when  due. See id. at 497-98. We examined whether the  statutory claim depended on an interpretation of  the CBA, and found the claims preempted because  resolution was "substantially dependent on  analysis of the CBA." Id. at 500. The analysis in  Atchley centered on the interpretation prong  because the statute created an independent state  right, penal and nonnegotiable in nature, and did  not involve a right founded directly on the CBA.  As in Lingle, the Atchley court had no reason to  discuss the "founded on" prong. And, as we  explained in Bluffton, the fact that it did not  discuss the "founded on" prong does not mean that  the "sole test" for preemption is the  interpretation prong. See 186 F.3d at 862.

18
In National Metalcrafters, employees brought  suit under the Illinois Wage Payment and  Collection Act to force their employer to pay  vacation benefits owed under the CBA. See 784  F.2d at 820. We found the claims preempted  because resolution of the state cause of action  required interpretation of the CBA. See id. at  824. The statute created an independent state  cause of action to recover entitlements due under  the CBA, and we found that interpretation of the  CBA was necessary to resolution. Further, it  should be noted that, while still valid law,  National Metalcrafters was decided before  Caterpillar and Lingle clarified the categories  we rely on here. Atchley and National  Metalcrafters are inapplicable because they  involved causes of action created by state law  and required interpretation of the CBAs. This  case does not involve an independent state cause  of action.

19
The employees ask that, if we decline to  overrule Bluffton (as we do), we carve a  distinction based on the facts. Again, they argue  that the validity of the liens is not at issue  because the amount owing has been stipulated by  all parties, and thus, no interpretation of the  CBA is necessary, so the question remaining is  merely one of priority under Indiana property  law. We disagree. This case is factually the same  as Bluffton. The sole difference is in Bluffton  the employees argued that only a "brief analysis"  of the CBA was needed, instead of none, as the  employees here postulate. See 186 F.3d at 862  n.5. Despite this semantic variation, there is no  indication in Bluffton that the amount owing was  in dispute. And, whether the amount was disputed  was not determinative. Certainly, the Bluffton  employees' liens listed the amounts they were  owed under the CBA. This case, like Bluffton, is  actually a contractual action by employees to  enforce the CBA breached by Bentz. This is a  federal claim "dressed in state-law clothing."  Atchley, 101 F.3d at 500. 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, 784 F.2d at 823 (citations  omitted).

20
The employees misconstrue the nature of  mechanic's liens.2 The Indiana mechanic's lien  statute does not create an independent  substantive cause of action for vacation pay;  rather, it provides a state statutory remedy  against an employer who breaches a contractual  obligation to pay earned monies. The statute's  utility to the employees is directly dependent on  underlying contractual rights created by the CBA.  While the parties do not dispute that the  employees are owed $12,700.38, we reckon that  drawing a distinction with Bluffton on this basis  would be unsound. It would encourage employers to  avoid liability by simply disputing the amount  owed. Cf. Antol v. Esposto, 100 F.3d 1111, 1123  (3d Cir. 1997) (Mansmann, J., dissenting).

21
Here, as in Bluffton, "plaintiffs are attempting  to enforce their rights under the CBA with a  state remedy that would give their liens priority  in a bankruptcy proceeding. Because the claims  are founded on the CBA, they are preempted  whether or not they require analysis of the CBA's  terms." 186 F.3d at 862.

CONCLUSION

22
We hold that the employees' state mechanic's  liens are preempted by sec. 301 of the LMRA. The  district court's order is AFFIRMED.

notes:

1
 Or, as employees' counsel asked the Bankruptcy  Court, "whether there would be preemption under  Section 301 of the [LMRA] if a claim is simply  grounded in a [CBA] or if it then--or if it also  requires not only grounding, but an  interpretation." Summ. J. Hr'g Tr., Sept. 27,  1999, at 3.

2
 This is not a case in which plaintiffs are trying  to enforce the arbitration decision, and the CBA  need only be consulted to calculate damages. The  employees have not exhausted their contractual  remedies under the CBA, namely arbitration.

23
EVANS, Circuit Judge, dissenting.

24
Stare decisis,  as Judge Bauer appropriately notes, is extremely  important, and Bluffton Casting is squarely on  point. But in my view, Bluffton Casting, born  just 15 months ago, is clearly wrong. So this is  one of those rare situations where stare decisis  should not carry the day. Instead, we should cut  our losses and reject Bluffton Casting before it  grows older.

25
As I see it, Bluffton Casting is inconsistent  with Atchley, National Metalcrafters, Livadas,  and Lingle. The result is that unionized workers  (who have a CBA) lose out in a situation like  this, whereas nonunionized workers (with no CBA)  can file a state mechanic's lien and jump to the  front of the creditors' queue. The purpose of  federal preemption is to ensure the uniform  interpretation of CBAs, but that purpose isn't  served when no interpretation of a CBA is  required. In this situation, I don't see how an  Indiana law that preferences unpaid workers over  an unpaid bank interferes with consistent federal  law governing labor agreements between employers  and unions.