Court Opinion

ID: 768748
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:13:19+00
Date Added: 2024-06-11T17:55:37.942668
License: Public Domain

212 F.3d 1010 (7th Cir. 2000)
Northeast Illinois Regional Commuter  Railroad Corporation, d/b/a Metra,    Plaintiff-Appellant,v.Hoey Farina & Downes,    Defendant-Appellee.
No. 99-1588
In the  United States Court of Appeals  For the Seventh Circuit
Argued February 14, 2000Decided May 15, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 98 C 1320--Harry D. Leinenweber, Judge. [Copyrighted Material Omitted]
Before Bauer, Flaum, and Evans, Circuit Judges.
Flaum, Circuit Judge.

1
On March 4, 1998,  Northeast Illinois Regional Commuter Railroad  Corporation (d/b/a "Metra") filed a complaint for  declaratory and injunctive relief against Douglas  Baethke and the law firm Hoey Farina & Downes  ("Hoey") in the United States District Court for  the Northern District of Illinois. Metra alleged  that the defendants were interfering with Metra's  rights, guaranteed under the federal Railway  Labor Act ("RLA"), 45 U.S.C. sec. 151 et seq., to  conduct disciplinary hearings according to the  terms of a collective bargaining agreement. The  district court dismissed for lack of subject  matter jurisdiction. For the reasons stated  herein, we affirm.

Background

2
Metra is a corporation that operates commuter  passenger trains in the Chicago region, and it is  a "carrier" within the meaning of the RLA, which  governs labor relations matters within the rail  industry. Douglas Baethke was employed by Metra  as a locomotive engineer. His employment was  governed by a collective bargaining agreement  ("CBA") between Metra and the Brotherhood of  Locomotive Engineers ("BLE"), his bargaining  representative, as well as by the provisions of  the RLA. Under the CBA, Metra may only discipline  a covered employee after first conducting a fair  and impartial disciplinary investigation hearing,  at which the employee may be represented by a BLE  official, but not by a private attorney.

3
On May 2, 1996, Baethke allegedly suffered an  injury to his leg during the course of his  employment, and he was off work until July 21,  1997, and then from October 9, 1997 through the  date at which Metra's initial complaint was  filed. Baethke retained the Hoey law firm to  represent him in his personal injury suit against  Metra. Baethke repeatedly told Metra  representatives that his injury rendered him  unable to return to work, but on December 4,  1997, he was observed engaging in strenuous  physical activities. On January 28, 1998, Metra  officials sent Baethke a letter informing him  that he was medically released to return to work  as of January 26, but that he was removed from  service pending an investigation hearing, to be  conducted under the procedures established in the  Metra-BLE CBA, concerning his possible violation  of Metra work rules.

4
Baethke informed Hoey of the disciplinary  investigation hearing, then scheduled for  February 13, 1998, and on February 5 a Hoey  attorney sent Metra a letter threatening to file  suit, in the law firm's own name, against Metra  if Metra did not agree to grant Baethke certain  rights beyond those provided by the CBA.  Specifically, the attorney demanded that he be  permitted to attend the hearing, that he be able  to cross-examine company witnesses, that he  receive copies of all relevant medical documents,  and that the hearing be postponed to allow him  time to assemble his own evidence. The Hoey  attorney conceded that the CBA did not permit  Baethke any of these rights but he insisted that  if Metra adhered to the CBA's terms Metra would  be tortiously interfering with the attorney's  relationship with Baethke.1 The Hoey attorney  threatened to sue for injunctive relief, and  Metra responded with a letter stating that Metra  would not grant Baethke the additional rights  demanded by the Hoey attorney. The Hoey attorney  then sent Metra another letter threatening to sue  if Metra continued to refuse.

5
On March 4, 1998, Metra filed a complaint in  federal district court for declaratory and  injunctive relief against Baethke and Hoey. The  RLA prescribes mandatory procedures that must be  followed with respect to certain types of  employment disputes. Metra asserted that Baethke  and Hoey understood that any direct assertion by  Baethke or Hoey that Metra's decision to hold the  disciplinary hearing would violate Baethke's  rights would be subject to the exclusive dispute  resolution procedures prescribed by the RLA,  under which Metra would be entitled to proceed  with the hearing pending resolution of the  dispute over the application of the CBA.  Therefore, Metra alleged, Baethke and Hoey  concocted a scheme to prevent Metra's holding of  the disciplinary hearing by demanding terms  different from those prescribed by the CBA and  the RLA based on the law firm's supposed rights  under Illinois law. Hoey's warnings that Metra's  exercise of the railroad's RLA-based rights would  tortiously interfere with the law firm's rights,  Metra claimed, was part of Hoey and Baethke's  scheme to obtain for Baethke different terms than  those prescribed by the CBA

6
Metra requested declaratory and injunctive  relief against both Baethke and Hoey to prevent  them from interfering with Metra's right to  conduct the Baethke disciplinary hearing and any  future disciplinary hearings pursuant to the  provisions of its CBA and the RLA. Metra sought  declarations that it enjoyed the legally  protected right to conduct the Baethke  disciplinary hearing and future disciplinary  hearings involving Hoey clients according to  terms of the CBA and that this right, as a matter  of federal law, supersedes any legally cognizable  rights that the firm may have. Metra also sought  declarations that Hoey could not enjoin such  hearings because Metra's conduct either did not  violate any legally cognizable rights belonging  to Hoey or was privileged as a matter of Illinois  common law. Finally, Metra sought injunctive  relief preventing Hoey from interfering with  Metra's federally protected rights, such as by  commencing a lawsuit to prevent Metra from  conducting its hearings.

7
On March 5, 1998, one day after Metra filed its  complaint, Hoey carried out its threat and filed  a lawsuit against Metra in the Circuit Court of  Cook County, Illinois, alleging that Metra's  conduct of the Baethke disciplinary proceeding  under the procedures prescribed in the CBA would  tortiously interfere with the law firm's  relationship with its client. Metra responded by  filing a motion to dismiss Hoey's state lawsuit  on the ground that it was barred by the pendency  of Metra's earlier-filed federal action.

8
In response to Metra's federal lawsuit and its  motion to dismiss Hoey's later-filed state court  suit, Hoey sent a letter to Metra stating that it  was withdrawing its demand to be present at the  pending investigation of Baethke or to assert any  other rights the law firm might have under state  law to enjoin the investigation. The letter  concluded: "I trust this renders all issues in  the above-referenced matters moot and both cases  can be dismissed." Hoey then voluntarily  dismissed its lawsuit in state court, and on  March 24, 1998, it moved to dismiss on mootness  grounds the present, federal action on behalf  itself and Baethke.

9
On June 2, the district court granted the  motion to dismiss Metra's claims against Baethke  and Metra's claims against Hoey that related  specifically to the Baethke hearing. The court  denied Hoey's motion to dismiss Metra's claim  seeking relief to prevent Hoey from commencing  future lawsuits to interfere with Metra's  federally protected rights, the court having  concluded that these claims were not moot because  there exists a present threat that Hoey, which  represents other Metra employees, might disrupt  future proceedings.

10
In November 1998, Metra filed a motion for  summary judgment with respect to its claims for  declaratory relief only, asserting that it was  entitled as a matter of law to such relief. Hoey  argued that the district court lacked subject  matter jurisdiction because Metra's claims for  declaratory and injunctive relief did not "arise  under" federal law, since Metra's RLA-based  preemption claims were ones that the railroad  could raise as a defense in the type of state  court tortious interference suit threatened  against it by the law firm.

11
On February 12, 1999, the district court  dismissed Metra's claims against Hoey for lack of  subject matter jurisdiction, and Metra now  appeals that dismissal.

Discussion

12
District courts "shall have original  jurisdiction of all civil actions arising under  the Constitution, laws, or treaties of the United  States." 28 U.S.C. sec. 1331. Under the well-  pleaded complaint rule, it must be clear from the  face of the plaintiff's complaint that there is  a federal question. Louisville & Nashville  Railroad Co. v. Mottley, 211 U.S. 149 (1908);  Burda v. M. Ecker Co., 954 F.2d 434, 438 (7th  Cir. 1992). But, "[i]n declaratory judgment  cases, the well-pleaded complaint rule dictates  that jurisdiction is determined by whether  federal jurisdiction would exist over the  presumed suit by the declaratory judgment  defendant." GNB Battery Technologies, Inc. v.  Gould, Inc., 65 F.3d 615, 619 (7th Cir. 1995). In  other words, as the Supreme Court explained in  Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (1950), if the plaintiff cannot get into  federal court by anticipating what amounts to a  federal defense to a state-law cause of action,  he also should not be able to use the Declaratory  Judgment Act to do so by asserting what is really  a preemptive federal defense as the basis of his  complaint. See also Ceres Terminals, Inc. v.  Industrial Commission of Illinois, 53 F.3d 183,  185 (7th Cir. 1995).

13
In Public Services Commission of Utah v. Wycoff  Co., 344 U.S. 237 (1952), the Supreme Court  reiterated the position taken in Skelly Oil:  "Where the complaint in an action for declaratory  judgment seeks in essence to assert a defense to  an impending or threatened state court action, it  is the character of the threatened action, and  not of the defense, which will determine whether  there is federal question jurisdiction in the  District Court." Id. at 248 (emphasis added).  Then, in Franchise Tax Board v. Construction  Laborers Vacation Trust, 463 U.S. 1 (1983), the  Court made clear the strictness of the rule that  "if, but for the availability of the declaratory  judgment procedure, the federal claim would arise  only as a defense to a state created action,  jurisdiction is lacking." Id. at 16 (citing  Skelly Oil and quoting 10A C. Wright, A. Miller  & M. Kane, Federal Practice and Procedure sec.  2767).

14
Based on the line of precedent running through  Skelly Oil, Wycoff, and Franchise Tax Board, the  district court in this case lacked jurisdiction  to hear Metra's claim. Metra argues that the  district court had jurisdiction over its claim  for a declaration that the RLA preempts any state  law claim that Hoey might have for alleged  tortious interference because Metra's claim  arises under the RLA and the Supremacy Clause of  the Constitution. Metra characterizes its claims  as an attempt to protect its rights under federal  law to discipline employees for workplace  misconduct in accordance with the procedures  prescribed in certain collective bargaining  agreements. But these Supreme Court cases  establish that a conflict between federal law and  state law is not enough to confer subject matter  jurisdiction. In essence Metra went to district  court seeking adjudication of its argument that  the RLA provides a federal law defense to the  type of state law tortious interference suit Hoey  threatened to bring. The precedent just outlined,  however, precludes Metra from recharacterizing  the claim to fit the well-pleaded complaint rule  by means of the Declaratory Judgment Act. See  Ceres Terminals, 53 F.3d at 184-85 (holding that  a district court lacked jurisdiction over  declaratory judgment actions filed by stevedore  contractors, where the contractors sought a  declaration that the state's power ends at the  water's edge, therefore barring threatened state  workers' compensation claims by two workers);  Nuclear Engineering Co. v. Scott, 660 F.2d 241,  253 (1981) ("It is well-settled that the  Declaratory Judgment Act confers no additional  jurisdiction upon the federal courts. When a  declaratory judgment plaintiff asserts a claim  that is in the nature of a defense to a  threatened or pending coercive action, the  character of the threatened or pending coercive  action determines whether federal question  jurisdiction exists over the declaratory judgment  action.") (citations omitted).

15
Metra does not dispute the applicability of the  directives spelled out in Wycoff and Franchise  Tax Board to its claim. Instead of arguing that  its claim lies outside the jurisdictional lines  that the language of Wycoff draws, Metra argues  that the Wycoff approach has been renounced or  limited by subsequent Supreme Court and Seventh  Circuit decisions. Specifically, Metra argues  that federal question jurisdiction must exist  over claims that a threatened action based upon  state law would violate the declaratory  plaintiff's federal rights because to hold  otherwise would conflict with Ex parte Young, 209 U.S. 123 (1908), and its progeny, which establish  that federal courts have subject matter  jurisdiction over suits to enjoin state  interference with a plaintiff's federal rights.  In Illinois v. General Electric Co., 683 F.2d 206  (7th Cir. 1982), this Court considered whether  federal question jurisdiction over a claim for  declaratory relief must be assessed by reference  to the "character" of the cause of action  threatened by the declaratory defendant rather  than the nature of the claims actually pleaded by  the declaratory plaintiff. In that case, the  recently enacted Illinois Spent Fuel Act  prohibited actions that General Electric believed  it was entitled to take under federal law.  General Electric filed suit in federal district  court seeking a declaration that the Act violated  the Commerce and Supremacy Clauses of the U.S.  Constitution. This Court ultimately ruled that  the district court had subject matter  jurisdiction over General Electric's declaratory  claim. In doing so, we noted that the "character"  of the claim rule spelled out in Wycoff, "if  understood to require federal claimants always to  litigate their claims as defenses in state court  if they can, . . . must be wrong. . . . Since the  impending state action will almost always be  based on state law alone, the dictum [of Wycoff],  read broadly, would overrule Ex Parte Young and  every case that has ever followed it." Id. at  211.

16
But General Electric involved a challenge to  threatened state regulation, not private actions  under state law, and to extend the observations  of that case to cover declaratory actions like  Metra's ignores the unique doctrinal concerns  underlying Ex parte Young. Ex parte Young carves  out an exception to the otherwise strict  application of Eleventh Amendment immunity, to  ensure state compliance with federal law. "Ex  parte Young was the culmination of efforts by  [the Supreme Court] to harmonize the principles  of the Eleventh Amendment with the effective  supremacy of rights and powers secured elsewhere  in the Constitution." Perez v. Ledesma, 401 U.S. 82, 106 (1971) (Brennan, J., concurring in part  and dissenting in part). With respect to suits  challenging threatened state-law actions by  private parties, however, even though the  procedural posture may resemble that of an Ex  parte Young suit challenging threatened state  regulation, federal courts have continued to  apply the well-pleaded complaint rule and other  traditional jurisdictional principles outlined  above. See, e.g., Ceres, 53 F.3d at 185; see also  Colonial Penn Group, Inc. v. Colonial Deposit  Co., 834 F.2d 229, 237 (1st Cir. 1987); Armstrong  v. Armstrong, 696 F.2d 1237 (9th Cir. 1983).  Accordingly, the district court correctly  dismissed Metra's suit for lack of subject matter  jurisdiction.

Conclusion

17
For the reasons stated herein, we AFFIRM the  decision of the district court.

Notes:

1
 This lawsuit was based on an Illinois appellate  court decision, Callis, Papa, Jensen, Jackstadt  & Halloran, P.C. v. Norfolk Southern Corp., 292  Ill.App.3d 1003 (1997), which suggested that a  law firm in Hoey's position might have a tortious  interference claim against the railroad.