The opinion of the court was delivered by: MACMAHON
Plaintiff Long Island Rail Road Company ("LIRR") moves to remand this action to the Supreme Court of New York, New York County, pursuant to 28 U.S.C. § 1447(c). For the reasons below, we grant the motion.
This action arises from the well-publicized labor contract deadlock between LIRR and the defendant operating employees of LIRR, unions and locals representing them, and officers of those organizations (the "Unions"). After eighteen months of negotiation, mediation, and the investigation and report of a Presidential Emergency Board pursuant to the national Railway Labor Act, 45 U.S.C. §§ 151 et seq., failed to produce a new contract, the Unions allegedly threatened to call a strike to begin at 12:01 a.m. on February 14, 1980.
On February 13, LIRR commenced this action against the Unions in New York Supreme Court to enjoin the threatened strike under New York common law and its so-called "Taylor Law," which prohibits strikes by any "public employee" or "employee organization" representing him. N.Y.Civ.Serv.Law §§ 210(1), 211.
On February 13, proceeding ex parte, LIRR moved in state court for a temporary restraining order and preliminary injunction against the strike. Justice Bernheim entered an order prohibiting the strike until a full hearing could be held, and scheduled the hearing for February 15.
On February 14, however, the Unions removed the action to this court pursuant to the general federal removal statute, 28 U.S.C. § 1441, whereupon LIRR moved for a remand to the state court on the ground that we lack jurisdiction over the subject matter of the action. On February 15, upon the consent of the parties, we entered an order enjoining any strike pending determination of the remand motion.
The Unions assert that the action is one "arising under any Act of Congress regulating commerce," 28 U.S.C. § 1337, and "founded on a claim or right arising under the Constitution . . . or laws of the United States," id. § 1441(b), over which this court would have had original jurisdiction and thus has removal jurisdiction. Id. §§ 1441(a), 1441(b). We disagree.
In determining whether an action "arises under" federal law, we must look initially to plaintiff's complaint. Gully v. First National Bank, 299 U.S. 109, 57 S. Ct. 96, 81 L. Ed. 70 (1936). If plaintiff chooses to rely on state law as the basis for its claim, then the case cannot be said to arise under federal law even if plaintiff could have relied on federal law instead. Great Northern Railway v. Alexander, 246 U.S. 276, 282, 38 S. Ct. 237, 239, 62 L. Ed. 713 (1918); American Well Works v. Layne, 241 U.S. 257, 36 S. Ct. 585, 60 L. Ed. 987 (1916).
Here the complaint on its face relies solely on state, not federal, law. It alleges that LIRR, as a "public benefit corporation," is a "government" or "public employer" within the meaning of the Taylor Law, N.Y.Civ.Serv.Law § 201(6)(a), and therefore that its employees and the unions representing them are, respectively, "public employees," id. § 201(7)(a), and "employee organizations," id. § 201(5), prohibited from striking by § 210(1). The complaint seeks injunctive relief under § 211 of the Taylor Law. In addition, the complaint alleges that the threatened strike violates New York common law and seeks injunctive relief under the common law. Nowhere does it refer to federal law.
The Unions make several arguments that federal subject matter jurisdiction exists. First, they assert that on February 8, LIRR converted from a Rail Road Redevelopment Corporation into a "public benefit corporation" under New York law for the sole purpose of bringing its employees within the coverage of the Taylor Law. See N.Y.Civ.Serv.Law § 201(6)(a), (5). This transformation is said to be a mere sham requiring a holding that the Taylor Law does not apply. Second, the Unions assert that since for years LIRR has bargained solely under the Railway Labor Act, its sudden reincorporation under New York law and invocation of the Taylor Law constitute bad faith litigation tactics that preclude injunctive relief under the equitable doctrine of "unclean hands."
These assertions, even if true, do not confer removal jurisdiction because they simply amount to defenses under state law. The New York state courts can determine the propriety of LIRR's reincorporation and the equities of its prayer for an injunction by looking solely to New York statutes and general equity principles, without any reference to federal law. If we were to assert jurisdiction over the case based only on these defenses, we would not serve the removal statute's purpose of allowing defendants to have federal claims decided by a federal court. See 14 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3722 (1976). Moreover, we would risk an unnecessary intrusion on the authority of the New York courts to "interpret doubtful regulatory laws of the state," such as the Taylor Law. Cf. Railroad Comm'n v. Pullman Co., 312 U.S. 496, 500, 61 S. Ct. 643, 645, 85 L. Ed. 971 (1941) (federal courts have equitable discretion to abstain from needless friction with state policies).
The Unions next assert that the Supremacy Clause of the United States Constitution, U.S.Const. art. 6, and federal preemption doctrine preclude application of the Taylor Law in this case. Their argument in this respect is twofold. First, they argue that LIRR is a "class 1 railroad" subject to the regulations of the Federal Railway Labor Act, see 45 U.S.C. § 151, and as such is prohibited from becoming a "public benefit corporation" entitled to the injunction remedy furnished by the Taylor Law. Second, they argue that LIRR is prohibited from invoking the Taylor Law because an injunction would infringe the right of its employees to strike under the Railway Labor Act. See Brotherhood of Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 384-86, 89 S. Ct. 1109, 1118-19, 22 L. Ed. 2d 344 (1969). In short they claim that the Taylor Law conflicts with the Railway Labor Act and must give way to it because the latter, as one of the "Laws of the United States," is the "supreme Law of the Land." U.S.Const. art. 6.
These contentions certainly raise federal questions as to the scope of the Railway Labor Act and the effect of the Supremacy Clause, but the questions arise only as defenses to claims based on state law. Though there are cases to the contrary, it has long been held by the Supreme Court, our Court of Appeals, and other federal circuit courts that a suit brought upon a state statute such as the Taylor Law "does not arise under an act of Congress or the Constitution of the United States because prohibited thereby." Gully v. First National Bank, supra, 299 U.S. at 116, 57 S. Ct. at 99. Federal preemption is a matter of defense to a state law claim, and not a ground for removal. Milligan v. Milligan, 484 F.2d 446, 447 (8th Cir. 1973); Washington v. American League of Professional Baseball Clubs, 460 F.2d 654, 660 (9th Cir. 1972); Bailey v. Logan Square Typographers, Inc., 441 F.2d 47, 51-52 (7th Cir. 1971) (Stevens, J.); Debevoise v. Rutland Railway, 291 F.2d 379, 380 (2d Cir.), cert. denied, 368 U.S. 876, 82 S. Ct. 123, 7 L. Ed. 2d 77 (1961). Contra, New York v. Local 144, Hotel, Nursing Home & Allied Health Servs. Union, 410 F. Supp. 225, 229 (S.D.N.Y.1976).
If indeed the suit is barred by federal law, we have every confidence that the state court, bound as we are by the Supremacy Clause, will deny the injunction. See New York v. Local 1115, Joint Bd., Nursing Home & Hosp. Employees Div., 412 F. Supp. 720 (E.D.N.Y.1976). In any event, consideration of the Unions' federal defense in a federal forum is ultimately available through Supreme Court review of the final state court disposition. 28 U.S.C. § 1257. The Supreme Court, not federal district court, is the forum that Congress has chosen for such review, and we have no power to override that legislative allocation of judicial competence.
The Unions' final argument is that LIRR has, by "artful pleading," disguised what is essentially a federal claim as one arising solely under state law. As a general rule, of course, where a plaintiff's rights arise under both state and federal law, he may choose to cast his complaint solely in reliance on state law and so avoid federal subject matter jurisdiction. Great Northern Railway v. Alexander, supra. But where federal law is the very source of plaintiff's claimed right, courts have looked beyond the complaint to find federal subject matter jurisdiction where a litigant is in fact relying on federal law to establish a cause of action, even where the complaint is couched only in terms of state law. See, e.g., Coditron Corp. v. AFA Protective Systems, Inc., 392 F. Supp. 158 (S.D.N.Y.1975) (federal patent law held the source of plaintiff's right); Hearst Corp. v. Shopping Center Network, Inc., 307 ...