its right to a federal forum by competent proof").
Section 1441(b) of Title 28 of the United States Code permits removal to federal court of any civil action over which the district court has original jurisdiction, including any action that arises under federal law.
Removal on the basis of federal question jurisdiction is improper unless a federal question is an essential element of a plaintiff's cause of action, and is apparent on the face of the plaintiff's well-pleaded complaint. See Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-11, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983); Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 96 L. Ed. 2d 318, 107 S. Ct. 2425 (1987); Barbara v. New York Stock Exchange, Inc., 99 F.3d 49, 53-4 (2d Cir. 1996); Lupo v. Human Affairs Int'l, Inc., 28 F.3d 269 (2d Cir. 1994). Under the well-pleaded complaint rule, the plaintiff is "master to decide what law he will rely upon." The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 57 L. Ed. 716, 33 S. Ct. 410 (1913). Thus, where the plaintiff's claims involve both state and federal grounds, "the plaintiff is free to ignore the federal question and pitch his claim on the state ground" to defeat removal. Travelers Indemnity Co. v. Sarkisian, 794 F.2d 754, 758 (2d Cir. 1986) (citation omitted). See also Caterpillar, 482 U.S. at 392 (plaintiff "may avoid federal jurisdiction by exclusive reliance on state law"). Furthermore, removal may not be predicated on the existence of a federal defense, such as the defense of preemption, "even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Caterpillar, 482 U.S. at 393. See also Barbara 99 F.3d at 53-54 (fact that federal defense might bar suit entirely not sufficient to create removal jurisdiction).
A limited exception to the well-pleaded complaint rule arises, however, where Congress has mandated the "complete preemption" of a specific area of law, such that any civil complaint raising a state law claim in that area "is of necessity so federal in character that it arises under federal law . . . and permits removal to federal court under 28 U.S.C. § 1441." Plumbing Indus. Bd., Plumbing Local Union No. 1 v. E.W. Howell Co., Inc., 126 F.3d 61, 66 (2d Cir. 1997) (citing Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987)). In those rare instances, a plaintiff cannot avoid removal by artfully pleading his complaint to rely upon state law, because the real nature of the claim is federal. See Travelers, 794 F.2d at 758; Franchise Tax Bd., 463 U.S. at 24 ("If a federal cause of action completely preempts a state cause of action any complaint that comes within the scope of the federal cause of action necessarily 'arises under' federal law").
Here, Schepis' complaint facially asserts only state claims. The Union's removal petition contends, however, that the complaint raises "substantial questions of federal law" under LMRDA § 501, 29 U.S.C. § 501, the federal labor law provision concerning the fiduciary duties of union officials. (See Removal Petition, P4.) The Union's argument, as briefed for the Court, is somewhat contorted in that it stops short of asserting that § 501 preempts all of Schepis' state law claims, yet devotes the bulk of its analysis to comparing § 501 to ERISA provisions that do completely preempt state rules. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987) (finding complete preemption by ERISA of state rules concerning employee benefits). The Union also accuses Schepis of artfully pleading his complaint to avoid federal jurisdiction although, according to the Union, any cognizable claim Schepis has to reimbursement arises from and "exist[s] only by virtue of' the fiduciary standard expressed in § 501. (Def. Brief at 9.) Alternatively, the Union argues that this Court has subject matter jurisdiction over Schepis' claims under Section 301 of the Labor Management Relations Action of 1947 ("LMRA"), 29 U.S.C. § 185. Significantly, § 301 was not cited as a basis for jurisdiction in the Union's removal petition.
A. Removal Premised on § 501 of the LMRDA
Section 501 of the LMRDA contains two parts. Subsection 501(a) declares that union officials are fiduciaries who hold certain enumerated duties to their labor organization.
29 U.S.C. § 501(a). Subsection 501(b) provides individual union members with a cause of action to sue union officials who are alleged to have violated their fiduciary duties, as set forth in § 501(a). Suits under § 501(b) may be brought only "upon leave of the court" and if the union itself refuses or fails to bring suit after being requested to do so by a member. Id. Section 501(b) further provides that the trial court may allot part of the recovery in such an action to pay the attorney's fees and costs of the union member who successfully brought the suit.
Nothing in the text of § 501(b) addresses the reimbursement of attorney's fees incurred by union officials who are charged with violating their fiduciary duties. Rather, "the statutory language, by its terms, deals only with reimbursement to successful plaintiffs, and contemplates payment only out of funds recovered on behalf of the union." Doyle v. Kamenkowitz, 114 F.3d 371, 375 (2d Cir. 1997). Section 501(b) is therefore not applicable to the type of reimbursement claim asserted by Schepis. Admittedly, courts in this Circuit and elsewhere have construed the language of § 501(b) "so as not to bar payment of successful defendants' legal expenses out of the union's coffers." Doyle, 114 F.3d at 375 (citing Morrissey v. Segal, 526 F.2d 121, 128-29 (2d Cir. 1975), which held that § 501(b) did not prohibit a union's voluntary reimbursement of an exonerated union official's legal defense costs) (other citations omitted). But in Doyle, when asked to decide whether an exonerated union official could compel reimbursement of defense fees and costs under § 501(b), the Second Circuit answered this question firmly in the negative, holding that "the plain language of the statute [did not] support creation of such a right of reimbursement against a union that is unwilling to pay." 114 F.3d at 375. Significantly, the Doyle Court then remanded the case back to the district court for a determination of whether such reimbursement could be compelled on other legal grounds, including under various provisions of New York State law. Id. at 379.
As the holding in Doyle evinces, nothing in § 501(b) forecloses Schepis from bringing state law claims for the reimbursement of his criminal defense costs. Even more conclusive on this point, however, is that the LMRDA explicitly preserves a plaintiff's right to resort to state law in this area. Section 603(a) of the Act provides that:
except as explicitly provided to the contrary, nothing in this Act shall reduce or limit the responsibilities of any labor organization or any officer, agent shop steward, or other representative of a labor organization . . . under the laws of any State.
29 U.S.C. § 523. Since the LMRDA's enactment, the Supreme Court has reinforced that § 603(a) is "an express disclaimer of pre-emption of state laws regulating the responsibilities of union officials, except where such preemption is expressly provided in the 1959 Act." De Veau v. Braisted, 363 U.S. 144, 157, 4 L. Ed. 2d 1109, 80 S. Ct. 1146 (1960) (plurality opinion); see also id., at 160-61 (BRENNAN, J. concurring in judgment) (LMRDA "explicitly provides that it shall not displace such legislation of the States"); Id., at 164 n.4 (DOUGLAS, J. dissenting in judgment) (stating that § 603(a) specifically refers to "the fiduciary responsibilities created by § 501 of the Act and makes clear that these provisions of federal law do not pre-empt state law").
Accord Brown v. Hotel and Restaurant Employees and Bartenders Int'l Union Local 54, 468 U.S. 491, 506, 82 L. Ed. 2d 373, 104 S. Ct. 3179 (1984).
Based on the foregoing, this Court has no basis for finding, as the Union suggests, that § 501 exclusively occupies the reimbursement field for exonerated union fiduciaries, or that it somehow infuses all state law claims for such reimbursement with "substantial questions of federal law." Such a finding would be unwarranted not only because of Doyle's holding and the disclaimer of preemption in § 603(a), but also because § 501 does not even address the reimbursement of a union official's criminal defense costs. At best, the Union's assertion that § 501(b) provides the sole basis for Schepis' reimbursement claim is a defensive allegation, which furnishes no basis for removal. See Caterpillar, 482 U.S. at 393. Furthermore, even if Schepis could have sought reimbursement on federal as well as state grounds, as master of his complaint he exercised his right not to do so.
B. Removal Premised on § 301 of the LMRA
As an alternative basis for removal, the Union argues that Schepis' claims are federal in nature because they require analysis of the Union's constitution and by-laws and, therefore, should be treated as claims arising under LMRA § 301.
As a threshold matter, this argument is waived because the Union failed to identity § 301 as a basis for removal in its petition; rather the Union raised this jurisdictional ground for the first time in opposing Schepis' remand motion. See Wyant v. National R.R. Passenger Corp., 881 F. Supp. 919, 924-25 (S.D.N.Y. 1995) (a defendant cannot, in opposing remand, argue a new substantive ground as a basis for removal); In re CBS Inc. v. Snyder, 762 F. Supp. 71, 73 (S.D.N.Y. 1991) (while defendant is free to amend removal petition within 30-day statutory removal period to add additional grounds, a wholly absent basis for removal cannot be supplied after the 30-day period has run). See also 28 U.S.C. § 1446(b) (requiring a notice of removal to contain "a short and plain statement of the grounds for removal"). Nevertheless, this Court will explain why § 301 would not, in any event, provide it with subject matter jurisdiction over this action.
Section 301 grants federal courts jurisdiction over actions for breach of a "contract between an employer and a labor organization."
29 U.S.C. § 185(a). While such "contracts" typically are collective-bargaining agreements, the Supreme Court has held that union constitutions are also contracts within the meaning of § 301. United Ass'n of Journeymen & Apprentices of the Plumbing & Pipefitting Indus. v. Local 334, 452 U.S. 615, 621-22, 69 L. Ed. 2d 280, 101 S. Ct. 2546 (1981). The Supreme Court has further held that individual union members may bring suit under § 301 for violation of a union constitution. Wooddell v. International Bhd. of Elec. Workers, 502 U.S. 93, 101, 116 L. Ed. 2d 419, 112 S. Ct. 494 (1991).
Unlike § 501, which does not carry preemptive force, § 301 has been held to preempt completely state law claims pertaining to the breach of union contracts. See Franchise Tax Bd., supra, 463 U.S. at 23. Accordingly, § 301 might well give this Court jurisdiction over the instant action (assuming the Union had raised § 301 in its removal petition) were Schepis alleging that the Union breached its constitution or other collective bargaining agreement by refusing to reimburse him. But the complaint makes no such allegation. Rather, the only contract claim in the complaint alleges that Schepis is entitled to recoup his legal defense costs "pursuant to defendants' custom and practice and representation." (Complaint P 22, 23.) Schepis' brief in support of remand describes this claim as being one based on principles of "contractual estoppel." (Pltf. Mem. of Law, at 3.) While this Court is not aware of any such claim under New York State law,
Schepis' quasi-contract claim does not appear to rely on any written provisions in the Union's constitution, by-laws, or on any other contract within § 301's scope. Indeed, Schepis and the Union agree that no provision in the Union's constitution, by-laws, or collective bargaining agreements, provides for the reimbursement of his legal defense costs -- further evidence that interpretation of these documents will not be required in deciding Schepis' claims.
Despite § 301's broad preemptive force, the Supreme Court has made it clear that § 301 does not prevent a union member from asserting state law contract claims which do not rely upon rights contained in a labor agreement. See Caterpillar, 482 U.S. at 396 ("[A] plaintiff covered by a collective-bargaining agreement is permitted to assert legal rights independent of that agreement, including state-law contract rights, so long as the contract relied upon is not a collective-bargaining agreement."). See also Dougherty v. American Tel. and Tel. Co., 902 F.2d 201, 203 (2d Cir. 1990) ("Not every state-law claim is preempted by Section 301, and rights and obligations that are truly independent of a collective bargaining agreement are enforceable."). Accordingly, in Caterpillar, the Supreme Court remanded to state court the plaintiffs' contractual claims alleging an employer's breach of oral representations; because such claims did not require interpretation or application of a collective-bargaining agreement, they were not removable under § 301. 482 U.S. at 395. In so holding, the Court noted that, while plaintiffs could have sued under § 301, "as masters of the complaint . . . they chose not to do so." Id. See also Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 409-410, 100 L. Ed. 2d 410, 108 S. Ct. 1877 (1988) (state law action alleging retaliatory discharge was "independent" of collective bargaining agreement and therefore not preempted by § 301); Bimler v. Stop & Shop Supermarket Co., 965 F. Supp. 292, 300-301 (D.Conn. 1997) (employee's state claims for infliction of emotional distress and invasion of privacy not preempted by § 301 where based upon rights wholly separate from collective bargaining agreement). Likewise, here, the Union has failed to demonstrate that Schepis' state law claims are "inextricably intertwined" with considerations of any terms of the Union constitution, by-laws, or collective bargaining agreements, so as to arise under § 301. Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 213, 85 L. Ed. 2d 206, 105 S. Ct. 1904 (1985).
C. Fees and Costs
Plaintiff requests the Court to award its fees and costs incurred in bringing this motion. Such awards are discretionary under 28 U.S.C. § 1447(c), which provides that "an order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." See Morgan Guar. Trust Co. v. Republic of Palau, 971 F.2d 917, 924 (2d Cir. 1992) (noting that § 1447(c) "affords a great deal of discretion and flexibility to the district courts in fashioning awards of costs and fees"). Assessment of costs and fees does not require a finding of bad faith or frivolity. Id. at 923.
This case is an appropriate one for the granting of fees and costs. The Union removed the case solely on the basis of LMRDA § 501, despite the Second Circuit's recent and unambiguous determination in Doyle v. Kamenkowitz that § 501 provides union officials with no federal cause of action for reimbursement of their criminal defense costs. 114 F.3d at 375. Moreover, both the Court's holding in Doyle and the disclaimer in LMRDA § 603(a) made it crystal clear that plaintiffs are free to pursue such claims on alternative state law grounds. Most charitably, the Union failed to consult Doyle before filing its removal notice. More likely, however, is that defendant understood that Schepis had no federal claim to reimbursement under § 501(b), and for that very reason tried to recast Schepis' state law claims as federal ones, to set them up for dismissal. The Union's argument under LMRA § 301 was equally contrived and raised only as an afterthought in opposing remand. Under these circumstances, Schepis is entitled to costs and reasonable attorney's fees in connection with this motion.
Plaintiff's claims do not arise under federal law and therefore may not be removed to federal court. This action is hereby remanded to the state court and plaintiff is awarded his costs and reasonable attorney's fees in connection with this motion. The Court retains jurisdiction only to decide any disputes relating to the amount of the costs and fees, which amount the parties should first try to assess amicably between themselves, or otherwise submit to the Court in letter briefing by no later than January 30, 1998.
DATED: New York, New York
January 8, 1998