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United States District Court, S.D. New York

May 12, 2004.

THOMAS CESPUGLIO, Plaintiff, -against- PETER WARD, Defendant

The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge



  Thomas Cespuglio, an employee of the New York Hotel Trades Council Associated Benefit Funds, is suing Peter Ward, a trustee and co-chair of the Funds, for tortious interference with contract. The contract in question is a collective bargaining agreement between the Funds and Cespuglio's union, the Office and Professional Employee International Union Local 153. Ward now moves to dismiss the complaint, arguing that Cespuglio's tort claim is preempted by the Labor Management Relations Act (LMRA)*fn1, and that Cespuglio has failed to exhaust his remedies as required by that Act. Cespuglio cross-moves for remand back to the New York state court. II. BACKGROUND

  A. Procedural History

  Cespuglio filed this suit on October 10, 2003, in New York State Supreme Court, New York County. The original complaint named three defendants: Ward, the "Hotel Association of New York City, Inc.,"*fn2 and Local 153. It alleged that the Hotel Association breached its employment contract with Cespuglio, that Ward induced the breach, and that Local 153 failed to adequately represent Cespuglio in his grievance against the Hotel Association. (Cespuglio had contacted his union delegate to grieve the suspension as early as June 2003).

  On October 31, 2003, Ward (joined by the other defendants) removed the action to federal court, asserting preemption under the LMRA. At the initial conference before this court, Cespuglio stated that he wished to discontinue the action against Local 153 and the Hotel Association; an order was entered to that effect on December 17, 2003. I also granted leave for Cespuglio to file an amended complaint. B. The Complaint

  On December 31, 2003, Cespuglio filed his amended complaint. It reads, in its entirety, as follows:

1. Jurisdiction of this Court is pursuant to a notice of removal, dated October 31, 2003, by the attorneys for defendant Peter Ward, a copy of which (without attachments) is attached as Exhibit A and incorporated herein.
2. At all times referred to herein the defendant was an officer of the New York Hotel Trade Council and Association Benefit Funds, referred to herein as "Funds".
3. At all times referred to herein the plaintiff was a member of the Office of [sic] Professional Employees International Union, Local 153, AFL-CIO, referred to herein as "Local 153".
4. At all times referred to herein there was a contract between Funds and Local 153, referred to herein as "the contract".
5. On or about the 12th day of June, 2003, Funds did breach the contract by suspending plaintiff from his employment and relocating plaintiff to a substantially worse location and position for his employment, notwithstanding plaintiff's seniority.
6. Defendant Peter Ward was fully aware of the contract.
7. Defendant Peter Ward did intentionally procure the breach [of] the contract as alleged in paragraph 5 hereof.
8. Such inducement of breach by Peter Ward was an abuse of his authority, and of his position of trust.
9. The actions of Peter Ward in inducing said breach of contract were malicious, and were motivated by animosity towards the plaintiff, and were such as to justify the award of punitive damages.
WHEREFORE, plaintiff requests judgment against defendant for $250,000.00 compensatory damages and $1,000,000.00 punitive damages together with interest, costs and disbursements thereon, and any other relief which the Court may find to be fair, just and equitable.
Cespuglio alleges in his brief that Ward had him transferred from Brooklyn to a less desirable post in upper Manhattan because Cespuglio refused to give enough playing time to Ward's nephew, who was on a baseball team coached by Cespuglio.


  A. Removal and Remand

  When a party files a motion to remand challenging the removal of an action from state court, "the burden falls squarely upon the removing party to establish its right to a federal forum by `competent proof.'"*fn3 "Out of respect for the independence of state courts, and in order to control the federal docket, `federal courts construe the removal statute narrowly, resolving any doubts against removability.'"*fn4 If the removing party cannot demonstrate federal jurisdiction by "competent proof," the removal was in error and the district court must remand the case to the court in which it was filed.*fn5

  It is well-established that "[t]o determine whether the claim arises under federal law, [courts] examine the Well pleaded' allegations of the complaint and ignore potential defenses: a suit arises under the Constitution and laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution.'"*fn6 "As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim."*fn7

  There are, however, two exceptions to the general rule.*fn8 First, a state law claim may be removed to federal court when the claim is completely preempted by federal law. "When the federal statute completely pre-empts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law. This claim is then removable under 28 U.S.C. § 1441(b), which authorizes any claim that `arises under' federal law to be removed to federal court."*fn9 The Supreme Court has found "complete preemption" in only two types of cases: certain causes of action under the LMRA and the Employee Retirement Income Security Act.*fn10 Recently, the Second Circuit found complete preemption in a third category of cases: those arising under the Securities Litigation Uniform Standards Act.*fn11 In so finding, the Court of Appeals emphasized that "the complete preemption doctrine must be applied sparingly and with great restraint."*fn12

  Second, an action may be removed to federal court where Congress so provides. Thus, where a statute specifically gives federal courts jurisdiction over a particular subject matter, and states that actions involving that subject matter may be removed to federal court despite the absence of federal claims, removal is proper even where the "well-pleaded complaint" rule is not satisfied.*fn13 B. Motion to Dismiss

  "Given the Federal Rules' simplified standard for pleading, `[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'"*fn14 Thus, a plaintiff need only plead "`a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests."*fn15 Simply put, "Rule 8 pleading is extremely permissive."*fn16

  At the motion to dismiss stage, the issue "`is not whether a plaintiff is likely to prevail ultimately, but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleading that a recovery is very remote and unlikely but that is not the test.'"*fn17

  The task of the court in ruling on a Rule 12(b)(6) motion is "`merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.'"*fn18 When deciding a motion to dismiss pursuant to Rule 12(b)(6), courts must accept all factual allegations in the complaint as true and draw all reasonable inferences in plaintiff's favor.*fn19


  A. LMRA Preemption

  "Section 301 of the LMRA governs actions by an employee against an employer for breach of a collective bargaining agreement."*fn20 Any such action is within the exclusive jurisdiction of federal courts and subject exclusively to federal law, regardless of where it is brought.*fn21

  Thus, the threshold question in this case is whether Cespuglio's claim is preempted by Section 301, which provides:

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.*fn22
Section 301 preemption applies in any case that raises questions about the construction of, or rights and responsibilities under, a collective bargaining agreement, regardless of whether the plaintiffs claims sound in tort or contract.*fn23 Indeed, suits arising under section 301 "encompass those seeking to vindicate `uniquely personal 5 rights of employees such as wages, hours, overtime pay, and wrongful discharge."*fn24 This is so because of the strong federal interest in the uniform interpretation of collective bargaining agreements.*fn25


These policies require that the relationships created by a collective-bargaining agreement be defined by application of an evolving federal common law grounded in national labor policy. The interests in interpretive uniformity and predictability that require that labor-contract disputes be resolved by reference to federal law also require that the meaning given a contract phrase or term be subject to uniform federal interpretation. Thus, questions relating to what the parties to a labor agreement agreed, and what legal consequences were intended to flow from breaches of that agreement, must be resolved by reference to uniform federal law, whether such questions arise in the context of a suit for breach of contract or in a suit alleging liability in tort.*fn26
Accordingly, "[t]he Supreme Court has said that § 301 is not to be given a narrow reading and has directed the courts `to formulate and apply federal law to suits for violation of collective bargaining contracts.'"*fn27 Consistent with the broad application of section 301, suits will be preempted even if the defendant is a non-signatory to the collective bargaining agreement, so long as the suit implicates provisions of the agreement.*fn28

  It is easy to see why Cespuglio's tortious interference claim falls within the ambit of Section 301. A tortious interference with contract claim, by necessity, presumes a breach of contract.*fn29 An adjudication of the tort claim therefore requires the court to inquire about that breach — what duties did the contract create? Did the parties to the contract fulfill those duties? If not, was the failure of one side to fulfill its duty caused by the defendant? It is hard to imagine a situation where a claim for tortious interference with a collective bargaining agreement will not implicate the provisions of that agreement. Accordingly, Cespuglio's claim — though framed as a state law claim for tortious interference with contract — is really a claim under section 301, and federal jurisdiction is proper.

  B. Exhaustion of Remedies

  Consistent with the policy underlying section 301, the Supreme Court has long required plaintiffs to exhaust whatever dispute-resolution or grievance procedures exist in the collective bargaining agreement before suing in federal court.*fn30 If employees could sue under section 301 in federal courts in the first instance, mandatory grievance or arbitration procedures would be meaningless.

  Ward argues that Cespuglio has not exhausted his remedies under the collective bargaining agreement. In particular, the Funds/Local 153 collective bargaining agreement provides that any grievance "may be taken to arbitration before the Impartial Chairman of the Hotel Industry or his designated representative. The decision of the Arbitrator shall be final and binding upon the parties hereto."*fn31 The language of the industry-wide agreement, incorporated by reference into the Funds/Local 153 agreement,*fn32 is stronger:

All complaints, disputes or grievances arising between the parties hereto involving questions of interpretation or application of any clause of this Agreement . . . shall be referred to a permanent umpire to be known as the Impartial Chairman, and his decision shall be final and binding upon the parties hereto.*fn33
Interpreting just this language in a predecessor version of the industry-wide agreement, the Second Circuit noted that "[n]o grievance — either specific or general — is excluded from this broad coverage."*fn34

  There is no question that Cespuglio has failed to exhaust his remedies under the collective bargaining agreement. Indeed, grievances filed on his behalf by the union are still pending.*fn35

  C. Hybrid Section 301/Fair Representation Claim

  There is an exception to the exhaustion requirement in so-called "hybrid" section 301/fair representation claims, which allege "(1) that the employer breached a collective bargaining agreement and (2) that the union breached its duty of fair representation in redressing [the employee's] grievance against the employer."*fn36 Where the union in bad faith fails to adequately represent its members, the policies of the labor law are undermined and it "works an unacceptable injustice" to require the employee to exhaust her remedies before suing.*fn37

  A breach of the duty of fair representation occurs when a union "arbitrarily ignore[s] a meritorious grievance or processe[s] it in perfunctory fashion."*fn38 In particular, "[t]he Union's conduct must, first, have been arbitrary, discriminatory or in bad faith, and second, it must have seriously undermined the arbitral process."*fn39 Although such hybrid claims require that certain allegations be made against the union, the union need not be named as a defendant.*fn40

  Cespuglio may be alleging a hybrid claim. Certainly, it cannot be said that his pleadings foreclose that possibility.*fn41 For that reason alone, on a motion to dismiss, I must assume that Cespuglio is asserting a hybrid claim and therefore need not have exhausted his remedies under the collective bargaining agreement.

  Although I cannot and do not rest my decision on a motion to dismiss on material outside of the pleadings, it is worth noting that there is substantial evidentiary support for the conclusion that Cespuglio is asserting a hybrid claim. The initial complaint filed in state court explicitly alleged that "Local 153 breached its duty of fair representation of plaintiff with respect to [his] grievance."*fn42 And Cespuglio argues in papers submitted in connection with the instant motion that Local 153 breached its duty of fair representation:

At first I complained to my union delegate, Peter Krippa. I did everything I could to have my union file a grievance, and was frustrated. . . . After this litigation started, and only then, did my union move ahead on my grievance. . . . I believe that my union's initial failure to protect me was because of the influence of the defendant, Peter Ward.*fn43
On balance, it appears that Cespuglio is asserting a hybrid claim.*fn44 D. Failure to State a Claim

  Finally, Ward argues that the complaint fails to state a claim for tortious interference with contract because Ward is an agent of the Funds. In order to prevail on a claim for tortious interference, a plaintiff must prove*fn45 (1) the existence of a valid contract between plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional procuring of that breach by the third party; (4) actual breach; and (5) damages.*fn46 An employee may not sue an agent of her employer for tortious interference with an employment contract, however, because the agent, when acting in his official capacity, is not a "third party."*fn47


"[A] corporate officer who is charged with inducing the breach of a contract between the corporation and a third party is immune from liability if it appears that he is acting in good faith as an officer . . . [and did not commit] independent torts or predatory acts directed at another."*fn48
In this case, however, Cespuglio alleges that Ward was not acting in good faith or in his capacity as an officer of the Funds. Rather, Cespuglio explicitly alleges that the inducement was "an abuse of [Ward's] authority"*fn49 and was "malicious," and "motivated by animosity."*fn50 Those allegations are sufficient to bring this case outside of the ordinary rule governing agents of employers.

  Ward does not otherwise contest that the complaint adequately alleges a claim for tortious interference, nor could he. The complaint puts Ward on notice of the claim against him and the conduct of which Cespuglio complains. That is all that Rule 8(a) requires. V. CONCLUSION

  For the reasons set forth above, the Fund's motion to dismiss and Cespuglio cross-motion to remand are both denied. This action will proceed as a hybrid section 301/fair representation claim. The Clerk is directed to close these motions [11 and 13]. A conference is scheduled for 4:30 p.m. on May 28, 2004, in Courtroom 15C.


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