Lontz v. Tharp

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GRACE LONTZ; BEVERLY PETTIT, 

Plaintiffs-Appellants,

v.

JOYCE THARP; ELIZABETH DOAK;  No. 04-1967

JAMES BAISH; SANDEEP THAKRAR;

MONICA, LLC, d/b/a Holiday Inn

Express,

Defendants-Appellees.



Appeal from the United States District Court

for the Northern District of West Virginia, at Wheeling.

Frederick P. Stamp, Jr., District Judge.

(CA-03-260-5)

Argued: March 17, 2005

Decided: July 1, 2005

Before WILKINSON, LUTTIG, and TRAXLER, Circuit Judges.

Vacated and remanded with instructions by published opinion. Judge

Wilkinson wrote the opinion, in which Judge Luttig and Judge Trax-

ler joined.

COUNSEL

ARGUED: Paul Joseph Harris, Wheeling, West Virginia, for Appel-

lants. Mario Richard Bordogna, STEPTOE & JOHNSON, Clarks-

burg, West Virginia, for Appellees. ON BRIEF: John R. Merinar, Jr.,

STEPTOE & JOHNSON, Clarksburg, West Virginia, for Appellees.

2 LONTZ v. THARP

OPINION

WILKINSON, Circuit Judge:

The phrase "complete preemption" has become a term of art. It

refers to that "small category of statutes that . . . ‘authoriz[e] removal

of actions that sought relief only under state law.’" Alongi v. Ford

Motor Co., 386 F.3d 716, 724 (6th Cir. 2004) (quoting Beneficial

Nat’l Bank v. Anderson, 539 U.S. 1, 6-7 (2003)). In this case we con-

sider whether state wrongful discharge claims are completely pre-

empted by the National Labor Relations Act, 29 U.S.C. §§ 157, 158

(2000). We conclude that they are not. We express no view as to

whether such claims on the merits are preempted by federal law, as

this is a question for state courts to resolve. We accordingly vacate

the judgment of the district court and remand with instructions to

remand the case in turn to state court.

I.

Grace Lontz and Beverly Pettit were employed as hotel supervisors

at a Holiday Inn Express in Dallas Pike, West Virginia. Some of the

employees at the hotel initiated union-organizing activities in 2003.

Pettit alleges that management, convinced that she had assisted and

encouraged the activities, fired her on July 2, 2003.

Lontz alleges that members of management "met with [her] and

instructed her to seek the assistance of a deputy sheriff, (a friend of

[hers]) and have a union organizer arrested." Lontz refused. Thereaf-

ter, she claims, management "created an intolerable work environ-

ment" for her. Lontz says that she resigned on October 8, 2003, for

this reason.

Later in October, Lontz and Pettit jointly brought suit in West Vir-

ginia state court, naming as defendants their former employer, Mon-

ica, LLC (the entity operating the Holiday Inn Express), and four

members of its management. Plaintiffs’ claims sounded entirely in

state law. Pettit and Lontz alleged respectively wrongful discharge

and constructive discharge "in violation of the public policy of the

State of West Virginia" and contrary to W. Va. Code § 21-1A-1

LONTZ v. THARP 3

(Michie 2002). Lontz also alleged a violation of the West Virginia

Wage Payment and Collection Act, W. Va. Code § 21-5-1 et seq.*

Defendants removed the case to the U.S. District Court for the

Northern District of West Virginia. They subsequently filed a motion

to dismiss, and the plaintiffs filed a motion to remand the case to state

court. On July 1, 2004, the district court dismissed the wrongful and

constructive discharge claims but remanded the statutory wage pay-

ment claim. The district court concluded that the discharge claims

were not brought under state law, but rather alleged violations of sec-

tions 7 and 8 of the National Labor Relations Act ("NLRA"), 29

U.S.C. §§ 157, 158 (2000), which it felt sufficient for federal jurisdic-

tion. In other words, the district court concluded that the putative state

law claims were completely preempted by the NLRA. It was on this

basis that the district court noted that the complaint "allege[d] viola-

tions of federal law," making removal jurisdiction proper. Having

assumed jurisdiction on these grounds, the district court further

observed that claims under sections 7 and 8 are channeled exclusively

to the NLRB. The court therefore dismissed the discharge claims.

Lontz and Pettit timely filed a notice of appeal. They argue that the

case was improperly removed, and therefore seek a remand to the

state court in which the claims were filed. Like all questions implicat-

ing the subject matter jurisdiction of the federal courts, we review de

novo the denial of a motion to remand to state court. Dixon v. Coburg

Dairy, Inc., 369 F.3d 811, 815-16 (4th Cir. 2004) (en banc); Sonoco

Prods. Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 370 (4th

Cir. 2003). In particular, "[w]e review de novo the question of

whether Plaintiffs’ state law claims are completely preempted." Felix

v. Lucent Techs., Inc., 387 F.3d 1146, 1153 (10th Cir. 2004).

*Lontz and Pettit also filed charges with the NLRB. They later con-

cluded that as supervisory employees they lacked a remedy under the

NLRA and that they therefore had been in error to file the charges. They

withdrew them, and the regional director of the NLRB wrote to the

employer in February 2004 noting that the charges had, "with [his]

approval, been withdrawn." The district court found NLRA preemption

regardless of the plaintiffs’ status as supervisory employees. We decline

to address this question or to speculate on the effect of the withdrawn

charges because our jurisdictional resolution renders these issues irrele-

vant.

4 LONTZ v. THARP

II.

Because this case began in state court, our jurisdiction depends on

the propriety of removal, which in turn depends on the scope of the

district court’s original jurisdiction. This is because the removal stat-

ute allows defendants to remove a case to federal court only if "the

district courts of the United States have original jurisdiction" over it.

28 U.S.C. § 1441(a) (2000); Rivet v. Regions Bank of La., 522 U.S.

470, 474 (1998). The question, then, is "whether [this] claim could

have been brought originally in federal district court." King v. Marri-

ott Int’l, Inc., 337 F.3d 421, 424 (4th Cir. 2003). To answer it, we

observe that § 1441 generally makes removal appropriate in three cir-

cumstances, demonstration of which is the burden of the party seek-

ing removal. See Mulcahey v. Columbia Organic Chems. Co., 29 F.3d

148, 151 (4th Cir. 1994).

First, a defendant may remove a case to federal court if the parties

are diverse and meet the statutory requirements for diversity jurisdic-

tion. See 28 U.S.C. §§ 1332, 1441(b) (2000); Richardson v. Kruchko

& Fries, 966 F.2d 153, 155 (4th Cir. 1992) (federal jurisdiction over

claim of retaliatory discharge for pro-union activities "based on diver-

sity of citizenship"). Since diversity always vests original jurisdiction

in the district courts, diversity also generates removal jurisdiction.

Second, removal is appropriate if the face of the complaint raises

a federal question. See § 1441(b); King, 337 F.3d at 424. Under the

firmly settled well-pleaded complaint rule, however, merely having a

federal defense to a state law claim is insufficient to support removal,

since it would also be insufficient for federal question jurisdiction in

the first place. See Louisville & Nashville R.R. v. Mottley, 211 U.S.

149, 152 (1908); King, 337 F.3d at 424. Thus, the Supreme Court

unwaveringly has maintained that "[t]o bring a case within [§ 1441],

a right or immunity created by the Constitution or laws of the United

States must be an element, and an essential one, of the plaintiff’s

cause of action." Gully v. First Nat’l Bank, 299 U.S. 109, 112 (1936).

The third justification for removal is actually a narrow exception

to the well-pleaded complaint rule. "[K]nown as the ‘complete pre-

emption’ doctrine," Caterpillar Inc. v. Williams, 482 U.S. 386, 393

(1987), it provides that if the subject matter of a putative state law

LONTZ v. THARP 5

claim has been totally subsumed by federal law — such that state law

cannot even treat on the subject matter — then removal is appropriate.

See Aetna Health Inc. v. Davila, 124 S. Ct. 2488, 2494-95 (2004);

Franchise Tax Board v. Construction Laborers Vacation Trust, 463

U.S. 1, 23-24 (1983); King, 337 F.3d at 424-25. Although completely

preempted claims are rare, they are held to satisfy the well-pleaded

complaint requirements of Mottley and Gully.

Neither party believes that diversity exists or that the complaint

explicitly raises a federal question. We therefore turn to complete pre-

emption.

III.

We have noted our obligation "to construe removal jurisdiction

strictly because of the ‘significant federalism concerns’ implicated"

by it. Maryland Stadium Auth. v. Ellerbe Becket Inc., 407 F.3d 255,

260 (4th Cir. 2005) (quoting Mulcahey, 29 F.3d at 151). "Federalism

concerns strongly counsel against imputing to Congress an intent to

displace a whole panoply of state law . . . absent some clearly

expressed direction." Custer v. Sweeney, 89 F.3d 1156, 1167 (4th Cir.

1996) (internal quotes omitted). Consistent with these principles, we

have recognized that state law complaints usually must stay in state

court when they assert what appear to be state law claims. See, e.g.,

Harless v. CSX Hotels, Inc., 389 F.3d 444, 450 (4th Cir. 2004); King,

337 F.3d at 424; Darcangelo v. Verizon Communications, Inc., 292

F.3d 181, 186 (4th Cir. 2002); Cook v. Georgetown Steel Corp., 770

F.2d 1272, 1274 (4th Cir. 1985). The presumption, in other words, is

against finding complete preemption. Custer, 89 F.3d at 1167.

But that presumption is rebuttable, because federal law occasion-

ally "displace[s] entirely any state cause of action." Franchise Tax

Board, 463 U.S. at 23. When it does, federal law then "provide[s] the

exclusive cause of action for such claims," and therefore "there is . . .

no such thing as a state-law claim" in the regulated area. Beneficial,

539 U.S. at 11. The doctrine of complete preemption thus prevents

plaintiffs from "defeat[ing] removal by omitting to plead necessary

federal questions." Franchise Tax Board, 463 U.S. at 22. It thereby

ensures compliance with congressional intent that federal courts be

available to resolve certain claims which are peculiarly national in

6 LONTZ v. THARP

scope. Defendants’ burden, then, is to demonstrate that a federal stat-

ute indisputably displaces any state cause of action over a given sub-

ject matter.

In assessing whether defendants have carried their burden, we may

not conflate "complete preemption" with "conflict" or "ordinary" pre-

emption. While these two concepts are linguistically related, they are

not as close kin jurisprudentially as their names suggest. Complete

preemption is a "jurisdictional doctrine," while ordinary preemption

simply declares the primacy of federal law, regardless of the forum

or the claim. Sonoco Prods., 338 F.3d at 370-71. Ordinary preemption

has been categorized as a federal "defense to the allegations." Cater-

pillar, 482 U.S. at 392. And as a mere defense, the "preemptive effect

of a federal statute . . . will not provide a basis for removal." Benefi-

cial, 539 U.S. at 6 (internal citations omitted). See also Rivet, 522

U.S. at 475-76; Caterpillar, 482 U.S. at 392-93; Metro. Life Ins. Co.

v. Taylor, 481 U.S. 58, 66 (1987) ("even an ‘obvious’ pre-emption

defense does not, in most cases, create removal jurisdiction"); Fran-

chise Tax Board, 463 U.S. at 14, 28. Even if preemption forms the

very core of the litigation, it is insufficient for removal. Caterpillar,

482 U.S. at 393.

By contrast, when complete preemption exists, there is "no such

thing" as the state action, Beneficial, 539 U.S. at 11, since the federal

claim is treated as if it appears on the face of the complaint because

it effectively displaces the state cause of action. Complete preemption

thus "transform[s] the plaintiff’s state-law claims into federal claims."

Rivet, 522 U.S. at 476. Since the complaint is then understood to state

a federal question, the well-pleaded complaint rule is satisfied,

thereby justifying removal under § 1441(b).

Recognizing that complete preemption undermines the plaintiff’s

traditional ability to plead under the law of his choosing, the Supreme

Court has made clear that it is "reluctant" to find complete preemp-

tion. Metro. Life, 481 U.S. at 65. The Court has, in fact, found com-

plete preemption in only three statutes. See Beneficial, 539 U.S. at 10-

11 (National Bank Act); Metro. Life, 481 U.S. at 66-67 (ERISA

§ 502(a)); Avco Corp. v. Aero Lodge No. 735, Int’l Ass’n of Machin-

ists, 390 U.S. 557, 560 (1968) (Labor Management Relations Act

("LMRA") § 301). Unsurprisingly, therefore, the Court has articulated

LONTZ v. THARP 7

exacting standards that must be met before it will find complete pre-

emption. Most notably, the congressional intent that state law be

entirely displaced must be clear in the text of the statute. See Metro.

Life, 481 U.S. at 65-66.

In fact, the Court in Beneficial emphasized that the preempting

statute must not only create a federal cause of action, but must also

show that Congress intended it to "provide the exclusive cause of

action" for claims of overwhelming national interest. Beneficial, 539

U.S. at 9, 11 (emphasis added). In finding that the National Bank Act

completely preempted state law governing interest rates, Beneficial

stressed that national banks were the subject of unique national con-

cern. Such banks are, after all, chartered at the national level and

explicitly not governed by state law. Id. at 10. Under these circum-

stances, federal law alone regulates the interest charged by national

banks, extinguishing — that is, completely preempting — state regu-

lation of the same subject. Id. at 10-11.

This view of the complete preemption doctrine is consistent with

our approach in Rosciszewski v. Arete Associates, Inc., 1 F.3d 225

(4th Cir. 1993). In that case, we concluded that the Copyright Act, 17

U.S.C. § 301(a), completely preempted the state law claims that had

been brought. We recognized, as Beneficial did in its context, the stat-

utory text’s insistence on exclusive, uniform national regulation of

copyright. Rosciszewski, 1 F.3d at 229, 232. And like Beneficial, we

made clear that "the focus of our inquiry must be congressional

intent." Id. at 231.

Nothing in Beneficial or Rosciszewski altered the general principle

that defendants seeking removal under the doctrine of complete pre-

emption bear a significant burden. They must establish congressional

intent to extinguish similar state claims by making the federal cause

of action exclusive. And as we must construe removal strictly, reason-

able doubts must be resolved against the complete preemption basis

for it. Maryland Stadium Auth., 407 F.3d at 260.

IV.

We now apply these standards to the present case. Defendants

argue that the state court lacks jurisdiction because the state law

8 LONTZ v. THARP

claims should be recharacterized as deriving from sections 7 and 8 of

the National Labor Relations Act. Those provisions concern employ-

ees’ protected "concerted activities," 29 U.S.C. § 157, and regulate

the ability of employers or labor organizations to engage in "unfair

labor practices," id. § 158.

Preemption under those sections is known as "Garmon preemp-

tion," named for the Supreme Court case which clarified that "[w]hen

an activity is arguably subject to § 7 or § 8 of the Act, the States as

well as the federal courts must defer to the exclusive competence of

the National Labor Relations Board . . . ." San Diego Bldg. Trades

Council v. Garmon, 359 U.S. 236, 245 (1959). However, defendants’

deployment of this principle proves too much. Garmon may strip state

courts of adjudicatory authority, but in the very same breath it also

deprives federal courts of that authority. Indeed, the same "exclusive

competence" of the NLRB which divests state courts of original juris-

diction over claims subject to sections 7 and 8 also divests federal

courts of such jurisdiction.

If this distinction amounted to deciding which court had the honor

of dismissing the case, it might appear to be a dispute over trifles. But

even if the structural allocation of authority could be dismissed as

trivial, we think more is at stake. For instance, the removal-cum-

dismissal urged by defendants is predicated on the assumption that

sections 7 and 8 do in fact preempt the state law claims. But what if

that assumption is faulty? Garmon itself made clear that not every

state law claim that touches on sections 7 and 8 is in fact preempted.

See Garmon, 359 U.S. at 247-48; see also Caterpillar, 482 U.S. at

396 n.10. If it turned out that the plaintiffs’ claims here are among

those not preempted, removal and dismissal unconstitutionally

deprive the plaintiffs of the opportunity to make their case, and

deprive West Virginia of the right to vindicate its own non-preempted

laws.

The district court held that this was one of those cases in which

state law was indeed preempted. But that this conclusion had to be

made is itself the best proof that strict adherence to the removal stat-

ute is more than mere formalism. The state court may, of course, ulti-

mately share the district court’s view. But its ability to determine its

LONTZ v. THARP 9

own jurisdiction is a serious obligation, and not something that fed-

eral courts may easily take for themselves.

Fidelity to Supreme Court precedent and our own case law requires

us to agree with our sister circuits that sections 7 and 8 do not com-

pletely preempt these claims. As noted, the sine qua non of complete

preemption is a pre-existing federal cause of action that can be

brought in the district courts. Beneficial, 539 U.S. at 9; see also

Metro. Life, 481 U.S. at 63 (noting the "exclusive federal cause of

action for resolution of such disputes"); Franchise Tax Board, 463

U.S. at 26 (contrasting a non-completely preemptive statute with

LMRA § 301, which "expressly supplied the plaintiff in Avco with a

federal cause of action to replace its" state law claim); King, 337 F.3d

at 425 ("a vital feature of complete preemption is the existence of a

federal cause of action that replaces the preempted cause of action").

Under this standard, sections 7 and 8 do not work to completely

preempt the kind of state law claims that plaintiffs are pressing.

Indeed, the contrast between sections 7 and 8 of the NLRA and provi-

sions of the statutes with complete preemptive force is unmistakable.

For instance, section 301 of the LMRA explicitly "provides that the

federal district courts have plenary jurisdiction, without regard to citi-

zenship or amount in controversy . . . ." Alongi, 386 F.3d at 723

(emphasis added); see also Childers v. Chesapeake & Potomac Tel.

Co., 881 F.2d 1259, 1262 (4th Cir. 1989) (noting that section 301 pro-

vides federal jurisdiction). Similarly unlike sections 7 and 8,

"[s]ection 502 of ERISA creates a civil cause of action," King, 337

F.3d at 426, necessary for the complete preemption deriving from that

provision. And the National Bank Act, 12 U.S.C. § 86 (2000), pro-

vides a cause of action for "a usury claim against a national bank."

Beneficial, 539 U.S. at 9. In this case, we cannot find complete pre-

emption if for no other reason than that Congress has not chosen to

create a cause of action.

Other courts have considered the completely preemptive effect of

sections 7 and 8 and "are uniform in finding that Garmon preemption

under the NLRA does not completely preempt state laws so as to pro-

vide removal jurisdiction." Felix, 387 F.3d at 1166. "[S]tate law

actions claimed to be preempted by sections 7 and 8 of the NLRA are

not removable to federal court." Ethridge v. Harbor House Rest., 861

10 LONTZ v. THARP

F.2d 1389, 1400 (9th Cir. 1988) (footnote omitted). "Nothing in the

history of the Garmon doctrine suggests that state courts are incapable

of determining their own jurisdiction." Id. To the contrary, "Garmon-

preemption analysis is one that the state courts are to undertake in the

first instance." Id.; see also Felix, 387 F.3d at 1165-66 ("Garmon pre-

emption does not provide a basis for removal jurisdiction."); Alongi,

386 F.3d 716, 723 (6th Cir. 2004) (same); Kline v. Sec. Guards, Inc.,

386 F.3d 246, 262 (3d Cir. 2004) (same); United Ass’n of Journeymen

& Apprentices v. Bechtel Power Corp., 834 F.2d 884, 886-87 (10th

Cir. 1987) (same); Sandoval v. New Mexico Tech. Group LLC, 174

F. Supp. 2d 1224, 1233-35 (D.N.M. 2001) (same).

That Congress’s allocation of authority to an agency and away

from district courts defeats a complete preemption claim is further

confirmed by the analogous situation in Opera Plaza Residential Par-

cel v. Hoang, 376 F.3d 831 (9th Cir. 2004). Section 207 of the Tele-

communications Act of 1996 undeniably has preemptive effect, but

violations of its rules are within the exclusive jurisdiction of the FCC.

Id. at 838-39. In Opera Plaza, the Ninth Circuit concluded that Con-

gress had not created a federal cause of action, id. at 838, and that

complete preemption was therefore unavailable, id. at 839.

Because sections 7 and 8 do not create a cause of action, the

Supreme Court has always assumed, as we now hold, that Garmon

preemption is a matter for the state courts to determine in those cases

where federal jurisdiction cannot be independently established by

some other means. The Court has twice stated as much in resolving

other issues. In International Longshoremen’s Association v. Davis,

476 U.S. 380, 393 (1986), the Court noted that "when a claim of Gar-

mon pre-emption is raised, it must be considered and resolved by the

state court." In Caterpillar, the Court observed that "[t]he fact that a

defendant might ultimately prove that a plaintiff’s claims are pre-

empted under the NLRA does not establish that they are removable

to federal court." 482 U.S. at 398 (footnote omitted). It specifically

noted that such preemption arguments "are questions that must be

addressed in the first instance by the state court in which respondents

filed their claims." Id. at 398 n.13.

V.

Removal statutes do not create jurisdiction. They are instead a

mechanism to enable federal courts to hear the cases that are already

LONTZ v. THARP 11

within their original jurisdiction. See Darcangelo, 292 F.3d at 186.

Even though their ordinary preemptive power is great, sections 7 and

8 do not on their own terms confer federal jurisdiction and therefore

cannot be the basis of removal through complete preemption.

We therefore hold that the district court lacked subject matter juris-

diction over this case, and thus had no basis to permit removal under

§ 1441. We vacate the judgment of the district court and remand with

instructions to remand the case to state court.

VACATED AND REMANDED WITH INSTRUCTIONS