Ian McCray v. Marriott Hotel Services

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IAN MCCRAY, an individual, and on No. 17-15767

behalf of himself, and on behalf of

all other persons similarly situated, D.C. No.

Plaintiff-Appellant, 5:16-cv-02092-

NC

v.

MARRIOTT HOTEL SERVICES, INC., a OPINION

Delaware corporation; SJMEC, INC.,

a California corporation,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of California

Nathanael M. Cousins, Magistrate Judge, Presiding

Argued and Submitted June 11, 2018

San Francisco, California

Filed August 31, 2018

Before: Mary M. Schroeder, Ronald M. Gould,

and Albert Diaz, * Circuit Judges.

*

The Honorable Albert Diaz, United States Circuit Judge for the

U.S. Court of Appeals for the Fourth Circuit, sitting by designation.

2 MCCRAY V. MARRIOT HOTEL SERVICES

Opinion by Judge Diaz;

Dissent by Judge Schroeder

SUMMARY **

Labor Law

The panel vacated the district court’s grant of summary

judgment in favor of the defendant and its denial of the

plaintiff’s motion to remand to state court an action alleging

violation of a City of San Jose minimum wage ordinance.

The defendant had removed the case from state court on

the basis that the plaintiff’s claims were preempted by § 301

of the Labor Management Relations Act. The panel held that

the district court lacked subject matter jurisdiction to hear

the case, which amounted to an interpretive challenge to the

San Jose ordinance, rather than a lawsuit that required

substantial analysis of the plaintiff’s union’s collective-

bargaining agreement. The panel remanded with

instructions for the district court to return the case to state

court for further proceedings.

Dissenting, Judge Schroeder wrote that she would affirm

the district court because the case substantially depended

upon analysis of the terms of the collective-bargaining

agreement, which should be interpreted in accordance with

federal law.

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

MCCRAY V. MARRIOT HOTEL SERVICES 3

COUNSEL

James L. Pagano (argued) and Ian A. Kass, Pagano & Kass

APC, San Jose, California, for Plaintiff-Appellant.

William J. Dritsas (argued), Seyfarth Shaw LLP, San

Francisco, California; Michael W. Kopp, Seyfarth Shaw

LLP, Sacramento, California; for Defendants-Appellees.

Paul L. More, McCracken Stemerman & Holsberry LLP,

San Francisco, California, for Amicus Curiae Unite Here

Local 19.

OPINION

DIAZ, Circuit Judge:

When the City of San Jose enacted an ordinance that

established a minimum wage of $10/hour, the San Jose

Marriott Hotel continued to pay Ian McCray and other

employees less. It turned out that McCray’s union had

negotiated with Marriott and agreed to waive the ordinance’s

minimum-wage requirement so that it could bargain for

other benefits for its members.

McCray sued Marriott in state court. He says that the

ordinance doesn’t allow for waiver, and so Marriott owes

him the difference between what he was paid and the new

minimum wage. Marriott removed the case to federal court

on the basis that McCray’s claims are preempted by § 301 of

the Labor Management Relations Act (the “LMRA”),

29 U.S.C. § 185. The district court concluded that McCray

failed to first exhaust his claim through a required grievance

process and granted summary judgment to Marriott.

4 MCCRAY V. MARRIOT HOTEL SERVICES

Whether McCray’s claims were exhausted or not, the

district court was without jurisdiction to hear this case.

While we recognize the strong preemptive force of § 301,

McCray’s lawsuit amounts to an interpretive challenge to the

San Jose ordinance, not one that requires substantial analysis

of his union’s collective-bargaining agreement. We

therefore vacate the district court’s denial of remand and

grant of summary judgment. We remand this case so that it

may be returned to state court for further proceedings.

I.

In 2012, voters in San Jose, California, considered a

ballot initiative that would establish a new minimum wage

for most of the city’s workers. Under the proposed

ordinance, employees would be paid a minimum wage of

$10 an hour, subject to cost-of-living adjustments over time.

See San Jose, Cal., Mun. Code § 4.100.040. The ordinance

also purported to give employers and employees the ability

to waive the minimum wage requirements through collective

bargaining. “To the extent required by federal law,” the

proposed law provided, “all or any portion of the applicable

requirements of this Chapter may be waived in a bona fide

collective bargaining agreement, provided that such waiver

is explicitly set forth in such agreement in clear and

unambiguous terms.” Id. § 4.100.050.

Meanwhile, Ian McCray was employed at the Marriott

Hotel in San Jose. There, he performed several hospitality-

related jobs, including working as a busser, then later a

server, in the hotel’s restaurant. As a busser, McCray

received an hourly wage of $10.80. When McCray became

a server, his hourly wage decreased to $9, but he generally

wound up taking home more pay than he had as a busser

because of tips he received from customers.

MCCRAY V. MARRIOT HOTEL SERVICES 5

Throughout his employment with Marriott, McCray was

represented by the union Unite Here, Local 19. The terms

of McCray’s employment were governed by a collective-

bargaining agreement (a “CBA”) entered into between Unite

Here and Marriott. Anticipating the passage of San Jose’s

minimum wage ordinance, Marriott and the union executed

an addendum to the CBA, prospectively opting out of the

minimum wage requirement. The waiver explained that

should the ordinance become law, the “Employer and the

Union, through collective bargaining, have agreed to

explicitly waive as part of the parties[’] collective bargaining

agreement, all provisions and requirements of the City of

San Jose Minimum Wage Ordinance.” EOR 119. The ballot

initiative passed, and the ordinance and waiver took effect in

2012.

Shortly thereafter, McCray, then earning $9 an hour as a

server, spoke with a Marriott human resources employee and

a representative from his union and asked why he was being

paid less than the new minimum wage. 1 McCray was told

that the union had opted out of the minimum wage ordinance

so that it could secure other benefits, such as healthcare, for

its members.

Apparently not satisfied with that answer, McCray filed

this lawsuit in state court in Santa Clara County. McCray

seeks to represent himself as well as similarly situated

Marriott employees in a class action. His complaint asserts

a bevy of wage and hour claims that flow from a single,

simple theory: the San Jose ordinance requires Marriott to

1

Tips that employees like McCray might receive don’t count toward

the minimum wage for purposes of the ordinance.

6 MCCRAY V. MARRIOT HOTEL SERVICES

pay its employees a minimum wage of $10 an hour; McCray

and others received less.

Marriott removed this case to federal court. In support

of removal, Marriott argued that § 301 of the LMRA

preempts McCray’s claims and thus jurisdiction to hear this

case lies in federal court. The district court agreed and

denied McCray’s motion to remand. Next, the court granted

summary judgment in favor of Marriott. It held that McCray

couldn’t pursue his claims in court because he had failed to

exhaust the mandatory administrative grievance procedure

set forth in the CBA. This appeal followed.

II.

We begin with the issue of preemption. The question

here is whether the LMRA preempts McCray’s state law

claims, thus allowing this case to be heard in federal court.

Preemption is a matter of subject matter jurisdiction, which

we review de novo. See Ritchey v. Upjohn Drug Co.,

139 F.3d 1313, 1315 (9th Cir. 1998).

Section 301 of the LMRA vests federal courts with

jurisdiction to hear suits “for violation of contracts between

an employer and a labor organization representing

employees in an industry affecting commerce . . . without

respect to the amount in controversy or without regard to the

citizenship of the parties.” 29 U.S.C. § 185(a). By enacting

the LMRA, Congress completely preempted state law for

certain labor-related claims. See Caterpillar Inc. v.

Williams, 482 U.S. 386, 393–94 (1987).

MCCRAY V. MARRIOT HOTEL SERVICES 7

A claim that falls within § 301’s ambit “is considered,

from its inception, a federal claim,” and so is subject to

removal based on federal question jurisdiction. Id. at 393;

see also 28 U.S.C. §§ 1331, 1441. In these areas, “the

preemptive force of § 301 is so powerful as to displace

entirely any state cause of action for violation of contracts

between an employer and a labor organization. Any such

suit is purely a creature of federal law, notwithstanding the

fact that state law would provide a cause of action in the

absence of § 301.” Franchise Tax Bd. v. Constr. Laborers

Vacation Tr. for S. Cal., 463 U.S. 1, 23 (1983) (internal

quotation marks and footnote omitted). However, “not every

dispute concerning employment, or tangentially involving a

provision of a collective-bargaining agreement, is pre-

empted by § 301 or other provisions of the federal labor

law.” Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 211

(1985). “Claims bearing no relationship to a collective-

bargaining agreement beyond the fact that they are asserted

by an individual covered by such an agreement are simply

not pre-empted by § 301.” Caterpillar, 482 U.S. at 396 n.10.

The distinction between claims that are preempted and

claims that are not doesn’t “lend[] itself to analytical

precision.” Cramer v. Consol. Freightways, Inc., 255 F.3d

683, 691 (9th Cir. 2001) (en banc); see also Livadas v.

Bradshaw, 512 U.S. 107, 124 n.18 (1994). In an effort to

clear the waters, our prior decisions have set out a two-part

test to determine when § 301 preemption applies. Section

301 preempts claims that are “founded directly on rights

created by collective-bargaining agreements,” Caterpillar,

482 U.S. at 394, as well as claims that are “substantially

dependent on analysis of a collective-bargaining

agreement,” Int’l Bhd. of Elec. Workers v. Hechler, 481 U.S.

851, 859 n.3 (1987). So when faced with a claim that may

implicate a CBA, a court must first ascertain “whether the

8 MCCRAY V. MARRIOT HOTEL SERVICES

asserted cause of action involves a right conferred upon an

employee by virtue of state law, not by a CBA. If the right

exists solely as a result of the CBA, then the claim is

preempted, and the analysis ends there.” Kobold v. Good

Samaritan Reg’l Med. Ctr., 832 F.3d 1024, 1032 (9th Cir.

2016) (alteration omitted) (quoting Burnside v. Kiewit Pac.

Corp., 491 F.3d 1053, 1059 (9th Cir. 2007)).

On the other hand, if the court determines that the right

at issue exists independently of the CBA, it must then ask

“whether the right is nevertheless substantially dependent on

analysis of a collective-bargaining agreement.” Id. (internal

quotation marks omitted). A claim that substantially

depends on a collective-bargaining analysis is preempted. In

other words, § 301 generally preempts state law claims that

implicate a collective-bargaining agreement, except for

claims that (1) arise independently of a CBA, and (2) don’t

substantially depend on analysis of a CBA.

A.

We first decide whether McCray’s complaint asserts

claims that exist solely as a result of the CBA, or if the rights

at issue are conferred independently by state law. In doing

so, we consider whether “the legal character of a claim” is

rooted in the CBA. Burnside, 491 F.3d at 1060 (internal

quotation marks and emphasis omitted). A defendant can’t

rely on a CBA as an aspect of her defense simply to “inject

a federal question into an action that asserts what is plainly

a state-law claim.” Id. (alteration and internal quotation

marks omitted).

McCray has plainly asserted claims arising under

California state law and the San Jose ordinance. His case

rests on the premise that Marriott didn’t pay McCray and

other workers the minimum wage that the ordinance

MCCRAY V. MARRIOT HOTEL SERVICES 9

requires. The rights at issue—that is, the right to be paid the

$10 hourly minimum wage and the right to receive back pay

and other compensation for Marriott’s alleged failure to do

so—arise under state and local law and would exist with or

without the CBA.

Burnside’s fact pattern is instructive. There, the plaintiff

employees sought pay for time spent traveling between

designated meeting points and their actual job sites.

491 F.3d at 1055. The complaint made no reference to

CBAs the workers’ unions had entered into with their

employer. Instead, it asserted claims under California state

law, including some of the same provisions here, as well as

a common law claim for conversion. See id. at 1058. The

employer argued that certain provisions contained in the

CBAs effectively waived the obligation to pay workers for

their travel time. See id. at 1064.

We held that the claims in that case were independent

rights asserted under state law and did not depend on the

CBAs. In doing so, we specifically rejected the employer’s

argument that the fact that a right could theoretically be

waived meant that the right necessarily depended on a CBA.

See id. at 1064–65. The right to be paid according to state

law, we explained, is “one that came into existence entirely

independently of the CBA, and that remains in existence,

independently of the CBA” unless and until the CBA waives

it. Id. at 1064. The employees’ claimed right to be paid for

their travel time was “based on a right conferred as a matter

of state law . . . not by the CBAs,” and the fact that the state

law “contain[ed] an opt-out provision [did] not change our

analysis.” Id. at 1070.

So too here. The San Jose ordinance and relevant state

law afford workers in San Jose the right to be paid the

minimum wage established by the ordinance, subject to the

10 MCCRAY V. MARRIOT HOTEL SERVICES

requirements of California law. That the ordinance contains

an opt-out mechanism doesn’t change the fact that these

rights originate outside of the CBA. We therefore hold that

McCray’s claims arise independently under state law and are

not subject to § 301 preemption on that basis.

B.

Because McCray’s claims arise independently under

state law, we next ask whether his claims substantially

depend on an analysis of the CBA. To answer this, we must

decide if McCray’s case will require a court to merely “look

to” the CBA or instead “interpret” its terms. Compare

Livadas, 512 U.S. at 125, with Balcorta v. Twentieth

Century-Fox Film Corp., 208 F.3d 1102, 1108–09 (9th Cir.

2000). “[T]he mere need to ‘look to’ the collective-

bargaining agreement . . . is no reason to hold [a] state-law

claim defeated by § 301.” Livadas, 512 U.S. at 125. It is

only “state-law actions that require interpretation of labor

agreements” that are preempted. Balcorta, 208 F.3d at 1108

(internal quotation marks omitted).

“[T]he line between reference to and interpretation of an

agreement may be somewhat hazy . . . .” Ramirez v. Fox

Television Station, Inc., 998 F.2d 743, 749 (9th Cir. 1993).

But “the totality of the policies underlying § 301—

promoting the arbitration of labor contract disputes, securing

the uniform interpretation of labor contracts, and protecting

the states’ authority to enact minimum labor standards—

guides our understanding of what constitutes

‘interpretation.’” Balcorta, 208 F.3d at 1108–09. 2

2

An en banc panel of this court recently explained that “[s]etting

minimum wages, regulating work hours and pay periods, requiring paid

MCCRAY V. MARRIOT HOTEL SERVICES 11

“[I]n the context of § 301 complete preemption, the term

‘interpret’ is defined narrowly—it means something more

than ‘consider,’ ‘refer to,’ or ‘apply.’” Id. at 1108. That’s

why in Livadas, there was no “interpretation” afoot when

resolving the case because the court only needed to look to

the CBA to determine the plaintiff’s undisputed pay rate in

order to calculate damages. See 512 U.S. at 124–25. The

same goes for Burnside, where the court simply had to flip

through the CBA and ask whether a valid waiver was

anywhere to be found. See 491 F.3d at 1066–68.

Our recent decision in Kobold helps further sharpen the

look-to/interpret distinction. That case involved preemption

analysis in three consolidated cases, two of which are

particularly relevant here. First, Kobold considered a claim

brought by an operating nurse who sought to receive time-

and-a-half pay for certain “extra” shifts she’d worked.

832 F.3d at 1034–35. The nurse asserted claims under

Oregon state law, which we assumed arose independently

from the CBA (thus satisfying step one of Burnside). We

nevertheless found that § 301 preempted her claims because

resolving her case would require interpretation of the CBA.

Id. at 1035–36. This was so because before the court “could

calculate the total amount Kobold is owed, it must determine

which of the shifts she worked qualified for premium pay.”

Id. at 1035. And the definition of which shifts qualified for

and unpaid leave, protecting worker safety, prohibiting discrimination in

employment, and establishing other worker rights remains well within

the traditional police power of the states, and will naturally result in labor

standards that affect workers differently from one jurisdiction to the next

. . . .” Alaska Airlines Inc. v. Shurke, No. 13-35574, 2018 WL 3636431,

at *6 (9th Cir. Aug. 1, 2018) (en banc). That case involved a question of

preemption under the Railway Labor Act, 45 U.S.C. §§ 151–65, 181–88,

whose preemptive force is “virtually identical” to that of the LMRA. Id.

at *1 n.1.

12 MCCRAY V. MARRIOT HOTEL SERVICES

premium pay was contained not within the state law under

which the action arose, but rather was based on the terms of

the CBA. Id. at 1035–36. Because there was a live dispute

over the meaning of a particular provision of the relevant

CBA, resolving the case would mean that the court “must

interpret, not just refer to or look at” the agreement. Id. at

1036. Specifically, the CBA did not “directly and clearly

explain what constitutes a ‘change of schedule,’ nor how an

agreement between [the hospital] and a nurse is to be made.”

Id. Since interpretation of the CBA’s terms would be

necessary, preemption was appropriate.

By contrast, Kobold also considered claims brought by a

group of truck drivers who claimed that their employer had

failed to make timely premium payments to a benefit plan

negotiated under a CBA. Id. at 1037. The plaintiffs asserted

claims under state employment and labor laws, which

provided that those sorts of deductions must be paid

consistent with the time and manner set out in the CBA. Id.

at 1037–38. The employer claimed that resolving the dispute

would require the district court to “interpret several key

provisions of the contract,” including the employer’s

“obligations to make any deductions from employee’s

paychecks; the amount and frequency of deductions taken;

increases in monthly premium changes; coverage

requirements of employees,” and other issues. Id. at 1040.

We rejected that argument, explaining that “[n]one of

these matters require CBA interpretation” because the CBAs

“unambiguously specif[ied]” the employer’s obligation to

deduct funds from employee paychecks; “the amount and

frequency of the deductions; to whom the deduction must be

remitted and for what purpose; and the terms of employee

eligibility for the health benefits.” Id. In other words,

reading and applying relevant, unambiguous provisions of

MCCRAY V. MARRIOT HOTEL SERVICES 13

the CBA required the court to only “look to,” rather than

“interpret,” the agreement. See also Alaska Airlines, 2018

WL 3636431, at *12 (no preemption in dispute over

employee’s banked vacation days, which existed “only by

virtue of her having earned them in accordance with a

workplace policy incorporated in the CBA”).

This same reasoning applies here. McCray’s theory of

liability goes like this: The San Jose ordinance establishes a

$10 minimum hourly wage. Marriott paid McCray and other

workers less than that. The CBA (which governs McCray’s

employment) purports to waive the minimum wage

requirement. But the ordinance only allows waiver “[t]o the

extent required by federal law”—and no federal law requires

the minimum wage requirement to be waivable. So, McCray

argues, the waiver is ineffective (no matter what it says), and

McCray is owed the difference between what he was

actually paid and what the ordinance requires.

At bottom, this case is a matter of statutory

interpretation. The primary task of the court deciding this

case will be to determine whether the minimum wage

established by the ordinance is waivable. If the court

determines it can’t be waived, then it’s irrelevant whether

the CBA contains a waiver. On the other hand, if the

minimum wage is subject to waiver, the court will need only

“look to” the CBA to determine whether it contains a valid

waiver.

“[R]eliance on and reference to CBA-established or

CBA-defined terms of employment do not make for a CBA

dispute if there is no disagreement about the meaning or

application of any relevant CBA-covered terms of

employment.” Alaska Airlines, 2018 WL 3636431, at *12.

So far, there’s been no dispute about the waiver’s validity.

Aside from claiming that the waiver conflicts with the

14 MCCRAY V. MARRIOT HOTEL SERVICES

ordinance, McCray has pointed to no defect in the document

itself. This would be a different case if, for example,

McCray had argued that the text of the waiver was not

sufficiently “clear and unambiguous” to satisfy the

ordinance or suffered some other flaw that rendered it

invalid. But McCray has made no such argument. Since the

case he’s brought will only require a court to check and see

whether the CBA contains a waiver, this isn’t a case where

a court must do “more than ‘consider,’ ‘refer to,’ or ‘apply’”

the agreement. Balcorta, 208 F.3d at 1108.

The degree of analysis of the CBA this case requires isn’t

altogether different from checking an agreement to identify,

for example, an employee’s pay rate. See Livadas, 512 U.S.

at 124–25. And in many respects, it presents the inverse of

the issue in Burnside: there, we said that looking at a CBA

to see whether it contained a valid waiver didn’t require

“interpreting” the agreement. 491 F.3d at 1066–68, 1074.

We fail to see why the result should be any different here

simply because a waiver does exist.

Finally, we recognize that although McCray hasn’t yet

challenged the substance of the waiver, he may attempt to do

so later in the litigation. But that speculative possibility isn’t

enough to warrant preemption at this early stage. We have

stressed in this context the principle that “the plaintiff is the

master of the complaint, and that if the defendant could

engineer the forum in which the claim shall be litigated

based on the substance of his defense, the plaintiff would be

master of nothing.” Id. at 1060 (internal quotation marks

omitted).

Additionally, we recognized in Burnside (where we

found that the claim wasn’t preempted) that it was “of course

possible . . . that some dispute we cannot now foresee will

arise in the course of computing damages that will require

MCCRAY V. MARRIOT HOTEL SERVICES 15

the interpretation of the CBAs.” Id. at 1074 n.19. But that

possibility did not create a basis for preemption. In fact, we

specifically rejected the Burnside employer’s invitation to

“preempt[] the entire cause of action now, even though the

likelihood is that no dispute requiring interpretation of the

CBAs will ever arise,” because doing so “would turn section

301 preemption doctrine[ ]into the ‘mighty oak’ we know it

is not.” Id. (quoting Livadas, 512 U.S. at 122). As McCray

has framed his claims (and argued them thus far), his case

will rise or fall based on interpretation of the local ordinance,

not interpretation of the CBA. The possibility that things

could change down the road is simply not enough to warrant

preemption now. 3

III.

In sum, the district court didn’t have jurisdiction to hear

this case, because the LMRA doesn’t preempt McCray’s

claims. The district court therefore erred in denying

McCray’s motion to remand this case to state court and

shouldn’t have reached the merits of Marriott’s motion for

summary judgment. See MacKay v. Pfeil, 827 F.2d 540, 543

(9th Cir. 1987). Accordingly, we vacate the district court’s

denial of McCray’s motion to remand and also vacate its

grant of summary judgment in favor of Marriott. Upon

3

Of course, should McCray change tack later in the course of

litigation and make an argument directly challenging the CBA, Marriott

would then have the opportunity to again pursue removal. See 28 U.S.C.

§ 1446(b)(3) (“[I]f the case stated by the initial pleading is not

removable, a notice of removal may be filed within 30 days after receipt

by the defendant . . . of a copy of an amended pleading, motion, order or

other paper from which it may first be ascertained that the case is one

which is or has become removable.”).

16 MCCRAY V. MARRIOT HOTEL SERVICES

remand, the district court should return this case to state

court for further proceedings.

VACATED AND REMANDED WITH

INSTRUCTIONS.

SCHROEDER, Circuit Judge, dissenting:

This case is about whether the employer is entitled to rely

on provisions of the collective bargaining agreement

(“CBA”) that establish a contractual hourly wage rate, as

well as a waiver, or “opt out,” of the City of San Jose’s

minimum wage ordinance. The CBA’s hourly rate, a dollar

lower than the City’s minimum wage, was negotiated in

connection with the employer’s providing health care

benefits. The District Court correctly held that the case

substantially depends upon analysis of the terms of the CBA

that should be interpreted in accordance with federal law.

The District Court followed the Supreme Court’s

decision in Allis-Chalmers Corp. v. Lueck, 471 U.S. 202,

220 (1985), which says as much. In Allis-Chalmers, the

Supreme Court held that “when resolution of a state-law

claim is substantially dependent upon analysis of the terms

of an agreement made between the parties in a labor contract,

that claim must either be treated as a § 301 claim [of the

Labor Management Relations Act (“LMRA”), 29 U.S.C.

§ 185(a)], . . . or dismissed as pre-empted by federal labor-

contract law.” 471 U.S. at 220 (citing Avco Corp. v. Aero

Lodge 735, 390 U.S. 557 (1968)); see also Firestone v. S.

Cal. Gas Co., 219 F.3d 1063, 1065 (9th Cir. 2000) (“When

the meaning of particular contract terms is not disputed, the

fact that a collective bargaining agreement must be consulted

for information will not result in § 301 preemption . . . .

MCCRAY V. MARRIOT HOTEL SERVICES 17

However, § 301 does preempt state law claims that are

substantially dependent on an analysis of a collective

bargaining agreement.”) (citations and internal quotation

marks omitted).

The majority nevertheless holds that the case must be

remanded to state court for the application of state law. The

majority does so on the basis of Plaintiff McCray’s theory

that we must first interpret the City’s ordinance to determine

whether it means, as McCray argues, that it can only be

waived by some overarching federal law, rather than by a

CBA. The majority concludes that because that initial

question involves interpretation of the ordinance under state

law, the entire case must be resolved in state court.

Even assuming that would be a plausible result in some

cases, in this case that initial issue concerning interpretation

of the ordinance raises no serious question. The ordinance

on its face refers to waivers in CBAs; it states, “all or any

portion of the applicable requirements of this Chapter may

be waived in a bona fide collective bargaining agreement,

provided that such waiver is explicitly set forth in such

agreement in clear and unambiguous terms.” And the

explanatory material accompanying the ordinance even

provides sample language that can be used in CBAs to

accomplish a waiver.

Federal labor law does not require unions and employers

to agree to specific substantive provisions in CBAs, such as

a minimum wage opt-out. Federal labor law merely requires

unions and employers to engage in the collective bargaining

process to reach agreement on terms. They did so here. As

the Supreme Court stated in Metropolitan Life Insurance Co.

v. Massachusetts, “The [National Labor Relations Act

(“NLRA”)] is concerned primarily with establishing an

equitable process for determining terms and conditions of

18 MCCRAY V. MARRIOT HOTEL SERVICES

employment, and not with particular substantive terms of the

bargain that is struck when the parties are negotiating from

relatively equal positions.” 471 U.S. 724, 753 (1985); see

also Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 20

(1987). Furthermore, similar opt-out provisions have been

uniformly upheld under federal law. See, e.g., Livadas v.

Bradshaw, 512 U.S. 107, 131–32 (1994) (recognizing

validity of state and federal laws allowing opt-outs in CBAs

of minimum labor standards). As the Union, UNITE HERE

Local 19, points out in its amicus brief, McCray’s reading

would nullify the opt-out provision altogether.

The essence of McCray’s claim is that the employer is

required to pay the City’s minimum wage. Thus, he contends

the opt-out contained in the CBA is not to be given effect.

Of course McCray’s complaint does not discuss the CBA

because he wishes the claim to be litigated in state court, but

the District Court correctly recognized that the dispute is

actually about the CBA. We should similarly reject the

pretense that this case is about state law.

When state law claims require analysis of the provisions

in a CBA, the claims are preempted by the LMRA’s

exclusive federal jurisdiction. The District Court saw that the

issue is not whether the complaint frames the case in terms

of the CBA, but whether resolution of the claims will depend

on analyzing the agreement. Allis-Chalmers, 471 U.S. at

220; see also Int’l Bhd. of Elec. Workers, AFL-CIO v.

Hechler, 481 U.S. 851, 859 n.3 (1987) (“[W]hen a state-law

claim is substantially dependent on analysis of a collective-

bargaining agreement, a plaintiff may not evade the pre-

emptive force of § 301 of the LMRA by casting the suit as a

state-law claim.”). We faithfully followed this principle in

Kobold v. Good Samaritan Regional Medical Center,

832 F.3d 1024, 1032 (9th Cir. 2016).

MCCRAY V. MARRIOT HOTEL SERVICES 19

The majority cites to our Court’s decisions in Burnside

v. Kiewit Pacific Corp., 491 F.3d 1053, 1058 (9th Cir. 2007),

and Alaska Airlines Inc. v. Shurke, No. 13-35574, 2018 WL

3636431, at *12 (9th Cir. Aug. 1, 2018) (en banc), in which

we held that claims predicated on state law were not

preempted, because they related to subjects that were

independent of the CBA: travel time in Burnside and leave

interchangeability in Shurke. Shurke, 2018 WL 3636431, at

*2; Burnside, 491 F.3d at 1055. Such claims did not

challenge the basic wage rate, a core subject of virtually all

collective bargaining negotiations. Nor did those claims seek

to replace any collectively bargained-for provision with

inconsistent state law. McCray’s claim here does both.

Section 301 of the LMRA provides that disputes

regarding CBAs belong in federal court. CBAs are to be

interpreted and applied in accordance with federal common

law, a principle going back more than sixty years to Textile

Workers v. Lincoln Mills, 353 U.S. 448 (1957). In this case

the CBA contains a grievance procedure which McCray did

not follow, and his complaint was properly dismissed.

I would affirm the District Court and I therefore

respectfully dissent.