UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT
decided: January 2, 1985.
DANA OGLESBY, PLAINTIFF-APPELLANT CROSS-APPELLEE,
RCA CORPORATION, DEFENDANT-APPELLEE CROSS-APPELLANT
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 83-672C -- James E. Noland, Judge.
Bauer, Circuit Judge, Pell, Senior Circuit Judge, and Dupree, Senior District Judge.*fn*
DUPREE, Senior District Judge.
In this action filed originally in the Marion County, Indiana Superior Court on April 27, 1983, plaintiff, Dana Oglesby, sought recovery of damages resulting from the termination of his employment by defendant, RCA Corporation, approximately twenty-two months earlier. Pursuant to 28 U.S.C. § 1441 the case was promptly removed by defendant to the United States District Court for the Southern District of Indiana upon allegations that plaintiff's alleged causes of action arose under Section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185. Shortly thereafter plaintiff's motion to remand was denied, defendant's motion for summary judgment was allowed and judgment of dismissal was entered from which plaintiff brought this appeal. Defendant cross-appeals from the denial of its request for an award of attorney's fees pursuant to 28 U.S.C. § 1927. We affirm.
In the first and second counts of his three-count complaint plaintiff alleged in substance that defendant discharged him for refusing to perform an assigned task for which he had not been furnished tools and protective clothing as required by regulations promulgated under the Occupational Safety and Health Act (OSHA), 29 U.S.C. § 654; 29 C.F.R. 1910.132. In the third count it was alleged in substance that plaintiff was discharged in retaliation for having asserted "his statutory rights and privileges." In each count it was alleged that defendant's actions were "intentional, egregious, and exhibited reckless disregard" and that plaintiff had been caused to suffer "loss of wages and other benefits." Actual and punitive damages were sought.
There was no mention in plaintiff's complaint of his membership in a labor union or of a collective bargaining agreement, but in defendant's petition for removal it was alleged that defendant was an employer in an industry affecting commerce; that the terms and conditions of plaintiff's employment were governed by a collective bargaining agreement between RCA and International Brotherhood of Electrical Workers, Local No. 1048; that plaintiff's action was for alleged wrongful discharge; and that since defendant's right to discharge an employee is limited by the agreement to termination for "just cause," the action is in fact "an action by Plaintiff for alleged violation of said agreement." In his motion to remand plaintiff confirmed that RCA was an employer engaged in an industry affecting commerce; that it had a collective bargaining agreement with the union as alleged and that plaintiff was a member of the union. But, protested plaintiff, he is not suing on a contract theory but "on a tort theory for the breach of a statutory duty which caused the plaintiff to refuse an assigned task which resulted in termination of his employment."
The district court, adopting RCA's position that the action was in fact one for wrongful discharge governed by Section 301, LMRA, held that it had been properly removed, and applying the six-month statute of limitations held applicable in such cases in Del Costello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S. Ct. 2281, 76 L. Ed. 2d 476 (1983), granted defendant's motion for summary judgment and dismissed the action. Plaintiff concedes that if the action was properly removed, this latter ruling was correct, and so the only issue raised by plaintiff's appeal is whether the district court erred in denying plaintiff's motion to remand the case to the state court.
Under 28 U.S.C. § 1441 any civil action brought in a state court of which the district courts of the United States have original jurisdiction may be removed to the district court for the district and division embracing the place where such action is pending, and where the action is founded on a claim or right arising under the Constitution or laws of the United States it is removable without regard to the citizenship or residence of the parties. To bring a case within the statute the claim or right created by the Constitution or laws of the United States must be an essential element of the plaintiff's cause of action and the subject of a genuine and present controversy. Moreover, the controversy must be revealed in the complaint unaided by the answer or petition for removal. Gully v. First National Bank in Meridian, 299 U.S. 109, 112-114, 81 L. Ed. 70, 57 S. Ct. 96 (1936); Jones v. General Tire & Rubber Company, 541 F.2d 660, 664 (7th Cir. 1976).
If given a literal construction these rules would allow a plaintiff to exercise a veto over a defendant's right of removal by the simple expedient of omitting from his complaint direct reference to those essential elements and indicia of his claim which would serve to identify it as one grounded in federal law. To avoid such result the courts have developed the "artful pleading" doctrine.
The federal claim must generally appear on the face of the complaint, unaided by any other pleadings, including a removal petition. E.g., Arkansas v. Kansas & Texas Coal Co., 183 U.S. 185, 188, 22 S. Ct. 47, 48, 46 L. Ed. 144 (1901). American Invs-Co. Countryside, Inc. v. Riverdale Bank, 596 F.2d 211 (7th Cir. 1979). A qualification of this so-called "well-pleaded complaint" rule for determining jurisdiction is that a plaintiff may not deny a defendant his right to a federal forum by artfully disguising an essentially federal law claim in terms of state law.
Nuclear Engineering Company, Inc. v. Scott, 660 F.2d 241, 249 (7th Cir. 1981), cert. denied sub. nom, Nuclear Engineering Company, Inc. v. Fahner, 455 U.S. 993, 71 L. Ed. 2d 855, 102 S. Ct. 1622 (1982).
The plaintiff here leaves us with little doubt that he was striving assiduously to allege his claims in terms of state law in order to avoid the certain bar of his federal claims by the statute of limitations.
There is no fraud or attempt to avoid the federal forum present in the instant case. In fact, the plaintiff-appellant-cross-appellee had precluded himself from the federal forum long before the commencement of this suit by missing time limitations and mandatory actions requisite to federal suit litigating his termination. (Plaintiff's Brief, p. 15)
In the instant case, the plaintiff-appellant-cross-appellee guilelessly plead his complaint and made his allegations in the state court. He intentionally and with forethought did not plead and did not allege the breach or violation of a collective bargaining agreement. Such was not the case and such is not at issue. (Plaintiff's Brief, p. 17).
It is true that plaintiff's complaint never mentions a collective bargaining agreement, but all of defendant's wrongs complained of have their origin in the alleged violation by RCA of the OSHA law and regulations. Nowhere in the complaint is there an allegation that plaintiff suffered physical or emotional harm as a result of any of these alleged violations, nor is there any reference to a cause of action grounded on Indiana law.*fn1 Instead, the gravamen of each count is that plaintiff was fired without just cause, first because he refused to perform an assigned task in order to avoid exposure to a hazard unlawfully maintained in violation of OSHA regulations and second, because he asserted his rights under the OSHA laws and regulations.*fn2
We agree with the district court, therefore, that plaintiff has simply alleged a cause of action for wrongful discharge and if shown to be in violation of a collective bargaining agreement subject to Section 301, LMRA, the action arises under federal law and the fact that it was not characterized in the complaint as a federal claim is not determinative. Jones v. General Tire & Rubber Company, 541 F.2d 660, 664 (7th Cir. 1976); American Synthetic Rubber Corporation v. Louisville and Nashville Railroad Company, 291 F. Supp. 723 (W.D. Ken. 1968), reversed on other grounds, 422 F.2d 462 (6th Cir. 1970). Nor will a disclaimer by plaintiff of any right to recover under a collective bargaining agreement defeat removal. Sheeran v. General Electric Company, 593 F.2d 93 (9th Cir.), cert. denied, 444 U.S. 868, 62 L. Ed. 2d 93, 100 S. Ct. 143 (1979). And where the pre-emptive effect of federal legislation is so complete as to exclude from application all state law on the subject, a case is removable regardless of the manner in which it has been alleged in the state court. Avco Corporation v. Aero Lodge No. 735, 390 U.S. 557, 20 L. Ed. 2d 126, 88 S. Ct. 1235 (1968), as explained in Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S. Ct. 2841, 2853, 77 L. Ed. 2d 420 (1983).
If the only remedy available to plaintiff is federal, because of preemption or otherwise, and the state court necessarily must look to federal law in passing on the claim, the case is removable regardless of what is in the pleading.
14 Wright, Miller & Cooper, Federal Practice and Procedure § 3722 at 567-69 (1976).*fn3
The situation referred to by these authors is exactly the same as the one we have here. It is settled law that all rights and claims arising from a collective bargaining agreement in an industry affecting interstate commerce arise under federal law, Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 1 L. Ed. 2d 972, 77 S. Ct. 912 (1957), and while state courts are not deprived of jurisdiction in such cases, Charles Dowd Box Company, Inc. v. Courtney, 368 U.S. 502, 7 L. Ed. 2d 483, 82 S. Ct. 519 (1962), in exercising their jurisdiction state courts are bound to apply only federal law, Teamsters Local 174 v. Lucas Flour Company, 369 U.S. 95, 7 L. Ed. 2d 593, 82 S. Ct. 571 (1962). The state law in cases necessarily rooted in Section 301, LMRA has been completely pre-empted. Avco v. Aero Lodge No. 735, supra.
Since such cases, regardless of where instituted or how they are styled, arise under the laws of the United States, they are removable to federal court under 28 U.S.C. § 1441. Olguin v. Inspiration Consolidated Copper Company, 740 F.2d 1468 (9th Cir. 1984); Eitmann v. New Orleans Public Service, Inc., 730 F.2d 359 (5th Cir. 1984); Fisher v. CPC International, Inc., 591 F. Supp. 228 (W.D. Mo. 1984).*fn4
Notwithstanding plaintiff's "guileless" attempt to allege a state cause of action the district court held that the complaint stated a cause of action under Section 301, LMRA, a finding which necessarily involved examination of pleadings other than the complaint, and therefore seemingly at odds with the requirement imposed by Gully v. First National Bank, supra, that inquiry be confined to the complaint alone unaided by allegations of the answer or removal petition.*fn5 Thus there remains the question of the extent to which the court, notwithstanding the rule in Gully, may consider pleadings other than plaintiff's complaint to determine the true nature of plaintiff's claim. Here the "artful pleading" doctrine comes into play.
An exception to the rule limiting the court's examination to the face of the complaint arises in cases in which plaintiff seeks to conceal the federal nature of his claim by fraud or obfuscation. Although the court is not free to second-guess the plaintiff's chosen form of pleading, it is entitled to assure itself that the plaintiff has not by "artful pleading" sought to defeat defendant's right to a federal forum. Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 101 S. Ct. 2424, 2427 n.2, 69 L. Ed. 2d 103 (1981); See Wright, Miller & Cooper, supra, § 3722, at 564. In those circumstances, it is proper for the court to examine the record to determine if the real nature of the claim is federal, notwithstanding plaintiff's characterization to the contrary.
Salveson v. Western States Bankcard Association, 525 F. Supp. 566, 572 (N.D. Cal. 1981).
As Judge Weinstein said in In Re Wiring Device Antitrust Litigation, 498 F. Supp. 79, 82 (E.D.N.Y. 1980):
A federal court need not blind itself to the real gravamen of a claim because plaintiff tenders a blindfold in the form of artificial characterizations in its complaint.
In applying this exception to the Gully rule in Section 301 cases the courts have not hesitated to look to the removal petition to ascertain if a state court complaint has artfully omitted pleading facts essential to show the federal nature of plaintiff's claim. Olguin v. Inspiration Consolidated Cooper Company, supra; Eitmann v. New Orleans Public Service, Inc., supra; Avco Corporation v. Aero Lodge No. 735, 376 F.2d 337 (6th Cir. 1967), aff'd, 390 U.S. 557, 20 L. Ed. 2d 126, 88 S. Ct. 1235 (1968); Johnson v. England, 356 F.2d 44 (9th Cir. 1966), cert. denied, 384 U.S. 961, 16 L. Ed. 2d 673, 86 S. Ct. 1587 (1966); George D. Roper Corporation v. Local Union No. 16, 279 F. Supp. 717 (S.D. Ohio 1968); Katz v. Architectural & Engineering Guild, Local 66, 263 F. Supp. 222 (S.D.N.Y. 1966); Old Dutch Farms, Inc. v. Milk Drivers and Dairy Employees Union Local 584, 222 F. Supp. 125 (E.D.N.Y. 1963); Central Metal Products, Inc. v. International Union, 195 F. Supp. 70 (E.D. Ark. 1961). Contra: Carroll Construction Company v. Reneau, 279 F. Supp. 715 (N.D. Fla. 1968).
We hold, therefore, that it was entirely proper for the district court to look to the removal petition to ascertain the facts concerning plaintiff's membership in the union, the collective bargaining agreement and the interstate character of defendant's business as well as to plaintiff's motion to remand in which these essential facts were admitted. Jones v. General Tire & Rubber Company, 541 F.2d 660, 662 (7th Cir. 1976). Having done so, it followed ineluctably that plaintiff's claim arose under federal law, Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, which law pre-empts state law; that the action was therefore properly removed to federal court; and that since the action was clearly barred by the six-month statute of limitations, Del Costello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S. Ct. 2281, 76 L. Ed. 2d 476 (1983), defendant's motion for summary judgment was properly allowed.
The defendant's cross-appeal challenges the denial by the district court of defendant's request for the assessment of attorney's fees against plaintiff and his attorney pursuant to 28 U.S.C. § 1927.*fn6 The issue was not presented by formal motion in the district court but was simply incorporated in the "conclusion" in defendant's memorandum of law filed in opposition to plaintiff's motion to remand the case to the state court.*fn7
In neither the court's original order dated August 5, 1983 which allowed defendant's motion for summary judgment and denied plaintiff's motion to remand nor in the final judgment of dismissal entered August 23, 1983 is there any mention of attorneys' fees, but the district court addressed the "request" for attorneys' fees in defendant's brief in a "memorandum entry" made coincident with the entry of final judgment as follows:
The court finds that the plaintiff's counsel has not filed any unwarranted or unjustified pleadings and that plaintiff's counsel has not acted in bad faith. Therefore, the court will not require plaintiff's counsel to pay defendant's attorneys' fees.
Assuming without deciding that the issue is properly before us on appeal, we find nothing in the record to indicate that these findings are clearly erroneous or that the district court abused its discretion in denying defendant's request for attorneys' fees. The court's ruling on the Section 1927 issue will therefore not be disturbed. See Reid v. United States, 715 F.2d 1148, 1154 (7th Cir. 1983); Overnite Transportation Company v. Chicago Industrial Tire Company, 697 F.2d 789, 794-795 (7th Cir. 1983).*fn8
In this court defendant has also asked for the assessment of attorneys' fees against plaintiff's attorney under Rule 38, F. R. App. P., which reads:
Rule 38. Damages for Delay
If a court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee.
Here the defendant is on somewhat sounder ground, but again we conclude that the record does not warrant the imposition of attorneys' fees under this rule.
Following the entry of the judgment of dismissal in the district court plaintiff's attorney seems to have considered his services in the case at an end, but he filed over his signature, presumably at the request of the plaintiff (and perhaps, also, to protect himself), a notice of appeal to this court on September 15, 1983 coincident with which plaintiff filed an affidavit of indigency and requested that counsel be appointed to represent him on appeal. At that point plaintiff's attorney, apparently considering that he was out of the case, took no further action, but five days later defendant filed its notice of cross-appeal "with respect to that portion of the judgment denying its petition for attorneys' fees". Obviously realizing that he was personally going to be the target of this cross-appeal, plaintiff's attorney then sought and was granted leave to re-enter the case and represent the plaintiff on appeal thus mooting plaintiff's request for the appointment of counsel. Thereafter the two appeals were consolidated and proceeded normally through the briefing stage to oral argument.
The standards by which a frivolous appeal are judged are well settled in this circuit.
Thus, the appellate court in order to award damages [under Rule 38] makes two determinations. First, it must determine that the appeal is frivolous. . . . Second, the appellate court, in its discretion, must examine whether the appeal is an appropriate one for the imposition of a sanction. "Damages are awarded by the court in its discretion in the case of a frivolous appeal as a matter of justice to the appellee and as a penalty against the appellant." Advisory Committee Note to Rule 38, 43 F.R.D. 155 (1968). Typically the courts have looked for some indication of the appellant's bad faith suggesting that the appeal was prosecuted with no reasonable expectation of altering the district court's judgment and for the purpose of delay or harassment or out of sheer obstinacy.
Ruderer v. Fines, 614 F.2d 1128, 1132 (7th Cir. 1980).
And as Judge Pell said in N.L.R.B. v. Lucy Ellen Candy Division, 517 F.2d 551, 555 (7th Cir. 1975):
If we were to accede to the request that a Rule 38 penalty be assessed, we would be, in our opinion, determining in effect that the Company had undertaken the present litigation in bad faith measured on a reasonable and objective basis. A frivolous appeal means something more to us that an unsuccessful appeal. We will grant that law may become so clear and well established that persistence in a course could be determinative of bad faith. We simply are saying that we are not so persuaded in the present case. We also bear in mind that notwithstanding the overburdened condition in which the courts now find themselves we would not desire to take action which could become the basis of chilling the assertion of rights reasonably held in good faith by virtue of imposing a penalty because of a failure to prevail in the litigation.
And so it is here. While we have found plaintiff's appeal lacking in merit, we are unable to find, measured on a reasonable and objective basis, that it was undertaken in bad faith. Accordingly, defendant's motion for the assessment of attorneys' fees under Rule 38 is denied.
The judgments and orders appealed from are in all respects affirmed.