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COMMONWEALTH EDISON CO. v. IBEW

February 21, 1997

COMMONWEALTH EDISON COMPANY, Plaintiff,
v.
INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 15, Defendant. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, LOCAL UNION NO. 15, Plaintiff, v. COMMONWEALTH EDISON COMPANY, and KINCAID GENERATION, L.L.C., Defendants.



The opinion of the court was delivered by: ANDERSEN

 Plaintiff International Brotherhood of Electrical Workers, Local Union No. 15 ("Local 15") filed suit (Case No. 96 C 7295) against Commonwealth Edison Company ("ComEd"), Kincaid Generation, L.L.C. ("Kincaid"), and the Illinois Commerce Commission ("ICC") alleging that the Asset Sale Agreement negotiated between ComEd and Kincaid for the sale of the Kincaid Generating Station (the "Generating Station") in Sangamon and Christian Counties, Illinois, is in direct violation of the Illinois Collective Bargaining Successor Employer Act, 820 ILCS 10/1 (the "Illinois successor statute"). ComEd and Kincaid have filed separate motions for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c) arguing that the Illinois successor statute is pre-empted by § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, and by the National Labor Relations Act ("NLRA"), 29 U.S.C. § 151 et seq.

 ComEd has also filed suit (Case No. 96 C 3989) against Local 15 seeking, among other things, a declaration that ComEd has not violated the Illinois successor statute because it is completely preempted by § 301 of the LMRA, 29 U.S.C. § 185, and by the NLRA, 29 U.S.C. § 151 et seq. ComEd has filed a motion for a judgment on the pleadings *fn1" in this case as well.

 For the following reasons, ComEd's and Kincaid's motions for summary judgment in Case No. 96 C 7295 are granted. ComEd's motion for summary judgment in Case No. 96 C 3989 is also granted.

 BACKGROUND

 The undisputed facts are as follows. Defendant ComEd is a public utility company that provides electrical power to customers in the State of Illinois. Plaintiff Local 15 is the exclusive bargaining representative of ComEd's bargaining unit employees, including all of the bargaining unit employees at ComEd's Generating Station in Sangamon and Christian Counties, Illinois.

 Local 15 and ComEd are parties to a collective bargaining agreement that governs the terms and conditions of employment for ComEd's bargaining unit employees, including all employees at the Generating Station. The collective bargaining agreement provides in part:

 
This agreement shall be binding upon the parties and their respective successors and assigns. Subject to the Company obtaining all necessary approval of any governmental authority or regulatory body, including but not limited to the Illinois Commerce Commission, and except in cases of liquidation or condemnation or sale or transfer (i) to any entity which has the authority to initiate condemnation proceedings, or (ii) pursuant to any right granted prior to the date hereof, in the event the Company sells or otherwise transfers all or substantially all of its assets to another person, company, corporation, or firm during the term of this Agreement, the Company will require such purchaser or transferee to assume the obligations under this Agreement until the expiration of the term of this Agreement.

 (Compl. P 5; Answer P 5). The agreement expires on September 30, 1997.

 Defendant Kincaid is a Virginia limited liability company which operates public utility companies. On March 29, 1996, Kincaid entered into an Asset Sale Agreement (the "Sale Agreement") with ComEd for the purchase of ComEd's Generating Station in Sangamon and Christian Counties, Illinois. The Sale Agreement provides in part:

 
Buyer shall not be subject to the provisions of any collective bargaining agreement between Seller and its employees as a result of the transactions contemplated by this Agreement and Buyer's employment of some or all of the employees of Seller employed at the Plant.

 (Asset Sale Agreement P 8.10; Compl. PP 12-13; Answer PP 12-13). The Sale Agreement also permits Kincaid to establish its own employment level at the Generating Station and the terms and conditions for such employment, but requires Kincaid to offer positions to ComEd's bargaining unit employees who apply for non-supervisory positions up to the employment level established by Kincaid. (Asset Sale Agreement P 6.12). If a majority of the non-supervisory employees hired by Kincaid were formerly employed by ComEd in the bargaining unit represented by Local 15, Kincaid will recognize Local 15 as the exclusive bargaining representative of employees holding non-supervisory positions at the Generating Station. (Asset Sale Agreement P 6.12).

 The sale of the Generating Station is subject to approval by the defendant ICC. On May 13, 1996, ComEd filed a petition with the ICC pursuant to § 7-102 of the Illinois Public Utilities Act, 220 ILCS 5/7-102, requesting approval of the Sale Agreement. Local 15 opposes the sale and, consequently, moved to intervene in the proceedings. The ICC granted Local 15's motion to intervene on September 25, 1996. Oral argument on the pending petition was conducted on January 21, 1997. The ICC has not yet issued a decision.

 Local 15 objects to the sale of the Generating Station because the Sale Agreement does not require Kincaid to assume ComEd's obligations under the collective bargaining agreement negotiated with Local 15. According to Local 15, this constitutes a violation of the Illinois successor statute, 820 ILCS 10/1, which makes a new employer liable for the obligations of a predecessor's collective bargaining agreement when the agreement contains a "successor clause." The statute provides in part:

 
Where a collective bargaining agreement between an employer and a labor organization contains a successor clause, such clause shall be binding upon and enforceable against any successor employer who succeeds to the contracting employer's business, until the expiration date of the agreement therein stated. No such successor clause shall be binding upon or enforceable against any successor employer for more than 3 years from the effective date of the collective bargaining agreement between the contracting employer and the labor organization.
 
An employer who is a party to a collective bargaining agreement containing a successor clause has the affirmative duty to disclose the existence of such agreement and such clause to any successor employer. Such disclosure requirement shall be satisfied by including in any contract of sale, agreement to purchase, or any similar instrument of conveyance, a statement that the successor employer is bound by such successor clause as provided for in the collective bargaining agreement. Failure of an employer to disclose the existence of a collective bargaining agreement containing a successor clause as required by subsection (d) shall not effect the enforceability of such collective bargaining agreement against a successor employer.

 820 ILCS 10/1(d). Additionally, the statute imposes a fine not to exceed $ 5,000 on an employer that fails to comply with its provisions. 820 ILCS 10/2.

 On July 1, 1996, ComEd filed suit against Local 15 in the United States District Court for the Northern District of Illinois, Eastern Division (Case No. 96 C 3989) seeking, among other things, a declaration that ComEd has not violated the Illinois successor statute because it is completely preempted by § 301 of the LMRA, 29 U.S.C. § 185, and by the NLRA, 29 U.S.C. § 151 et seq. Jurisdiction over this action is premised on 28 U.S.C. § 1331 and 29 U.S.C. § 185.

 On July 18, 1996, Local 15 filed suit (Case No. 96 C 7295) against ComEd, Kincaid, and the ICC in the Circuit Court of Sangamon County, Illinois, alleging that the Sale Agreement between ComEd and Kincaid for the sale of the Generating Station is in direct violation of the Illinois successor statute because the Sale Agreement expressly provides that Kincaid is not required to assume ComEd's obligations under the collective bargaining agreement negotiated with Local 15. (Compl. P 17-18). Local 15 seeks an order compelling ComEd to incorporate in the Sale Agreement the terms of the current collective bargaining agreement between ComEd and Local 15 and an order that those terms and conditions are binding on Kincaid. (Compl. P 19). Local 15 further requests that "the Court enjoin the ICC, ComEd, and Kincaid, from the continued processing of a Petition before the ICC containing an Asset Sale Agreement with provisions that are in direct violation of an Illinois statute; that the Court enjoin the ICC from issuing an Order consenting to and/or approving a Petition for the sale of certain utility property, including the Kincaid Generating Station, by ComEd to Kincaid when the Petition contains an Asset Sale Agreement which is in direct violation of an Illinois statute." (Compl. P 25).

 On August 9, 1996, ComEd and Kincaid filed a timely notice of removal, see 28 U.S.C. § 1446(b), pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 185 asserting that the Illinois successor statute is completely preempted by § 301 of the LMRA. Consequently, the case was removed to the United States District Court for the Central District of Illinois. The ICC did not join in the petition for removal. ComEd and Kincaid asserted that the ICC's consent to removal was not necessary since it was fraudulently joined as a party to this suit. On September 6, 1996, Local 15 filed a timely motion to remand the case to the Circuit Court of Sangamon County, Illinois, for lack of subject matter jurisdiction pursuant to 28 U.S.C. § 1447.

 Judge Richard Mills of the United States District Court for the Central District of Illinois addressed Local 15's motion to remand on October 30, 1996. He concluded:

 
Because all three preemption doctrines have been raised in the Northern District case and only one has been raised here, it makes sense to consolidate these cases. It would be a waste of judicial resources to have two cases pending when the parties and the issues are nearly identical and the results of one case would be res judicata on the other. See Kearney & Trecker Corp. v. Cincinnati Milling Mach. Co., 254 F. Supp. 130, 133 (N.D.Ill. 1966). Furthermore, it would conserve judicial resources to have all preemption issues relating to the same statute decided in one forum.

 International Brotherhood of Electrical Workers, AFL-CIO, Local Union 15 v. Commonwealth Edison Company, Kincaid Generation L.L.C., and Illinois Commerce Commission, 1996 U.S. Dist. LEXIS 16039, No. 96-3228, slip op. at 5-6 (C.D.Ill. Oct. 30, 1996). In the interest of justice, Judge Mills transferred the case to this Court pursuant to 28 U.S.C. § 1404(a). Id. at 6. *fn2" Judge Mills also denied all pending motions as moot and granted the parties leave to refile them before this Court. Id.

 On or about November 5, 1996, Local 15 filed a renewed motion to remand the case (No. 96 C 7295) to the Circuit Court of Sangamon County, Illinois, for lack of subject matter jurisdiction pursuant to 28 U.S.C. § 1447. On December 31, 1996, we denied the motion to remand holding that this case arises under § 301 of the LMRA and, therefore, pursuant to the complete preemption exception to the well-pleaded complaint rule, this Court is vested with subject matter jurisdiction under 28 U.S.C. § 1331 (federal question). See Commonwealth Edison Company v. International Brotherhood of Electrical Workers, Local Union No. 15, 961 F. Supp. 1154, 1996 WL 754073, at *10 (N.D.Ill. 1996). We also dismissed the ICC as a party to this suit under the doctrine of fraudulent joinder thereby leaving ComEd and Kincaid as the only remaining defendants. Id. at *15.

 ComEd and Kincaid have filed motions for judgment on the pleadings--which we will treat as motions for summary judgment--in Case No. 96 C 7295 contending that the Illinois successor statute is preempted by federal labor law, i.e., the LMRA and NLRA. *fn3" ComEd has filed a similar motion--which we will also treat as a motion for summary judgment--in its declaratory judgment action (Case No. 96 C 3989). Local 15 responds that the motions must be denied because: (1) this case is only of peripheral concern to the LMRA and touches interests in state law and local feeling and responsibility; (2) this case does not involve interpretation of the collective bargaining agreement but only application of its terms and conditions; (3) there are disputed material facts; and (4) this dispute is not a "real case" ripe for decision. *fn4"

 DISCUSSION

 The issues in Local 15's case (No. 96 C 7295) against ComEd and Kincaid are identical to those in ComEd's declaratory judgment action (No. 96 C 3989): whether the Illinois successor statute is preempted by federal labor law, i.e., the LMRA and NLRA. The following discussion on federal preemption is therefore directed to both cases.

 The Supremacy Clause of the United States Constitution provides that "the Laws of the United States which shall be made in Pursuance [of the Constitution]... shall be the supreme law of the land." U.S. Const. art. VI, cl. 2. *fn5" This provision invalidates all laws that conflict or interfere with an Act of Congress. Rose v. Arkansas State Police, 479 U.S. 1, 3, 93 L. Ed. 2d 183, 107 S. Ct. 334 (1986). It also gives Congress the power to preempt state law. NLRB v. State of Ill. Dept. of Employment Sec., 988 F.2d 735, 738 (7th Cir. 1993).

  Congressional power to legislate in the area of labor relations is well-established. Evans v. Einhorn, 855 F.2d 1245, 1249 (7th Cir. 1988)(citing NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 81 L. Ed. 893, 57 S. Ct. 615 (1937)). Two federal statutes provide the major sources of federal preemption in this area: § 301 of the LMRA, 29 U.S.C. § 185(a), and § 8 and § 9(a) of the NLRA, 29 U.S.C. § 158 and § 159(a). Because Congress has never exercised its authority to occupy the entire field of labor relations, the question whether a certain state statute is preempted by federal labor law is one of congressional intent. Hawaiian Airlines, Inc. v. ...


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