SHAMOUN v. PEERLESS IMPORTERS, INC. (E.D.N.Y. 2003)

NINA GERSHON, District Judge

On April 9, 2001, plaintiff, Isaac Shamoun, filed a charge of age discrimination against defendant, Peerless Importers, Inc., under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. with the Equal Employment Opportunity Commission ("EEOC"). On June 11, 2001, plaintiff filed a grievance under the collective bargaining agreement ("CBA") between defendant and United Food and Commercial Workers International Union, AFL-CIO, Local 2-D("Local 2-D"). Both the age discrimination charge and the grievance concerned defendant's sales quota system. On August 6, 2001, plaintiff and defendant entered into an agreement ("Settlement Agreement") settling both the grievance and the EEOC charge. On March 10, 2003, plaintiff commenced this action by Order to Show Cause in New York Supreme Court, Nassau County, seeking specific performance of the Settlement Agreement. Plaintiff seeks injunctive relief, namely, that John and Antonio Magliocco, the principal owners of the defendant, be directed to comply with the terms of the Settlement Agreement. On March 13, 2003, defendant removed the action to federal court on the grounds that (1) plaintiffs claim is preempted by Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, and alternatively (2) plaintiff's claim is preempted by the National Labor Relations Act ("NLRA"), 29 U.S.C. § 160, because it may constitute an unfair labor practice. On March 27, 2003, plaintiff moved to remand, arguing that, as his claim does not arise out of a collective bargaining agreement or involve an unfair labor practice, this court lacks jurisdiction. Plaintiff also seeks an award of attorneys' fees relating to the expense of litigating the remand pursuant to 28 U.S.C. § 1447 (c).

The material facts relevant to subject matter jurisdiction are not disputed. Plaintiff is employed by defendant as a wine and spirits salesperson and is a member of the collective bargaining unit represented by Local 2-D. Local 2-D is a signatory to a collective bargaining agreement ("CBA") with defendant. The CBA provides that defendant is allowed to set sales quotas for its employees, that disputes arising under the CBA are expressly subject to grievance and arbitration proceedings, and that individual agreements that alter the terms of the CBA are void. The CBA does not require, nor does defendant argue, that age discrimination claims must be arbitrated.

The Settlement Agreement provides, among other things, that plaintiff and the Maglioccos will meet once monthly to discuss the sales quotas to ensure that the quotas are realistic. Plaintiff is now claiming that the Maglioccos failed to fulfill their obligations, on behalf of the defendant, under the Settlement Agreement by refusing to meet with him, by continuing to set unrealistic sales quotas and by continuing to discriminate against him.

Federal question jurisdiction sufficient to support removal is governed by the "well-pleaded complaint rule," which provides that jurisdiction exists solely where a federal question is presented on the face of the properly pleaded complaint. Caterpillar Inc., et al. v. Williams et al., 482 U.S. 386, 392 (1987). A case may not be removed to federal court on the basis of a federal defense, including the defense of preemption, even if that defense is anticipated in the complaint and is the only question at issue. Id. at 393. However, where an area of state law has been completely preempted, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law. Id.

Section 301 of the LMRA governs claims founded directly on rights created by collective bargaining agreements and also claims substantially dependent on analysis of collective bargaining agreements. Id. at 395. Plaintiff argues that this case should be remanded because the complaint sets forth a contract claim that is independent of the CBA. The complaint demands specific performance of the terms of the Settlement Agreement, specifically, that the Maglioccos be required to hold monthly meetings with plaintiff and that realistic sales quotas be set at those meetings. Plaintiff argues that, as the Settlement Agreement grants him additional rights not afforded him under the CBA, his claims are not preempted. As the Supreme Court noted in Caterpillar, "individual contracts are not inevitably superseded by any . . . collective bargaining agreement covering the individual employee, and claims based upon them may arise under state law." Id. at 396. Defendant counters that, because the Settlement Agreement resolved a grievance filed by the plaintiff under the CBA, the claimed breach of the Settlement Agreement necessarily involves the interpretation of the CBA.

In Foy v. Pratt Whitney Group, 127 F.3d 229 (2d Cir. 1997), the Court of Appeals for the Second Circuit held that a negligent misrepresentation claim was not preempted because the subject of the claim was outside the ambit of the collective bargaining agreement. There, the defendant argued, unsuccessfully, that plaintiffs claim was preempted because the question of whether an alleged promise of a pre-layoff transfer was false would be substantially dependent upon analysis of a collective bargaining agreement. Here, defendant makes substantially the same argument, namely, that plaintiffs claim is preempted because the issue of whether the defendant's obligations under the Settlement Agreement are enforceable requires an interpretation of the CBA. This argument fails because here, as in Foy, plaintiffs claims involve the breach of defendant's obligations under an agreement that is independent of the CBA and to which the union, Local 2-D, is not a party. Moreover, the Settlement Agreement arose, at least in part, out of the settlement of an EEOC charge that was completely independent of, and not subject to mandatory arbitration under, the CBA. See generally Rogers v. New York University, 220 F.3d 73 (2d Cir. 2000).

Wilds v. United Postal Service Inc., 2003 WL21032022 (S.D.N.Y. 2003), is also instructive. In Wilds the court found that, as plaintiff's prima facie case did not require an interpretation of the collective bargaining agreement, removal was not proper. Here, plaintiff's claim is a state law breach of contract, which can be demonstrated without an examination of the CBA. Plaintiff is claiming that defendant has breached its agreement to meet with him prior to setting sales quotas and to set realistic sales quotas. Plaintiff does not claim that he has the right to set the quotas himself. As stated in Caterpillar, a plaintiff covered by a collective bargaining agreement is permitted to assert state law contract rights, so long as the contract right asserted is not provided by a collective bargaining agreement. Put simply, plaintiffs complaint is not dependent upon an interpretation of the CBA.

Defendant also argues that this court has jurisdiction because it will raise a defense to the enforcement of the Settlement Agreement requiring an interpretation of the CBA, namely, that Article X of the CBA prohibits any individual contracts between defendant and a member of the bargaining unit. While it is true that a defense to a state law claim based on the terms of the CBA will require the state court to interpret the CBA, the presence of a Section 301 question in a defensive argument does not overcome the paramount policies of the well-pleaded complaint rule. These policies, namely, "that a plaintiff is master of the complaint, that a federal question must appear on the face of the complaint, and that plaintiff may, by eschewing claims based on federal law, choose to have the cause heard in state court" ensure that a "defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated. If a defendant could do so the plaintiff would be master of nothing." Caterpillar, 482 U.S. at 398-399. Plaintiff does not assert a right under the CBA and his claim does not require an interpretation of the CBA. That defendant may raise the terms of the CBA as a defense to the enforcement of the Settlement Agreement does not establish that this court has removal jurisdiction over plaintiffs claim. Id. If defendant chooses to dispute the viability of the Settlement Agreement as contrary to the terms of the CBA, it may do so in state court. Id. at 397.

Finally, defendant's contention that enforcement of the Settlement Agreement might violate the NLRA, because it is an unfair labor practice for an employer to disregard the bargaining representative by negotiating with individual employees with respect to working conditions does not, for reasons similar to those already stated, establish that this court has removal jurisdiction. Caterpillar at 398 n. 12. In sum, that defendant may ultimately prove that plaintiffs claims are preempted by the LMRA or the NLRA does not establish that they are removable to federal court. Id. at 398. For the above stated reasons, this action will be remanded to state court.

In addition to a remand, plaintiff seeks to recover the attorneys' fees incurred in resisting the removal of this claim and seeking a remand. Under 28 U.S.C. § 1447 (c), "[a]n order remanding the case may require payment of just costs and any actual expenses, including attorneys fees, incurred as a result of the removal." See Circle Industries USA, Inc. v. Parke Construction Group, Inc., 183 F.3d 105, 108 (2d Cir. 1999), cert. denied 582 U.S. 1062 (1999).

The commentary to the 1988 revisions to Section 1447 emphasizes that the goal of the fee provision is to deter improper removal. See David D. Siegel, Commentary on 1988 Revision of Section 1447, at 28 U.S.C. § 1447, p. 52 (1990 pocket part). As stated in Circle Industries:

Removal is done ex parte and without need of a court order. A defendant removes a case from state court to federal court simply by filing a signed notice of removal in the United States district court. See 28 U.S.C. § 1446 (a). While the simplicity of this procedure facilitates removal, it also exposes a plaintiff to the possibility of abuse, unnecessary expense and harassment if the defendant removes improperly, thereby requiring plaintiff to appear in federal court, prepare motion papers and litigate, merely to get the action returned to the court where the plaintiff initiated it.

By allowing a plaintiff to recover attorneys' fees where a case is remanded, Section 1447(c) serves the purpose of deterring improper removal. Circle Industries at 109.

Defendant argues that an award of costs and attorneys' fees is not appropriate here because there has not been a demonstration of improper or egregious conduct, and substantial arguments exist in favor of finding removal jurisdiction. As an initial matter, there is no bad faith prerequisite to an award of attorneys' fees under Section 1447; rather the award turns upon "overall fairness given the nature of the case, the circumstances of the remand and the effect on the parties." Morgan Guaranty Trust Co. of New York v. Republic of Palau, 971 F.2d 917, 923-24 (2d Cir. 1999) (quoting the district court's opinion at 791 F. Supp.2d 561, 563 (S.D.N.Y. 1991)). Here, plaintiffs complaint presents a straightforward state law breach of contract claim. While the court appreciates that removal under the well-pleaded complaint rule can be complicated, the issues presented here as a basis for removal jurisdiction are not novel. The impropriety of the removal is apparent given the clear applicability of Caterpillar and Foy. See Greenidge v. Mundo Shipping Corporation , 60 F. Supp.2d 10, 12 (E.D.N.Y. 1999); Cf. Wilds v. United Postal Service Inc. supra, (declining to award attorneys' fees because "the full scope of the bases for the claims enumerated in those actions were not necessarily readily apparent from the face of the complaint.")

Congress has made a determination that the creation of a fee shifting statute was necessary to deter improper removal by ensuring that costs of such removal will be born by defendants. The improper removal of this case has delayed a relatively simple state law breach of contract claim and added unnecessary litigation expenses. It would be unfair to require plaintiff to absorb the cost of litigating the remand motion. Id. An award of fees will alleviate the expense, though not the delay, caused by the removal. Accordingly plaintiffs request for attorneys' fees is granted.

In sum, plaintiffs motion is granted and the Clerk of Court is directed to remand the action to New York Supreme Court, Nassau County. Plaintiffs request for attorneys' fees and costs is also granted. Plaintiff is directed to submit his application for fees by September 15, 2003. Any response by defendant shall be submitted by September 29, 2003. Any reply to defendants response shall be submitted by October 13, 2003.

SO ORDERED.