Unreported / Non-Citable
Background
Gregg S. Bosnak sued The Olympic Club in California state court on wage-and-hour and retaliation claims, all of them arising under state law. The Olympic Club removed the case to the Northern District of California, arguing that federal question jurisdiction existed because the Labor Management Relations Act of 1947 preempts some of Bosnak's claims. The court identified a potential lack of subject-matter jurisdiction and ordered the Olympic Club to show cause why the case should not be remanded. The order resolves that question.
Under Burnside v. Kiewit Pacific Corp., the LMRA preempts a state claim if the right exists solely because of a collective bargaining agreement (step one) or if the claim is substantially dependent on analysis of such an agreement (step two). In earlier orders, including Hooks v. S.F. Opera Ass'n and Radford v. Nexstar Broadcasting, this court had read Curtis v. Irwin Industries to mean that claims falling within Cal. Lab. Code section 514 and similar exemptions are preempted at step one, which supplies federal question jurisdiction through complete preemption. A growing minority of courts, including Cortes, Hernandez, and Sica, have since concluded that Curtis did not and could not make Section 514 a basis for complete preemption.
The Court’s Holding
The court reversed its earlier position. It was persuaded by the minority view that Section 514 is an affirmative defense under California law. Both the Supreme Court and earlier Ninth Circuit panels have held that a federal question, even a Section 301 question, raised only in a defense does not overcome the well-pleaded complaint rule. The court cited Caterpillar Inc. v. Williams for that principle and reasoned that Curtis could not overrule that authority. It concluded that its prior reasoning was incorrect and that the Olympic Club's anticipated Section 514 defense cannot create federal question jurisdiction.
The court also rejected the Olympic Club's alternative step-two argument. To the extent the club contended that interpreting the agreement is needed to decide whether Section 514 applies, that argument fails for the same reason. To the extent it contended that the elements of Bosnak's claims require interpreting the agreement, it identified no active dispute over the meaning of any agreement term, as Alaska Airlines Inc. v. Schurke requires. Referring to the pay rates listed in the agreements to identify the applicable regular rate of pay does not trigger Section 301 preemption under Renteria-Hinojosa v. Sunsweet Growers, Inc., and the agreements' dispute resolution procedures supply no basis for federal jurisdiction either. The court remanded the case to the Superior Court of California, County of San Francisco, and directed the clerk to close the federal file.
Key Takeaways
- The court did not overrule binding precedent; it abandoned its own earlier orders that treated Section 514 as triggering complete preemption, finding that reasoning incorrect.
- A Section 514 exemption raised as an anticipated defense cannot create federal question jurisdiction under the well-pleaded complaint rule.
- At step two, a defendant must identify an active dispute over the meaning of the collective bargaining agreement's terms; looking up agreement pay rates to determine the regular rate of pay is not enough.
- Collective bargaining agreement dispute resolution procedures do not independently support federal jurisdiction.
- The order decides only jurisdiction; the merits of the wage and retaliation claims, and whether Section 514 ultimately applies, remain for the state court.
Why It Matters
This is an unreported district court order, and it binds no other judge. Its importance lies in a change of position by a court that had previously allowed removal in Section 514 cases. Defendants in the Northern District of California who rely on a collective bargaining agreement exemption to remove state wage claims should expect closer scrutiny. This court now treats the exemption as a defense that cannot support removal and requires a genuine interpretive dispute before step-two preemption applies.
The order is limited. It rests on persuasive district decisions and on Caterpillar, together with the court's conclusion that Curtis could not overrule that authority. It does not decide whether Section 514 exempts any of Bosnak's claims, whether any claim has merit, or whether the Olympic Club may assert the defense in state court. Those questions now go forward in San Francisco Superior Court, and the remand is not a judgment on the merits.