Tendick et al v. Henkel Chemical Corporation et al

Filing 38

OPINION MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Plaintiffs Motion to Remand, [Doc. No. 24], is granted. IT IS FURTHER ORDERED that this matter is remanded to the Circuit Court for the City of St. Louis, Missouri. 24 Signed by District Judge Henry E. Autrey on 2/24/14. cc; Circuit Court(CLA)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
THOMAS TENDICK, SR., et al.

)
)
Plaintiffs,
)
)
v.
)
)
HENKEL CHEMICAL CORPORATION, )
et al.,
)
)
Defendants,
)

Case No. 4:13CV759 HEA

OPINION, MEMORANDUM AND ORDER
This matter is before the Court on Plaintiffs’ Motion to Remand, [Doc. No.
24]. Defendants oppose the motion. For the reasons set forth below, the Motion is
granted.
Facts and Background
Plaintiffs filed their lawsuit in the Circuit Court for the City of St. Louis,
Missouri. The First Amended Petition contains two counts, Count I is a claim for
fraudulent misrepresentation; Count II is a claim for negligent misrepresentation.
The First Amended Petition alleges the following: Plaintiffs are former
employees of Defendant Henkel dba Dial and members of Teamsters Local 618
(the Union). Plaintiffs claim that beginning in 2009, Defendant Dial approached
Plaintiffs at the plant in St. Louis, Missouri regarding a program to offer a

voluntary separation package (VSP) to each Plaintiff. Under the VSP, Dial
offered each Plaintiff a lump sum to retire. The sum was a mathematical
calculation based on years of service with the company, and was to be paid out in
equal installments over the course of 52 weeks. Dial offered the lump sum in
order to induce each Plaintiff to retire early. At the time Plaintiffs were offered
the VSP, Plaintiffs ere earning yearly compensation in excess of the amount
offered in the VSP. Dial and the Union conducted meetings in groups and
individually with Plaintiffs. At the meetings, Plaintiffs asked whether acceptance
of the VSP would affect his or her retirement benefits. Plaintiffs were told by Dial
and Union representatives that it would not. In addition to the meetings,
Defendants submitted written materials outlining the VSP. Defendants
represented to Plaintiffs that they would not be making pension contributions to
Central States Pension Fund for each Plaintiff’s VSP/separation pay. Several
Plaintiffs spoke individually with representatives from Defendants Dial and the
Union. In each of the meetings, individual Plaintiffs asked Defendants’
representatives whether they could retire and collect VSP payments and pension
benefits at the same time. On each occasion, Plaintiffs were told they could
collect both. Upon retirement, Plaintiffs applied for pension benefits with Central
States Pension Fund, the entity that administers the Plaintiffs’ pension plan.
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Plaintiffs were informed by Central States that they could not collect both VSP
and pension benefits at the same time. Central States adjusted each Plaintiff’s
retirement date to coincide with the last day of VSP payments and sought
reimbursement of any pension benefits paid to each plaintiff.
Plaintiffs claim that the representations were made to induce them to retire,
that the representations were false, that Defendants knew the representations were
false, that Plaintiffs would not have retired and accepted VSP payments had they
known of the falsity of the statements.
Defendants removed this action based on the Court’s federal question
jurisdiction, 28 U.S.C. § 1331. Defendants claim that Plaintiffs’ claims arise
under Section 301 of the Labor Management Relations Act, (LMRA), 29 U.S.C. §
185, and the Employee Retirement Income Security Act of 1974, (ERISA), 29
U.S.C. § 1002, et seq. Defendants argue that Plaintiffs’ claims are completely
preempted by Section 301 of the LMRA and ERISA.
Plaintiffs argue that this action should be remanded because the Court lacks
subject matter jurisdiction. Plaintiffs contend that the allegations of their First
Amended Petition are based strictly on state law, not on any collective bargaining
agreement, (CBA) or ERISA benefit plan, nor do they ask the Court to interpret a
collective bargaining agreement or ERISA plan. Rather, Plaintiffs argue that they
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are seeking recovery strictly for the actions of Defendants that induced them to
retire and receive different benefits than they would have received had it not been
for Defendants’ alleged fraudulent and negligent misrepresentations. The fact that
Plaintiffs were members of the Union, that the benefits they do receive are
incidental to the reason Plaintiffs are receiving less than they could have.
Plaintiffs argue that their claims are not preempted by the LMRA as interpretation
of the collective bargaining agreement (“CBA”) in place is not necessary to
resolve their claim. Likewise, it is not the benefits that are in issue, rather, the
method of inducing Plaintiffs to apply for the benefits are what Plaintiffs claim
entitle them to relief. Plaintiffs, in essence, argue that it is Defendants’ prebenefits actions that were fraudulently and negligently performed.
Discussion
Any civil action brought in a state court over which the district courts have
original jurisdiction may be removed to the proper district court. 28 U.S.C. §
1441(a). In the event that the federal court determines it does not have
subject-matter jurisdiction over a removed action, it must remand the action to
state court where it originated. 28 U.S.C. § 1447(c). Removal statutes are strictly
construed, and any doubts about the propriety of removal must be resolved in
favor of remand. In re Business Men's Assurance Co. of America, 992 F.2d 181,
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183 (8th Cir.1993). As the party invoking jurisdiction, defendant has the burden
of establishing that prerequisites to jurisdiction have been satisfied. Id.; Hatridge
v.. Aetna Cas & Sur. Co., 415 F.2d 809, 814 (8th Cir.1969). Generally, in
determining whether removal was proper, the court must look to Plaintiffs’
pleadings at the time of removal. Pullman Co. v. Jenkins, 305 U.S. 534, 537–38
(1939). The basis for federal jurisdiction must be apparent from the face of
Plaintiffs’ properly pleaded complaint. Caterpillar, Inc. v. Williams, 482 U.S.
386, 392 (1987). However, where a complaint raises issues to which federal law
applies with preemptive force, the Court must look beyond the face of the
complaint in determining whether remand is proper. Williams v. National Football
League, 582 F.3d 863, 874 (8th Cir.2009).
LMRA
Defendants have alleged federal jurisdiction on removal based upon Section
301 of the LMRA which states that federal law governs “suits for violation of
contracts between an employer and a labor organization.” 29 U.S.C. § 185(a). The
Supreme Court has held that federal law exclusively governs suits for breach of a
Collective Bargaining Agreement (CBA), and thus, § 301 of the LMRA applies
with preemptive force. United Steelworkers v. Rawson, 495 U.S. 362, 369 (1990).
Section 301 preempts state law claims that are “substantially dependent upon
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analysis” of a CBA, Allis–Chalmers Corp. v. Lueck, 471 U.S. 202, 220 (1985),
because “the application of state law ... might lead to inconsistent results since
there could be as many state law principles as there are States.” Lingle v. Norge
Div. of Magic Chef, Inc., 486 U.S. 399, 406 (1988); See also Williams, 582 F.3d at
874.
Section 301 of the LMRA “expresses a congressional policy that federal
labor law should govern § 301 disputes.” Vacca v. Viacom Broadcasting of
Missouri, Inc., 875 F.2d 1337, 1341 (8th Cir.1989). “It is a mandate to the federal
courts to establish a federal common law to govern disputes arising out of labor
contracts .” Id. (citations omitted). Therefore, if an action alleges a violation of a
term of a labor contract, “federal labor law preempts any local law purporting to
define the meaning or delineate the scope of a labor contract provision.” Id. at
1342. “This assures uniformity of interpretation of collective bargaining
agreements and promotes harmonious and consistent resolution of labor contract
disputes.” Id. (citations omitted). The preemptive effect of § 301 is not limited to
actions alleging violations of labor contracts, however. Section 301 preempts all
actions “where resolution of the action requires interpretation of a collective
bargaining agreement.” Id. As explained by the United States Court of Appeals
for Eighth Circuit in Vacca, however, the preemptive effect of § 301 is not all
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encompassing.
Not all actions commenced by an employee covered under a labor contract
must be brought under § 301. Such an employee may assert a state law claim
against his employer if resolution of that claim does not require interpretation of
the terms of the union contract. If resolution of the claim, however, is
“substantially dependent” on the terms of the union contract, or if evaluation of
the state law claim is “inextricably intertwined with consideration of the terms of
the labor contract,” it is preempted by § 301. The complete factual background of
the case must be examined against all elements of the state law claim, including
defenses, to determine whether the terms of the union contract “come into play.”
Id. at 1342 (internal citations omitted). As explained by the Supreme Court in
Allis–Chalmers Corp. v. Lueck, 471 U.S. 202, 211–213 (1985):
Of course, 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.
Section 301 on its face says nothing about the substance of what
private parties may agree to in a labor contract. Nor is there any
suggestion that Congress, in adopting § 301, wished to give the
substantive provisions of private agreements the force of federal law,
ousting any inconsistent state regulation. Such a rule of law would
delegate to unions and unionized employers the power to exempt
themselves from whatever state labor standards they disfavored.
Clearly, § 301 does not grant the parties to a collective-bargaining
agreement the ability to contract for what is illegal under state law. In
extending the preemptive effect of § 301 beyond suits for breach of
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contract, it would be inconsistent with congressional intent under that
section to preempt state rules that proscribe conduct, or establish
rights and obligations, independent of a labor contract.
Therefore, state-law rights and obligations that do not exist
independently of private agreements, and that as a result can be
waived or altered by agreement of private parties, are preempted by
those agreements.
The focus must be, therefore, whether the state law cause of action, as
applied in the current case:
[C]onfers nonnegotiable state-law rights on employers or
employees independent of any right established by
contract, or, instead, whether evaluation of the tort claim
is inextricably intertwined with consideration of the
terms of the labor contract. If the state tort law purports
to define the meaning of the contractual relationship, that
law is preempted.
Id. at 213.
A two-step analysis has been endorsed by the United States Court of
Appeals for the Eighth Circuit in determining whether Plaintiffs’ claims is
preempted by section 301.
In applying the section 301 preemption doctrine, we begin with “the
claim itself,” see Trustees of the Twin City Bricklayers Fringe Benefit
Funds v. Superior Waterproofing, Inc., 450 F.3d 324, 331 (8th
Cir.2006), and apply a two-step approach in order to determine if the
claim is sufficiently “independent” to survive section 301 preemption,
see Bogan, 500 F.3d at 832. First, a “state-law claim is preempted if it
is ‘based on’ [a] ... provision of the CBA[,]” meaning that “[t]he CBA
provision at issue” actually sets forth the right upon which the claim
is based. Id. Second, section 301 preemption applies where a
state-law claim “is ‘dependent upon an analysis' of the relevant
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CBA,” meaning that the plaintiff's state-law claim requires
interpretation of a provision of the CBA. Id.
Williams v. National Football League, 582 F.3d 863, 874 (8th Cir.2009). “[T]he
crucial inquiry is whether ‘resolution of a state-law claim depends upon the
meaning of a [CBA].’” Miner v. Local 373, 513 F.3d 854, 865 (8th Cir.2008)
(quoting Lingle v. Norge Div. Of Magic Chef, Inc., 486 U.S. at 399, 405–06
(1988)).
The Court is persuaded by the reasoning set forth by the Williams decision.
Under this more narrow construction of Section 301 preemption, a court
determines “whether the claim itself, regardless of probable defenses, is
necessarily grounded in rights established by the CBA.” Williams, 582 F.3d at 877
n. 13. Further, the Court in Williams reiterated that Section 301 preemption only
applies to claims that “require interpretation or construction of the CBA” as
opposed to “those which only require reference to it” or where “the CBA need
only be consulted during its adjudication.” Id. at 876 (quoting Trustees of the
Twin City Bricklayers Fringe Benefit Funds v. Superior Waterproofing, Inc ., 450
F.3d 324, 331 (8th Cir.2006); citing also Livadas v. Bradshaw, 512 U.S. 107,
124–25, 114 S.Ct. 2068, 129 L.Ed.2d 93 (1994)).
Addressing the employer's concerns over consistency in collective

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bargaining agreement interpretation, the Williams Court agreed with the Ninth
Circuit in finding this justification unpersuasive. Id. at 877–78 (citing Cramer v.
Consolidated Freightways, Inc ., 255 F.3d 683, 695 n. 9 (9th Cir.2001) (en banc).
The Williams Court found further support for this rule in the Supreme Court's
observation that:
[T]here [is not] any suggestion that Congress, in adopting § 301,
wished to give the substantive provisions of private agreements the
force of federal law, ousting any inconsistent state regulation. Such a
rule of law would delegate to unions and unionized employers the
power to exempt themselves from whatever state labor standards they
disfavored. Clearly, § 301 does not grant the parties to a[CBA] the
ability to contract for what is illegal under state law. In extending the
pre-emptive effect of § 301 beyond suits for breach of contract, it
would be inconsistent with congressional intent under that section to
preempt state rules that proscribe conduct, or establish rights and
obligations, independent of a labor contract.

Id. at 878 (quoting Allis–Chalmers Corp. v. Lueck, 471 U.S. 202, 211–12 (1985);
citing also Livadas, 512 U.S. at 123 (cautioning that section 301 “cannot be read
broadly to pre-empt nonnegotiable rights conferred on individual employees as a
matter of state law”)).
Like the Williams Plaintiffs, Plaintiffs here allege violations of rights
independent from the CBA and created under state law. Thus, the Court must
examine the elements of the state law claim, as plead by Plaintiffs, to determine

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whether resolution of any claim is “inextricably intertwined” with the CBA cited
by Defendants. Dunn v. Astaris, 292 Fed. Appx. 525, 526–27 (8th Cir.2008).
To establish a claim for fraudulent misrepresentation under Missouri
common law, Plaintiffs must prove the following elements:
(a) A representation by Defendant;
(b) That the representation was made by Defendant with the intent
that Plaintiff rely on the representation;
(c) That the representation was false;
(d) That Defendant knew that the representation was false and/or
made the representation without knowing whether it was true or false;
(e) That the representation was material to Plaintiff;
(f) That Plaintiffs reasonably relied upon the representations; and
(g) That Plaintiffs sustained damages as a direct result of the
representations.
Missouri Jury Instruction M.A.I 23.05.
The elements for Plaintiffs’ State law claim of negligent misrepresentation
are as follows:
(a) that the speaker supplied information in the course of speaker’s
business or because of some other pecuniary interest;
(b) due to the speaker’s failure to exercise reasonable care or
competence in obtaining or communicating this information, the
information was false;
(c) that the speaker intentionally provided the information for the
guidance of a limited group of persons in a particular business
transaction;
(d) that the listener justifiably relied on the information; and
(e) that as a result of the listener’s reliance on the statement, the
listener
In Home Health, Inc. V. The Prudential Ins. Co. of America, 101 F.3d 600, 602
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(8th Cir. 1996).
Plaintiffs’ claims are neither dependent on nor require interpretation or
analysis of the CBA. Rather, Plaintiffs’ claims are solely based on Defendants’
actions prior to Plaintiffs electing to receive the VSP payments. The mere fact
that subsequently their pension benefits were effected by their selection does not
transform this state action into an action under Section 301. The CBA is not
necessary to the determination of whether Defendants fraudulently or negligently
misrepresented the underlying facts upon which Plaintiffs relied.
The Union argues that but for the CBA, Plaintiff would not have a cause of
action, therefore this matter is preempted by Section 301. This position falls
outside the realm of 301 preemption because it fails to establish that the terms of
the CBA must be interpreted in order to be resolved.
The Court would not properly consult the CBA in order to resolve
Plaintiffs’ claims. Rather, the Court would compare the facts as developed with
the elements of fraudulent and negligent misrepresentation to determine whether
Defendants have committed the alleged misrepresentations. Such claims are not
preempted by section 301. See Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246,
266 (1994) (holding that strictly factual questions about an employer's conduct do
not require interpretation of a term of a CBA). Section 301 does not grant parties
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to a CBA license to contract for what is a cause of action under state law. Lueck,
471 U.S. at 211–12.
ERISA
ERISA by its terms preempts state laws to the extent they relate to
employee benefit plans. 29 U.S.C. § 1144. Through ERISA, Congress has “set
minimum, uniform national standards for employee benefit plans ... to provide for
uniform remedies in the enforcement of the plans. In doing so, Congress
preempted all state laws which relate to employee benefit plans, not only state
laws which directly attempt to regulate an area expressly covered by ERISA.”
Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208, 1215 (8th Cir.1981) cert.
denied, 454 U.S. 968 (1981). In general, a three step process is utilized to
determine if preemption is mandated by the statute. “First, there must be a ‘plan’
as defined by the Act. [29 U.S.C. § 1003(a) ]. Second, if a state law ‘relates to’ an
employee benefit plan it is preempted. 29 U.S.C. § 1144(a) (general preemption
clause). Third, the ‘savings clause’ must be considered. [29 U.S.C. §
1144(b)(2)(A).” Tucker v. Employers Life Ins. Co., 689 F.Supp. 1073, 1075
(N.D.Ala.1988).
It is the second step of this process that is at issue in this case. The focal
point of applying the preemption provision, 29 U.S.C. § 1144, is to ascertain
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whether the state law in question “relates to” the employee benefit plan. The
Supreme Court has noted the expansive sweep of the preemptive clause.
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987); Shaw v. Delta Air Lines,
Inc., 463 U.S. 85 (1983). In several cases the Court has stated, “[t]he phrase
‘relate to’ was given its broad common-sense meaning, such that a state law
‘relate[s] to’ a benefit plan in the normal sense of the phrase, if it has a connection
with or reference to such a plan.” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41
(1987); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 (1985);
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983). “In those cases where
federal courts have decided that preemption is not mandated, the rationale often
advanced is that the state law in question impacts upon ERISA in an indirect
manner that is too tenuous or too remote to warrant preemption.” Greenblatt v.
Budd Co., 666 F.Supp. 735, 741 (E.D.Pa.1987). See Shaw v. Delta Air Lines, Inc.,
463 U.S. at 100 n. 21.
Defendants argue Plaintiffs’ First Amended Petition alleging fraudulent
misrepresentation and negligent misrepresentation should be dismissed because
those claims are preempted by ERISA. Specifically, Defendants point out that in
order for Plaintiffs to be eligible for the VSP, Dial had to ascertain whether the
employees were in “critical” positions, that the VSP placed an ongoing demand on
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Dial’s assets and imposed long-term obligations on Dial. However, the state law
claims do not challenge any actions with regard to who was entitled to receive the
VSP or the amount received from the VSP, but rather stem from a separate duty
arising from their positions in inducing Plaintiffs to accept the VSP. As was
noted by the court in Greenblatt v. Budd Co., “[t]hat the subject of the deception
concerned [or impacted on] pension benefits is only incidental and not essential to
plaintiff's cause of action.” Greenblatt v. Budd Co., 666 F.Supp. 735, 742
(E.D.Pa.1987).
In Greenblatt, supra, the plaintiff contended his employer orally represented
that the pension benefits he was receiving under one pension plan would be made
equal to those available to comparable salaried management personnel under
another plan. Greenblatt, 666 F.Supp. at 741. The court found this claim was not
preempted because “the premise underlying this action was that plaintiff was
deceived by the [oral] statements made and the actions taken by his employer.” Id.
at 742. The court found additional support “by the fact that the representations at
issue were made by plaintiff's superiors, as his employers, and not as plan
fiduciaries. Similarly, the misrepresentations at issue were made to plaintiff in the
ordinary course of business and not in the course of administering a Budd
Company pension plan.” Id.
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In this case, Plaintiffs are challenging the actions of Defendants in their
inducement to get Plaintiffs to accept the VSP, not whether they are entitled to
benefits under the ERISA plan. This is precisely the type of action which would
not be preempted by ERISA because nothing about Defendants’ actions gives rise
to an ERISA claim.
Conclusion
The Court concludes that Plaintiffs’ claims are based on Missouri law and
the Defendants’ conduct. It is not based on the CBA. Plaintiffs’ claim does not
depend upon an interpretation or construction of the CBA. Thus, plaintiffs’ claims
are not preempted by the LMRA. Likewise Plaintiffs’ claims do not arise under
ERISA, rather, the actions of which Plaintiffs complain are based on Missouri
state law for actions which took place before any issues of ERISA benefit arose.
The Court, therefore lacks subject matter jurisdiction to adjudicate the claim.
Accordingly,
IT IS HEREBY ORDERED that Plaintiffs’ Motion to Remand, [Doc. No.
24], is granted.
IT IS FURTHER ORDERED that this matter is remanded to the Circuit
Court for the City of St. Louis, Missouri.
Dated this 22nd day of February, 2014.
_______________________________
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE
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