Holden, Chris et al v. Arbor Green, Inc. et al
Filing
30
ORDER denying 7 Motion to Dismiss Count Two of the Complaint; denying 25 Motion to Strike Reply Brief; granting 26 Motion for Leave to File Reply Brief in Support of Motion to Stay; denying 18 Motion to Stay All Proceedings. Signed by District Judge William M. Conley on 5/8/2024. (lam)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
CHRIS HOLDEN, DREW LULOW
and SAMUEL SCHMUCKER,
on behalf of themselves and all others similarly situated,
Plaintiffs,
OPINION AND ORDER
v.
23-cv-461-wmc
ARBOR GREEN, INC. and CHRISTY WADE,
Defendants.
Plaintiffs Chris Holden, Drew Lulow, and Samuel Schmucker claim that defendants
failed to pay them at proper wage rates while employees of defendant Arbor Green, Inc.,
in violation of the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. § 201 et seq., and
Wisconsin state law. Defendants now move to dismiss plaintiffs’ state-law claims, asserting
that this court lacks jurisdiction to consider those claims to the extent preempted by § 301
of the Labor Management Relations Act of 1947 (“LMRA”), 29 U.S.C. § 185, and plaintiffs
did not exhaust the grievance procedure under their collective bargaining agreement. The
court will deny defendants’ motion as premature at this early stage of the litigation. For
the same reasons, the court will also deny defendants’ separate motion to stay this case
pending resolution of a union grievance. Finally, the court will deny plaintiffs’ motion to
strike defendants’ reply brief in support of their motion to stay and grant defendants’
motion for leave to file a reply brief.
ALLEGATIONS OF FACT1
A. The Complaint’s Allegations
Plaintiffs Holden, Lulow, and Schmucker are employees of defendant Arbor Green,
a Wisconsin-based construction company. Defendant Christy Wade is the registered agent
of Arbor Green. Plaintiffs allege individual and collective actions under the FLSA and
individual and class actions under Wis. Stat. §§ 103.02 (hours of labor), 109.03(1) and
(5) (providing employees a right of action to recover wages due).
Arbor Green allegedly paid its employees a location-based “jobsite” rate and a
“shop” rate that was about one-third the “jobsite” rate. At the beginning of most workdays,
plaintiffs reported to Arbor Green’s shop where they unloaded trucks from the previous
day and reloaded the trucks with items needed for that day’s work. Arbor Green paid
employees for time spent loading trucks in the morning at the lower “shop” rate. After
loading the trucks, employees rode together to the jobsites in the trucks. Arbor Green paid
the drivers at the “jobsite” rate but did not pay the passengers at all for their ride time. At
the end of the workday, Arbor Green instructed drivers to drop the trucks off at an
overnight storage location but did not pay them for this return trip.
Next, Arbor Green allegedly paid overtime “at a rate equal to time and a half of the
rate for specific types of work, rather than at a rate equal to time and a half the average
straight time wage rate earned by the employee during the workweek.” For example, when
an employee worked more than ten hours in a day and some of those hours were in the
The following allegations are drawn from plaintiffs’ complaint (dkt. #1) and accepted as true for
purposes of resolving defendants’ pending motion to dismiss.
1
2
shop in the morning, Arbor Green would apply the overtime-time-and-a-half modifier to
the “shop” rate, but not to the “jobsite” rate for work performed later in the day. Plaintiffs
allege that they would have received more overtime pay had Arbor Green paid them: (1)
the overtime rate using the “average straight time wage” or (2) at an overtime rate for hours
actually worked beyond the usual 10 per day or 40 per week. Plaintiffs also assert that
they would have received more overtime pay had Arbor Green counted their driving time
from the final jobsite for the day to the overnight truck storage location. Plaintiffs Lulow
and Schmucker also assert that they would have received more overtime pay had Arbor
Green paid them for their riding time to the first jobsite.
Similarly, plaintiffs appear to allege three violations of Wisconsin’s Department of
Workforce Development (“DWD”) regulations. First, defendants allegedly violated DWD
§ 274.03 by not calculating plaintiffs’ overtime rate as time and a half of their “regular rate
of pay.” Second, defendants allegedly failed to pay plaintiffs for riding time from the shop
to the first jobsite of the day in violation of DWD § 272.12(2)(g)5. Third, defendants
allegedly did not pay plaintiffs for driving company trucks back to overnight storage
locations in violation of DWD § 272.12(2)(g)8. Relatedly, plaintiffs allege that Wisconsin
law also entitles them to recover pay at the applicable jobsite rates for their riding and
driving time that Arbor Green should have, but did not, count as hours worked and
overtime pay at one-and-one-half times the normal rate.
For all of these violations, plaintiffs seek back pay and injunctive relief.
3
B. The Collective Bargaining Agreement
In support of their motion to dismiss, defendants attach a collective bargaining
agreement (“CBA”) between the Wisconsin Transportation Employers’ Council and
various unions. (Dkt. #11-1.) Each of the plaintiffs belonged to a union that was party
to the CBA. (Dkt. #11-2.) The CBA covered all “highway and heavy construction work”
under contracts awarded by the Wisconsin Department of Transportation. (Dkt. #11-1,
at 3.) Article VI of the CBA set forth the grievance and arbitration procedures for covered
parties, explaining that grievances are initially submitted to the Wisconsin Employment
Relations Commission (“Commission”), and if the Commission is unable to resolve the
grievance, that grievance must be submitted to final and binding arbitration. (Id. at 8-9.)
Article IV defined this “jurisdictional” work (i.e., work under the unions’ jurisdiction) as
including, among other activities, “unloading/loading materials” for heavy and highway
construction. (Id. at 4, 7.) Article IX of the CBA also addressed overtime, explaining that
“[a]ny time worked in excess of eight (8) hours per day shall be paid at a rate of one and
one-half times,” unless with union agreement, laborers work 10 hours per day, 4 days a
week, in which case any time worked beyond 10 hours per day is paid at an overtime rate.
(Id. at 12.) Finally, Article XI of the CBA listed the pay rates based on type of work and
location. (Id. at 14-20.)
OPINION
Defendants move to dismiss plaintiffs’ state-law claims under Rule 12(b)(1),
asserting that their state-law claims are preempted by section 301 of the LMRA and
unexhausted. Defendants also move to stay the case pending resolution of the union
4
grievance, as well as this court’s motion to dismiss. Plaintiffs further move to strike
defendants’ reply brief in support of their motion to stay, while defendants move for leave
to file that brief. The court will grant defendants’ motion for leave to file a reply brief in
support of their motion to stay and deny plaintiffs’ motion to strike that brief. The court
addresses the remaining motions in turn below.
I. Motion to Dismiss
A. Subject Matter Jurisdiction
A Rule 12(b)(1) motion tests whether the court has subject matter jurisdiction. Long
v. Shorebank Development Corp., 182 F.3d 548, 554 (7th Cir. 1999). Defendants move for
dismissal of plaintiffs’ wage claims under Wisconsin law for lack of subject matter
jurisdiction under Rule 12(b)(1), asserting that the claims are “preempted by Section 301
of the [LMRA] and [p]laintiffs have failed to exhaust the grievance procedure prior to filing
suit.” (Defs.’ Br. (dkt. #8) 1-2.)
Section 301(a) of the LMRA states: “Suits for violation of contracts between an
employer and a labor organization representing employees in an industry affecting
commerce . . . may be brought in any district court of the United States having jurisdiction
of the parties.” 29 U.S.C. § 185(a). Further, the U.S. Supreme Court has held state-law
claims based on CBA terms are completely preempted because “[t]he subject matter of §
301(a) is peculiarly one that calls for uniform law” to avoid “[t]he possibility that
individual contract terms might have different meanings under state and federal law,”
which “would inevitably exert a disruptive influence upon both the negotiation and
administration of collective agreements.” Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 210
5
(1985) (quotation marks omitted). Thus, a state law claim “substantially dependent upon
analysis of the terms of an agreement made between the parties in a labor contract . . .
must either be treated as a § 301 claim . . . or dismissed as pre-empted by federal laborcontract law.” Id. at 220. However, even if the LMRA ultimately preempts plaintiffs’
state-law claims here, § 301(a) “[b]y its terms, . . . confers federal subject-matter
jurisdiction . . . over suits for violation of [CBAs].” Textron Lycoming Reciprocating Engine
Div., AVCO Corp. v. UAW & Its Local 787, 523 U.S. 653, 656, 661-62 (1998) (quotation
marks omitted); see also 28 U.S.C. § 1331; 29 U.S.C. § 185(a).
Moreover, while some district courts have addressed LMRA preemption as a
jurisdictional issue under Rule 12(b)(1), the FLSA claim alleged here provides this court
an independent basis to assert federal question jurisdiction, making this case
distinguishable from many of the cases addressing LMRA preemption under Rule 12(b)(1).
See Meatheney v. Arts Performing Ctr., LLC, No. 21-CV-683, 2022 WL 912144, at *5 (E.D.
Wis. Mar. 29, 2022) (“The FLSA is a federal statute providing a federal cause of action, so
the Court has subject-matter jurisdiction under 28 U.S.C. § 1331.” (quotation marks
omitted)); Carcillo v. Nat’l Hockey League, 529 F. Supp. 3d 768, 776-77 (N.D. Ill. 2021)
(addressing defendant’s argument that the LMRA provided a basis for federal jurisdiction);
Crosby v. Cooper B-Line, Inc., 725 F.3d 799, 803 (7th Cir. 2013) (observing in a case
involving state-law claims with non-diverse parties that, “[w]ithout Section 301 ‘complete
preemption,’ there is no basis for federal subject-matter jurisdiction over this case”); but see
Anderson v. JCG Indus., Inc., No. 09 C 1733, 2009 WL 3713130 *2-7(N.D. Ill. Nov. 4,
2009) (appearing to address LMRA preemption under Rule 12(b)(1) even though there
was another federal claim). Accordingly, if brought at all, defendants’ motion is likely more
6
properly brought under Rule 12(b)(6).2
See Healy v. Metro. Pier & Exposition Auth., 804
F.3d 836, 840 (7th Cir. 2015) (deeming “a dismissal of preempted state law claims [under
the LMRA], a 12(b)(6) dismissal for failure to state a claim, a dismissal on the merits”);
but see Miller v. Sw. Airlines Co., 926 F.3d 898, 901 (7th Cir. 2019) (dismissal of claim
preempted by the Railway Labor Act, 45 U.S.C. § 151 et seq., which as explained below,
has the same preemption standards as the LMRA should be “labeled either as a judgment
on the pleadings, Fed. R. Civ. P. 12(c), or a dismissal for lack of subject-matter
jurisdiction”).
B. Defendants’ LMRA Preemption Motion is Premature
Regardless of whether defendants’ motion was properly brought under Rule
12(b)(1) or Rule 12(b)(6), the motion is still premature at best. Indeed, there is presently
no dispute before the court as to the meaning of terms of the CBA. Instead, defendants
assert that plaintiffs’ state-law wage claims are preempted by the LMRA because those claims
are inextricably intertwined with the CBA. Specifically, defendants contend that the court
would have to interpret “jurisdictional work” and Articles IV, IX, and XI of the CBA to
determine whether plaintiffs were entitled to overtime pay and their pay rate, making
plaintiffs’ state-law claims preempted. (Defs.’ Br. (dkt #8) (citing In re Bentz Metal Prod.
Co., Inc., 253 F.3d 283 (7th Cir. 2001) (“If the entitlement to wages (or other employee
Notably, it does not appear that the court can properly consider the CBA at the Rule 12(b)(6)
stage, as it was not even referred to in the complaint. Burke v. 401 N. Wabash Venture, LLC, 714
F.3d 501, 505 (7th Cir. 2013) (court can consider documents attached to a motion to dismiss if
they are “referred to in the plaintiff’s complaint and are central to his claim”). As discussed below,
plaintiffs may have artfully drafted their complaint to avoid mentioning the CBA. However, even
considering the CBA, defendants’ motion is premature for the reasons discussed above.
2
7
pay) or the amount due were at issue, the CBA would control . . . [so] preemption would
apply”).)
Plaintiffs respond that the court need not interpret the CBA to resolve its state-law
claims because the court could determine plaintiffs’ “regular rate” by averaging their hourly
pay. Alternatively, plaintiffs assert that, even if it was necessary to interpret the CBA, the
parties have not yet “staked out” competing interpretations of it.3 Said another way,
assessing complete preemption under Section 301 will require this court to look beyond
the face of the complaint and “evaluate the substance of plaintiff’s claims.” Crosby, 725 F.3d
at 800 (quotation marks omitted). Although Section 301 broadly preempts many statelaw theories, it does not extend to every state law that “may have some connection to a
CBA.” Id. The key inquiry is whether a state-law claim is “inextricably intertwined with
consideration of the terms of the labor contract.” Id. (quotation marks omitted). A claim
is inextricably intertwined with a CBA where an element of the claim “requires a court to
interpret any term of” the CBA. Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 407
(1988).
In Wisconsin Central v. Shannon, 539 F.3d 751 (7th Cir. 2008), an employer sought
declaratory judgment that the Railway Labor Act4 and applicable CBAs in that case would
preempt its employees from enforcing the overtime provisions of Illinois law. Id. at 755-
Plaintiffs also argue that the court need not interpret the CBA at all, since “[t]o compute the
regular rate the Court must only take notice of whether [the union] grievance recovered additional
wages for hours worked by employees in the shop.” (Pls.’ Resp. Br. (dkt. #13) 14.) However, that
argument is less persuasive, as the outcome of the union grievance obviously depends on an
application of the CBA’s terms.
3
The preemption provision in the Railway Labor Act is substantially identical to § 301 of the
LMRA, and precedent interpreting one is applicable when interpreting the other. See Hawaiian
Airlines v. Norris, 512 U.S. 246, 260, 263-64 (1994).
4
8
56. The relevant CBAs provided terms for calculation of wage rates and hours. Id. at 758
& n.3. Accordingly, the district court found for the employer, “reasoning that determining
whether [the employer] had violated [Illinois law] would require interpreting the applicable
CBAs.” Id. at 756. However, the Seventh Circuit reversed, holding that the district court
lacked jurisdiction because the claim was not ripe for adjudication. Id. at 761. More
specifically, the Seventh Circuit explained that the district court had “incorrectly” relied
on In re Bentz, emphasizing that for an entitlement to wages or the amount due to be “at
issue” -- and therefore, for preemption to apply -- there must be an actual dispute between
the parties as to the interpretation of the relevant terms of the CBA. Id. at 760. For
example, § 301 preemption would not apply where: “(1) the particular contractual
provision is so clear as to preclude all possible dispute over its meaning; (2) the parties do
not dispute the interpretation of the relevant CBA provisions; or (3) reference to the CBA
is only necessary for computing damages.” Id. at 758 (quotation marks and citations
omitted).
Defendants’ argument here appears to be quite similar to the argument that the
Seventh Circuit rejected in Wisconsin Central: defendants purport to dispute plaintiffs’
allegation that they must be paid at the CBA rate for time spent loading materials at the
beginning of the day, as well as for travel time to the first jobsite of the day and from the
last jobsite of the day. While this case presents a live dispute and is ripe for adjudication,
the reasoning in Wisconsin Central also applies here. At the outset, the court is suspicious
of plaintiffs’ claim that the court need not interpret the CBA to resolve their claims,
especially having artfully pleaded to avoid mentioning the CBA. Marcus v. UPS, No. 5:14CV-01625, 2014 WL 3421552, at *3 (N.D. Cal. July 14, 2014) (absence of references to
9
the CBA in the complaint, when claims clearly asserted rights created by the CBA, only
showed a “conscious attempt to artfully plead around it”).
Still, neither side’s position is very well defined: the complaint does not mention
the CBA, and plaintiffs assert interpreting the CBA is unnecessary altogether, while
defendants only briefly and superficially address their disagreement with plaintiffs’
position on the rate of pay for loading materials and travel, but fail to identify any material
dispute over the meaning of the CBA provisions that would affect the merits of the parties’
claims. Likely, all of this can be flushed out at summary judgment, but defendants’ motion
to dismiss plaintiffs’ state-law claims as preempted is simply premature at this stage. See
Chavez v. Don Stoltzner Mason Contractor, Inc., No. 10 C 264, 2010 WL 1417029, at *4
(N.D. Ill. Apr. 5, 2010) (concluding that it was too early to determine if a dispute existed
because the parties had not taken positions on the meaning of relevant CBA provisions).
Because the court has concluded that it is premature to determine that the LMRA preempts
plaintiffs’ state-law claims, it is likewise premature for the court to conclude that plaintiffs
cannot maintain an action under § 301 due to their asserted failure to exhaust.
See
Williams, No. 19-CV-8198, 2020 WL 5702294, at *4 (“to treat a claim as a § 301 claim,
the plaintiff must first exhaust administrative remedies.”).
Of course, as this lawsuit
progresses, it may become more obvious that plaintiffs’ state-law claims are dependent upon
interpreting the terms of the parties’ CBA. Should that become clear, defendants are free
to raise the issues of LMRA preemption and exhaustion again.
10
II. Motions to Strike and Stay
Finally, defendants move to stay this action pending resolution of the union
grievance and their motion to dismiss in this court, asserting that a stay is appropriate
because: (1) this lawsuit is at an early stage; (2) deciding plaintiffs’ claims requires
interpreting the CBA; (3) resolution of the grievance will determine the proper
interpretation of key CBA provisions; (4) a stay would prevent defendants from enduring
duplicative discovery; and (5) the grievance is likely to be resolved within one year.
Plaintiffs respond that a stay would prejudice them by delaying conditional certification,
recovery of unpaid wages, and injunctive relief. They add that granting a stay will neither
simplify nor resolve this action because the grievance deals with different claims, although
they acknowledge that the outcome of the union grievance could impact the damages
determination in this case.
While this court must exercise discretion before staying proceedings pending the
resolution of other suits, Grice Eng’g, Inc. v. JG Innovations, Inc., 691 F. Supp. 2d 915, 920
(W.D. Wis. 2010), considerations include whether: (1) the litigation is at an early stage;
(2) a stay will unduly prejudice or tactically disadvantage the non-moving party; (3) a stay
will simplify the issues and streamline the trial; and (4) a stay will reduce the burden of
litigation on the parties and on the court. Id. The case is still at an early stage, but other
factors cut against staying the case pending resolution of the union grievance. For one,
defendants seek to stay the case indefinitely while the union grievance is pending; however,
the grievance apparently has no hard deadline for resolution, as the parties suggest that it
might be resolved within a year. Cherokee Nation of Oklahoma v. United States, 124 F.3d 1413,
11
1416 (Fed. Cir. 1997) (“A stay so extensive that it is ‘immoderate or indefinite’ may be an
abuse of discretion.”).
Moreover, it is uncertain whether resolution of the union’s grievance will actually
simplify the issues or streamline the dispute before this court. As explained above, the
degree to which the grievance and this lawsuit are intertwined has yet to be determined,
and even if there was overlap between the union’s and plaintiffs’ claims, defendants cite
no authority for their implicit assumption that the Commission’s interpretation of the CBA
in the grievance process would be binding on this court. At this point then, the court will
deny defendants’ motion to stay the case pending resolution of the union grievance and
deny as moot their motion for a stay pending this court’s decision on their motion to
dismiss.
ORDER
IT IS ORDERED that:
1) Defendants’ motion to dismiss Count Two of the complaint is DENIED.
(Dkt. #7.)
2) Plaintiffs’ motion to strike defendants’ reply brief is DENIED and defendants’
motion for leave to file a reply brief is GRANTED. (Dkt. #25 and Dkt. #26.)
3) Defendants’ motion to stay the proceedings is DENIED. (Dkt. #18.)
Entered this 8th day of May, 2024.
BY THE COURT:
/s/
__________________________________
WILLIAM M. CONLEY
District Judge
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?