Verizon New England, Inc. v. Rhode Island Department of Labor & Training , 723 F.3d 113 ( 2013 )

United States Court of Appeals
For the First Circuit
No. 12-2398
VERIZON NEW ENGLAND, INC.,
Plaintiff, Appellant,
v.
RHODE ISLAND DEPARTMENT OF LABOR AND TRAINING;
INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 2323;
CLAIMANTS,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. John J. McConnell, Jr., U.S. District Judge]
Before
Torruella, Thompson and Kayatta,
Circuit Judges.
Arthur G. Telegen, with whom James M. Hlawek and Seyfarth Shaw
LLP, were on brief for appellant.
Marc B. Gursky, with whom Elizabeth Wiens and Gursky Law
Associates, was on brief for appellees Local 2323 and Claimants.
Adam J. Sholes, Special Assistant Attorney General, Peter F.
Kilmartin, Attorney General, and Thomas A. Palombo, Assistant
Attorney General, was on brief for appellee Rhode Island Department
of Labor and Training.
July 17, 2013
TORRUELLA, Circuit Judge. Plaintiff-Appellant Verizon
New England, Inc. ("Verizon") appeals from an order dismissing its
federal court action against the Rhode Island Department of Labor
and Training ("RIDLT") and claimant members of the International
Brotherhood of Electrical Workers ("IBEW"), Local 2323, who claimed
unemployment benefits following a large-scale work stoppage at
Verizon ("Claimants"). After careful consideration, we affirm the
district court's dismissal, but on the singular ground that
dismissal is warranted under the Younger abstention doctrine.
I. Background
A. Factual Background
Verizon was a party to a collective bargaining agreement
("CBA") with six IBEW local unions (the "System Council T-6"),
which included Local 2323. The CBA was in effect from August 3,
2008 until August 6, 2011. Between June 22, 2011 and August 6,
2011, the parties to the CBA attempted to reach a new agreement
through negotiations. During said negotiations, on July 26, 2011,
Verizon sent a letter to System Council T-6 notifying them in
writing that, "if we do not reach a new agreement by August 6, the
arbitration provisions of the various labor contracts would not be
in effect for grievances."
Verizon and System Council T-6 were unable to reach a new
agreement before the CBA expired. System Council T-6 called for a
work stoppage, and its members commenced picketing Verizon's
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facilities and remote work sites in New England. On or around
August 23, 2011, Verizon reached an agreement with System Council
T-6 under which the members of the various unions would return to
work under the terms of the expired CBA. After the employees
returned to work, approximately 800 members of the various unions
employed by Verizon in Rhode Island applied for unemployment
benefits before RIDLT.
On August 29, 2011, the Director of RIDLT denied the
Claimants' application for unemployment benefits, concluding that
they became unemployed as a result of a strike and were thus barred
from such benefits under Section 28-44-16 of the Rhode Island
Employment Security Act. Section 28-44-16(a) of that Act provides
that an individual will not be entitled to benefits "if he or she
became unemployed because of a strike or other industrial
controversy in the establishment in which he or she was employed,"
but Section 28-44-16(b), which governs lockouts, provides that an
individual is entitled to benefits if "unemployment is a result of
his or her employer's withholding of employment for the purpose of
resisting collective bargaining demands or gaining collective
bargaining concessions."
The Claimants appealed the Director's denial of
unemployment benefits to the RIDLT's Board of Review. On May 22,
2012, the Board reversed the Director's denial of unemployment
benefits and found that the Claimants were entitled to receive
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unemployment benefits under Section 28-44-16(b). Specifically, the
Board found a series of actions on the part of Verizon to have
constituted a constructive and actual lockout, including: "deleting
of the arbitration provisions," which created a "substantial change
to the status quo"; allowing Claimants to return to work if the
current CBA were modified by removing the arbitration provisions;
denying Claimants' access to Verizon's computers for employer
business and Claimants' personal business (i.e., 401 accounts,
health insurance, sick and vacation time, etc.) in preparation for
the impending job action; collecting Claimants' employer-issued
swipe/identification cards, employer-issued cell phones, laptops,
various other tools and equipment; locking doors, chaining gates,
and, at various work sites, having no personnel to allow Claimants
access to work; and violating its past practice of allowing
employees to work under an expired unmodified agreement. The Board
also found that "record testimony established that the constructive
lockout morphed into an actual lockout when the employer took overt
actions of chaining gates, locking doors, failing to staff security
kiosks, and denying access to its computer system." Verizon
appealed the Board's decision to the Sixth Division District Court,
Providence County, Rhode Island, where it remains pending.
B. Procedural History
While the matter was pending before the state court,
Verizon filed a complaint in the United States District Court for
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the District of Rhode Island challenging the Board's decision and
seeking declaratory and injunctive relief. Specifically, Verizon
argued that the Board's decision should not be enforced as it was
preempted by the National Labor Relations Act ("NLRA").
RIDLT moved to dismiss Verizon's complaint for failure to
state a claim on two grounds: (1) the Board's decision was not
preempted by the NLRA; and (2) in the alternative, the district
court should abstain from hearing the matter under the Younger
abstention doctrine. The district court agreed with RIDLT and
dismissed the complaint on both grounds. On the preemption issue,
it held that the Supreme Court's decision in New York Telephone Co.
v. New York State Department of Labor, 440 U.S. 519 (1979), which
held that the NLRA does not preempt a state's ability to provide
strikers unemployment benefits, governed. As to abstention, it
held that the action must be dismissed as having met the applicable
requirements under Younger. Verizon filed this timely appeal
challenging both grounds of dismissal.
II. Discussion
For purposes of this appeal, we accept as true the well-
pleaded factual allegations in Verizon's complaint and draw all
reasonable inferences from those allegations in its favor. Lass v.
Bank of America, N.A., 695 F.3d 129, 133 (1st Cir. 2012). Since we
find that the proper route in this case is to abstain from hearing
it under Younger v. Harris, 401 U.S. 37 (1971), we do not reach the
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merits of Verizon's preemption claim. We thus proceed directly to
discuss our abstention reasoning.
A. Ongoing State Court Proceedings and Younger Abstention
This court reviews a district court's dismissal of a
complaint on a motion to dismiss de novo. Lass, 695 F.3d at 133.
We also review de novo whether Younger mandates a district court's
abstention. Colonial Life & Accident Ins. Co. v. Medley, 572 F.3d
22, 25 (1st Cir. 2009).
In Younger, the Supreme Court held that abstention is
required where a plaintiff defending criminal charges in state
court sought to have the federal court enjoin the ongoing state
criminal proceedings. Younger doctrine has been extended to civil
actions, and is most commonly applied to suits seeking declaratory
or injunctive relief. Rossi v. Gemma, 489 F.3d 26, 34 (1st Cir.
2007). Based on principles of comity, the doctrine instructs that,
unless there are extraordinary circumstances, federal courts should
not "interfere with ongoing state-court litigation, or, in some
cases, with state administrative proceedings." Id. (quoting Maymo-
Meléndez v. Álvarez-Ramírez, 364 F.3d 27, 31 (1st Cir. 2004)). In
this circuit, abstention is appropriate "when the requested relief
would interfere (1) with an ongoing state judicial proceeding; (2)
that implicates an important state interest; and (3) that provides
an adequate opportunity for the federal plaintiff to advance his
federal constitutional challenge." Id. at 34-35.
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Verizon does not seem to challenge that the three
criteria for Younger abstention were met here, and we agree with
the district court that they were.1 Verizon focuses instead on the
availability of an exception to the Younger abstention doctrine
when a preemption claim is "facially conclusive."
The "facially conclusive" preemption exception evolved
out of the Supreme Court's suggestion in New Orleans Public
Service, Inc. v. City of New Orleans ("NOPSI"), 491 U.S. 350(1989), that Younger abstention may not be appropriate "if the
federal plaintiff will 'suffer irreparable injury' absent equitable
relief." Id. at 366 (quoting Younger, 401 U.S. at 43-44); see also
Colonial Life, 572 F.3d at 26. The Court offered an example of
such an injury upon "a showing that the challenged state statute is
'flagrantly and patently violative of express constitutional
prohibitions.'" NOPSI, 491 U.S. at 366 (quoting Younger, 401 U.S.
at 53-54). A "facially conclusive" claim of preemption, it found,
could be "sufficient to render abstention inappropriate." Id. at
367. The Court, however, did not elaborate on when such an
1
While Verizon does not directly concede that the three
requirements under Younger were met, they only address those
requirements in their brief on appeal by making the following
statement: "Even if the three elements are met, Younger abstention
is not appropriate if it is 'facially conclusive' that a state
action is preempted by federal law." We accordingly deem Verizon's
arguments waived as to whether the requirements for abstention
under Younger are met. United States v. Zannino, 895 F.2d 1, 17
(1st Cir. 1990) ("issues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are deemed
waived").
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exception would be applicable since it held that the proceedings
and order at issue did not "meet th[e] description" of such a
"facially conclusive" claim. Id. It did explain that merely
showing "a substantial claim of federal preemption" would not be
enough, and stated that "[w]hat requires further factual inquiry
can hardly be deemed 'flagrantly' unlawful for purposes of a
threshold abstention determination." Id. at 366-67.
Subsequent to NOPSI, this and other circuits have
explicitly recognized that an exception to abstention exists where
preemption is "facially conclusive" or "readily apparent." See
Colonial Life, 572 F.3d at 26; Chaulk Servs., Inc. v. Mass. Comm'n
Against Discrimination, 70 F.3d 1361, 1370 (1st Cir. 1995); see
also Midwestern Gas Transmission Co. v. McCarty, 270 F.3d 536, 539
(7th Cir. 2001); Commc'ns Telesys. Int'l v. Cal. Pub. Util. Comm'n,
196 F.3d 1011, 1017 (9th Cir. 1999). In evaluating the
applicability of this exception in the labor context, our circuit
has mostly dealt with preemption challenges brought under San Diego
Building Trades v. Garmon, 359 U.S. 236 (1959), to ongoing state
proceedings that infringe on the jurisdiction of the National Labor
Relations Board. See, e.g., Local Union No. 12004, USW v. Mass.,
377 F.3d 64, 78-80 (1st Cir. 2004); Chaulk Servs., 70 F.3d at 1370.
However, we have more fully addressed the scope of the exception in
Colonial Life. There, we were asked, inter alia, to review a
question of first impression: whether a plaintiff's state anti-
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discrimination law claims, brought before the Massachusetts
Commission Against Discrimination ("MCAD"), were preempted by the
Employee Retirement Income Security Act of 1974 ("ERISA") because
they also constituted federal discrimination claims under the
Americans with Disabilities Act ("ADA"). Colonial Life, 572 F.3d
at 24-25. We held that a "preemption determination [that] would
require the district court to resolve a novel question of law . .
. is not 'facially conclusive,' and, under such circumstances, the
district court [is] required to abstain from deciding the
preemption issue." Id. at 24. We also observed without deciding
that the existence of a factual dispute presents "several problems
with the district court's determination that preemption [is]
'facially conclusive.'" Id. at 29.
Navigating the evolution of the applicability of this
exception, Verizon first dismisses any potential concern that a
disagreement is present here requiring a detailed analysis of the
factual record. Instead, it accepts as undisputed the pertinent
facts "set forth in the Board's decision." It then claims that the
district court should have found abstention inappropriate since it
is "facially conclusive" that the Board's decision was preempted
under International Ass'n of Machinists & Aerospace Workers v.
Wisconsin Employment Relations Commission ("Machinists"), 427 U.S.
132 (1976). The Machinists preemption doctrine holds that states
may not interfere with areas of federal labor relations intended by
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Congress "to be controlled by the free play of economic forces."
Id. (quoting NLRB v. Nash-Finch Co., 404 U.S. 138, 144 (1971)).
In Verizon's view, the Board's determination that Verizon's
"deletion of the arbitration provisions" from the CBA constituted
a "constructive lockout" improperly interfered with such an area of
federal labor relations. It did so by incentivizing Verizon to
violate the NLRA "by unilaterally imposing arbitration procedures
after expiration of a labor contract and pressuring Verizon to
offer arbitration as a concession to unions during collective
bargaining negotiations."
RIDLT responds by arguing that the Supreme Court's
holding in New York Telephone directly contradicts Verizon's claim
that preemption is "facially conclusive" in this case. In New York
Telephone, the Court held that, even though Congress was undeniably
aware "of the possible impact of unemployment compensation on the
bargaining process," the NLRA's "omission of any direction
concerning payment to strikers . . . implies that Congress intended
that the States be free to authorize, or to prohibit, such
payments." N.Y. Tel., 440 U.S. at 544. Under that holding, RIDLT
asserts that Rhode Island is not preempted from deciding how, or
if, to award unemployment benefits, and Verizon cannot avoid the
application of that holding here by narrowly interpreting the
Board's decision as "only taking into account the issue concerning
the deletion of arbitration procedures for grievances."
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Additionally, RIDLT rejects Verizon's claim that there is no
factual dispute as to the pertinent facts here. It argues that
Verizon's exclusive concentration on the Board's factual finding
pertaining to the "deletion of the arbitration provisions" fails to
acknowledge the Board's additional factual findings that Verizon
effectuated a constructive and actual lockout.
We agree with RIDLT that preemption is not "facially
conclusive" here. First, Supreme Court precedent in New York
Telephone could not be clearer that "a State's power to fashion its
own policy concerning the payment of unemployment compensation is
not to be denied on the basis of speculation about the unexpressed
intent of Congress." 440 U.S. at 545. Rather, "Congress has
decided to tolerate a substantial measure of diversity" in that
area. Id. at 546. Further, New York Telephone addressed head on
the Machinists preemption challenge in considering the conjunction
of State administration of unemployment compensation schemes and
the economic self-help capabilities of the parties to a labor-
management dispute and expressly found that, even though "Congress
was aware of the possible impact of unemployment compensation on
the bargaining process," "the fact that the implementation of [a]
general state policy affects the relative strength of the
antagonists in a bargaining dispute is not a sufficient reason for
concluding that Congress intended to pre-empt that exercise of
state power." Id. at 544, 546. Therefore, if anything, it is
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facially conclusive that New York Telephone precludes Verizon's
preemption claim here.
To the extent that this case is distinguishable from New
York Telephone on the basis of any legal implications of Verizon's
announced position concerning the arbitration provisions, Verizon
could only be characterized as presenting a novel question of law
regarding the NLRA. We have not before decided whether the NLRA
permits States, in their administration of unemployment
compensation schemes, to influence labor arbitration. By asking us
to decide that issue, Verizon is thus doing the equivalent of what
the petitioners attempted to do in New York Telephone, which is "to
extend the doctrine of labor law pre-emption in a new area." Id.
at 533. However, under our precedent in Colonial Life, such a
novel issue precludes any legal determination that preemption is
"facially conclusive." Colonial Life, 572 F.3d at 24.
Finally, we cannot deem preemption "facially conclusive"
here because while Verizon states that there is no factual dispute,
its entire appeal is contingent on rejecting the Board's factual
determination that a lockout occurred and challenging the Board's
reversal of the Director's determination that the Claimants became
unemployed as the result of a strike. The Board's factual finding
that Claimants were constructively and actually locked out was
directly contrary to the Director's findings and was dispositive
for its conclusion that the Claimants were eligible for
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unemployment benefits. It is clear, then, that the parties indeed
dispute the factual underpinnings decisive for the Claimants'
eligibility for unemployment benefits, and in reaching a conclusion
on the merits of Verizon's challenge, the district court would need
to perform its own inquiry into the factual record to resolve that
dispute. Such a dispute precludes us from agreeing with Verizon
that preemption is "facially conclusive" here. See NOPSI, 491 U.S.
at 367 ("what requires further factual inquiry can hardly be deemed
'flagrantly' unlawful for purposes of a threshold abstention
determination"); Colonial Life, 572 F.3d at 29 ("given the
existence of [a] factual dispute, we see several problems with the
district court's determination that preemption was 'facially
conclusive.'"). Since Younger "prohibits a district court from
addressing the merits of the parties' claims unless preemption is
facially conclusive," Colonial Life, 572 F.3d at 29, it was thus
proper for the district court to dismiss Verizon's claim on
abstention grounds.
III. Conclusion
We thus conclude that the district court properly
dismissed Verizon's complaint on Younger abstention grounds and
accordingly affirm.
Affirmed.
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