Teamsters Nat'l Auto v. Troha, Dennis M. , 328 F.3d 325 ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-3103
TEAMSTERS NATIONAL AUTOMOTIVE TRANSPORTERS
INDUSTRY NEGOTIATING COMMITTEE, a labor organization,
and TEAMSTERS LOCAL UNION 745,
Plaintiffs-Appellants,
v.
DENNIS M. TROHA, Chairman and CEO of JHT Holdings,
Incorporated, JHT HOLDINGS, INCORPORATED, a Delaware
corporation, and ACTIVE TRANSPORTATION COMPANY,
a Kentucky limited liability company,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 02 C 504—Rudolph T. Randa, Chief Judge.
____________
ARGUED FEBRUARY 19, 2003—DECIDED APRIL 29, 2003
____________
Before FLAUM, Chief Judge, and COFFEY and KANNE,
Circuit Judges.
FLAUM, Chief Judge. The Teamsters Automobile Trans-
porters Industry National Negotiating Committee and
Teamsters Local Union 745 (collectively “the Teamsters”)
brought an action to enforce an arbitration subpoena
against JHT Holdings, Inc. (“JHT”), and its Chairman and
2 No. 02-3103
CEO, Dennis Troha,1 neither of whom are signatories to the
collective bargaining agreement that forms the basis of
the underlying arbitration. The district court, concluding
that it lacked subject matter jurisdiction, dismissed the
action, and the Teamsters appeal. We are presented with
the question of whether a federal cause of action exists
to enforce an arbitration subpoena against parties who
were not signatories to the collective bargaining agree-
ment that forms the basis for the arbitration. Because we
find that a cause of action to enforce the subpoena does
exist under federal common law, the district court had
federal question jurisdiction over this suit. We therefore
reverse the judgment of the district court.
I. Background
Active Transportation Company and its subsidiary Active
USA, Inc. (collectively “Active”) operate a terminal in
Garland, Texas. The Teamsters are the bargaining repre-
sentatives for certain employees at Active’s Garland
1
Active Transportation Company, a signatory of the bargaining
agreement, was also named as a defendant. At this point the
dispute is whether the court has jurisdiction to enforce a sub-
poena against the non-signatories, and Active Transportation
Company’s role in this legal dispute is minimal and their brief
generally adopts the arguments of Mr. Troha and JHT. Further-
more, it is not clear that Active Transportation Company is even
a proper defendant. The Teamsters seek enforcement against Mr.
Troha and JHT, and it is not apparent how the district court
could have ordered relief from Active Transportation Company
that could have redressed the Teamsters alleged injury. Accord
Am. Fed’n of Television and Radio Artists v. WJBK-TV, 164 F.3d
1004, 1013 n.6 (6th Cir. 1999) (Clay, J., dissenting) (questioning
standing to bring this type of suit against the signatory when
relief is only sought from the third-parties named in the sub-
poena).
No. 02-3103 3
terminal. The Teamsters and Active are signatories to the
National Master Automobile Transporters Agreement
and the Work Preservation Agreement (collectively “the
bargaining agreements”). The Teamsters allege that on
September 29, 2001, Active breached these bargaining
agreements. The breach allegedly occurred when Active
transferred work, previously performed at the terminal
in Garland, to Auto Truck Transport Corporation (“Auto
Truck”). According to the Teamsters this was an unautho-
rized transfer prohibited by the bargaining agreements.
Pursuant to the rules set forth in the agreements, the
Teamsters filed a grievance with a three-member Board
of Arbitration.
The grievance, as would be expected, was filed against
Active, the signatory of the bargaining agreements. But
there are other parties involved. It seems that Active
and Auto Truck are more than just business partners. In
fact they share the same majority owner, Mr. Troha. Mr.
Troha is also the Chairmen and CEO of JHT, which the
Teamsters claim is a controlled affiliate of both Auto
Truck and Active. Recognizing the involvement of these
parties and seeking to resolve this dispute, the arbitra-
tion board issued a subpoena to Mr. Troha and JHT
directing Mr. Troha to appear and testify as well as direct-
ing both Mr. Troha and JHT to produce numerous docu-
ments. Neither Mr. Troha nor JHT complied with the
subpoena. On May 20, 2002, the Teamsters brought this
action to enforce the subpoena. The district court con-
cluded that it lacked subject matter jurisdiction because
Mr. Troha and JHT were non-signatories to the underly-
ing bargaining agreement. The district court dismissed
the action, and the Teamsters appeal that ruling.
II. Discussion
Federal courts are courts of limited jurisdiction and may
only exercise jurisdiction where it is specifically authorized
4 No. 02-3103
by federal statute. Recognizing this principle, the Team-
sters turn to § 301 of the Labor-Management Relations Act,
29 U.S.C. § 185, in an attempt to establish the authority
for federal subject matter jurisdiction.2 Still it is not clear
from the briefs whether the Teamsters are attempting
to establish jurisdiction directly under § 301(a) of the
Labor-Management Relations Act, which provides that
[s]uits for violation of contracts between an employer
and a labor organization representing employees in an
industry affecting commerce as defined in this Act, or
between any such labor organizations, may be brought
in any district court of the United States having juris-
diction of the parties, without respect to the amount
in controversy or without regard to the citizenship of
the parties,
or indirectly under 28 U.S.C. § 1331, which provides that
[t]he district courts shall have original jurisdiction of
all civil actions arising under the Constitution, laws, or
treaties of the United States,
or under both.3 This ambiguity is somewhat excusable
given the fact that specific statutory grants of jurisdiction
over federal causes of action are often largely superfluous
given that the grant under § 1331 includes all civil actions
where a federal law creates a federal cause of action.
Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation
Trust For Southern Cal., 463 U.S. 1, 8-9 (1983). Still, the
2
The Teamsters do not attempt to establish diversity jurisdic-
tion under 28 U.S.C. § 1332.
3
The jurisdictional statement in the Teamsters’ opening brief
cites § 1331, however this is the only reference in the entire brief
to that statute and the statute does not appear anywhere in their
reply brief. Reference to § 1331 was equally sparse during oral
arguments.
No. 02-3103 5
provisions are nonetheless distinct sources under which a
party may seek to establish subject matter jurisdiction. See,
e.g., Textron Lycoming Reciprocating Engine Div., Avco
Corp. v. UAW, 523 U.S. 653, 655 n.1 (1998) (holding that
plaintiff was limited to arguing for jurisdiction under
§ 301 because Petition for Certiorari contained no refer-
ence to 28 U.S.C. § 1331). The distinction can be especially
relevant where a party asserts jurisdiction under § 301
and not under § 1331. Specific jurisdictional provisions like
§ 301 are grants of jurisdiction over cases where the
plaintiff is pressing a particular federal cause of action—
in the § 301 context, causes of action brought “for viola-
tion of contracts between an employer and a labor organ-
ization.” § 1331 jurisdiction, on the other hand, includes
most causes of action, state or federal, where the plaintiff’s
right to relief necessarily depends on the resolution of a
substantial federal question. Franchise Tax Bd., 463 U.S. at
27-28.4 Seeking to establish jurisdiction under § 301 alone
and not under § 1331 may therefore limit a party to argu-
ing that they are bringing a suit for violation of a collec-
tive bargaining agreement. For example, in Textron the
Supreme Court rejected plaintiff’s argument that “what
would suffice to sustain a declaratory judgment action
premised on § 1331 federal-question jurisdiction would
suffice to sustain a declaratory judgment action brought
under § 301(a)” because “the language of the two provi-
sions is quite different.” 523 U.S. at 660. The Court ex-
plained: “Whereas § 1331 authorizes ‘civil actions arising
under the . . . laws . . . of the United States’ . . . § 301
authorizes only ‘suits for violations of contracts.’ ” Id. All
this being said, because of the inherent overlap in the
4
This statement “must be read with caution” as federal courts do
not have jurisdiction over every single case that turns on the
resolution of a federal question. See Merrell Dow Pharm., Inc. v.
Thompson, 478 U.S. 809 (1986).
6 No. 02-3103
provisions, we will construe the Teamsters’ brief as assert-
ing jurisdiction under both provisions.
We can dispense with the claim that jurisdiction exists
under § 301 quickly. The § 301 grant of jurisdiction is
extremely limited. The Supreme Court’s holding in Textron
emphasizes this narrowness. The plaintiffs in that suit
sought a declaration that a contract was invalid. Relying
on the specific statutory language of § 301, the Textron
Court explained, “By its terms, this provision confers
federal subject-matter jurisdiction only over ‘suits for
violations of contracts.’ ” Id. at 656. The Court reasoned
that the phrase “for violations of contracts” encompassed
only suits “filed because a contract has been violated” and
therefore did not include “suits that claim a contract
is invalid.” Id. at 657. The Court concluded that “[b]ecause
the Union’s complaint alleges no violation of the collec-
tive bargaining agreement, neither we nor the federal
courts below have subject-matter jurisdiction over this
case under § 301(a) of the Labor-Management Relations
Act.” Id. at 661. The holding of Textron is that only cases
that allege violations of the collective bargaining agree-
ment fall under the jurisdictional grant of § 301. Since
only parties to a contract can violate it, a plaintiff cannot
possibly allege that a non-party violated a collective
bargaining agreement; therefore, the plaintiff cannot
assert jurisdiction under § 301 to bring a federal action
against the non-party.5
5
Cases prior to Textron have read the § 301 grant more broadly,
asserting that any suit that requires an interpretation of the
collective bargaining agreement is de facto a suit “for violation” of
the agreement. See, e.g., Brazinski v. Amoco Petroleum Additives
Co., 6 F.3d 1176, 1180 (7th Cir. 1993) (“The rule seems to be that
if the plaintiff ’s claim, ostensibly based on state law, cannot be
adjudicated without interpretation of the collective bargaining
(continued...)
No. 02-3103 7
The question of § 1331 jurisdiction is more challenging.
The first question for us to address is whether the plain-
tiffs are asserting a federal cause of action. If the plaintiffs
are asserting such a cause of action then § 1331 plainly
creates jurisdiction because the suit would arise under
federal law. This question is complicated because the Su-
preme Court has determined that § 301, beyond expressly
authorizing the federal courts to hear suits brought for
violations of collective bargaining agreements, also autho-
rizes the federal courts to fashion a body of common law
for the enforcement of the collective bargaining agree-
ments over which they have jurisdiction. Textile Workers
Union of Am. v. Lincoln Mills, 353 U.S. 448 (1957). In
general we have viewed this authorization to create fed-
5
(...continued)
agreement, the claim turns into a federal claim that the agree-
ment itself has been violated.”); In re Amoco Petroleum Additives
Co., 964 F.2d 706, 709 (7th Cir. 1992) (“[T]he Supreme Court
treats any attempt to interpret, enforce, or question a collective
bargaining agreement as necessarily based on national law.”); see
also Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 405-06
(1988) (holding that where interpretation of the agreement is
required, state-law is pre-empted). But even under that analysis
an action to enforce an arbitration subpoena still does not
fall under the § 301 grant of jurisdiction. Mr. Troha and JHT’s
duty to provide information or testimony to the arbitration
board that is trying to determine whether Active breached a
collective bargaining agreement cannot logically be dependent
upon a determination of whether Active actually did breach the
agreement. If such a determination were necessary, the result
would be absurd. The Teamsters would have to prove that Active
breached the agreement in order to subpoena information from
JHT and Mr. Troha. But the only reason the Teamsters want
the information from JHT and Troha is to prove that Active
breached the agreement. See Lingle, 486 U.S. at 406 (“[A]s long as
the state-law claim can be resolved without interpreting the
agreement itself, the claim is ‘independent’ of the agreement
for § 301 pre-emption purposes.”).
8 No. 02-3103
eral law under § 301 as limited to disputes between signato-
ries of the collective bargaining agreement. See Loss v.
Blankenship, 673 F.2d 942, 958 (7th Cir. 1982) (“We hold,
therefore, that a complaint for interference with a collec-
tive bargaining agreement, against a non-party to that
agreement, is not actionable under § 301(a) of the LMRA.”),
and at 946 (“ ‘§ 301 suits are confined to defendants who
are signatories of the collective bargaining agreement
under which they are brought.’ ”) (quoting Ramsey v.
Signal Delivery Serv., Inc., 631 F.2d 1210 (5th Cir. 1980)).
But this rule is not absolute. Indeed, the limitation is
more aptly described not in terms of parties but in terms
of the purpose of a lawsuit. See, e.g., Wooddell v. Intern’l
Bhd. of Elec. Workers, 502 U.S. 93 (1991); Smith v. Evening
News Ass’n, 371 U.S. 195 (1962). When the purpose of
the lawsuit effectuates the goals of § 301, then it is appro-
priate for federal common law to embrace such suits. The
Court in Lincoln Mills explained the reason for authoriz-
ing the creation of federal common law in this area:
[T]he legislation does more than confer jurisdiction in
the federal courts over labor organizations. It ex-
presses a federal policy that federal courts should
enforce these agreements on behalf of or against labor
organizations and that industrial peace can be best
obtained in only that way.
. . . And when the House debate narrowed to the
question of whether § 301 was more than jurisdictional,
it became abundantly clear that the purpose of the
section was to provide the necessary legal remedies.
Lincoln Mills, 353 U.S. at 455. With enforcement of these
agreements and the provision of necessary legal remedies
as our guides it becomes clear that Lincoln Mills en-
visions the creation of federal common law to enforce
arbitration subpoenas. A collective bargaining agreement
that requires arbitration is powerless if the parties to the
arbitration cannot present evidence in the form of third
No. 02-3103 9
person testimony or documents possessed by third parties.
Enforcement of an agreement to arbitrate cannot pro-
vide the “necessary legal remedy” if the parties to the
arbitration have no means of securing valuable evidence
other than their own testimony.
Viewed in this light, today’s case is distinguishable
from Loss. We held that the plaintiff in Loss failed to state
a federal claim not because the defendant was a third
party, but because the tortious interference suit was not
necessary to the purpose of enforcing the collective bar-
gaining agreement between the signatories. Suits for
enforcement of an arbitration subpoena, on the other hand,
have a great impact on the arbitration process and are
necessary to the purpose of enforcing the agreement to
arbitrate. It is therefore appropriate to apply the reach
of federal common law to ensure that such subpoenas do
not go unenforced.
This conclusion finds support in § 7 of the Federal
Arbitration Act (FAA), 9 U.S.C. § 7. Although the FAA
does not apply in this case, the reasoning behind the
act is instructive in fashioning federal common law. § 7
provides that in an arbitration covered by the FAA an
arbitrator may issue a subpoena, and
if any person or persons so summoned to testify
shall refuse or neglect to obey said summons, upon
petition the United States district court for the district
in which such arbitrators, or a majority of them, are
sitting may compel the attendance of such person or
persons before said arbitrator or arbitrators, or punish
said person or persons for contempt in the same man-
ner provided by law for securing the attendance of
witnesses or their punishment for neglect or refusal to
attend in the courts of the United States.
Id. The same principles underlying the Congressional
decision to create an enforcement mechanism for arbitra-
tion subpoenas under the FAA apply to the arbitrations
10 No. 02-3103
pursuant to collective bargaining agreements even when
those arbitrations do not fall under the application of the
FAA. See United Paperworkers Intern’l Union v. Misco,
Inc., 484 U.S. 29, 40 n.9 (1987) (“Federal courts have often
looked to the Act for guidance in labor arbitration cases,
especially in the wake of the holding that § 301 of the
Labor Management Relations Act, 1947, 61 Stat. 156,
29 U.S.C. § 185, empowers the federal courts to fashion
rules of federal common law.”); see also American Fed’n of
Television and Radio Artists v. WJBK-TV, 164 F.3d 1004,
1009 (6th Cir. 1999) (applying the reasoning of the FAA
in holding that an arbitration subpoena could be en-
forced in federal court without deciding whether the FAA
itself applied to the case before it).
We therefore hold that federal common law under § 301
creates a cause of action by which a party to a collective
bargaining agreement that is otherwise covered by § 301
can enforce an arbitration subpoena against a non-signatory
of the agreement. In turn, because the cause of action
arises under federal common law, the district court had
jurisdiction over the action under 28 U.S.C. §1331.
III. Conclusion
For the reasons stated above the district court’s dismiss-
al of this case is REVERSED and the case is REMANDED for
further proceedings consistent with this opinion.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-29-03