By Harold S. Berman J.D.
A Marriott hotel employee who claimed that he and his coworkers were paid less than San Jose’s statutory minimum wage was entitled to litigate his claim in state court because his allegations required interpreting the waiver provisions of the San Jose minimum wage ordinance and not the parties’ collective bargaining agreement, which would have triggered federal preemption, the Ninth Circuit ruled. The court reversed and remanded the district court’s decision, which had denied the employee’s motion for remand, and then granted summary judgment for Marriott. The LMRA gives federal courts jurisdiction only for claims that require interpreting a CBA, and the employee’s claim instead turned on whether the San Jose ordinance permitted waiver of its minimum wage requirement. Judge Schroeder dissented (McCray v. Marriott Hotel Services, Inc., August 31, 2018, Diaz, A.).
Paid under minimum wage. Although in 2012, the City of San Jose enacted an ordinance setting the minimum wage at $10 an hour, the San Jose Marriott Hotel continued to pay the employee and his coworkers less. The ordinance purportedly offered employers and employees the option of waiving the minimum wage requirements through collective bargaining. The employee’s union had negotiated with Marriott to waive the minimum wage requirement in exchange for other benefits. They negotiated the CBA before the ordinance had passed, providing an addendum which prospectively opted out of the minimum wage requirement should the ordinance become law.
Removal to federal court and dismissal. The employee sued Marriott in state court, claiming that the ordinance did not permit a waiver, and so Marriott owed him the unpaid amount of the minimum wage. Marriott removed the case to federal court, asserting that the employee’s claims were pre-empted by Section 301 of the LMRA, and so the federal court properly had jurisdiction.
The federal district court held that it did have jurisdiction, denying the employee’s motion to remand. The district court went on to find that the employee failed to first exhaust his claim through the CBA’s required grievance process, and granted summary judgment to Marriott. The employee appealed.
Reversal and remand. The appeals court vacated the district court’s denial of the employee’s motion for remand, and its grant of summary judgment in favor of Marriott, and instructed the district court upon remand, to return the case to state court. The court held that the district court lacked jurisdiction to hear the case, and so had no basis to rule on whether or not the employee had administratively exhausted his claims.
The LMRA gave federal courts jurisdiction to hear suits for contract violations between an employer and a labor organization representing employees, consequently preempting state law for certain labor-related claims. However, claims that did not substantially concern a CBA were not preempted.
Claims arose under state law. The employee’s claims arose under state law and the San Jose ordinance, because he asserted that Marriott did not pay him and his coworkers the minimum wage required by the ordinance. The alleged right to be paid the municipal minimum wage, and to receive compensation for Marriott’s alleged failure to pay minimum wage involved matters of state and municipal law, and would be at issue regardless of whether the CBA existed. The right to be paid a certain minimum wage was established by the municipal ordinance, and so that right existed apart from the CBA, regardless of whether the ordinance contained an opt-out clause.
CBA not required. The employee’s claims not only originated under state and municipal law, but did not require an analysis of the CBA. At heart, the employee’s claims required only an interpretation of the local statute. The employee had claimed that, although the CBA purported to waive the municipal minimum wage requirement, the ordinance allowed for waiver only “[t]o the extent required by federal law,” and because federal law did not mandate that a minimum wage requirement be waivable, the waiver was invalid.
Consequently, the court held, the primary task for a court deciding the case would be to determine whether the minimum wage established by the ordinance was waivable. If a court determined the requirement could not be waived, then whether the CBA contained a waiver would be irrelevant. If a court instead found that the minimum wage was subject to waiver, then the court would merely need to look to the CBA to determine if it contained a valid waiver, but would not be required to interpret the CBA. That the employee had not challenged the substance of the CBA’s waiver, but might possibly do so later in the litigation, was a speculative possibility that was insufficient to warrant preemption.
Dissent. Dissenting, concluded that the district court’s decision was correct, and that the case really concerned whether Marriott was entitled to rely on the CBA’s provisions, which established an hourly pay rate and a waiver of the municipally mandated rate. The ordinance referred to waivers in CBAs, and so resolving the employee’s claims required analysis of the CBA’s waiver provision.
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