Campos v. Green Diamond Resource Company

Background

Campos brought a representative action under California’s Labor Code Private Attorneys General Act of 2004 (PAGA) on behalf of himself and other allegedly aggrieved employees. He alleged that Green Diamond required employees to work off the clock, used unlawful rounding practices, failed to include nondiscretionary bonuses in overtime calculations, denied or discouraged meal and rest breaks, failed to provide suitable resting facilities and potable drinking water, did not reimburse business expenses, and did not provide accurate wage statements.

The complaint asserted one PAGA cause of action based on eight theories: failure to pay all hours worked and overtime; failure to pay wages due at termination; failure to provide rest breaks; failure to provide suitable resting facilities; failure to provide uninterrupted meal breaks; failure to reimburse required business expenses; failure to provide potable drinking water; and failure to provide accurate itemized wage statements.

Campos was a member of a union covered by a collective-bargaining agreement (CBA) with Green Diamond’s Korbel Operations. Green Diamond removed the action from Humboldt Superior Court based on federal-question jurisdiction, arguing that Section 301 of the Labor Management Relations Act (LMRA) completely preempted the claims because resolving them would require applying or interpreting the CBA. Green Diamond then moved to dismiss based on preemption, failure to exhaust the CBA’s procedures, and failure to state a claim. Campos opposed dismissal and moved to remand the case to state court.

Federal jurisdiction and preemption

The court explained that Section 301 of the LMRA can completely preempt certain state-law claims, converting them into federal claims for jurisdiction purposes. The court applied the Ninth Circuit’s two-step test: first, whether the asserted right exists independently under state law or exists solely because of the CBA; and second, if the right exists independently, whether resolving the claim substantially depends on analyzing the CBA.

For the overtime-related claims, the court held that the CBA satisfied California Labor Code section 514. The agreement addressed wages, hours of work, and working conditions, provided overtime premium rates, and set regular hourly rates exceeding 130 percent of the applicable California minimum wage. The court therefore concluded that Campos’s right to overtime existed solely because of the CBA and was preempted under LMRA Section 301. The court held that this gave it subject-matter jurisdiction over the overtime-related claims and allowed it to exercise supplemental jurisdiction over the remaining PAGA theories.

Exhaustion of the CBA procedures

The court then addressed the CBA’s grievance process. It stated that Section 301 generally requires an employee to exhaust the administrative remedies provided by a CBA before seeking judicial relief. The CBA provision at issue covered disputes concerning the agreement’s interpretation or operation. The CBA also required an employee claiming an injustice connected with a discharge to request union representation and notify the company within five working days; failing to protest within that period waived claims related to the discharge.

The court concluded that Campos’s PAGA claim—including the allegations concerning unpaid hours, meal and rest breaks, resting facilities, drinking water, termination wages, business expenses, and wage statements—constituted a dispute concerning the CBA’s interpretation or operation. It held that the claim could not be evaluated separately from the CBA’s grievance and discharge procedures. Because Campos had not exhausted the required procedures, he could not pursue judicial relief on the claims.

Disposition

The court denied Campos’s motion to remand and granted Green Diamond’s motion to dismiss. The opinion states that the failure to exhaust, together with the preemption ruling, resulted in dismissal of Campos’s claims with prejudice. The clerk was instructed to close the case.

Classification

This is a procedural order because the court dismissed the action based on federal preemption and failure to exhaust required grievance procedures, rather than deciding whether the alleged wage-and-hour violations occurred.