Jacobs v. Palamerican Security California Inc.

Background

Tom Jacobs brought a putative class action against Palamerican Security (California) Inc. He alleged that the company failed to timely pay minimum and overtime wages, provide meal and rest periods, reimburse employment-related costs, and provide accurate wage statements. Palamerican removed the action to federal court, asserting federal-question jurisdiction based on preemption under § 301 of the Labor Management Relations Act. Jacobs moved to remand the case to state court and requested $7,200 in attorneys’ fees and costs.

Labor-agreement preemption

The court explained that § 301 can completely preempt a state-law claim when the claim is grounded in a collective bargaining agreement or requires interpreting that agreement. But merely looking to or applying an agreement is not enough; the claim must substantially depend on interpreting it. The court also noted that a federal question generally must appear in the plaintiff’s complaint, rather than only in a defendant’s anticipated defense.

Palamerican identified four agreement provisions that it claimed supported preemption: a class-action waiver, a grievance and arbitration process, procedures for reporting missed meal and rest breaks, and a telephone-expense reimbursement provision.

The court held that the class-action waiver and dispute-resolution provisions were defenses and that Palamerican had not shown that Jacobs’s claims required interpreting either provision. The court likewise held that the meal-and-rest-break procedures did not trigger preemption. Finally, the reimbursement provision concerned reimbursement for telephone calls, while Jacobs alleged that employees were not reimbursed for using personal cellphones and data to clock in and out and record meal breaks. The court therefore held that this claim did not require interpreting the telephone-call provision.

Because Palamerican failed to show that Jacobs’s claims were substantially dependent on the collective bargaining agreement, the court held that § 301 preemption did not apply and that Palamerican had not established federal-question jurisdiction.

Other jurisdictional basis

Although Palamerican’s removal notice relied only on federal-question jurisdiction, its opposition also referred to diversity jurisdiction. The court held that Palamerican did not establish that the amount in controversy exceeded the required threshold. The court further held that it was too late for Palamerican to add a new jurisdictional basis after the applicable removal period had expired.

Attorneys’ fees and disposition

Under 28 U.S.C. § 1447(c), attorneys’ fees for removal may be awarded when the removing party lacked an objectively reasonable basis for removal. The court found that the removal lacked merit but was not objectively unreasonable because Jacobs’s employment was governed by the collective bargaining agreement. The court therefore denied Jacobs’s request for attorneys’ fees and costs.

The court granted Jacobs’s motion to remand and denied his request for attorneys’ fees. The conclusion states that the action is remanded to the Superior Court of California, County of Alameda. The order disposes of Docket No. 13.