Jeff Franke v. Norfolk S. Ry. Co.

Court of Appeals for the Sixth Circuit·Decided May 12, 2023·No. 21-3848·Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 23a0225n.06

No. 21-3848

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED May 12, 2023

DEBORAH S. HUNT, Clerk

)

JEFF FRANKE, et al., )

Plaintiffs-Appellants, ) ON APPEAL FROM THE ) UNITED STATES DISTRICT v. ) COURT FOR THE NORTHERN ) DISTRICT OF OHIO

NORFOLK SOUTHERN RAILWAY CO., et al., )

)

Defendants-Appellees. OPINION )

)

Before: MOORE, CLAY, and NALBANDIAN, Circuit Judges.

CLAY, Circuit Judge. Plaintiffs Jeff Franke, Steven Frye, and Greg Fish appeal the district court’s order granting Defendants’ motion to dismiss, which addressed whether removal to federal court was proper, whether Plaintiffs’ fraud claims were preempted by the Railway Labor Act (“RLA”), 45 U.S.C. §§ 151 et seq., and whether Plaintiffs properly pleaded fraud. For the reasons set forth below, we AFFIRM the district court’s judgment.

I. BACKGROUND

A. Factual Background

Franke, Frye, and Fish worked as locomotive engineers for Norfolk Southern Railway Company (“Norfolk Southern”). (Compl., R. 1-1, Page ID #14, 20, 26). Plaintiffs were each disciplined and discharged by Norfolk Southern. (Id. at Page ID #14, 20, 27). Each Plaintiff was represented by the International Brotherhood of Teamsters (“IBT”), IBT’s subdivision the Brotherhood of Locomotive Engineers and Trainmen (“BLET”), and BLET’s subdivision, the Norfolk and Southern Northern Lines Wheeling and Lake Erie General Committee of Adjustment

(“GCA”) (collectively, “Union Defendants” or “Union”) under 45 U.S.C. §§ 151 et seq., the RLA, and a Collective Bargaining Agreement (“CBA”). (Id., Page ID #12–14, 20–21, 26–27).

Following the internal company hearing that resulted in Plaintiffs’ termination, the Union appealed Norfolk Southern’s determination to a Public Law Board (the “Board”) for arbitration pursuant to the RLA and in accordance with the CBA. (Id. at Page ID #14, 20–21, 27). As agreed upon by Norfolk Southern and the Union, Defendant David Ray served as the sole neutral arbitrator in each Board arbitration. (Id. at Page ID #15, 21, 27). The Board upheld Plaintiffs’ terminations. (Board Arbitration Awards; R. 28-3, R. 28-4, R. 28-5; Page ID #440–42).

B. Procedural History

Plaintiffs sued Norfolk Southern, the Union, and Ray in the Court of Common Pleas for Lucas County, Ohio on August 20, 2020. (Compl., R. 1-1, Page ID # 9–10). In their complaint, Plaintiffs allege that they were deprived of a fair and neutral arbitration process, because Ray, who presided over each matter, was a former employee of Norfolk Southern, and thus, had a bias toward Defendant Norfolk Southern, as well as a conflict-of-interest. (Id. at Page ID ## 15–16, 21–22, 28). Plaintiffs further allege that Defendants colluded in a scheme where Board arbitrations conducted before Ray would not be decided on their merits, but rather based on the Union’s political preferences. (Id. at Page ID # 17, 23, 29–30).

Under the terms of the RLA and CBA, either Norfolk Southern or the Union could reject any arbitrator. (Id. at Page ID #15, 21, 28). Plaintiffs assert that Norfolk Southern and the Union knew of Ray’s alleged bias and conflict-of-interest and “acted in bad faith, collusively, with corrupt and fraudulent intent” when selecting him to arbitrate the grievances. (Id. at Page ID #16, 22, 28–29). According to Plaintiffs, this is evidenced by Defendants’ knowledge of: (1) Ray’s prior employment at Norfolk Southern; and (2) Ray’s potentially “undisclosed conflict-of-interest

with the existence of pension and retirement benefits and stock holdings with [] Norfolk Southern.” (Id.). As noted above, Plaintiffs contend Defendants “concocted a scheme” where Ray would give favorable appeals for grievances that came from local divisions whose local chairman would vote for Dewayne Dehart to be General Chairman of Adjustment for the Union, and would deny appeals from divisions whose local chairmen would not. (Id. at Page ID # 17, 23, 29–30). Plaintiffs assert that the Union benefited by gaining political favor through the favorable resolution of certain arbitrations, Ray benefited because he would be hired more frequently, and thus have a more lucrative arbitration practice, and Norfolk Southern benefited because it would win a disproportionate number of arbitrations conducted in front of Ray. (Id.).

Plaintiffs assert that Union Defendants owed them a duty of fair representation, which they failed to fulfill when they did not represent Plaintiffs fairly, impartially, and in good faith. (Id. at Page ID #15, 21, 27–28). Plaintiffs further allege that Ray owed Plaintiffs “a duty to comply with the federal statutes[,] regulations, [and] the National Mediation Board policy requiring him to have no bias between the parties and to have no financial interest in any party while acting as a neutral arbitrator.” (Id.). Plaintiffs contend that all Defendants had a duty to “allow [Plaintiffs’] appeals to be decided on the merits with an unbiased neutral arbitrator that had no conflicts-of-interest and without engaging in an appeal fixing scheme.” (Id. at Page ID #18, 24, 30–31). They also aver that “Defendants had a duty to inform [Plaintiffs] that [the] arbitration[s] had been compromised because of David Ray’s bias and conflict-of-interest, and the appearance of an appeals fixing scheme Defendants were engaged in.” (Id. at Page ID #18, 24, 30–31). Based on this purported conduct, each Plaintiff alleged fraud claims against Defendants. (See generally id.).

We pause here to note the unique nature of the claims before us. On the one hand, Plaintiffs argue that their complaint alleges only state fraud claims under Ohio law. (Id. at Page ID #13, 20,

26). On the other hand, their complaint is riddled with references to federal-statutory frameworks and federal obligations, and they seek federal relief by stating Plaintiffs’ “entitle[ment] to judicial review of the Public Law Board decisions upholding [their] termination[s],” by asking that a court award “damages for fraud under state and federal statutes and common law,” and by seeking “reinstatement to [their] prior employment position[s] with all rights, benefits and status as [they] maintained” previously “as well as past wage loss,” and “expungement and removal of any and all references to the adverse actions, charges and discipline which formed the basis of the arbitration related to” Plaintiffs. (Id. at Page ID #18–19, 24–25, 31; see also Page ID #12, 15–18, 21–24, 27– 31). Defendants removed the case on the basis that Plaintiffs’ action “arises under the laws of the United States and invokes the federal question jurisdiction.” (Notice of Removal, R. 1, Page ID #2). The removal notice asserted that Plaintiffs’ allegations of common law fraud in connection with the RLA arbitral decisions arise under federal law. (Id., Page ID #2–5). Defendants also asserted that Plaintiffs’ claims are preempted by the RLA. (Id., Page ID #4).

On October 16, 2020, the Parties submitted a joint proposed preliminary case schedule, which included a proposed briefing schedule for a motion to remand. (Joint Proposed Case Schedule, R. 16, Page ID #134). Three days later, having reviewed the preliminary case schedule, the district court ordered the parties to “exchange letters (two-page limit) with each other and confer regarding the merits of such a motion.” (Case Schedule Order, R. 17, Page ID #137). The district court instructed counsel to forward the letters to the district court, and then convened a phone conference with counsel to discuss potential briefing of the motion. (Id.).

The district court, following the telephone conference and review of the letters, denied Plaintiffs’ proposed motion to remand, holding that although Plaintiffs assert state law fraud

claims, “Defendants correctly note that the Railway Labor Act (“RLA”) preempts1 Plaintiffs’ attempts to limit the scope of their claims and those claims must necessarily arise under federal law.” (Remand Order, R. 19, Page ID #159).

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