National Football League Players Ass'n v. National Football League

874 F.3d 222, 2017 WL 4564713, 209 L.R.R.M. (BNA) 3708, 2017 U.S. App. LEXIS 20052

• Court: Court of Appeals for the Fifth Circuit
• Decided: October 12, 2017
• Docket: No. 17-40936
• Status: Published

Opinions

PER CURIAM:

On August 31, 2017, the National Football League Players Association (NFLPA) filed a complaint in the District Court for the Eastern District of Texas on behalf of Ezekiel Elliott, a running back for the Dallas Cowboys, seeking a preliminary injunction preventing enforcement of a forthcoming six-game suspension by the National Football League (NFL) and the National Football League Management Council. Elliott and the NFL had been engaged in the arbitration process following an investigation resulting from domestic violence allegations against Elliott. After reviewing the investigation report and underlying evidence, Rodger Goodell, the Commissioner of the NFL, determined the domestic violence allegations were substantiated and that Elliott should be suspended for six games. Under the collective bargaining agreement between the NFLPA and the NFL, a player has the right to contest before an arbitrator a player discipline determination by the league. Elliott invoked that right and Harold Henderson, a former NFL executive, presided over the August 29-31, 2017 arbitration hearing. When the NFLPA filed this lawsuit and moved for a preliminary injunction on August 31, 2017, Henderson had indicated a decision was forthcoming, but had not yet issued the decision.

On September 5, 2017, the district court held a preliminary injunction hearing. That same day, the arbitrator issued his decision upholding the NFL’s six-game suspension of Elliott. On September 8, 2017, the district court enjoined the NFL from enforcing Elliott’s six-game suspension. The NFL moved this court for a stay of the district court’s injunction on September 15, 2017. We VACATE the district court’s preliminary injunction and REMAND to the district court with instructions to dismiss the case.

The NFL contends the district court lacked subject matter jurisdiction under the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, to issue the preliminary injunction.¹ While preliminary injunctions are generally reviewed under an abuse of discretion standard, de novo review is appropriate where “a district court’s ruling rests solely on a premise as to the applicable rule of law” and the applicable facts are established or of no controlling relevance. United Offshore Co. v. S. Deepwater Pipeline Co., 899 F.2d 405, 407 (5th Cir. 1990). On appeal, a court may also examine the basis for jurisdiction sua sponte. Simon v. Wal-Mart Stores, Inc., 193 F.3d 848, 850 (5th Cir. 1999). When courts lack subject matter jurisdiction over a case, they lack the power to adjudicate the case. Home Builders Ass’n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998). Thus, we must examine jurisdiction whenever subject matter jurisdiction appears “fairly in doubt.” See Ashcroft v. Iqbal, 556 U.S. 662, 671, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Questions-of subject matter jurisdiction cannot be forfeited or waived and are reviewed de novo. Hous. Refining, L.P. v. United Steel, Paper & Forestry, Rubber, Mfg., 765 F.3d 396, 400 (5th Cir. 2014).² “[T]he jurisdiction of the court depends upon the state of things at the time of the action brought.” Grupo Dataflux v. Atlas Glob. Grp. L.P., 541 U.S. 567, 570, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004).

Under the LMRA, a lawsuit for violations between an employer and a labor organization must satisfy the following three elements: “(1) a claim of violation of (2) a contract (3) between an employer and a labor organization.” Carpenters Local Union No. 1846 of United Bhd. of Carpenters & Joiners of Am., AFL-CIO v. Pratt-Farnsworth, 690 F.2d 489, 500 (5th Cir. 1982); 29 U.S.C. § 185(a). The NFLPA argues that because Elliott has stated a claim that satisfies these three elements, the district court was vested with jurisdiction over this case. In response, the NFL argues that jurisdiction only vests under the LMRA if Elliott exhausts his contractual remedies and that the lack of a final arbitral decision at the time of filing the complaint is a fatal jurisdictional defect.³

It has long been established that “federal labor policy requires that individual employees wishing to assert contract grievances must attempt use of the contract grievance procedure agreed upon by employer and union as the "modé of redress.” Republic Steel Corp. v. Maddox, 379 U.S. 650, 652, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965). “If a grievance procedure cannot be made exclusive, it loses much of its desirability as a method of settlement.” Id. at 653, 85 S.Ct. 614. The “grievance and arbitration procedures are part arid parcel of the ongoing process of collective bargaining.” United Paperworkers Int’l Union, AFL-CIO v, Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987).

Outside of limited circumstances, the failure to “fully exhaust[]” contracted for “grievance procedures” places an employee’s claim for breach of a collective bargaining agreement beyond “judicial review.” Vaca v. Sipes, 386 U.S. 171, 184-85, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967) (discussing situations where an “employee may obtain judicial review of his breach-of-contract claim despite his failure to secure relief through the contractual remedial procedures”). While courts have jurisdiction to enforce collective bargaining contracts, “where the contract provides grievance and arbitration procedures, those procedures must first be exhausted and courts must order resort to the private settlement mechanisms without dealing with the merits of the.dispute.” Misco, 484 U.S. at 37, 108 S.Ct. 364,. Our circuit holds that federal courts lack subject matter jurisdiction “to decide cases alleging violations of a collective bargaining agreement ... by an employee against his employer unless the employee has exhausted contractual procedures for redress.” Meredith v. La. Fed’n of Teachers, 209 F.3d 398, 402 (5th Cir. 2000).

The NFLPA argues; following the Supreme Court’s decision in Arbaugh v. Y&H Corp., 546 U.S. 500, 510-11, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006), that Meredith is no longer good law and exhaustion should not be considered as an issue of subject matter jurisdiction. Arbaugh addressed- when the term “jurisdiction” is properly utilized. 546 U.S. at 510, 126 S.Ct. 1235. The Court stated at times the term had been applied to procedural requirements that “are not properly typed ‘jurisdictional.’ ” Id. Particularly in the “subject-matter jurisdiction/ingredient-of-claim-for-relief dichotomy,” the Court stated that it, among other courts, “ha[d] been less than meticulous” in the use of the label. Id. At issue in Arbaugh was whether the threshold number of employees for the application of Title VII to an employee’s claim was an element of a claim for relief pr a jurisdictional ;issue. Id. at 516, 126 S.Ct. 1235. The Court held that because Congress had not ranked the statutory limitation on coverage in Title VII as jurisdictional, “courts should treat the restriction as nonjurisdietional.” Id. The Court further clarified' in Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 435, 131 S.Ct. 1197, 179 L.Ed.2d 159 (2011), “that a rule should not be referred to as jurisdictional unless it governs a court’s adjudicatory capacity, that is, its subject-matter or personal jurisdiction.” Claims-processing rules, which are rules “requiring that a party take certain procedural steps at certain specified times,” are not jurisdictional—even if mandatory—unless Congress clearly indicated the rule was “jurisdictional.” Id. at 435-46, 131 S.Ct. 1197. However, the Court held there were no “magic words” Congress needed to invoke and if there was “a long line of this Court’s decisions left undisturbed by Congress” treating a requirement as jurisdictional, the Court would “presume that Congress intended to follow that course.” Id. at 436, 131 S.Ct. 1197.

As discussed above, the Supreme Court has long treated the exhaustion of grievance procedures provided for in collective bargaining agreements as jurisdictional. See Vaca, 386 U.S. at 184-85, 87 S.Ct. 903 (discussing when judicial review is available if grievance procedures have not been, exhausted); Misco, 484 U.S. at 37, 108 S.Ct; 364 (holding jurisdiction to enforce a collective bargaining agreement only vests once grievance and arbitration procedures are exhausted). Moreover, exhaustion is not a claims-processing- rule that goes, to the timing of filing a lawsuit. Instead, it is a.rule reflecting the forum in which an employee’s remedy lies, which is the grievance procedures to settle disputes under the LMRA. See Maddox, 379 U.S. at 653, 85 S.Ct. 614 (“Congress has expressly approved contract grievance procedures .as a preferred method for settling disputes.... ”); 29 U.S.C. § 173(a), Further, following Arbaugh, this court has not overruled its decision in Meredith.⁴ Given that Congress has left undisturbed the Supreme Court precedent holding the exhaustion of remedies is a jurisdictional prerequisite to bring an action alleging a breach of a collective bargaining agreement, the court declines to hold that Meredith is no longer good law in light of Arbaugh.

The NFLEA’s lawsuit on Elliott’s behalf was premature.⁵ The procedures provided for in the collective bargaining agreement between the NFL and NFLPA were not exhausted. The parties contracted to have an arbitrator make a final decision. That decision had not yet been issued. Although the NFLPA argues there were final procedural rulings, those rulings were not necessarily indicative of the arbitrator’s final decision. At the time the NFLPA filed the complaint, it was possible the arbitrator could have issued a final decision that was favorable to Elliott. Elliott cannot show it was futile to wait for a final decision simply because he believed the arbitrator would issue an unfavorable ruling. As there was no final decision, Elliott had not yet exhausted the contracted-for remedies.

We next turn to whether Elliott’s failure to exhaust his remedies was excused. There are three exceptions to the exhaustion requirement: “(1) the union wrongfully refuses to process the employee’s grievance, thus violating its duty of fair representation; (2) the employer’s conduct amounts to a repudiation of the remedial procedures specified in the contract; or (3) exhaustion of contractual remedies would be futile because the aggrieved employee would have to submit his claim to a group which is in large part chosen by the employer and union against whom his real complaint is made.” Rabalais v. Dresser Indus., Inc., 566 F.2d 518, 519 (5th Cir. 1978) (internal citations omitted).⁶

The NFLPA only argues the repudiation exception to the exhaustion requirements applies. An allegation that an employer has repudiated the grievance process is not substantiated merely by its “refusal to accept an employee’s position with respect to a grievance.”⁷ Id.; see also Meredith, 209 F.3d at 403 (holding the repudiation exception applied where an employer claimed the employee “was not covered by the collective bargaining agreement and did not consider her grievance”). “An employer can obviously take a stance contrary to that of the employee during the grievance process without being deemed to have repudiated that process.” Rabalais, 566 F.2d at 520. Here, it is undisputed the NFL and Elliott were engaged in arbitration as provided for under the collective bargaining agreement. Unlike Meredith, where the employer refused to consider the grievance under the collective bargaining agreement, the NFL cannot be said to have repudiated the agreement here. The NFLPA takes issue with the outcome and fairness of the arbitration proceedings. However, for the repudiation exception to the exhaustion requirements to apply, the NFL would have had to completely refuse to engage in the process. See Meredith, 209 F.3d at 403. Accordingly, the court finds the repudiation exception does not apply and Elliott was required to exhaust his contractual remedies before filing his lawsuit.

When the NFLPA filed the complaint on August 31, 2017, the arbitrator had not yet issued his decision. Athough the district court issued the injunction on September 8, 2017, and the arbitrator had previously issued his decision on September 5, 2017, jurisdiction depends on the facts as they exist when the complaint was filed. See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989). The district court, therefore, lacked subject matter jurisdiction when it issued the preliminary injunction.⁸

For the foregoing reasons, we VACATE the district court’s preliminary injunction and REMAND to the district court with instructions to dismiss the case.

1 . The parties agree that the Federal Arbitration Act does not confer subject matter jurisdiction on the district court. Nat’l Football League Players Ass’n v. Nat’l Football League, 4:17-cv-00615, — F.Supp.3d —, —, 2017 WL 3940545, at *3 (E.D. Tex. Sept. 8, 2017). Therefore, the only basis for jurisdiction in the district court would be pursuant to the LMRA.

2 . The NFLPA contends the district court’s decision should be reviewed under an abuse of discretion standard. However, the court first determines the question of subject matter jurisdiction, which is reviewed de novo. See Hous. Refining, 765 F.3d at 400. Because the court finds the question of subject matter jurisdiction dispositive, it need not address the proper standard of review for the district court’s preliminary injunction.

3 . The dissenting opinion's citation to Houston Refining, L.P. v. United Steel, Paper & Forestry, Rubber, Mfg., 765 F.3d 396 (5th Cir, 2014) is a red herring. The issue in Houston Refining was whether the mere allegation that a collective bargaining agreement existed was sufficient to support jurisdiction under the LMRA. Id. at 402. There is no dispute here that a collective bargaining agreement existed. At issue is whether there was a repudiation of that collective bargaining agreement to trigger an exception to the exhaustion requirements for a court to exercise subject matter jurisdiction.

4 , “It is a well-settled Fifth Circuit rule of orderliness that one panel of our court may not overturn another panel’s decision, absent an intervening change in the law....” Jacobs v. Nat’l Drug Intelligence Ctr., 548 F.3d 375, 378 (5th Cir. 2008).

5 . Importantly, even if exhaustion were merely a mandatory claim-processing rule after Arbaugh, Elliott’s failure to exhaust his remedies would still preclude our review here. See Gonzalez v. Thaler, 565 U.S. 134, 146, 132 S.Ct, 641, 181 L.Ed.2d 619 (2012) (stating that "calling a rule nonjurisdictional does not mean that it is not mandatory or that a timely objection can be ignored”). Here, the NFL timely raised that Elliott had failed to exhaust his remedies before filing suit. :An .employee must first resort to the procedures provided for in a collective bargaining agreement before filing a lawsuit. Boone v. Armstrong Cork Co., 384 F.2d 285, 288 (5th Cir. 1967). Decisions from the Sixth and Seventh Circuits support holding that the exhaustion of remedies provided for in a collective bargaining agreement is mandatory and any timely raised defect at the litigation's outset cannot be cured by the subsequent issuance of an arbitral award. See Kaiser v. U.S. Postal Service, 908 F.2d 47, 49-50 (6th Cir. 1990) (holding that exhaustion of the arbitration and grievance procedures set out in the collective bargaining agreement was required where an employee alleged the union was not processing the claim in a timely manner); Macon v. Youngstown Sheet & Tube Co., 698 F.2d 858, 861 & n.2 (7th Cir. 1983) (holding there was a failure to exhaust remedies where an employee filed a lawsuit while an arbitration pursuant to a collective bargáining agreement was ongoing, even though a final arbitral award had subsequently issued).

Our holding in Gorman v. Verizon Wireless Tex., L.L.C., 753 F.3d 165 (5th Cir. 2014) does not compel us to a contrary conclusion. Gor-man addressed whether under the Texas Commission on Human Rights Act (TCHRA) a right-to-sue letter was a jurisdictional requirement or a condition precedent, such that any defect could be cured after the lawsuit was commenced. Id. at 169. Gorman held that the right to sue requirement was not jurisdictional based on a Texas Supreme Court case interpreting the TCHRA, which harmonized Texas’s law with the United States Supreme Court's holdings that Title VII right-to-sue letters are mandatory not jurisdictional. Id. at 169-70. Whether exhaustion was mandatory here does not turn on interpreting whether a prerequisite to filing a lawsuit is a jurisdictional requirement under state law.

6 . The dissenting opinion argues that the existence of exceptions to the exhaustion requirement undermines the NFL’s argument that exhaustion is a jurisdictional prerequisite. However, these exceptions are better thought of as exceptional circumstances in which ar-bitral processes are deemed "concluded” absent final arbitral awards. Here, the mere fact that the record was closed and the arbitrator had issued final evidentiary rulings is not an exceptional circumstance where we should deem the arbitral process as concluded absent a final award. The existence of adverse evi-dentiary rulings against a party does not indicate that it is a foregone conclusion that the arbitrator will issue an award adverse to that party. An adverse evidentiary ruling does not a judgment make.

7 . The dissenting opinion conflates a claim for breach of a collective bargaining agreement with an allegation that the employer repudiated the collective bargaining agreement. An allegation that an employer did not abide by the terms of a collective bargaining agreement during the grievance process is not equivalent to an allegation the employer refused to participate in the grievance procedures provided by the collective bargaining agreement. An allegation of the latter is required to show the repudiation exception applies.

Citing to an out-of-circuit case, the dissenting opinion argues it has not conflated a claim for breach of a collective bargaining agreement with a claim for repudiation of a collective bargaining agreement. Ramirez-Lebron v. International Shipping Agency, Inc., 593 F.3d 124 (1st Cir. 2010), however, is easily distinguishable. Ramirez-Lebron involved two groups of employees with conflicting seniority claims, where one group of employees and the employer allegedly entered into a "sham, secret agreement” that was submitted to the arbitrator. 593 F.3d at 127-28. Both groups of employees were supposed to appear before an arbitrator, but that hearing was suspended and the arbitrator subsequently issued an award allegedly based on the secret agreement between only one group of employees and the employer, without the second group of employees ever participating in the arbitral process. Id. at 128-29, 135. The second group of employees alleged the employer breached the collective bargaining agreement and repudiated the arbitration process by inducing the arbitrator to issue an arbitral award based on a fraudulent scheme. Id. at 128. The Ramirez-Lebron employer simultaneously breached and repudiated the collective bargaining agreement because it allegedly fraudulently induced the arbitrator to enter an award benefitting one group of employees, which had the effect of excluding from the arbitral process another group of employees with access to that same process under the collective bargaining agreement. Id. at 134-35. Here, the dissenting opinion admits "there is no claim of fraud.” Likewise, here, there is no allegation a party is being excluded from the arbitration process, as the group of plaintiff employees were in Ramirez-Lebron.

8 . Much of the dissenting opinion is devoted to examining the merits of the NFLPA's lawsuit. While these arguments and concerns about the arbitration process may have merit, they must be considered by a court with proper jurisdiction. See Home Builders Ass’n of Miss., Inc., 143 F.3d at 1010 ("When courts lack subject matter jurisdiction over a case, they lack the power to adjudicate the case.”); Morrison v. Nat. Austl. Bank, Ltd., 561 U.S. 247, 254, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010) (noting that subject matter jurisdiction is "an issue quite separate from the question of whether the allegations the plaintiff makes entitle him to relief”).