Railway Labor Executives Ass'n v. Pittsburgh & Lake Erie Railroad

858 F.2d 936
Court of Appeals for the Third Circuit·Decided October 14, 1988·No. No. 87-3853·Published·Cited by 61 cases

Opinion

OPINION OF THE COURT

STAPLETON, Circuit Judge:

This appeal is the third that we have faced within the past year arising out of challenges by appellant Railway Labor Executives’ Association (RLEA) to a proposed sale of assets by appellee Pittsburgh & Lake Erie Railroad Company (P & LE). In Railway Labor Executives’ Ass’n. v. Pittsburgh & Lake Erie R.R., 831 F.2d 1231 (3d Cir.1987), petition for cert. filed, 56 U.S.L.W. 3759 (U.S. Mar. 24, 1988) (No. 87-1589), we held that the district court had no jurisdiction to enjoin a strike by RLEA unions because Congress did not intend that the Norris-LaGuardia Act, 29 U.S.C. §§ 101-15, yield to the revised Interstate Commerce Act (ICA), 49 U.S.C. §§ 10101-11917. In Railway Labor Executives’ Ass’n v. Pittsburgh & Lake Erie R.R., 845 F.2d 420 (3d Cir.1988), petition for cert. filed, 56 U.S.L.W. 3839 (U.S. May 17, 1988) (No. 87-1888), we held that the expedited approval of the proposed sale by the Interstate Commerce Commission (ICC) under the ICA does not relieve P & LE from its duty to bargain under the Railway Labor Act (RLA), 45 U.S.C. §§ 151-188, over the effects of the proposed sale. In this case, RLEA contends that the proposed sale of assets would violate Pennsylvania’s version of the Uniform Fraudulent Conveyance Act (PFCA), Pa.Stat.Ann. tit. 39, §§ 351-363 (Purdon 1954). We agree with the district court conclusion that it lacked jurisdiction. We will reverse its order of dismissal, however, and remand to the district court with instructions that it in turn remand these proceedings to the state court.

[938] I.

The factual background to this dispute is fully set out in our prior two opinions; we summarize here only the allegations of the complaint and the procedural history relevant to this appeal. P & LE has been experiencing financial difficulties over the last several years. As a result, P & LE entered into an agreement on July 8, 1987 to sell most of its assets, including its rail lines and operating properties, to P & LE Railco, Incorporated (Railco), a noncarrier, and a wholly owned subsidiary of appellee Chicago West Pullman Transportation Corporation (CWPT). P & LE notified its unions of the proposed sale.

RLEA, an unincorporated association of the chief executive officers of nineteen railway labor unions, including the unions that represent P & LE’s employees, took several actions to preserve the alleged rights of its members. One of the actions RLEA took was to file this suit in Pennsylvania state court in October, 1987, claiming that the proposed sale of assets would be a fraudulent conveyance in violation of the PFCA and was only the most recent in a continuing series of the transactions which violate that Act. Named as defendants in addition to P & LE, Railco and CWPT, were Pleco, Inc., P & LE’s parent, and several stockholders, officers and directors of Pleco. In its complaint, RLEA asserts that the employees are creditors within the meaning of the PFCA because of P & LE’s obligations to the employees for accrued but unpaid wages, vacation pay, labor protection pay, life, health and insurance premiums, pension plan premiums, and pending grievance claims. In addition, RLEA asserts that the unions are creditors because of the P & LE’s obligations to the unions for union dues. RLEA contends that the proposed sale would be a fraudulent conveyance, inter alia, because the transaction would not involve fair consideration and would render the P & LE insolvent, and because it is an intentional attempt to defraud creditors. RLEA further contends that the proposed sale has been arranged for the benefit of some creditors to the prejudice of employee and other creditors. RLEA seeks a declaration that all of the transactions described in the complaint violate the PFCA, a preliminary and permanent injunction barring distribution of the proceeds of the sale until RLEA’s claims are provided for, a receivership to administer and distribute those proceeds, damages arising from the PFCA violations, subordination to RLEA’s claims of creditors who were preferred under the fraudulent conveyances, and such other relief as the court may find appropriate.

Before answering the complaint, the defendants removed the case to the federal district court and then moved to dismiss on the ground that RLEA’s claim was preempted by the RLA and the ICA. RLEA opposed the motion to dismiss and moved to remand the case to the state court. The district court granted P & LE’s motion to dismiss and denied RLEA’s motion to remand. It found that RLEA’s claim involved a “minor dispute” under the RLA and that the only proper forum for resolving this dispute was arbitration culminating, if necessary, in a determination by the National Railway Adjustment Board (NRAB). As a result, the district court held 680 F.Supp. 192 that it and the state court lacked jurisdiction. This appeal was taken from the order of dismissal.1

II.

The threshold issue is one of subject matter jurisdiction. There are several avenues of analysis in this setting that might lead to the conclusion that the district court [939] had no jurisdiction. The district court concluded that the RLA made the NRAB the exclusive forum for resolving a dispute of this kind and, accordingly, that it and the state court lacked jurisdiction. Defendants also urge, in the alternative, that the ICA makes the ICC the exclusive forum for resolving a dispute of this kind. Wholly apart from these forum preemption issues, however, given the exclusive reliance of RLEA’s state court complaint on state law, the district court may have lacked jurisdiction under well established principles of removal law. More specifically, under the “well pleaded complaint” rule, there is no removal jurisdiction in this case and a remand is required unless it can be said that the RLA or the ICA “completely preempts” RLEA’s state cause of action. Although the defendants argued that the doctrine of complete preemption bestowed jurisdiction on the district court, that court did not address the issue.

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Railway Labor Executives Ass'n v. Pittsburgh & Lake Erie Railroad, 858 F.2d 936 (3d Cir. 1988).

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