1 THE HONORABLE RICHARD A. JONES
9 UNITED STATES DISTRICT COURT AT SEATTLE 11
12 UNION PACIFIC RAILROAD COMPANY, No. 3:23-cv-05028-RAJ
13 Plaintiff, v. 14
ORDER CAPACITY AS COMMISSIONER OF THE
18 Defendant. 19 I. INTRODUCTION THIS MATTER comes before the Court on Plaintiff Union Pacific Railroad 20 Company’s (“Union Pacific” or “Plaintiff”) Motion to Amend Judgment Pursuant to 21 Federal Rule of Civil Procedure 59(e) and for Leave to File Amended Complaint 22 Pursuant to Federal Rule of Civil Procedure 15(a)(2). Dkt. # 22. Defendant Cami Feek 23 (“Defendant”), appearing in her official capacity as Commissioner of the Washington 24 State Employment Security Department (“ESD”), opposes the Motion. Dkt. #23. Plaintiff 25 filed a reply. Dkt # 24. Plaintiff requested oral argument; however, the Court finds this 26 motion may be resolved without oral argument. LCR 7(b)(4). Having reviewed the 27 1 pleadings, record, and relevant law, the Court DENIES Plaintiff’s Motion. 2 4 The Washington Paid Family and Medical Leave Act (“PFML”), RCW 5 50A.05.005, et seq., provides paid sick leave benefits to Washington employees. Passed 6 in 2017, the law established a statewide insurance program—funded by premiums 7 charged against employee wages—to provide paid leave to Washington workers. The 8 Washington Legislature, in passing the law, declared it to be “in the public interest to 9 create a family and medical leave insurance program to provide reasonable paid family 10 leave for” the birth or placement of a child and care of a family member with a serious 11 health condition, and reasonable paid medical leave “for an employee’s own serious 12 health condition.” RCW 50A.05.005. The PFML requires employers to collect premiums 13 via mandatory payroll deductions, and the amounts collected are remitted to the 14 Employment Security Department (“ESD”). RCW 50A.10.030. 15 In January 2023, Plaintiff filed a complaint in federal court alleging that the 16 Railroad Unemployment Insurance Act (“RUIA”), 45 U.S.C. § 351, et seq., which 17 requires that railroads pay for sickness benefits for employees that are unable to work due 18 to illness or injury, expressly preempts the PFML as to railroad employees, and that the 19 Adamson Act, 49 U.S.C. § 28301, preempts Defendant from mandating paid sick leave 20 benefits beyond those that are collectively bargained for. Dkt. # 1 (Complaint). 21 In their initial Complaint, Plaintiff alleged that, in 2022, Union Pacific employee 22 Mitchell Knobbe applied and was approved for paid family and medical leave with ESD. 23 Id. ¶ 20, 21, 22. Plaintiff appealed the decision, arguing in Washington administrative 24 courts that Washington’s PFML law was preempted as to railroad carriers. ESD opposed 25 Plaintiff’s position and argued that that the PFML applies to Plaintiff. Dkt. # 15. 26 Plaintiff sought from this Court an order declaring that the PFML is preempted by 27 the RUIA, Plaintiff is not subject to the PFML, and Union Pacific employees are not 1 entitled to benefits under the PFML and requested that this Court enter a permanent 2 injunction prohibiting Defendant from applying the PFML to Plaintiff or its RUIA- 3 covered employees. Dkt. # 1 ¶ 33. Plaintiff further sought an order declaring that the 4 PFML is preempted by the Adamson Act, and requested that this Court enter a permanent 5 injunction prohibiting Defendant from applying the PFML to Plaintiff or its employees 6 who are subject to collective bargaining. Id. ¶ 40. On March 7, 2023, Defendant filed a 7 motion to dismiss for lack of subject matter jurisdiction, arguing that the Tax Injunction 8 Act (TIA), 28 U.S.C. § 1341, bars Plaintiff’s claims. Dkt. # 15. 9 In March 2023, this Court found that the Tax Injunction Act, 28 U.S.C. § 1341, 10 barred Plaintiff’s RUIA and Adamson Act claims, because the relief sought by Plaintiff 11 amounted to an injunction enjoining the collection of payroll taxes via PFML premiums. 12 Dkt. # 20. Noting that the TIA has been “broadly construed” to apply to declaratory relief 13 actions because such actions “may in every practical sense operate to suspend collection 14 of state taxes,” Jerron West, Inc. v. State of California State Board of Equalization, 129 15 F.3d 1334, 1338 (9th Cir. 1997), this Court found that the PFML premiums assessed 16 under the law constituted a tax and that Union Pacific had a “plain, speedy, and efficient 17 remedy” to contest the application of the law in Washington state court. Dkt. # 20 at 7; 28 18 U.S.C. § 1341. This Court granted Defendant’s motion to dismiss the Complaint for lack 19 of subject matter jurisdiction, dismissed the action, and entered judgment. Dkt. # 21. 20 Plaintiff then moved to amend the judgment pursuant to Federal Rule of Civil 21 Procedure 59(e) and for leave to file an amended complaint. Dkt. # 22. Instead of seeking 22 a declaratory judgment that Union Pacific was not subject to the PFML and that its 23 employees are not entitled to benefits under the PFML, Dkt. # 1 ¶ 33, 40, Plaintiff seeks 24 leave to file an amended complaint that, it argues, does not implicate the Tax Injunction 25 Act at all and simply cures the deficiencies identified in this Court’s opinion. Dkt. # 22 at 26 5; Dkt. # 25-1. The proposed Amended Complaint instead alleges that making PFML 27 benefits available to Union Pacific employees incentivizes absenteeism amongst 1 employees. Dkt. # 22, Ex. A ¶ 28. Plaintiff alleges that this financial incentive to absent 2 themselves from work deprives Plaintiff of a portion of the workforce needed to maintain 3 its rail network. Id. ¶ 29. Plaintiff seeks a declaratory judgment establishing that the 4 payment of benefits to Union Pacific’s employees is preempted by the RUIA and 5 Adamson Act because federal laws expressly preempt other laws that mandate sickness 6 benefits or compensation for railroad employees. Id. ¶ 46, 56. Plaintiff further seeks a 7 declaratory judgment that RCW 50A.20.010, which requires that “whenever an employee 8 of an employer who is qualified for benefits under this title is absent from work to 9 provide family leave, or take medical leave for more than seven consecutive days, the 10 employer shall provide the employee with a written statement of the employee’s rights 11 under this title,” is preempted by the RUIA and is an undue burden on interstate 12 commerce. Id. ¶ 61. Further, the PFML requires that employers post in conspicuous 13 places on the premises notices to employees and applicants for employment pertinent 14 provisions of the law and information on how to file a complaint. RCW 50A.20.020. An 15 employer that fails to do so may face civil penalties that are paid into the family and 16 medical leave enforcement account. Id.
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1 THE HONORABLE RICHARD A. JONES
9 UNITED STATES DISTRICT COURT AT SEATTLE 11
12 UNION PACIFIC RAILROAD COMPANY, No. 3:23-cv-05028-RAJ
13 Plaintiff, v. 14
ORDER CAPACITY AS COMMISSIONER OF THE
18 Defendant. 19 I. INTRODUCTION THIS MATTER comes before the Court on Plaintiff Union Pacific Railroad 20 Company’s (“Union Pacific” or “Plaintiff”) Motion to Amend Judgment Pursuant to 21 Federal Rule of Civil Procedure 59(e) and for Leave to File Amended Complaint 22 Pursuant to Federal Rule of Civil Procedure 15(a)(2). Dkt. # 22. Defendant Cami Feek 23 (“Defendant”), appearing in her official capacity as Commissioner of the Washington 24 State Employment Security Department (“ESD”), opposes the Motion. Dkt. #23. Plaintiff 25 filed a reply. Dkt # 24. Plaintiff requested oral argument; however, the Court finds this 26 motion may be resolved without oral argument. LCR 7(b)(4). Having reviewed the 27 1 pleadings, record, and relevant law, the Court DENIES Plaintiff’s Motion. 2 4 The Washington Paid Family and Medical Leave Act (“PFML”), RCW 5 50A.05.005, et seq., provides paid sick leave benefits to Washington employees. Passed 6 in 2017, the law established a statewide insurance program—funded by premiums 7 charged against employee wages—to provide paid leave to Washington workers. The 8 Washington Legislature, in passing the law, declared it to be “in the public interest to 9 create a family and medical leave insurance program to provide reasonable paid family 10 leave for” the birth or placement of a child and care of a family member with a serious 11 health condition, and reasonable paid medical leave “for an employee’s own serious 12 health condition.” RCW 50A.05.005. The PFML requires employers to collect premiums 13 via mandatory payroll deductions, and the amounts collected are remitted to the 14 Employment Security Department (“ESD”). RCW 50A.10.030. 15 In January 2023, Plaintiff filed a complaint in federal court alleging that the 16 Railroad Unemployment Insurance Act (“RUIA”), 45 U.S.C. § 351, et seq., which 17 requires that railroads pay for sickness benefits for employees that are unable to work due 18 to illness or injury, expressly preempts the PFML as to railroad employees, and that the 19 Adamson Act, 49 U.S.C. § 28301, preempts Defendant from mandating paid sick leave 20 benefits beyond those that are collectively bargained for. Dkt. # 1 (Complaint). 21 In their initial Complaint, Plaintiff alleged that, in 2022, Union Pacific employee 22 Mitchell Knobbe applied and was approved for paid family and medical leave with ESD. 23 Id. ¶ 20, 21, 22. Plaintiff appealed the decision, arguing in Washington administrative 24 courts that Washington’s PFML law was preempted as to railroad carriers. ESD opposed 25 Plaintiff’s position and argued that that the PFML applies to Plaintiff. Dkt. # 15. 26 Plaintiff sought from this Court an order declaring that the PFML is preempted by 27 the RUIA, Plaintiff is not subject to the PFML, and Union Pacific employees are not 1 entitled to benefits under the PFML and requested that this Court enter a permanent 2 injunction prohibiting Defendant from applying the PFML to Plaintiff or its RUIA- 3 covered employees. Dkt. # 1 ¶ 33. Plaintiff further sought an order declaring that the 4 PFML is preempted by the Adamson Act, and requested that this Court enter a permanent 5 injunction prohibiting Defendant from applying the PFML to Plaintiff or its employees 6 who are subject to collective bargaining. Id. ¶ 40. On March 7, 2023, Defendant filed a 7 motion to dismiss for lack of subject matter jurisdiction, arguing that the Tax Injunction 8 Act (TIA), 28 U.S.C. § 1341, bars Plaintiff’s claims. Dkt. # 15. 9 In March 2023, this Court found that the Tax Injunction Act, 28 U.S.C. § 1341, 10 barred Plaintiff’s RUIA and Adamson Act claims, because the relief sought by Plaintiff 11 amounted to an injunction enjoining the collection of payroll taxes via PFML premiums. 12 Dkt. # 20. Noting that the TIA has been “broadly construed” to apply to declaratory relief 13 actions because such actions “may in every practical sense operate to suspend collection 14 of state taxes,” Jerron West, Inc. v. State of California State Board of Equalization, 129 15 F.3d 1334, 1338 (9th Cir. 1997), this Court found that the PFML premiums assessed 16 under the law constituted a tax and that Union Pacific had a “plain, speedy, and efficient 17 remedy” to contest the application of the law in Washington state court. Dkt. # 20 at 7; 28 18 U.S.C. § 1341. This Court granted Defendant’s motion to dismiss the Complaint for lack 19 of subject matter jurisdiction, dismissed the action, and entered judgment. Dkt. # 21. 20 Plaintiff then moved to amend the judgment pursuant to Federal Rule of Civil 21 Procedure 59(e) and for leave to file an amended complaint. Dkt. # 22. Instead of seeking 22 a declaratory judgment that Union Pacific was not subject to the PFML and that its 23 employees are not entitled to benefits under the PFML, Dkt. # 1 ¶ 33, 40, Plaintiff seeks 24 leave to file an amended complaint that, it argues, does not implicate the Tax Injunction 25 Act at all and simply cures the deficiencies identified in this Court’s opinion. Dkt. # 22 at 26 5; Dkt. # 25-1. The proposed Amended Complaint instead alleges that making PFML 27 benefits available to Union Pacific employees incentivizes absenteeism amongst 1 employees. Dkt. # 22, Ex. A ¶ 28. Plaintiff alleges that this financial incentive to absent 2 themselves from work deprives Plaintiff of a portion of the workforce needed to maintain 3 its rail network. Id. ¶ 29. Plaintiff seeks a declaratory judgment establishing that the 4 payment of benefits to Union Pacific’s employees is preempted by the RUIA and 5 Adamson Act because federal laws expressly preempt other laws that mandate sickness 6 benefits or compensation for railroad employees. Id. ¶ 46, 56. Plaintiff further seeks a 7 declaratory judgment that RCW 50A.20.010, which requires that “whenever an employee 8 of an employer who is qualified for benefits under this title is absent from work to 9 provide family leave, or take medical leave for more than seven consecutive days, the 10 employer shall provide the employee with a written statement of the employee’s rights 11 under this title,” is preempted by the RUIA and is an undue burden on interstate 12 commerce. Id. ¶ 61. Further, the PFML requires that employers post in conspicuous 13 places on the premises notices to employees and applicants for employment pertinent 14 provisions of the law and information on how to file a complaint. RCW 50A.20.020. An 15 employer that fails to do so may face civil penalties that are paid into the family and 16 medical leave enforcement account. Id. Plaintiff seeks a declaratory judgment that this 17 requirement is preempted by the RUIA and is an undue burden upon interstate commerce. 18 Dkt. # 22, Ex. A ¶ 68. Finally, Plaintiff seeks a declaratory judgment that provisions of 19 the law that require employers to “make reports, furnish information, and collect and 20 remit premiums … to [ESD],” RCW 50A.20.030, are preempted by the RUIA and an 21 undue burden upon interstate commerce. Id. ¶ 71. 22 // 23 // 24 // 25 // 26 // 27 // 2 Rule 59(e) allows a plaintiff to file a motion to alter or amend a judgment “no later 3 than 28 days after the entry of judgment.” Fed. R. Civ. P. 59(e). A Rule 59(e) motion 4 “‘should not be granted, absent highly unusual circumstances, unless the district court is 5 presented with newly discovered evidence, committed clear error, or if there is an 6 intervening change in the controlling law.’” McDowell v. Calderon, 197 F.3d 1253, 1255 7 (9th Cir. 1999) (quoting 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 8 1999)) (emphasis in original). 9 Rule 15(a) provides that a party may amend its pleading only with the opposing 10 party’s written consent or the court’s leave, and the court “should freely give leave when 11 justice so requires.” Fed. R. Civ. P. 15(a)(2). “The propriety of a motion for leave to 12 amend is generally determined by reference to several factors: (1) undue burden; (2) bad 13 faith; (3) futility of amendment; and (4) prejudice to the opposing party.” Hurn v. 14 Retirement Fund Trust of Plumbing, Heating & Piping Industry, 648 F.2d 1252, 1254 15 (9th Cir. 1981). 16 18 A.) Request to Reopen the Judgment 19 Noting that this Court dismissed the Complaint without prejudice, Plaintiff asks 20 this court to alter or amend the judgment, entered at Dkt. # 21, pursuant to Rule 59(e). 21 Dkt. # 22. Plaintiff argues that after the judgment has been reopened, Union Pacific 22 should be granted leave to file the proposed Amended Complaint. Id. While the Federal 23 Rules do not provide specific grounds for a motion to alter or amend, the Ninth Circuit 24 has held that such motion may be granted if: “1) the motion is necessary to correct 25 manifest errors of law or fact upon which the judgment is based; 2) the moving party 26 presents newly discovered or previously unavailable evidence; 3) the motion is necessary 27 to prevent manifest injustice; or 4) there is an intervening change in controlling law.” Turner v. Burlington Northern Santa Fe R.R. Co., 338 F.3d 1058, 1063 (9th Cir. 2003) 1 (citing McDowell, 197 F.3d at 1254 n. 1). “A Rule 59(e) motion is an ‘extraordinary 2 remedy, to be used sparingly in the interests of finality and conservation of judicial 3 resources.’” Wood v. Ryan, 759 F.3d 1117, 1121 (9th Cir. 2014) (quoting Kona 4 Enterprises, Inc. v. Estate of Bishop, 299 F.3d 877, 890 (9th Cir. 2000)). “A district court 5 has considerable discretion when considering a motion to amend a judgment under Rule 6 59(e).” Turner, 338 F.3d at 1063. 7 Here, Plaintiff does not identify a manifest error of law or fact, newly discovered 8 or previously unavailable evidence, possible manifest injustice, or an intervening change 9 in controlling law. Instead, Plaintiff argues that this Court should have granted Union 10 Pacific leave to amend its complaint and cure the identified deficiencies in its prior order. 11 Dkt. # 22 at 2-3. Citing California Dep’t of Water Res. v. Powerex Corp., C.A. 02-cv- 12 0518, 2005 WL 2789067 (E.D. Cal. Oct. 25, 2005) and Wallace v. City of Hampton, No. 13 2:15cv126, 2015 WL 13856526 (E.D. Va. Aug. 25, 2015), Plaintiff contends that when 14 the jurisdictional defect relied upon in dismissing a claim can be cured through 15 amendment, courts have relied upon Rule 59(e) as a “procedural path that permits the 16 court to vacate a judgment and allow a matter to move forward with an amended 17 complaint through Rule 15,” and urges this Court to do so here. Dkt. # 22 at 3. 18 B.) Request for Leave to Amend 19 When faced with a motion to amend, the district court considers four factors: bad 20 faith, undue delay, prejudice to the opposing party, and/or futility. Griggs v. Pace 21 American Group, Inc., 170 F.3d 877, 880 (9th Cir. 1999). The court must liberally apply 22 the rule that leave to amend should be freely granted, subject to the factors set forth 23 above. Bowles v. Reade, 198 F.3d 752, 757 (9th Cir. 1999). Here, Defendant concedes 24 that there is no suggestion of bad faith, but argues that Plaintiff has caused undue delay in 25 choosing to amend the complaint at this point in the proceedings and that ESD would be 26 prejudiced by the filing of an amended complaint at this time, as Union Pacific’s 27 continued attempt to litigate in federal court has created uncertainty for both ESD and 1 Union Pacific employees. Dkt. #23 at 7-8. This potential prejudice is highlighted, argues 2 Defendant, by Plaintiff’s failure to advance their arguments for preemption in state court, 3 despite having multiple opportunities to do so. Id. Further, Defendant contends, 4 amendment would be futile, as the amended complaint still seeks the same relief that led 5 this Court to hold that the Tax Injunction Act deprives this Court of subject matter 6 jurisdiction. Id. at 5-6. This Court agrees. 7 Although the amended complaint seeks a declaratory judgment as to preemption 8 of several specific provisions of the PFML that, on their face, have little to do with 9 premiums collections, Plaintiff continues to seek declaratory relief that would ultimately 10 enjoin, suspend, or restrain the assessment, levy, or collection of state taxes. Hibbs v. 11 Winn, 542 U.S. 88, 99, 124 S.Ct. 2276 (2004). For example, Plaintiff seeks an order 12 declaring RCW 50A.20.020 to be preempted by the RUIA. This provision requires 13 employers to post notices concerning pertinent provisions of the law in conspicuous 14 places and provides for civil penalties against employers who willfully violate the law. 15 RCW 50A.20.020. Civil penalties are to be deposited into the family and medical leave 16 enforcement account, which is used to administer and enforce the PFML. Id.; RCW 17 50A.05.080. This Court finds persuasive Defendant’s argument that to grant the relief 18 Plaintiff seeks would undermine enforcement of the law, ultimately enjoin the collection 19 of taxes, and bring the action within the ambit of the TIA. See Czajkowski v. State of 20 Illinois, 460 F. Supp. 1265, 1271-72 (N.D. Ill. 1977) (district court, based on the TIA, 21 rejected plaintiffs’ request for injunction preventing Illinois from expending funds on 22 enforcement of state law, finding that “[t]he state obviously cannot collect a tax when it 23 has no funds for enforcement”). Plaintiff’s pivot to challenging piecemeal provisions of 24 the PFML fails to evade the TIA’s “broad jurisdictional barrier,” Lowe v. Washoe 25 County, 627 F.3d 1151, 1155 (9th Cir. 2010) (citations omitted), and this “cannot be 26 avoided by attacks on the administration and implementation of the taxing scheme rather 27 than on the validity of the tax itself.” Czajkowski, 460 F. Supp. at 1272. 1 Moreover, Wallace v. City of Hampton, relied on by Plaintiff, stands for the 2 proposition that the liberal rule of setting aside the judgment and providing leave to 3 amend “gives effect to the federal policy in favor of resolving cases on their merits 4 instead of disposing of them on technicalities.” 2015 WL 13856526, at *1 (citing Conley 5 v. Gibson, 355 U.S. 41, 48 (1957)). But the initial complaint and case were not dismissed 6 on technicalities. Indeed, in the briefing for the motion to dismiss, the parties devoted 7 considerable argument to whether Plaintiff had yet paid any PFML premiums and 8 whether the relief requested would in fact “restrain” the “assessment, levy, or collection” 9 of taxes if Plaintiff had not yet paid. Dkt. # 18. But ultimately, the complaint was 10 dismissed, and the judgment entered, based on this Court’s analysis of the nature of the 11 relief requested by Plaintiff and this Court’s finding that Plaintiff’s challenge was barred 12 by the TIA. Dkt. # 20. Rules 59(e) and 15(a) are not meant to provide “second bite at the 13 apple.” Weeks v. Bayer, 246 F.3d 1231, 1236 (9th Cir. 2001). Considering Plaintiff’s 14 requests under Rule 59(e) and Rule 15(a)(2) together, id.; see also California Dep’t of 15 Water Res., 2005 WL 2789067, at *1, and based on the record before the court, see Dkt. 16 # 22, Ex. A (proposed Amended Complaint), amendment would be futile, and “leave to 17 amend may be denied if the proposed amendment is futile or would be subject to 18 dismissal.” Wheeler v. City of Santa Clara, 894 F.3d 1046, 1059 (9th Cir. 2018). 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 2 Based on the foregoing reasons, the Court DENIES Plaintiff’s Motion to Amend 3 Judgment Pursuant to FRCP 59(e) and for Leave to File Amended Complaint Pursuant to 4 FRCP 15(a)(2). 5 6 DATED this 6th day of September, 2024.
7 8 A 9
10 The Honorable Richard A. Jones 11 United States District Judge 12
13 14 15 16 17 18 19 20 21 22 23 24 25 26 27