prior opinion, we reviewed three possible bases for such jurisdiction: 1) LMDRA section 501(b); 2) section 301 of the National Labor Relations Act of 1947, 29 U.S.C. § 185; and 3) section 105(b) in conjunction with the general grant of jurisdiction conferred by 28 U.S.C. § 1337.
Rejecting the first two as jurisdictional bases for various reasons, we concluded that section 105(b) of LMRDA, in conjunction with section 1337, does, in fact, permit the union to maintain this action in federal court.
Section 1337 confers on federal district courts "original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce." 28 U.S.C. § 1337. With one exception not relevant here, there is no jurisdictional amount. LMRDA has been held to be "an 'act of Congress regulating commerce' within the meaning of § 1337,'" such that suits arising under it can be brought in federal court. Operative Plasters & Cement Masons v. Benjamin, (Benjamin), 776 F. Supp. 1360, 1364 (N.D.Ind. 1991), quoting Bachowski v. Brennan, 502 F.2d 79, 83 (3d Cir. 1974), reversed on other grounds, sub nom., Dunlop v. Bachowski, 421 U.S. 560, 564, 44 L. Ed. 2d 377, 95 S. Ct. 1851 (1975).
On the strength of the Third Circuit's endorsement of the section 1337 "arising under" basis for jurisdiction in Bachowski, supra, 502 F.2d at 82-83, we concluded that the court would find that such jurisdiction exists over LMRDA section 501 claims. On appeal, in Bachowski, supra, the United States Supreme Court reversed the judgment entered by the Third Circuit, but agreed, without analysis, with the Third Circuit's conclusion on the jurisdictional question, stating: "We agree that 28 USC § 1337...confers jurisdiction upon the District Court to entertain respondent's suit." See also: Benjamin, supra, 776 F. Supp. at 1365 ("A suit by a union for breach of the duty created in its favor by a federal law [under section 501(a)] 'arises under' federal law as defined by 28 U.S.C. § 1337.").
Defendant challenges this court's reliance on Bachowski, supra, 502 F.2d at 82-83, on the ground that that action, unlike the present suit, involved a claim under section 402 of LMRDA, 29 U.S.C. § 482(b), to set aside a union election. Defendant argues that that distinction renders the holding inapplicable. We reject that argument as unsupported. Both sections are part of the 1959 legislation mandating reporting and disclosure of union affairs, the only difference being that LMRDA section 402 regulates the reporting of union elections, whereas section 501 prohibits union officials from dipping into union coffers. We see no valid basis for distinguishing one section from the other in terms of determining whether federal jurisdiction exists.
General principles governing federal question jurisdiction compel the same result. Section 1337 and section 1331
share the same criteria for establishing federal jurisdiction, i.e. the "arising under" requirement. Cases interpreting one are equally applicable to the other. Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 8, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983) ("We have not distinguished between the "arising under" standards of § 1337 and § 1331.")
The prerequisite for finding federal question jurisdiction is a private remedy for a violation of a federal statute. Smith v. Industrial Valley Title Insurance Co., 957 F.2d 90, 93 (3d Cir.), cert. denied sub nom. Com. Land Title Insurance Co. v. Burns, 120 L. Ed. 2d 903, 112 S. Ct. 3034 (1992). As discussed above, section 501 explicitly confers on union members the right to enforce section 501(a) in federal court. Implicit in the same section is the right of the union to assert the same cause of action.
In Cort v. Ash, 422 U.S. 66, 78, 45 L. Ed. 2d 26, 95 S. Ct. 2080 (1975), the United States Supreme Court listed the factors which determine whether an implicit private cause of action exists under a federal statute: 1) whether plaintiff is a member of the class of persons for whose special benefit the statute was enacted; 2) whether there is an indication of legislative intent either to create a remedy or to deny a remedy; 3) whether a cause of action would be consistent with the legislative scheme; and 4) whether the cause of action is one traditionally relegated to the states. See also Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 810-11 n. 8, 92 L. Ed. 2d 650, 106 S. Ct. 3229 (1986) and cases cited therein.
The union is clearly a member of the class which section 501 is intended to benefit. As we noted above, even when a section 501 action is filed by union members, they are acting for the benefit of, and on behalf of, the union. All proceeds obtained from the action go to the union, since it sustained a loss as a result of the violation. Congress left no doubt about its intent to confer on union members the right to bring a private cause of action to enforce section 501(a). While an argument could be made that by omitting from the act the express authorization for the union to do the same, the preconditions set forth in section 501(b) clearly anticipate a right vested in the union to bring an action on its own initiative enforcing section 501(a). It would make no sense for Congress to vest jurisdiction in the federal courts over section 501 claims filed by union members, but allow the union asserting the same right to file only in state court. Rarely, if ever, does the existence or non-existence of federal question jurisdiction turn on the identity of the parties to the lawsuit. Jurisdiction turns on the identity of the parties only in cases in which some characteristic of a party, i.e. state residency, is the justification for establishing federal jurisdiction. Here, there is no logical reason to allow union members, but not the organization which they represent, and on whose behalf they act, to bring suit in federal court. Finally, although criminal and tort actions for conversion have traditionally been areas relegated to state authority, in the case of such acts committed by union officials, Congress clearly has declared the area one of federal concern subject to federal regulation. Id.
Taken as a whole, these factors clearly support the conclusion that Congress intended to create a private cause of action enforceable by the union. From that, it follows that the union's claim arises under federal law, creating jurisdiction under section 1337. See generally: Serio v. Liss, 189 F. Supp. 358 (D.N.J. 1960), aff'd 300 F.2d 386 (3d Cir. 1961).
On that basis, defendants' motion to dismiss for lack of standing or federal subject matter jurisdiction will be denied.
Claims of preemption
Citing Allis-Chalmers Corp. v. Lueck, (Lueck) 471 U.S. 202, 85 L. Ed. 2d 206, 105 S. Ct. 1904 (1985), defendants argue that the union's state law claims of conversion and fraud are preempted by federal law under section 301 of the Labor Management Relations Act of 1947 (LMRA), 29 U.S.C.A. § 185, because they "necessarily involve an interpretation of...the Defendants' rights, duties and obligations under the collective bargaining agreement which imposes those rights, duties and obligations under the Union's by-Laws." (Record document no. 4, p. 7)
Federal preemption in the area of labor law is not all-inclusive. Congress "has never exercised authority to occupy the entire field," but rather has exercised such authority only selectively. Lueck, supra, 471 U.S. at 208. State law claims which conflict "with federal law or would frustrate the federal scheme" are preempted, the Supreme Court has held, under section 301 of the LMRDA.
Id., quoting Malone v. White Motor Corp., 435 U.S. 497, 504, 55 L. Ed. 2d 443, 98 S. Ct. 1185 (1978). In practice, all state law claims which would require the court to analyze the collective bargaining agreement to ascertain the parties' intent are preempted. Lueck, supra. This interpretation bars not only those claims "founded directly on rights created by" the agreement but also those claims which substantially depend on an analysis of the agreement. Caterpillar Inc. v. Williams, 482 U.S. 386, 394, 96 L. Ed. 2d 318, 107 S. Ct. 2425 (1987) and Electrical Workers v. Hechler, 481 U.S. 851, 859 n. 3, 95 L. Ed. 2d 791, 107 S. Ct. 2161 (1987); and International Brotherhood of Electrical Workers, AFL-CIO v. Hechler, 481 U.S. 851, 95 L. Ed. 2d 791, 107 S. Ct. 2161 (1987).
Section 301 preemption is not limited to contract claims. Tort claims which would require the court to determine the intent of the contracting parties, e.g, claims that the parties failed to deal in good faith, are likewise preempted. Lueck, supra, 471 U.S. at 211. State law claims related to the interpretation of a collective bargaining agreement only tangentially or in a general way are, however, not preempted. Lueck, supra, 471 U.S. at 212 and 220.
In the final analysis, a state claim is preempted if: 1) its determination is "inextricably intertwined" with an analysis of the terms of a collective bargaining agreement; or 2) the state law right asserted exists independent of the bargaining agreement and thus, cannot be waived or altered by contracting parties. Lueck, supra, 471 U.S. at 213. See also: Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 412, 100 L. Ed. 2d 410, 108 S. Ct. 1877 (1988).
Under this analysis, the questions before us are: whether the union's state law claims for conversion of union property and breach of fiduciary obligation require us to delve into the meaning or intent expressed in the union's collective bargaining agreement or whether allowing such claims independent of the federally-based section 501 claim would frustrate congressional intent to establish a uniform body of law governing such agreements. See: Lueck, supra, 471 U.S. at 209 and McClure, supra, citing Jones v. General Motors Corp., 939 F.2d 380, 383 (6th Cir. 1991). We find neither to be the case.
No part of the collective bargaining agreement is referenced in plaintiff's claim. No reference to the agreement is necessary to resolve plaintiff's claims. All claims asserted are based on union bylaws precluding the transfer of a union-owned vehicle to a union official.
State law claims of fraud and conversion are asserted by the plaintiff. Under Pennsylvania law, to establish fraud, the plaintiff must prove that: 1) a representation was made; 2) which was material to the transaction at hand; 3) and was made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; 4) with the intent of misleading another into relying on it; 5) justifiable reliance on the misrepresentation; and 6) the resulting injury was proximately caused by the reliance. Gibbs v. Ernst, 647 A.2d 882, 890 (Pa. 1994), citing W. Page Keaton, Prosser and Keaton on the Law of Torts, § 105 (5th ed. 1984) and Restatement (Second) of Torts, § 525 (1977).
"Conversion at common law is a tort by which the defendant deprives the plaintiff of his or her right to a chattel or interferes with the plaintiff's use or possession of a chattel without the plaintiff's consent and without lawful justification." Chrysler Credit Corporation v. Smith, 434 Pa. Super. 429, 643 A.2d 1098, 1100 (Pa. Super. Ct. 1994). Specific intent is not required. However, the plaintiff must establish that the defendant intended to exercise dominion or control over the goods which is, in fact, inconsistent with the plaintiff's rights. "Money may be the subject of conversion." Shonberger v. Oswell, 365 Pa. Super. 481, 530 A.2d 112, 114 (Pa. Super. Ct. 1987).
Both state law claims raise the same issue as plaintiff's federal claim, i.e. whether defendants violated union by-laws by effecting the transfer. See, generally: McNamara v. Johnston, 522 F.2d 1157, 1163 (7th Cir. 1975). Neither will require this court to delve into the meaning or intent of the collective bargaining agreement. The agreement has nothing to do with the claims asserted.
See generally: Farmer v. United Brotherhood of Carpenters and Joiners of America, 430 U.S. 290, 51 L. Ed. 2d 338, 97 S. Ct. 1056 (1977) (National Labor Relations Act does not preempt state law cause of action for intentional infliction of emotional distress). Cf. McClure, supra, (State law claims preempted because the court found that it could not determine whether allegedly improper redistricting and election were held in an improper manner without scrutinizing the collective bargaining agreement.)
On that basis, we conclude that plaintiff may proceed on the state law claims asserted and will deny defendant's motion to dismiss on that ground.
Statute of limitations
Defendants next argue that the claims asserted are time-barred. There is no statute of limitations set forth in LMRDA for claims arising under Title V. When federal law fails to "provide explicitly for a limitations period for a federal action," it is understood to be Congress' intent that the courts borrow "the most closely analogous statute of limitations under state law." This is not true in every case, however. "In some circumstances...state statutes of limitations can be unsatisfactory vehicles for the enforcement of federal law. In those instances, it may be inappropriate to conclude that Congress would choose to adopt state rules at odds with the purpose or operation of federal substantive law." DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 158, 76 L. Ed. 2d 476, 103 S. Ct. 2281 and 161 (1983). In DelCostello, the Supreme Court adopted what it found to be the most closely analogous federal limitations period. The Court rejected the most relevant state statutory limitations period on the ground that it was too long and would be, for that reason, at cross-purposes with the federal interest in prompt resolution of such claims.
Relying on DelCostello, supra, defendants argue for the application of the six-month limitation period to the claims presented here. Contrary to defendants' argument, DelCostello, supra, does not require application of the six-month limitations period held applicable there for claims arising under other provisions of federal labor law. We read the Court's opinion as requiring an analysis of the issues to determine what statute, federal or state, is most closely analogous to the federal labor claim presented, and coupled with that consideration, what limitations period best serves the federal interests at stake. On this point, the Court stated:
Our holding today should not be taken as a departure from prior practice in borrowing limitations periods for federal causes of action, in labor law or elsewhere. We do not mean to suggest that federal courts should eschew use of state limitations periods anytime state law fails to provide a perfect analogy....On the contrary, as the courts have often discovered, there is not always an obvious state-law choice for application to a given federal cause of action; yet resort to state law remains the norm for borrowing of limitations periods.