Steven V. Geelan, Appellant, Michael Gray, Plaintiff, vs. Mark Travel, Inc., Respondent.

Steven V. Geelan, Appellant, Michael Gray, Plaintiff, vs. Mark Travel, Inc., Respondent. A05-348, Court of Appeals Unpublished, December 13, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-348

 

Steven V. Geelan,

Appellant,

 

Michael Gray,

Plaintiff,

 

vs.

 

Mark Travel, Inc.,

Respondent.

 

Filed December 13, 2005

Affirmed; motion granted Willis, Judge

 

Wright County District Court

File No. C6-03-1820

 

Scott A. Johnson, Todd M. Johnson, Johnson Law Group LLP, 10801 Wayzata Boulevard, Suite 120, Minnetonka, MN  55305; and Brian F. Leonard, Thomas C. Atmore, Leonard, O'Brien, Spencer, Gale & Sayre, Ltd., 100 South Fifth Street, Suite 2500, Minneapolis, MN  55402 (for appellant)

 

Charles F. Webber, Martin S. Fallon, Faegre & Benson, LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN  55402 (for respondent)

 

            Considered and decided by Willis, Presiding Judge; Toussaint, Chief Judge; and Huspeni, Judge.*

 

U N P U B L I S H E D   O P I N I O N

WILLIS, Judge

            Appellant appeals the state district court's dismissal of his claims against respondent for lack of subject-matter jurisdiction.  Because we find that appellant's claims are preempted by the Railway Labor Act, we affirm.

FACTS

            Appellant Steven Geelan worked as a union pilot for Sun Country Airlines, Inc.  A collective-bargaining agreement (CBA) governed the terms of Geelan's employment.  In December 2001, Sun Country laid off hundreds of its employees, including Geelan.  Sun Country did not pay any accrued vacation or severance to Geelan.  In January 2002, an involuntary bankruptcy proceeding was commenced against Sun Country, and a bankruptcy trustee began liquidating the company.

Geelan, along with a nonunionized coplaintiff who is not a party to this appeal, filed a complaint in state district court, alleging causes of action of "alter ego," "creditor control principal and agent," and tortious interference with contract, seeking damages for accrued vacation pay and severance pay.  Geelan named Mark Travel, Inc., a Wisconsin-based company, as the sole defendant, contending that it exercised extensive control over Sun Country.  The state district court ruled that the Railway Labor Act preempted Geelan's claims and dismissed them for lack of subject-matter jurisdiction, but the nonunion coplaintiff's claims remained before the court.  Minn. R. Civ. P. 54.02; Buchman Plumbing Co. v. Regents of Univ. of Minn., 293 Minn. 437, 439, 196 N.W.2d 629, 630 (1972).

Geelan then commenced a class-action lawsuit in federal district court in Minnesota, realleging the three causes of action that were in his state court complaint and adding two others:  a wage claim under Minn. Stat. § 181.13 (2004) and a claim that Mark Travel failed to timely warn Geelan of his layoff under 29 U.S.C. § 2102 (2000).  The state district court granted Mark Travel's motion to stay the state court proceedings pending the outcome of the federal district court action.  The federal district court subsequently dismissed Geelan's four state-law claims on jurisdictional grounds.  Geelan v. Mark Travel, Inc., 319 F. Supp. 2d 950, 953-55 (D. Minn. 2004).

On Geelan's motion, the state district court vacated its earlier order staying the state court proceedings and directed that judgment be entered on Geelan's claims.  Geelan now appeals from the state district court's dismissal for lack of subject-matter jurisdiction of Geelan's claims of "alter ego" and "creditor control principal and agent."

D E C I S I O N

I.

            Mark Travel argues that the federal district court's decision bars Geelan's appeal on collateral-estoppel grounds.  The federal court ruled that it lacked jurisdiction over Geelan's alter-ego and creditor-control claims because of the Rooker-Feldman doctrine.[1]  Geelan, 319 F. Supp. 2d at 953.  The federal court also stated that "even without the Rooker-Feldman bar [it] would lack jurisdiction" because Geelan failed to exhaust the remedies mandated by the CBA.  Id. at 954. 

Collateral estoppel, also known as issue preclusion, prevents a party from relitigating an issue that was determined in a prior action.  Nelson v. Am. Family Ins. Group, 651 N.W.2d 499, 511 (Minn. 2002).  Collateral estoppel applies when (1) the issue is identical with one in a prior adjudication; (2) there is a prior final judgment on the merits; (3) the estopped party was a party in the prior adjudication; and (4) the estopped party received a "full and fair opportunity to be heard on the adjudicated issue."  Willems v. Comm'r of Pub. Safety, 333 N.W.2d 619, 621 (Minn. 1983) (quotation omitted).[2]  The application of collateral estoppel is a mixed question of law and fact, subject to de novo review.  Falgren v. State, Bd. of Teaching, 545 N.W.2d 901, 905 (Minn. 1996).

            Under the identical-issue prong, "[t]he issue on which collateral estoppel is to be applied must be the same as that adjudicated in the prior action and it must have been necessary and essential to the resulting judgment in that action."  Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn. 2004).  The federal court expressly stated that it lacked jurisdiction over Geelan's alter-ego and creditor-control claims because of the Rooker-Feldman doctrine.  Geelan, 319 F. Supp. 2d at 953.  Any determination by the federal district court that these claims were preempted by federal labor law therefore proved unnecessary.  Collateral estoppel does not bar Geelan from now appealing the state district court's ruling that it lacked subject-matter jurisdiction over his claims of alter ego and "creditor control principal and agent."

II.

            Geelan argues that the state district court has subject-matter jurisdiction over his claims of alter ego and "creditor control principal and agent" because they are independent state-law claims that do not require interpretation of the CBA.  Mark Travel contends that the Railway Labor Act preempts state court jurisdiction because any right Geelan has to severance pay and vacation pay arises from the CBA.

The existence of jurisdiction is a question of law subject to de novo review.  Frost-Benco Elec. Ass'n v. Minn. Pub. Util. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).  Disputes between air carriers and their unionized employees arising solely out of a CBA are controlled by the Railway Labor Act (RLA).  Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 252, 114 S. Ct. 2239, 2243 (1994).  If the CBA is the only source of the employee's asserted right, any dispute arising from that right is preempted by the RLA, and state courts are without jurisdiction.  Andrews v. Louisville & Nashville R.R., 406 U.S. 320, 323-24, 92 S. Ct. 1562, 1565 (1972); Norris, 512 U.S. at 257-58, 114 S. Ct. at 2246.

Whether state-law claims are preempted by federal labor law, however, "continues to cause some bewilderment."  In re Bentz Metal Prods. Co., 253 F.3d 283, 286 (7th Cir. 2001).  Causes of action to enforce state-law rights that are independent of the CBA are not preempted unless resolution of the state-law claims requires interpretation of the CBA.  Norris, 512 U.S. at 256, 261, 114 S. Ct. at 2246, 2248; Ferrell v. Cross, 557 N.W.2d 560, 564-65 (Minn. 1997).  "[I]t is the legal character of a claim, as ‘independent' of rights under the collective-bargaining agreement, that decides whether a state cause of action may go forward . . . .  [T]he bare fact that a collective-bargaining agreement will be consulted . . . does not require the claim to be extinguished."  Livadas v. Bradshaw, 512 U.S. 107, 123-24, 114 S. Ct. 2068, 2078 (1994) (citations omitted).  "In summary, the overriding principle is that for preemption to apply, interpretation of the CBA and not simply a reference to it is required."  Bentz Metal, 253 F.3d at 289.

            To determine whether Geelan's state-law claims are preempted by the RLA, this court must "look to the underlying state law and to the specific allegations contained in [the] complaint to see whether the allegations involve rights and obligations that exist independent of the CBA or if they require interpretation of the CBA for their resolution."  Ferrell, 557 N.W.2d at 565.  Simply labeling a claim as one under state law is not enough to save it from the RLA's mandatory grievance provisions.  Andrews, 406 U.S. at 323-24, 92 S. Ct. at 1565; see also Gore v. Trans World Airlines, 210 F.3d 944, 950 (8th Cir. 2000) (stating that "artful pleading" cannot avoid the CBA's true impact on the dispute). 

            Geelan provides no support for the proposition that his alter-ego claim is a recognized cause of action.[3]  "[A]n alter ego claim is not by itself a cause of action.  Rather, it is a doctrine which fastens liability."  In re RCS Engineered Prod. Co., 102 F.3d 223, 226 (6th Cir. 1996) (quotation omitted); accord Victoria Elevator Co. v. Meriden Grain Co., 283 N.W.2d 509, 512 (Minn. 1979) (stating that courts have relied on alter ego as a "theory to impose liability").  Alter ego is a theory of liability that requires an independent cause of action.  RSC Engineered Products, 102 F.3d at 226.  The specific allegations of Geelan's complaint contend that Mark Travel is liable for Sun Country's "fail[ure] to pay the vacation pay and severance due to Geelan" under an alter-ego theory of liability.  The injuries Geelan complains of result not from Mark Travel's alleged control over Sun Country but from Sun Country's "employment agreement . . . to pay Geelan . . . a minimum of two weeks severance upon termination as well as vacation pay."  Accordingly, the source of Geelan's rights to vacation pay and severance pay is the CBA.

            Likewise, Geelan provides no support for the proposition that "creditor control principal and agent" is a recognized cause of action.  "Principal and agent" is also a theory of liability requiring an independent cause of action.  See Lewis v. St. Cloud State Univ., 693 N.W.2d 466, 471 (Minn. App. 2005) (stating that the "basis for holding the publisher of a newspaper vicariously liable for defamation . . . is the relationship of principal and agent between the publisher and the newspaper"), review denied (Minn. June 14, 2005).  The specific allegations of Geelan's complaint are that Mark Travel is liable under a theory of agency for Sun Country's failure to pay accrued vacation and severance.  Again, the injury of which Geelan complains results not from a principal-agent relationship but from Sun Country's alleged violation of the CBA.

            Geelan also argues that his rights to accrued vacation pay and severance pay arise from Minn. Stat. § 181.13, which imposes a penalty on employers for not timely paying earned wages.  But this claim was not before the state district court, and we will not consider it on appeal.  See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that this court will only consider matters argued before and considered by the district court).

Because Geelan does not allege recognized state-law causes of action, and because the CBA is the source of Geelan's right to vacation pay and severance pay, the district court did not err by concluding that it lacked subject-matter jurisdiction.

Lastly, Geelan has moved to strike the affidavit of bankruptcy trustee Timothy Moratzka in the appendix to Mark Travel's appellate brief, contending it is not part of the district court record.  See Minn. R. Civ. App. P. 110.01 (stating that the record on appeal consists of the "papers filed in the trial court, the exhibits, and the transcript of the proceedings").  Because the affidavit was not part of the district court file, we grant the motion to strike and did not consider the affidavit in our deliberations.

            Affirmed; motion granted.

*Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] Under the Rooker-Feldman doctrine, "lower federal courts do not have subject matter jurisdiction over claims seeking review of state court judgments."  Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999) (citing Rooker v. Fid. Trust Co., 263 U.S. 413, 415-16, 44 S. Ct. 149, 150 (1923), and D.C. Court of Appeals v. Feldman, 460 U.S. 462, 482-86, 103 S. Ct. 1303, 1315-17 (1983)).  This doctrine applies to claims that were actually raised before the state court and to claims that are "inextricably intertwined" with state court determinations.  Id.

 

[2] Because jurisdiction for Geelan's federal complaint was based on diversity of citizenship, Minnesota law governs the preclusive effect of the federal district court's dismissal.  See Semtek Int'l, Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508-09, 121 S. Ct. 1021, 1028 (2001).

[3] We note that the state district court dismissed Geelan's complaint on jurisdictional grounds, not for a failure to state a claim on which relief could be granted.  Compare Minn. R. Civ. P. 12.02(a) with Minn. R. Civ. P. 12.02(e).  Ferrell and Andrews, however, require more than merely labeling a cause of action as a state-law claim.  Ferrell, 557 N.W.2d at 565; Andrews, 406 U.S. at 323-24, 92 S. Ct. at 1565.