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American Dredging Co. v. Local 25

October 30, 1964

AMERICAN DREDGING COMPANY, APPELLANT
v.
LOCAL 25, MARINE DIVISION, INTERNATIONAL UNION OF OPERATING ENGINEERS, AFL-CIO, ET AL., APPELLEES.



Author: Kalodner

Before KALODNER and HASTIE, Circuit Judges, and KIRKPATRICK, District Judge.

KALODNER, C. J.: The District Court here*fn1 denied the plaintiff's motion to remand to the state court from which it had been removed, a suit, based solely on a state-created right, to enjoin the defendant union's violation, in the course of a labor dispute, of the "no-strike" provision of its collective bargaining agreement, and subsequently denied the plaintiff's motion for injunctive relief.*fn2 It premised its denial of remand on the ground that it had original jurisdiction under § 301(a) of the Labor Management Relations Act,*fn3,*fn4 of a suit for violation of a labor contract, and § 1441 of the Removal Statute*fn5 permits the removal to a federal district court of a civil action of which it has original jurisdiction under a law of the United States. It based its denial of plaintiff's motion for an injunction on the ground that it was "without power to grant injunctive relief because of § 4 of Norris-LaGuardia,*fn6 since this is a 'case involving or growing out of a labor dispute',*fn7 within the meaning of the Act. Sinclair Refining Co. v. Atkinson, 370 U.S. 195 (1962)."

The sum of the District Court's view*fn8 is that the Norris-LaGuardia limitations on jurisdiction of federal district courts, which the Supreme Court held in Sinclair extends to § 301 in cases growing out of labor disputes, do not divest these courts of subject matter jurisdiction of such cases, viz., the capacity to take cognizance of, or to entertain, but merely strip them of power to grant injunctive relief.

The view stated disregards the critical fact that in Sinclair, the Supreme Court, in holding that the jurisdiction conferred by § 301 was subject to the jurisdictional limitations enacted by the earlier Norris-LaGuardia Act, expressly ruled at page 215:

"The District Court was correct in dismissing Count 3 of the petitioner's complaint for lack of jurisdiction under the Norris-LaGuardia Act."*fn9

We can only construe the phrase "lack of jurisdiction" as embracing within its ambit subject matter jurisdiction and accordingly hold that the District Court erred in failing to grant the motion to remand in the instant case on its reasoning that it had subject matter jurisdiction under § 301 within the "original jurisdiction" provisions of § 1441. It merits observation that the background factual situation which constituted the basis of the injunctive action in Sinclair was on all fours with that existing here, as appears in Note 9.

It may be pointed out anent the holding in Sinclair, that the Supreme Court, some 36 years earlier, in General Investment Company v. New York Central Railroad Company, 271 U.S. 228 (1926) succinctly defined jurisdiction as follows: (p. 230):

"By jurisdiction we mean power to entertain the suit, consider the merits and render a binding decision thereon. . . ."

It is fair to assume that Congress in its use of the word "jurisdiction" in the Norris-LaGuargdia Act in 1932 was aware of the Supreme Court's definition of "jurisdiction" six years earlier, in the foregoing case.

The Norris-LaGuardia Act in its title declared that it was:

"An Act

"To amend the Judicial Code and to define and limit the jurisdiction of courts sitting in equity, and for other purposes."*fn*

In Section 2 - "Declaration of the public policy of the United States" - it was stated in relevant part:

"In the interpretation of this Act and in determining the jurisdiction and authority of the courts of the United States, as such jurisdiction and authority are herein defined, and limited, the public policy of the United States is declared as follows:

". . . therefore, the following definitions of, and limitations upon, the jurisdiction and authority of the courts of the United States are hereby enacted."

In State of Minnesota v. Northern Securities Company, 194 U.S. 48 (1904) the Supreme Court made it clear that the term jurisdiction as used in the Removal Statute means the power to take cognizance of the case upon removal from a state court and to decide it upon its merits. There, an action was brought by the State of Minnesota against the defendants, to annul an agreement and suppress a combination alleged to exist between the defendant corporations, upon the grounds that the agreement and combination were in violation of the laws of Minnesota, and of the anti-trust laws of the United States. The action was removed from the state court to the circuit court of Minnesota on the ground that it was "one arising under the Constitution and laws of the United States," and was subsequently dismissed by the circuit court on its merits.

The Supreme Court sua sponte raised the question as to whether the case was removable although all the parties to the action "deemed the case a removable one."

In so doing it stated at page 63:

"If the record does not affirmatively show jurisdiction in the circuit court, we must, upon our own motion, so declare, and make such order as will prevent that court from exercising an authority not conferred upon it by statute. . . .

"We proceed, therefore, to inquire whether the circuit court could take cognizance of this case upon removal from the state court, and make a final decree upon the merits."

After noting that it was the "general policy of these acts, manifest upon their face, and often recognized by this court, to contract the jurisdiction of the circuit district courts of the United States", it was said at pages 64-65:

"These cases establish, beyond further question in this court, the rule that, under existing statutes regulating the jurisdiction of the courts of the United States, a case cannot be removed from a state court as one arising under the Constitution or laws of the United States, unless the plaintiff's complaint, bill, or declaration shows it to be a case of that character. 'If it does not appear at the outset,' this court has quite recently said, 'that the suit is one of which the circuit court at the time its jurisdiction is invoked could properly take cognizance, the suit must be dismissed.' Third Street & Suburban R. Co. v. Lewis, 173 U.S. 457, 460, 43 L. ed. 766, 767, 19 Sup. Ct. Rep. 451".

It is of compelling significance here that in Northern Securities, the Supreme Court reversed the denial of remand below on the ground that the removed action did not "really and substantially involve a dispute or controversy within the jurisdiction of the circuit court for the purposes of a final decree " . . . and, "That being the case, the circuit court, following the mandate of the statute, should not have proceeded therein, but should have remanded the cause to the state court."

In the instant case the complaint alleged that the union had violated the "no-strike clause of its collective bargaining agreement in the course of a labor dispute, and thus it appeared "at the outset" that the District Court could not, under Sinclair, "properly take cognizance of this case upon removal from the state court, and make a final decree upon the merits."

It cannot be gainsaid that had the plaintiff initially brought suit in the District Court under § 301, alleging in its complaint a cause of action for breach of its collective bargaining agreement, in the course of a labor dispute, and praying for injunctive relief, that the action would have been dismissed for lack of jurisdiction under Sinclair.

To say then that a District Court has subject matter jurisdiction*fn10 of a cause of action, so as to authorize it to take cognizance of it under the provisions of the Removal Statute, when it does not in the first place have jurisdiction to entertain and decide it upon its merits, is to give sanction to an exercise in futility.

Or putting it another way, for a court to say that it has subject matter jurisdiction enabling it to take cognizance of a case, and then to rule that although the case has merit, it is without judicial power, viz., jurisdiction, to grant a final decree on the merits, is to pursue, what Mr. Justice Frankfurter once characterized, in another context, "a fox-hunting theory of justice that ought to make Bentham's skeleton rattle,"*fn11 and to do violence to the holding in General Investment Company v. New York Central Railroad Company, supra, that "By jurisdiction we mean power to entertain the suit, consider the merits and render a binding decision thereon."*fn12

It has been settled for almost a century that federal statutes should be construed and applied so as to avoid "injustice" or "absurd consequences."

In United States v. Kirby, 74 U.S. 482 (1869) it was said (p. 486, 487):

"All laws should receive a sensible construction. General terms should be so limited in their application as not to lead to injustice, oppression, or an absurd consequence. . . . The reason of the law, in such cases, should prevail over its letter."*fn13

In United States v. Katz, 271 U.S. 354 (1926) in which Kirby was cited with approval, it was said (p. 357):

"All laws are to be given a sensible construction; and a literal application of a statute, which would lead to absurd consequences, should be avoided whenever a reasonable application can be given to it, consistent with the legislative purpose. . . . In ascertaining that purpose, we may examine the title of the Act . . . and the legislative scheme or plan by which the general purpose of the Act is to be carried out."

Here the denial of remand not only led to the "absurd consequence" of leaving the District Court with a case on its judicial hands without judicial power to "make a final decree on its merits", but also to these serious consequences:

It rendered an "injustice" to the plaintiff in that it deprived it of the benefit of the temporary injunctive relief granted by the state court under state law, prior to the case's removal, and foreclosed it from the available remedy of a permanent injunction; it ousted the state court of its jurisdiction to apply state law in a field not preempted by Congress, in contravention of the historic comity doctrine which proscribes avoidable direct conflicts between federal and state courts; and it thwarted the Congressional policy intended to have § 301(a) "supplement" and "not to displace" or "to encroach upon the existing jurisdiction of the state courts" in suits for violation of collective bargaining contracts in industries affecting interstate commerce. Charles Dowd Box Co., Inc. v. Courtney, 368 U.S. 502, 509, 511 (1962).

Elaboration of these serious consequences must yield the right of way to the resolution of this transcending question:

Assuming, arguendo, that the Norris-LaGuardia Act did not deprive the District Court of § 301(a) subject matter jurisdiction, was the action here "founded on a claim or right arising under the Constitution, treaties, or laws of the United States", so as to make it removable, "without regard to the citizenship or residence of the parties", within the meaning of § 1441(b) of the Removal Statute?

If the answer to that question is that the removed state action was not "founded on a claim or right arising under" § 301(a), it will require the reversal of the denial of remand, independent of the resolution of all the other questions presented by this appeal.

In 1821 the Supreme Court was first called upon to decide when a case "arises under a law of the United States" in the landmark case of Cohens v. Virginia, 6 Wheat. 264.

Speaking for the Court, Mr. Chief Justice Marshall there said (p. 379):

"A case in law or equity consists of the right of the one party, as well as of the other, and may truly be said to arise under the Constitution or a law of the United States, whenever its correct decision depends on the construction of either."

It is of compelling significance here that in so holding the Supreme Court rejected the contention that a case arises under the Constitution or a law of the United States merely because it is founded on a right conferred by the Constitution or a federal law.

In doing so the Chief Justice said (p. 379):

"If it be to maintain that a case arising under the Constitution, or a law, must be one in which a party comes into court to demand something conferred on him by the Constitution or a law, we think the construction too narrow."

In amplification of the rule stated, Mr. Chief Justice Marshall, speaking for the Court, in Osborn v. The Bank of the United States, 9 Wheat. 738, 822 (1824), declared that a case arises under the Constitution or laws of the United States when " the title or right set up by the party may be defeated by one construction of the Constitution or law of the United States or sustained by the opposite construction."

More than a half century later, the Supreme Court, in Little York Gold Washing and Water Company, Limited v. Keyes, 96 U.S. 199 (1878), applied the principles declared in Cohens and Osborn, in construing a provision in the Removal Act of 1875,*fn14 for removal of suits "arising under the Constitution or laws of the United States."

It there held (pp. 203-204):

"A cause cannot be removed from a State Court simply because, in the progress of the litigation, it may become necessary to give a construction to the Constitution or laws of the United States. The decision of the case must depend upon that construction. The suit must, in part at least, arise out of a controversy between the parties in regard to the operation and effect of the Constitution or laws upon the facts involved. . . .

"Before, therefore, a circuit court can be required to retain a cause under this jurisdiction, it must in some form appear upon the record, by a statement of facts, 'in legal and logical form,' such as is required in good pleading, 1 Chit. Pl. 213, that the suit is one which ' really and substantially involves a dispute or controversy' as to a right which depends upon the construction or effect of the Constitution, or some law or treaty of the United States."

In Starin v. New York City, 115 U.S. 248 (1885) orders of the circuit court remanding a case which had been removed from a New York court were appealed on the ground that the suit was one arising under the Constitution and laws of the United States.

With respect to that contention the Court said (p. 257):

"We will first consider whether the suit is one which arises under the Constitution or laws of the United States; for if it is not, the order to remand was right.. . .

"The character of a case is determined by the questions involved. Osborn v. Bank of U.S. 9 Wheat. 824. If from the questions it appears that some title, right, privilege or immunity, on which the recovery depends, will be defeated by one construction of the Constitution or a law of the United States, or sustained by the opposite construction, the case will be one arising under the Constitution or laws of the United States, within the meaning of that term as used in the Act of 1875; otherwise, not. Such is the effect of the decisions on this subject."

In affirming the circuit court's remand of the removed case, the Court further stated (p. 258):

"The decision of these questions presented by the removed case does not depend on the Constitution or laws of the United States. There is nothing in the Constitution or laws of the United States entering into the determination of the cause which, if construed one way will defeat the defendants, or in another sustain them."

In Shulthis v. McDougal, 225 U.S. 561, 569 (1912) the Court, following its declaration that "jurisdiction cannot rest on any ground that is not affirmatively and distinctly set forth" in the complaint, said:

"A suit to enforce a right which takes its origin in the laws of the United States is not necessarily, or for that reason alone, one arising under those laws, for a suit does not so arise unless it really and substantially involves a dispute or controversy respecting the validity, construction, or ...


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