Labor & Employment Law Daily Wrap Up, LABOR—N.D. Ill.: District court lacked jurisdiction over employer’s NLRA Section 8(f) dispute, (Apr 30, 2025)

By Marjorie Johnson, J.D.

Federal courts do not have jurisdiction over activity that is arguably subject to Section 7 or 8 and “must defer to the exclusive competence of the National Labor Relations Act.”

A federal district court lacked subject matter jurisdiction over an employer’s counterclaim against a union that had sued to enforce two grievance awards, where the company’s owner argued that the collective bargaining agreement (CBA) expired prior to the two events that were the basis for the underlying grievances and characterized the dispute as arising under Section 8(f) of the NLRA. Section 301 did not grant jurisdiction since the counterclaim did not allege a contract violation, and federal-subject jurisdiction did not apply since the dispute was a representation issue that properly belonged before the NLRB (International Union of Operating Engineers, Local 150, AFL-CIO v. Hogan, No. 1:22-cv-05717 (N.D. Ill. Apr. 25, 2025)).

Grievances. The dispute arose between the parties after the excavating company’s owner operated machinery on a job site on October 28, 2021, resulting in a nonunion member performing work in violation of the CBA. The union brought this dispute through the grievance process and after a December 1, 2021 hearing, was ultimately awarded $4,359 in lost wages by the joint grievance committee.

The union also grieved a second dispute stemming from the owner also refusing to allow a union business representative onto the job site on the same day. That dispute resulted in the grievance committee awarding the union $10,000 at a November 8, 2021 hearing. The owner never paid either award, prompting the union to file this lawsuit against him to enforce the grievance awards.

Countersuit. The owner filed a counterclaim alleging the agreement expired prior to the October events that were the basis for the union’s grievances—either on February 16, 2021, when he allegedly gave the union notice of his intent to terminate the agreement, or on June 1, 2021, when the agreement would have expired. He sought a declaratory judgment that the agreement has been terminated, characterizing the dispute as arising under Section 8(f) of the NLRA concerning the effect of his repudiation of his pre-hire agreement with the union.

Bankruptcy. He subsequently filed for Chapter 7 bankruptcy and in May 2024, this case was stayed pending the resolution of that proceeding. The bankruptcy has resolved, and the parties agree that the owner’s debt to the union from the grievance awards (which formed the basis for the union’s claim) were discharged. The union conceded that its claims were moot in light of the bankruptcy discharge of the grievance awards but the owner would not agree to voluntarily dismiss his counterclaim.

Subject matter jurisdiction. The union sought dismissal by challenging the court’s subject matter jurisdiction. In response, the owner argued jurisdiction based on three sources, each of which the court rejected.

No Section 301 jurisdiction. First, his claim that the court had jurisdiction under Section 301 was “self-defeating” since such a grant of jurisdiction to federal district courts encompasses only suits that involve contract violations, and as such does not include suits that claim a contract is invalid. Here, the only contract violation the owner alleged was that despite his abiding by the terms of the CBA by providing timely notice of termination, the union ignored the CBA (violating it) by refusing to acknowledge termination and continuing with quasi legal proceedings at its joint grievance committee. However, the court reasoned that if the CBA had in fact been terminated, then there was no contract for the union to violate and thus no Section 301 jurisdiction. “Likewise, if [the owner] is wrong and there was a contract, then the Court does not see how refusing to acknowledge the termination of a still-valid contract could violate that contract.” Thus, the owner failed to allege facts that gave the court Section 301 jurisdiction.

No federal-question jurisdiction. Because the Declaratory Judgement Act could not provide an independent basis for subject-matter jurisdiction, the employer’s only remaining basis for federal jurisdiction was the general federal-question jurisdiction statute, 28 U.S.C. § 1331. The owner argued that such jurisdiction existed because the parties disputed whether the CBA was covered by Section 8(f) or 9(a) of the NLRA. The court disagreed, concluding that the dispute was a representation issue that properly belonged to the NLRB and declined to exercise jurisdiction on that basis.

The court noted that as a general rule, federal courts do not have jurisdiction over activity that is arguably subject to Section 7 or 8 and “must defer to the exclusive competence of the National Labor Relations Act.” Moreover, while federal courts may decide labor law questions that arise as collateral issues in suits brought under independent federal remedies, the owner did not identify any independent federal-law basis for his counterclaim. Indeed, the only authority he cited was a case that did not discuss jurisdiction at all.

Waived argument. The court also found that even if he could establish jurisdiction, he waived any argument that his claim was not time-barred by not responding to the union’s timeliness arguments.

The case is No. 1:22-cv-05717.

Judge: Alexakis, G.

Attorneys: Robert A. Paszta (Crane, Simon, Clar & Goodman) for International Union of Operating Engineers, Local 150, AFL-CIO. Raymond J. Sanguinetti (Rathje Woodward) for Michael Hogan.

Companies: International Union of Operating Engineers, Local 150, AFL-CIO

Cases: Labor Procedure IllinoisNews