Labor & Employment Law Daily Wrap Up, STATE-LAW CLAIMS—6th Cir.: Employee claims of illegal transfers based on bribery scheme between union and employer must be brought in federal court, (Apr 7, 2025)

By Ronald Miller, J.D.

At the heart of the employees’ claims is the theory that they were injured by virtue of their workplace transfers and subsequent resolution of internal workplace grievances as governed by the CBA.

Engineering employees employed by FCA US LLC, who were members of the UAW, must bring state-law claims based on a bribery scheme between the union and the automaker in federal court because LMRA Section 301 has completely preempted any claims based on rights created by a collective bargaining agreement, the Sixth Circuit ruled. The employees alleged that company officials had paid bribes to union officials to transfer the employees in violation of the CBA. Because the employees’ claims entirely rely on their rights as unionized employees, these were exactly the types of labor disputes for which Congress intended to ensure uniform enforcement through complete preemption. Judge Thapar filed a separate concurring opinion (Baltrusaitis v. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, No. 24-1356 (6th Cir. Apr. 4, 2025)).

Workplace transfers. The employees’ claims originate from their 2011 workplace transfers. On September 26, 2011, an FCA official wrote a letter to UAW officials explaining that FCA was transferring the employees to a different facility. The transfers added roughly an hour each way to the employees’ daily commutes to work.

Between 2012 and 2015, the employees noted some discrepancies in the implementation of their transfers, such as preferential treatment of some employees, and non-bargaining-unit employees performing work that was previously assigned to higher-paid unionized employees. In light of these discrepancies, the employees filed a grievance with the union in 2015. This grievance was never pursued by the union.

Bribery scheme. Unbeknownst to the employees, during this same time-period, the employer and union were engaged in an illicit bribery scheme. This bribery scheme intersected with the employees’ transfers and subsequent grievances in two important respects. First, the employer instituted the transfers to cause attrition of bargaining unit engineers so that it could replace them with non-bargaining unit engineers. Second, the employer made illegal payments to union officials to obtain concessions and advantages through negotiating company-friendly contracts and acting in the company’s interest on grievances.

After the massive bribery scheme was made public, the employees pursued workplace grievances alleging that company officials had paid bribes to union officials to transfer the employees in violation of the parties’ CBA. The union denied their grievances as untimely.

Prior to initiating this action in state court on March 30, 2023, the employees filed suit in federal court on October 16, 2020. The district court in Baltrusaitis I granted the defendants’ motions to dismiss on statute-of-limitations grounds and declined to exercise pendent jurisdiction over the remaining state-law claims. Thereafter, another panel of the Sixth Circuit affirmed that decision.

While the appeal in Baltrusaitis I was pending, the employees filed three state-law claims in state court. They brought two fraud claims, a breach-of-fiduciary-duty claim against the union based on Michigan common law, and a civil-conspiracy claim against both the employer and union.

LMRA preemption. On April 14, 2023, the UAW removed the state-court action to the federal court based on complete preemption under Section 301 of the LMRA. Thereafter, the district court denied the employees’ motion for remand, finding that the claims were completely preempted by Section 301 because each state-law claim required interpretation of collective bargaining agreement terms.

DeCoe preemption test. The Sixth Circuit held that the employees’ claims were completely preempted under the two-part Section 301 preemption test set forth in DeCoe v. General Motors Corp., 32 F.3d 212 (6th Cir. 1994). The employees’ allegations stemmed entirely from rights flowing out of the CBA. Their rights surrounding their transfers exist solely by virtue of the CBA. Consequently, because the employees’ claims entirely rely on their rights as unionized employees, these were exactly the types of labor disputes for which Congress intended to ensure uniform enforcement through complete preemption.

Common-law fraud. The employees brought two theories of state-law fraud: silent fraud and fraudulent misrepresentation. As to step one, the employees could not prove a material misrepresentation or silent fraud without interpreting the terms of the CBA governing grievances and transfers. The right to avoid the transfers existed solely because of the CBA, and thus proving economic harm stemming from any alleged fraud required proving that the employees were wrongfully transferred under the terms of the CBA.

For a claim of silent fraud, the employees had to plead that the union had “a legal duty to make a disclosure” of a material fact and that it failed to disclose that fact. The employees’ fraud claims were based on the theory that the union failed to disclose that they were taking bribes, that the union officials made positive representations that they represented their interests, and that, as a result, the employees suffered injuries from their wrongful transfers and unprocessed grievances. Because both fraud claims required interpreting the terms of the CBA, they were completely preempted under DeCoe step one, concluded the appeals court.

The employees’ fraud claims were also completely preempted under the second step of DeCoe because their rights and interests in their transfers were created by the CBA. Sixth Circuit precedent, Fox v. Parker Hannifin Corp., 914 F.2d 795 (6th Cir. 1990), and Terwilliger v. Greyhound Lines, Inc., 882 F.2d 1033 (6th Cir. 1989), establish that a state-law claim asserting the misprocessing of grievances based on rights created by the CBA (like the employees’ transfer rights) are completely preempted under Section 301. At bottom, the employees’ fraud claims asserted that the union violated the CBA by wrongfully transferring them (in violation of the CBA) and then mishandling their subsequent grievances (also in violation of the CBA). This type of fraud claim is completely preempted under Section 301 because “the plaintiff has merely alleged that the Company and the Union engaged in fraudulent malfeasance of CBA obligations.”

Accordingly, the appeals court affirmed the district court’s determination that the employees’ fraud claims were completely preempted by Section 301.

Breach of fiduciary duty. The appeals court also determined that the employees’ breach-of-fiduciary-duty claim was completely preempted under DeCoe step one and step two. Ultimately, the employees’ claim of breach of fiduciary duty was completely preempted under step one and step two because the claim hinged almost entirely on the terms of the CBA, the rights created by the CBA, and the relationships between the parties by virtue of the CBA. Accordingly, the appeals court affirmed the district court’s decision that the employees’ breach-of-fiduciary-duty claim was completely preempted by Section 301.

Concurrence. Judge Thapar agreed with the majority that Section 301 preempted the employees’ state-law claims, but he reached that conclusion by a different path. The concurrence would take the DeCoe steps in reverse order, first asking whether the CBA created the rights that the employees claim. The concurrence would find that the fraud claims are not preempted under DeCoe step two. The plaintiffs sought to vindicate their right to be free from fraudulent misrepresentations that cause loss. Michigan state law, not the collective bargaining agreement, created those rights, according to the concurrence. But the fraud claims are preempted under DeCoe step one. For the employees to vindicate this state-law right, the court would have to examine the CBA. Judge Trapar agreed with the majority that the breach of fiduciary duty claim was preempted under DeCoe step two since it was really a claim for breach of the CBA.

The case is No. 24-1356.

Judge: Moore, K.

Attorneys: Robert L. Levi (Law Offices of Robert L. Levi) for Thomas Baltrusaitis. Jacob Karabell (Bredhoff & Kaiser) for International Union, United Automobile, Aerospace and Agricultural Implement Workers of America. Brian M. Schwartz (Miller, Canfield, Paddock & Stone) for FCA US, LLC.

Companies: International Union, United Automobile, Aerospace and Agricultural Implement Workers of America; FCA US, LLC

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