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GLASS MOLDERS INTL. UNION v. WICKES COS.

February 28, 1989

GLASS MOLDERS, POTTERY, PLASTICS AND ALLIED WORKERS INTERNATIONAL UNION, AFL-CIO, et al., Plaintiffs,
v.
WICKES COMPANIES, INC., Defendant



The opinion of the court was delivered by: GERRY

 INTRODUCTION

 Plaintiffs Glass Molders, Pottery, Plastics and Allied Workers International Union, AFL-CIO, ("GMP"), GMP Local 252, and eight present and former members of the Local and present and former employees of Owens-Corning Fiberglass Corporation ("OCF"), bring this action on behalf of themselves and others similarly situated against defendant Wickes Company, Inc. ("Wickes"). Plaintiffs claim they are the economic casualties of a corporate takeover battle between Wickes and OCF, a battle which left OCF "victorious" but saddled with a two billion dollar debt, which it serviced in part by laying off thousands of workers, including some of the individually named plaintiffs here.

 Plaintiffs' complaint, alleging state law claims of tortious interference with prospective economic advantage and negligence, was brought originally in New Jersey Superior Court. On August 12, 1988, defendants removed the case to this court, contending that plaintiffs' allegations implicate federal law, specifically the Hart-Scott-Rodino Act, 15 U.S.C. § 18a, and § 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(d) (the Williams Act) et seq., and that plaintiffs' claims "sound in and may be based upon [the] breach or enforcement of a collective bargaining agreement" and therefore are governed by § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185.

 Presently before the court is plaintiff's motion to remand the case to state court and defendant's motion to dismiss the case. Since plaintiffs' motion challenges this court's jurisdiction over the matter, we must reach the remand issue first.

 FACTUAL BACKGROUND AND LEGAL ANALYSIS

 This matter is governed by well-settled principles of law. As the United States Court of Appeals for the Third Circuit has put it, "because lack of jurisdiction would make any decree in the case void and the continuation of the litigation in federal court futile, the removal statute should be strictly construed and all doubts should be resolved in favor of remand." Abels v. State Farm Fire & Casualty Co., 770 F.2d 26, 29 (3d Cir. 1985). Removal jurisdiction also "raises significant federalism concerns," which further counsels a cautious approach to its exercise. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988), citing Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 92 L. Ed. 2d 650, 106 S. Ct. 3229 (1986). It is the burden of the party seeking removal to show the existence of federal jurisdiction, and "the defendant's right to remove is to be determined according to the plaintiffs' pleading at the time of the petition for removal." Abels, 770 F.2d at 29.

 According to the plaintiffs' complaint, Wickes, a diversified conglomerate, emerged from the protection of Chapter 11 in 1986 and commenced a hostile takeover attempt of OCF. In July, 1986, Wickes decided to put OCF "in play" by acquiring voting securities of OCF. Through its own purchase and through purchase by others on its behalf, Wickes acquired an aggregate total amount of voting securities in excess of $ 15 million by August 5, 1986. On August 6, 1986 Wickes announced its intention to acquire OCF; by September 2, 1986 Wickes had sold all interest in the target's stock, earning, according to plaintiffs' complaint, a profit of approximately $ 30 million.

 In the meantime OCF, attempting to fight off the Wickes challenge, instituted a recapitalization plan that left it with a $ 2 billion debt. To raise cash to service this debt, OCF "retreated to its cyclically mature markets in autos and housing, while closing various operations and discontinuing further investments in developing new products and processes." Plaintiffs' Complaint para. 21. This resulted in worker layoffs, and in loss of dues income to the plaintiff unions.

 Plaintiffs' theory, as evidenced in their complaint, is that Wickes' takeover attempt constituted tortious interference with a prospective economic advantage plaintiffs anticipated in their employment relationship with OCF. Wickes' actions were wrongful, according to plaintiffs, because they were "neither generally acceptable nor sanctioned by common morality or applicable legal rules, including but not limited to those norms set forth in the Williams Act and Hart-Scott-Rodino." Id. at 42. *fn1"

 I. Jurisdiction Based on Federal Preemption

 Any attempt to found federal jurisdiction upon an argument that the case implicates a federal question, either via preemption or an "arising under" analysis, must overcome the substantial hurdle of the "well-pleaded complaint rule," which requires a federal court to decline jurisdiction unless it appears from plaintiffs' complaint that an allegation necessary to state a claim raises a federal issue, irrespective of whether a federal defense to that claim is a possibility or even a certainty. Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 53 L. Ed. 126, 29 S. Ct. 42 (1908). This is, in the Supreme Court's words, "a powerful doctrine . . . which as a practical matter severely limits the number of cases in which state law 'creates the cause of action' that may be initiated in or removed to federal district court . . ." Franchise Tax Bd. v. Laborers Vacation Trust, 463 U.S. 1, 9-10, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983). Reliance on the well-pleaded complaint means that a claim of federal preemption, being generally defensive in nature, is almost always insufficient to confer federal jurisdiction. There is but one extremely narrow exception: when "the pre-emptive force of a statute is so 'extraordinary' that it 'converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.'" Caterpillar, Inc. v. Williams, 482 U.S. 386, 107 S. Ct. 2425, 96 L. Ed. 2d 318 (1987).

 Recently, the Third Circuit discussed the requirements for finding that a federal statute "completely preempts" a state law cause of action. In Railway Labor Executives Assoc. (R.L.E.A.) v. Pittsburgh & Lake Erie Railroad Co., 858 F.2d 936 (3d Cir. 1988), the court held that in order to determine whether a state law cause of ...


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