George Melendez v. San Francisco Baseball Associates, LLC

Under California’s labor laws, “[i]f an employer discharges

an employee, the wages earned and unpaid at the time of

discharge are due and payable immediately.” (Lab. Code, § 201,

subd. (a).) Plaintiffs, security guards at what used to be named

AT&T Park in San Francisco and is now named Oracle Park (the

park), are suing San Francisco Baseball Associates LLC (the

Giants) for allegedly violating this provision. They claim they

are discharged after every Giants homestand, at the end of the

baseball season, and after other events at the park, and they are

entitled under Labor Code section 201 to receive their unpaid

wages immediately after each such discharge. The Giants deny

that the security guards are discharged on those occasions.

They contend that Labor Code section 204, which generally

requires semimonthly payment of employees’ wages, applies to

the guards.

The merits of this action are not now before us. Rather,

we must consider the Giants’ contention that this lawsuit

requires interpretation of the collective bargaining agreement

(hereafter sometimes CBA) that the guards’ union has entered

into with the Giants. If so, this lawsuit is preempted under

federal law and must be submitted to arbitration. (See, e.g.,

Livadas v. Bradshaw (1994) 512 U.S. 107 (Livadas).)

We conclude that, although the agreement between the

union and the Giants may be relevant to this lawsuit and may

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2

need to be consulted to resolve it, the parties’ dispute turns on

an interpretation of state law — namely, the meaning of

“discharge” under Labor Code section 201 — rather than an

interpretation of the agreement itself. Because no party has

identified any provision of the agreement whose meaning is

uncertain and that must be interpreted to resolve plaintiffs’

claim, this lawsuit is not preempted and state courts may decide

it on the merits. We reverse the judgment of the Court of

Appeal, which concluded otherwise.

I. FACTUAL AND PROCEDURAL HISTORY

We draw these facts, which are generally undisputed,

primarily from the Court of Appeal opinion. (Melendez v. San

Francisco Baseball Associates LLC (2017) 16 Cal.App.5th 339

(Melendez).)

George Melendez, a security guard at the park, is the lead

plaintiff in this putative class action against the Giants. He

“contends that he and other security guards were employed

‘intermittingly’ for specific job assignments (baseball games or

other events) and were discharged ‘at the end of a homestand,

at the end of a baseball season, at the end of an inter-season

event like a fan fest, college football game, a concert, a series of

shows, or other events,’ and that therefore under Labor Code

section 201 [they] were entitled to but did not receive immediate

payment of their final wages upon each such ‘discharge.’ ”

(Melendez, supra, 16 Cal.App.5th at p. 341.) Plaintiffs seek to

recover penalties under Labor Code section 203 for the Giants’

failure to pay them immediately after each such discharge.

The Giants contend that the “security guards are not

intermittent employees but are ‘year-round employees who

remain employed with the Giants until they resign or are

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terminated pursuant to the CBA.’ ” (Melendez, supra, 16

Cal.App.5th at p. 341.) To support this contention, they cite

provisions of the agreement entered into between the Giants

and the union that represents the security guards, the Service

Employees International Union, United Services Workers West

of San Francisco. (Ibid.)

As relevant here, the Giants moved to compel arbitration,

arguing that the action is preempted by the Labor Management

Relations Act of 1947. The trial court denied the motion. It

“held that resolution of the controversy does not require

interpretation of the CBA, but simply a determination of

whether the security guards are discharged within the meaning

of Labor Code section 201 at the conclusion of an event or series

of baseball games.” (Melendez, supra, 16 Cal.App. 5th at pp.

345-346.) The Giants appealed. (See Code Civ. Proc., § 1294,

subd. (a) [an aggrieved party may appeal from “[a]n order

dismissing or denying a petition to compel arbitration”].)

The Court of Appeal agreed with the Giants and reversed

the order denying the motion to compel arbitration. It explained

that, “[a]lthough no provision of the CBA provides an explicit

answer, the duration of the employment relationship must be

derived from what is implicit in the agreement.” (Melendez,

supra, 16 Cal.App.5th at p. 346.) It cited numerous provisions

of the agreement that it believed must be interpreted to resolve

this controversy: “There are numerous provisions from which

inferences may logically be drawn. The classification of

employees is based on the number of hours worked in a year,

itself suggesting that employment is considered to continue

beyond the conclusion of each event. Continued classification as

a ‘regular’ employee requires at least 1,700 hours of work in a

year. ‘All employees shall be probationary employees for their

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first five hundred (500) hours of work with the Giants.’

Employees rise to ‘senior’ and ‘super senior’ status by working a

minimum of 300 hours each year for the last five or 10 years,

hardly possible if each event is deemed a separate

employment. . . . [T]he CBA provides that ‘All new applicants for

employment as security personnel shall be subject to prehire

drug screening and background investigation’; the language

seems to imply that such screening and investigation will occur

only once prior to the start of a single employment, and practice

under the agreement confirms this interpretation. The

specification of holidays in the CBA certainly implies yearlong

employment. And under the CBA, the Giants have the right to

discharge an employee only for cause. Other provisions may

also support inferences as to the intended term of employment.”

(Id. at pp. 346-347.)

We granted plaintiffs’ petition for review limited to the

question of whether this action is preempted because it requires

interpretation of a collective bargaining agreement.

II. DISCUSSION

Section 301(a) of the Labor Management Relations Act of

1947 (29 U.S.C. § 185(a)) (hereafter section 301(a)) provides:

“Suits for violation of contracts between an employer and a labor

organization representing employees in an industry affecting

commerce as defined in this chapter, or between any such labor

organizations, may be brought in any district court of the United

States having jurisdiction of the parties, without respect to the

amount in controversy or without regard to the citizenship of the

parties.” (See Lingle v. Norge Division of Magic Chef, Inc. (1988)

486 U.S. 399, 403 (Lingle).) “Courts typically refer to the

statutory provisions at issue as ‘section 301(a)’ rather than by

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citation to the United States Code.” (Knutsson v. KTLA, LLC

(2014) 228 Cal.App.4th 1118, 1126.)

“In a series of opinions, the Supreme Court concluded that

§ 301’s jurisdictional grant required the ‘complete preemption’

of state law claims brought to enforce collective bargaining

agreements.” (Balcorta v. Twentieth Century-Fox Film Corp.

(9th Cir. 2000) 208 F.3d 1102, 1107 (Balcorta).) The main

policies behind this preemption rule are to “ensure nationwide

uniformity with respect to the interpretation of collective

bargaining agreements and preserve arbitration as the primary

means of resolving disputes over the meaning of collective

bargaining agreements.” (Sciborski v. Pacific Bell Directory

(2012) 205 Cal.App.4th 1152, 1163 (Sciborski), citing Lingle,

supra, 486 U.S. at p. 404, Allis-Chalmers Corp. v. Lueck (1985)

471 U.S. 202, 211, 219 (Allis-Chalmers).)

After reviewing the high court opinions that developed the

preemption rule, the Balcorta court explained that “[a]lthough

the language of § 301 is limited to ‘[s]uits for violation of

contracts,’ courts have concluded that, in order to give the

proper range to § 301’s policies of promoting arbitration and the

uniform interpretation of collective bargaining agreement

provisions, § 301 ‘complete preemption’ must be construed to

cover ‘most state-law actions that require interpretation of labor

agreements.’ [Citations.] One reason for expanding complete

preemption beyond the textual confines of § 301 is that any

claim the resolution of which requires the interpretation of a

collective bargaining agreement presents some risk to the policy

of uniformity if state law principles are employed in that

interpretation, even if the claim is not one for breach of contract.

[Citing Lingle, supra, 486 U.S. at pp. 405-406, Livadas, supra,

512 U.S. at pp. 121-123.] Moreover, extending complete

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preemption to cover claims involving interpretation of collective

bargaining agreements promotes the federal policy favoring

arbitration of labor disputes . . . .” (Balcorta, supra, 208 F.3d at

p. 1108, fn. omitted.)

Critically, Balcorta also explained that “[t]here is another

strand to this aspect of federal labor law, however. Despite the

breadth of § 301 complete preemption, ‘not every claim which

requires a court to refer to the language of a labor-management

agreement is necessarily preempted.’ [Citation.] In order to

help preserve state authority in areas involving minimum labor

standards, the Supreme Court has distinguished between

claims that require interpretation or construction of a labor

agreement and those that require a court simply to ‘look at’ the

agreement. See Livadas, supra, 512 U.S. at 123-126, 124, 114

S.Ct. 2068 (“[W]hen the meaning of contract terms is not subject

to dispute, the bare fact that a collective bargaining agreement

will be consulted in the course of state-law litigation plainly does

not require the claim to be extinguished.”). We have stressed

that, in the context of § 301 complete preemption, the term

‘interpret’ is defined narrowly — it means something more than

‘consider,’ ‘refer to,’ or ‘apply.’ ” (Balcorta, supra, 208 F.3d at p.

1108.) Moreover, “ ‘look[ing] to’ the CBA merely to discern that

none of its terms is reasonably in dispute does not require

preemption.” (Cramer v. Consolidated Freightways, Inc. (9th

Cir. 2001) 255 F.3d 683, 692 (en banc) (Cramer), citing Livadas,

supra, 512 U.S. at p. 125.)

“Preemption does not arise when interpretation is

required only by a defense. [Citing Caterpillar Inc. v. Williams

(1987) 482 U.S. 386, 398-399, Cramer, supra, 255 F.3d at p. 690.]

Preemption occurs when a claim cannot be resolved on the

merits without choosing among competing interpretations of a

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collective bargaining agreement and its application to the claim.

The determination of whether a claim is preempted depends on

the particular facts of each case.” (Sciborski, supra, 205

Cal.App.4th at pp. 1164-1165.) “The primary point of reference

in the preemption analysis is . . . not state law writ large . . . but

the plaintiff’s pleading.” (Alaska Airlines Inc. v. Schurke (9th

Cir. 2018) 898 F.3d 904, 923 (en banc) (Alaska Airlines).) The

inquiry is not “into the merits of a claim; it is an inquiry into the

claim’s ‘legal character’ — whatever its merits — so as to ensure

it is decided in the proper forum. . . . Our only job is to decide

whether, as pleaded, the claim ‘in this case is “independent” of

the [CBA] in the sense of “independent” that matters for . . . preemption

purposes: resolution of the state-law claim does not

require construing the collective-bargaining agreement.’ ” (Id.

at p. 924.)

The high court has also said that preemption applies

“when resolution of a state-law claim is substantially dependent

upon analysis of the terms of an agreement made between the

parties in a labor contract.” (Allis-Chalmers, supra, 471 U.S. at

p. 220.)

These concepts are not bright lines. “ ‘[T]he line between

reference to and interpretation of an agreement may be

somewhat hazy’ ” (Balcorta, supra, 208 F.3d at p. 1108), and

“ ‘[s]ubstantial dependence’ on a CBA is an inexact concept,

turning on the specific facts of each case . . . .” (Cramer, supra,

255 F.3d at p. 691.) But “the totality of the policies underlying

§ 301 — promoting the arbitration of labor contract disputes,

securing the uniform interpretation of labor contracts, and

protecting the states’ authority to enact minimum labor

standards — guides our understanding of what constitutes

‘interpretation.’ ” (Balcorta, at pp. 1108-1109.)

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As an overarching principle, the high court has also

“emphasized that ‘pre-emption should not be lightly inferred in

this area, since the establishment of labor standards falls within

the traditional police power of the State.’ ” (Lingle, supra, 486

U.S. at p. 412.) Although a policy exists in ensuring uniformity

of interpretation of collective bargaining agreements, no such

policy exists in favor of uniformity of state labor standards.

Federal law “does not provide for, nor does it manifest any

interest in, national or systemwide uniformity in substantive

labor rights.” (Alaska Airlines, supra, 898 F.3d at p. 919.)

Sciborski summarized the analytical process a court

should use to apply these principles. “Under section 301

preemption analysis, it is helpful to apply a two-part test to

determine whether a claim is preempted. First, the court should

evaluate whether the claim arises from independent state law

or from the collective bargaining agreement. If the claim arises

from the collective bargaining agreement, the claim is

preempted as a matter of law. [Citation.] However, if the claim

arises from independent state law, the court must then proceed

to the second step. In this step, the court determines whether

the claim requires ‘interpretation or construction of a labor

agreement,’ or whether a collective bargaining agreement will

merely be ‘reference[d]’ in the litigation. [Citations.] A state

law claim is preempted if a court must interpret a disputed

provision of the collective bargaining agreement to determine

whether the plaintiff’s state law claim has merit.” (Sciborski,

supra, 205 Cal.App.4th at p. 1164; see Kobald v. Good

Samaritan Regional Medical Center (9th Cir. 2016) 832 F.3d

1024, 1032-1033 [similar].) “At this second step of the analysis,

‘claims are only preempted to the extent there is an active

dispute over “the meaning of contract terms.” ’ ” (Curtis v. Irwin

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Industries, Inc. (9th Cir. 2019) 913 F.3d 1146, 1153, quoting

Alaska Airlines, supra, 898 F.3d at p. 921; see McCray v.

Marriott Hotel Services, Inc. (9th Cir. 2018) 902 F.3d 1005, 1013

[a “speculative possibility” that a collective bargaining

agreement dispute may arise later in the course of litigation will

not preempt a state law claim when none of the collective

bargaining agreement’s terms are presently in dispute].)

The first step in this analytical process is easy in this case.

Plaintiffs’ claim arises solely from independent state law —

Labor Code section 201 — and is not based on the collective

bargaining agreement.

Because the difference between interpreting and merely

referencing a collective bargaining agreement is inherently

“ ‘hazy’ ” (Balcorta, supra, 208 F.3d at p. 1108), the second step

is more difficult. But, bearing in mind that preemption should

not be lightly inferred because establishing minimum labor

standards comes within a state’s traditional police power, we

conclude this lawsuit is not preempted. The parties’ dispute

turns on an interpretation of California’s independent labor

laws, not on an interpretation of the collective bargaining

agreement.

As noted, Labor Code section 201, subdivision (a),

provides, “If an employer discharges an employee, the wages

earned and unpaid at the time of discharge are due and payable

immediately.” In Smith v. Superior Court (2006) 39 Cal.4th 77

(Smith), we construed the word “discharge” in this statute.

There, L’Oreal USA, Inc. hired the plaintiff to be a “hair model”

working for a single day. At the end of that day, the employment

relationship ended. But L’Oreal failed to pay her for more than

two months. She sued, claiming a violation of Labor Code

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section 201. Because the employment relationship was

voluntarily terminated, L’Oreal argued she was not discharged

under the statute. We stated the issue as “whether the

discharge element of [Labor Code sections 201 and 203] requires

an involuntary termination from an ongoing employment

relationship, such as when an employer fires an employee, or

whether this element also may be met when an employer

releases an employee after completion of a specific job

assignment or time duration for which the employee was hired.”

(Smith, at p. 81.) We concluded that “the statutory element

contemplates both types of employment terminations.” (Ibid.)

In reaching this conclusion, we noted that a “commonly

understood meaning of ‘discharge’ includes the action of an

employer who, having hired an employee to work on a particular

job or for a specific term of service, formally releases the

employee and ends the employment relationship at the point the

job or service term is deemed complete.” (Smith, supra, 39

Cal.4th at p. 84.) We held that “discharge” in this context

includes this commonly understood meaning. (Id. at p. 90.)

The parties debate at length how Smith, supra, 39 Cal.4th

77, applies here. The Giants argue that “[a]n employee cannot

be simultaneously discharged under statute while continuing to

remain continuously and gainfully employed by contractual

agreement.” They contend that “[t]his is a case about which

Labor Code protections apply.” In their view, Labor Code

section 204 — which applies to wages not governed by other

provisions such as Labor Code section 201, and which requires

semimonthly wage payments and places strict limits on the time

that may elapse between performance of labor and payment for

that labor — governs security guards. They also rely on a

declaration by the Giants’ senior director of security explaining

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the employment process that, they contend, shows plaintiffs are

not continually discharged. Plaintiffs argue that they are

“temporarily laid off” every time a specific job assignment ends,

and such layoffs are discharges within the meaning of Labor

Code section 201. They are willing to concede that, by the terms

of the collective bargaining agreement, their employment

relationship with the Giants is a continuing one. But they

contend that “[e]ven if the CBA contained an undisputed term

providing that security guards are employed for life, the layoffs

they endure would still trigger the employer obligations

contained in Labor Code section 201.” The parties also discuss

the legislative history behind the statute and the meaning and

significance of interpretations of it by the Division of Labor

Standards Enforcement.

These are credible arguments, and they will have to be

considered when the trial court resolves the merits of this

lawsuit on remand. But they are arguments concerning the

meaning of “discharge” under Labor Code section 201, not

concerning the meaning of the collective bargaining agreement.

The parties have pointed us to no disagreement concerning the

meaning of any provision of the agreement.

Closely on point is Balcorta, supra, 208 F.3d 1102. In that

case, the plaintiff, an electrical rigger in the film industry,

“worked several short-term ‘calls’ ” for Twentieth Century Fox

Film Corporation. (Id. at p. 1104.) He sued the corporation,

claiming a violation of Labor Code former section 201.5, which,

he alleged, required him to be paid within 24 hours of each call.

As here, the reviewing court had to decide whether the lawsuit

was preempted under section 301(a). The court held it was not.

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Balcorta concluded that the collective bargaining

agreement in that case had to be consulted but not interpreted.

“Although the provisions do detail fairly complicated procedures

and contain a hefty dose of industry jargon, their meaning is

neither uncertain nor ambiguous. A court may be required to

read and apply these provisions in order to determine whether

an employee was discharged from his ‘call’ at the end of his shift,

but no interpretation of the provisions would be necessary.”

(Balcorta, supra, 208 F.3d at pp. 1109-1110.) “[D]etermining

whether Balcorta was discharged does not require a court to

interpret the collective bargaining agreement . . . , and thus does

not render Balcorta’s claims subject to complete preemption.”

(Id. at p. 1110.)

Balcorta also explained that labor law rights such as that

under Labor Code former section 201.5, are not negotiable and

that section “301 does not permit parties to waive, in a collective

bargaining agreement, nonnegotiable state rights . . . .”

(Balcorta, supra, 208 F.3d at p. 1111; see Lab. Code, § 219 [“no

provision of this article can in any way be contravened or set

aside by a private agreement, whether written, oral, or

implied”].) Accordingly, the collective bargaining agreement did

not have to be interpreted to determine whether it waived the

right to timely payment of wages under state law. (Balcorta, at

pp. 1111-1112.)

Although this case involves Labor Code section 201, not

Labor Code former section 201.5, we believe the same result

applies. The collective bargaining agreement must be consulted

or referenced, but not interpreted. Nor is resolution of the state

law claim “substantially dependent upon analysis of the terms

of” the collective bargaining agreement. (Allis-Chalmers, supra,

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471 U.S. at p. 220.) Instead, Labor Code section 201 must be

interpreted.

The Court of Appeal in this case concluded that plaintiffs’

claim was preempted based on “inferences . . . drawn” from

several provisions of the collective bargaining agreement.

(Melendez, supra, 16 Cal.App.5th at p. 346.) It cited provisions

that define seniority and wage levels, pre-hire drug screening

and background investigation, and annual holidays. Those

provisions may be relevant, but none directly address whether

the Giants, at the end of each event or series of home games,

“discharge” plaintiffs pursuant to Labor Code section 201. As

the Court of Appeal recognized, no provision of the agreement

“provides an explicit answer.” (Melendez, at p. 346.) Nor do

those provisions require interpretation in the narrow sense in

which that word is used for preemption purposes. The parties

have not identified any provision of the collective bargaining

agreement whose meaning is “ambiguous” (Balcorta, supra, 208

F.3d at p. 1109) or subject to “active dispute.” (Alaska Airlines,

supra, 898 F.3d at p. 921.) Indeed, nothing in the agreement

addresses the timing of wage payments, which shows that

plaintiffs’ complaint is aimed at an issue separate from the

benefits bargained for in the agreement.

Our finding that the action is not preempted is consistent

with the policies underlying section 301(a). Allowing a state

court to interpret Labor Code section 201 does not threaten the

policies of “promoting the arbitration of labor contract disputes”

or “securing the uniform interpretation of labor contracts.”

(Balcorta, supra, 208 F.3d at pp. 1108-1109.) But, importantly,

it does “protect[] the states’ authority to enact minimum labor

standards.” (Id. at p. 1109.) It is up to state courts, not an

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arbitrator, to interpret state labor law standards applicable to

all workers.

We express no view on the parties’ interpretations of

Labor Code section 201 or the ultimate merits of this lawsuit,

which are not before us in this appeal from the denial of the

motion to compel arbitration, and on which no court has yet

ruled. We hold only that section 301(a) does not preempt this

lawsuit. The merits will have to be resolved when the matter is

remanded to the trial court.

The trial court correctly denied the motion to compel arbitration. Accordingly, we reverse the judgment of the Court of Appeal and remand the matter to that court for further proceedings consistent with this opinion.