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McCray v. Marriott Hotel Services, Inc.

United States Court of Appeals, Ninth Circuit

August 31, 2018

Ian McCray, an individual, and on behalf of himself, and on behalf of all other persons similarly situated, Plaintiff-Appellant,
Marriott Hotel Services, Inc., a Delaware corporation; SJMEC, Inc., a California corporation, Defendants-Appellees.

          Argued and Submitted June 11, 2018 San Francisco, California

          Appeal from the United States District Court No. 5:16-cv-02092-NC for the Northern District of California Nathanael M. Cousins, Magistrate Judge, Presiding

          James L. Pagano (argued) and Ian A. Kass, Pagano & Kass APC, San Jose, California, for Plaintiff-Appellant.

          William J. Dritsas (argued), Seyfarth Shaw LLP, San Francisco, California; Michael W. Kopp, Seyfarth Shaw LLP, Sacramento, California; for Defendants-Appellees.

          Paul L. More, McCracken Stemerman & Holsberry LLP, San Francisco, California, for Amicus Curiae Unite Here Local 19.

          Before: Mary M. Schroeder, Ronald M. Gould, and Albert Diaz, [*] Circuit Judges.


         Labor Law

         The panel vacated the district court's grant of summary judgment in favor of the defendant and its denial of the plaintiff's motion to remand to state court an action alleging violation of a City of San Jose minimum wage ordinance.

         The defendant had removed the case from state court on the basis that the plaintiff's claims were preempted by § 301 of the Labor Management Relations Act. The panel held that the district court lacked subject matter jurisdiction to hear the case, which amounted to an interpretive challenge to the San Jose ordinance, rather than a lawsuit that required substantial analysis of the plaintiff's union's collective-bargaining agreement. The panel remanded with instructions for the district court to return the case to state court for further proceedings.

         Dissenting, Judge Schroeder wrote that she would affirm the district court because the case substantially depended upon analysis of the terms of the collective-bargaining agreement, which should be interpreted in accordance with federal law.



         When the City of San Jose enacted an ordinance that established a minimum wage of $10/hour, the San Jose Marriott Hotel continued to pay Ian McCray and other employees less. It turned out that McCray's union had negotiated with Marriott and agreed to waive the ordinance's minimum-wage requirement so that it could bargain for other benefits for its members.

         McCray sued Marriott in state court. He says that the ordinance doesn't allow for waiver, and so Marriott owes him the difference between what he was paid and the new minimum wage. Marriott removed the case to federal court on the basis that McCray's claims are preempted by § 301 of the Labor Management Relations Act (the "LMRA"), 29 U.S.C. § 185. The district court concluded that McCray failed to first exhaust his claim through a required grievance process and granted summary judgment to Marriott.

         Whether McCray's claims were exhausted or not, the district court was without jurisdiction to hear this case. While we recognize the strong preemptive force of § 301, McCray's lawsuit amounts to an interpretive challenge to the San Jose ordinance, not one that requires substantial analysis of his union's collective-bargaining agreement. We therefore vacate the district court's denial of remand and grant of summary judgment. We remand this case so that it may be returned to state court for further proceedings.


         In 2012, voters in San Jose, California, considered a ballot initiative that would establish a new minimum wage for most of the city's workers. Under the proposed ordinance, employees would be paid a minimum wage of $10 an hour, subject to cost-of-living adjustments over time. See San Jose, Cal., Mun. Code § 4.100.040. The ordinance also purported to give employers and employees the ability to waive the minimum wage requirements through collective bargaining. "To the extent required by federal law," the proposed law provided, "all or any portion of the applicable requirements of this Chapter may be waived in a bona fide collective bargaining agreement, provided that such waiver is explicitly set forth in such agreement in clear and unambiguous terms." Id. § 4.100.050.

         Meanwhile, Ian McCray was employed at the Marriott Hotel in San Jose. There, he performed several hospitality-related jobs, including working as a busser, then later a server, in the hotel's restaurant. As a busser, McCray received an hourly wage of $10.80. When McCray became a server, his hourly wage decreased to $9, but he generally wound up taking home more pay than he had as a busser because of tips he received from customers.

         Throughout his employment with Marriott, McCray was represented by the union Unite Here, Local 19. The terms of McCray's employment were governed by a collective-bargaining agreement (a "CBA") entered into between Unite Here and Marriott. Anticipating the passage of San Jose's minimum wage ordinance, Marriott and the union executed an addendum to the CBA, prospectively opting out of the minimum wage requirement. The waiver explained that should the ordinance become law, the "Employer and the Union, through collective bargaining, have agreed to explicitly waive as part of the parties['] collective bargaining agreement, all provisions and requirements of the City of San Jose Minimum Wage Ordinance." EOR 119. The ballot initiative passed, and the ordinance and waiver took effect in 2012.

         Shortly thereafter, McCray, then earning $9 an hour as a server, spoke with a Marriott human resources employee and a representative from his union and asked why he was being paid less than the new minimum wage.[1] McCray was told that the union had opted out of the minimum wage ...

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