00-1320 In Re: Bentz Metal Products Co., Inc.: Faehnrich v. Bentz

Listen to this article

“In our case, as in Bluffton Castings, the employees’ rights to the monies due, and the precise amount, depend on the collective bargaining agreement. Here, that sum is undisputed. Nevertheless, it remains true that the entitlement to the money due is laid out in the CBA. If entitlement or the amount due were seriously in dispute, as to these questions interpretation of the CBA would be necessary and would be resolved in the appropriate way-arbitration followed by confirmation, or a direct 301 suit in federal court if arbitration is not called for in the CBA. But whether the amount due is resolved, as here, by stipulation, or whether it is resolved through procedures set out in the CBA, the contract issues are separate from the claim the employees presented to the bankruptcy court. Once the contract issues are resolved, the employees can present their separate claim in bankruptcy for priority based on the Indiana mechanic’s lien statute. The priority among creditors in a bankruptcy proceeding is not dependent on a CBA. It is not something which a collective bargaining agreement can or does dictate. No amount of interpretation of a CBA and no arbitrator’s decision would, independent of the state law lien, compel a bankruptcy court to let employees jump ahead of a bank in the money line.”

Reversed and remanded.

DISSENTING OPINION: Bauer, J. “I am convinced that preemption applies because the employees’ claims are founded on rights created by the CBA. The interpretation prong has been generally applied when independent state rights are implicated, such as tort actions, which require some interpretation of the CBA to resolve. When a cause of action is created by state law, independent of the CBA, a court must determine whether the CBA needs to be interpreted or if a quick look is enough. See Loewen Group Int’l, Inc. v. Haberichter, 65 F.3d 1417, 1421 (7th Cir. 1995). The employees here seek unpaid vacation pay owing to them only under the CBA, which Bentz failed to pay because it went bankrupt. This means, simply put, that for whatever reason, including lack of funds, Bentz breached its contract with its employees. The employees seek to enforce the CBA, and therefore their claims are wholly founded on rights created by the CBA. This is not a case in which the employees seek enforcement of a state right independent of the CBA. As the majority notes, federal law preempts a claim for breach of a CBA. See ante at 4. Since the employees’ claims are founded on the CBA, the interpretation prong is not implicated, and the employees’ state mechanic’s liens are preempted.”

00-1320 In Re: Bentz Metal Products Co., Inc.: Faehnrich v. Bentz

Appeal from the United States District Court for the Northern District of Indiana, Lee, J., Evans, J.