Union Pac. R.R. Co. v. Feek

1

UNION PACIFIC RAILROAD COMPANY, Plaintiff, v. CAMI FEEK, IN HER OFFICIAL CAPACITY AS COMMISSIONER OF THE WASHINGTON STATE EMPLOYMENT SECURITY DEPARTMENT, Defendant.

No. 3:23-cv-05028-RAJ

United States District Court, W.D. Washington, Seattle

March 28, 2024

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

The Honorable Richard A. Jones, United States District Judge

I. INTRODUCTION

THIS MATTER comes before the Court on Defendant's Motion to Dismiss Pursuant to FRCP 12(B)(1). (“Motion”). Dkt. # 15. Plaintiff opposes the Motion. Dkt. #18. Defendant filed a reply. Dkt # 19. Neither party requested oral argument. Having reviewed the Motion, record, and relevant law, the Court GRANTS Defendant's Motion.

II. BACKGROUND

The Washington Paid Family and Medical Leave Act (“PFML”), RCW 50A.05.005, et seq., provides paid sick leave benefits to Washington employees. Passed in 2017, the law established a statewide insurance program-funded by premiums charged against employee wages-to provide paid leave to Washington workers. The Washington Legislature, in passing the law, declared it to be “in the public interest to create a family and medical leave insurance program to provide reasonable paid family leave for” the birth or placement of a child and care of a family member with a serious health condition, and reasonable paid medical leave “for an employee's own serious health condition.” RCW 50A.05.005. The PFML requires employers to collect premiums via mandatory payroll deductions, and the amounts collected are remitted to the Employment Security Department (“ESD”). RCW 50A.10.030.

Plaintiff Union Pacific Railroad Company (“Union Pacific” or “Plaintiff”) is a Nebraska-based Class I railroad that provides freight transportation services in 23 states, including Washington. Dkt. # 1 (Complaint) ¶ 4, 5, 6. Defendant Cami Feek (“Defendant”), is being sued in her official capacity as ESD Commissioner. Id. ¶ 7.

According to the Complaint, Union Pacific employee Mitchell Knobbe took leave from January 4, 2022 to September 29, 2022. Id. ¶ 20. Mr. Knobbe filed an application for paid family and medical leave with ESD, and ESD issued a decision approving him for leave from January 4 to April 2, 2022. Id. ¶ 21, 22. On March 4, 2022, Plaintiff appealed ESD's decision, arguing that Washington's PMFL was preempted as to railroad carriers like Union Pacific. Id. ¶ 23. Plaintiff's appeal was assigned to the Washington Office of Administrative Hearings. Id. ¶ 24. According to Plaintiff, in the administrative proceeding, Defendant took the position that the PFML applies to Plaintiff, and the matter has “fully resolved.” Dkt. # 18 at 21.

Plaintiff's complaint alleges that the Railroad Unemployment Insurance Act (“RUIA”), 45 U.S.C. § 351, et seq., which requires that railroads pay for sickness benefits for employees that are unable to work due to illness or injury, expressly preempts other laws (such as the PFML) as to railroad employees.^[1]Id. ¶ 2, 13, 32. Additionally, Plaintiff argues, the Adamson Act, 49 U.S.C. § 28301, preempts Defendant from mandating paid sick leave benefits beyond those that are collectively bargained for. Id. ¶ 2. Plaintiff requests that this Court: 1) declare that the PFML is preempted by the RUIA, Plaintiff is not subject to the PFML, and Union Pacific employees are not entitled to benefits under the PFML; 2) enter a permanent injunction prohibiting Defendant from applying the PFML to Plaintiff or its RUIA-covered employees; 3) declare that the PFML is preempted by the Adamson Act, Plaintiff is not subject to the PFML, and Union Pacific employees are not entitled to benefits under the PFML; and 4) enter a permanent injunction prohibiting Defendant from applying the PFML to Plaintiff or its employees who are subject to collective bargaining. Id. ¶ 33, 40. On March 7, 2023, Defendant filed a motion to dismiss for lack of subject matter jurisdiction, arguing that the Tax Injunction Act (TIA), 28 U.S.C. § 1341, bars Plaintiff's claims. Dkt. # 15. Further, Defendant argues that Plaintiff lacks standing to challenge the law, and that the Employment Security Department is the real party in interest and therefore immune from suit under the Eleventh Amendment. Id. at 2-3.

III. LEGAL STANDARD

A party may move to dismiss a case for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). Federal courts are tribunals of limited jurisdiction and may only hear cases authorized by the Constitution or a statutory grant. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The burden of establishing subject matter jurisdiction rests upon the party seeking to invoke federal jurisdiction. Id. A challenge brought under Rule 12(b)(1) may be facial, where the inquiry concerns the allegations made in the complaint; or factual, where the court may look beyond the complaint to extrinsic evidence. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004); see also McCarthy v. U.S., 850 F.2d 558, 560 (9th Cir. 1988) (“Moreover, when considering a motion to dismiss pursuant to Rule 12(b)(1) the district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.”).

Here, Defendant asserts a facial, rather than factual, jurisdictional challenge. “In a facial attack, the challenger asserts that the allegations contained in the complaint are insufficient on their face to invoke federal jurisdiction.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). If it is determined that a federal court lacks subjectmatter jurisdiction, the court has no choice but to dismiss the suit. Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006); Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”).

IV. DISCUSSION

Defendant advances several arguments in support of dismissal. First, Defendant argues that this Court lacks subject matter jurisdiction because the Tax Injunction Act (“TIA”) bars the relief Plaintiff seeks because Plaintiff seeks to enjoin the collection of state taxes. Dkt. # 15 at 5. Next, Defendant argues, Plaintiff lacks standing because Union Pacific has failed to allege an injury that is concrete and remediable by a federal court. Because of this, there is no “actual and substantial controversy” between the parties. Id. at 14-19. Finally, Defendant asserts that the Eleventh Amendment bars all claims against ESD and Commissioner Cami Feek. Id. at 21.

Plaintiff counters that the Ninth Circuit recently held that a similar California leave act was pre-empted by the RUIA and asks this Court to follow suit. Dkt. # 18 at 1 (citing National R.R. Passenger Corp. v. Su, 41 F.4th 1147 (9th Cir. 2022)). Further, Plaintiff argues, Union Pacific contests the entire regulatory scheme of the PFML and not just ESD's assessment of premiums under the law; therefore, the TIA does not bar its suit. Because the TIA is “meant to be a broad jurisdictional impediment to federal court interference with the administration of state tax systems,” Dillion v. State of Mont., 634 F.2d 463, 466 (9th Cir. 1980), the Court will consider Defendant's argument against subject matter jurisdiction at the outset. See also May Trucking Co. v. Oregon Dep't of Transp., 388 F.3d 1261, 1266 (9th Cir. 2004) (The TIA has been interpreted as a “broad jurisdictional barrier.”) (citations omitted).

A.) Applicability of the Tax Injunction Act to Plaintiff's Claims

Defendant argues that Plaintiff's claims brought under the RUIA and Adamson Act are barred by the Tax Injunction Act (TIA), as the relief sought by Plaintiff amounts to an injunction enjoining the collection of payroll taxes via PFML premiums. Dkt. # 15 at 8. The TIA provides that district courts “shall not enjoin, suspend or restrain the assessment levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.” 28 U.S.C. § 1341.

Congress' intent in enacting the Act was “to prevent federal-court interference with the assessment and collection of state taxes,” and the Act prohibits both declaratory and injunctive relief. California v. Grace Brethren Church, 457 U.S. 393, 409, 102 S.Ct. 2498 (1982). A “broad jurisdictional barrier,” the Act “has its roots in equity practice, in principles of federalism, and in recognition of the imperative need of a State to administer its own fiscal operations.” Lowe v. Washoe County, 627 F.3d 1151, 1155 (9th Cir. 2010) (citations omitted).

At the outset, Plaintiff argues that the TIA does not apply because Plaintiff challenges the entirety of the law, and not merely the premiums. Dkt. # 18 at 6. Relying on Direct Marketing Ass'n v. Brohl, 575 U.S. 1, 135 S.Ct. 1124 (2015), Plaintiff argues that it is not seeking to “restrain” the “assessment, levy, or collection” of taxes, because no premiums have yet been asserted against Union Pacific. Id. at 8. According to Plaintiff, because Union Pacific has not yet paid PFML premiums and because Plaintiff seeks declaratory and injunctive relief that would ensure that it does not have to comply with any part of the law, the TIA does not apply.

This Court must consider the nature of the relief requested and whether the relief will enjoin, suspend, or restraint the assessment, levy, or collection of state taxes. Hibbs v Winn, 542 U.S. 88, 99, 124 S.Ct. 2276 (2004). Here, Plaintiff seeks an order declaring that the PFML is preempted by both the RUIA and the Adamson Act and a permanent injunction prohibiting Defendant from applying the PFML to Plaintiff or its employees covered under the RUIA or subject to collective bargaining. Dkt. # 1 ¶ 27-40. Such...