893 F.3d 636

BEA, Circuit Judge, dissenting:
The majority opinion ignores clear guidance from the Supreme Court regarding the meaning of section 301(a) of the Labor Management Relations Act (the "LMRA"), see 29 U.S.C. § 185(a), and, in doing so, reaches a formalistic and impractical result which gives to a game-playing party, who is perhaps in violation of a collective bargaining contract ("CBA"), the option to avoid the federal court jurisdiction provided by section 301(a) of the National Labor Relations Act. Because I think this court is bound to give the Supreme Court's guidance deference, I respectfully dissent.
I
Plaintiff-Appellant Nu Image, Inc. ("Nu Image") is an independent movie production and marketing company. Defendant-Appellee International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied Crafts of the United States, Its Territories and Canada ("IATSE") is a labor union that represents motion picture production crew members.
In 2006, Nu Image and IATSE negotiated a universal CBA to govern their future dealings (the "Overall CBA"). The Overall CBA incorporated by reference a form CBA used by IATSE to govern its relationship with a variety of production companies. The form CBA included a provision that required production companies to make "residual contribution" payments to certain defined benefit plans (the "Plans"). During negotiations, Nu Image claims that it made it clear that it would not enter into the Overall CBA if it were required to make residual contribution payments to the Plans. Nu Image claims that, in response, IATSE represented to Nu Image that neither IATSE nor the Plans would seek residual contribution payments from Nu Image. The parties then entered into the Overall CBA.
For seven years, Nu Image and IATSE operated and worked under the Overall CBA. Nu Image did not make residual contribution payments to the Plans. Neither the Plans nor IATSE requested residual contribution payments. In May 2013, however, the Plans, as beneficiaries to the Overall CBA, sued Nu Image for failure to make the residual contribution payments from 2006 through 2010 (the "First Plans-Nu Image Lawsuit"). Nu Image asked IATSE to inform the Plans that Nu Image was not required to make those payments, and to execute a side letter to that effect, but IATSE declined to do so.
When IATSE refused to execute the requested side letter, Nu Image filed a grievance against IATSE under the Overall CBA alleging that IATSE had fraudulently induced Nu Image to enter into the Overall CBA (the "Nu Image Grievance"). Importantly, Nu Image could not raise these arguments in the First Plans-Nu Image Lawsuit because fraud in the inducement of the underlying contract is not a defense in certain ERISA actions, such as the First Plans Nu-Image Lawsuit. See Sw. Administrators, Inc. v. Rozay's Transfer , 791 F.2d 769, 775 (9th Cir. 1986). As a result, Nu Image's only remedy was to seek indemnification from IATSE against the claims brought by the Plans in the First Plans-Nu Image Lawsuit.
In 2015, while the Nu Image Grievance was pending, Nu Image settled the First Plans-Nu Image Lawsuit with the Plans. But, in the meantime, the Plans sued Nu Image again, this time alleging that Nu Image had failed to make the required residual contribution payments from 2011 through 2014 (the "Second Plans-Nu Image Lawsuit"). The Second Plans-Nu Image Lawsuit was dismissed without prejudice to allow the Plans to conduct a further audit of Nu Image.
In March 2015, IATSE submitted a grievance against Nu Image, pursuant to the overall CBA. It claimed that Nu Image breached the overall CBA by failing to make the required residual contribution payments and that Nu Image's failure to make those payments was a "continuing breach" of the Overall CBA (the "IATSE Grievance"). IATSE sought to recover the difference between the residual contribution payments Nu Image should have made under the Overall CBA and the amount Nu Image had paid to the Plans to settle the First Plans-Nu Image Lawsuit.
Nu Image and IATSE moved toward arbitration on both the Nu Image Grievance and the IATSE Grievance. However, Nu Image then retained new counsel, who put the grievance proceedings on hold. Subsequently, Nu Image filed a complaint against IATSE in the District Court for the Central District of California (the "Complaint"). The Complaint alleges claims for Intentional Misrepresentation, Negligent Misrepresentation, and Declaratory Relief. In the Complaint, Nu Image seeks a judicial determination that residual contribution provisions of the Overall CBA do not apply to Nu Image and a finding that IATSE must indemnify Nu Image for any damages Nu Image incurs as a result of the Plans' lawsuits.
The Complaint asserted that the district court had subject matter jurisdiction pursuant to section 301(a) of the LMRA, which allows district courts to hear "Suits for violation of contracts between an employer and a labor organization." 29 U.S.C. § 185. IATSE filed a motion to dismiss the Complaint for lack of subject matter jurisdiction, arguing that the Complaint was not a suit "for violation of" a contract. See Fed. R. Civ. P. 12(b)(1). The district court agreed with IATSE and dismissed the Complaint. In response, Nu Image filed the instant appeal.
II
This case presents a difficult question, made more difficult by complicated precedent, regarding the scope of the federal court jurisdiction granted by section 301(a) that is complicated by precedent. Nu Image argues that the LMRA grants district courts jurisdiction to hear any case in which a party, or third party, has alleged a violation of a CBA, regardless whether the plaintiff in a given case specifically alleges a violation of a CBA as an element of its claims. IATSE, on the other hand, argues that section 301(a) grants jurisdiction to hear only those cases in which the plaintiff alleges a claim based on a violation of a CBA. Because Nu Image does not allege that there has been a violation by IATSE of the Overall CBA as an element of any of the claims in its Complaint, IATSE argues that section 301(a) does not provide the district court with subject matter jurisdiction in this case.
As the majority recognized, we have previously allowed claims substantively identical to Nu Image's to proceed under section 301(a). See Rozay's Transfer v. Local Freight Drivers, Local 208, Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am. , 850 F.2d 1321 (9th Cir. 1988). In Rozay's Transfer , we held that that the district court had jurisdiction under section 301(a) to "entertain this action alleging fraudulent inducement in the formation of the agreement." Id. at 1325-26. If Rozay's Transfer remains good law, the parties agree that the district court had subject matter jurisdiction over Nu Image's claims.
The majority correctly notes that the subsequent Supreme Court precedent has called our decision in Rozay's Transfer into doubt. See Textron Lycoming Reciprocating Engine Div., Avco Corp. v. United Auto., Aerospace, Agric. Implement Workers of Am., Int'l Union , 523 U.S. 653, 118 S.Ct. 1626, 140 L.Ed.2d 863 (1998). Thus, the first question we must answer in this case is whether Textron impliedly abrogated our decision in Rozay's Transfer .
I agree with the majority that Textron clearly abrogated the reasoning underlying Rozay's Transfer . In Textron , the Supreme Court held that " 'Suits for violation of contracts' under [section] 301(a) are not suits that claim a contract is invalid, but suits that claim a contract has been violated." Id. at 656-58, 118 S.Ct. 1626. The Textron explained that that a "Suit for violation of" a contract "is one filed because a contract has been violated ." Id. (emphasis in the original). The Court concluded that because "the [plaintiff] Union neither allege[d] that [the employer] has violated the contract, nor [sought] declaratory relief from its own alleged violation ," the suit was not one "for violation of" a CBA and, as a result, there was no jurisdiction under section 301(a). Id. (emphasis added).
It is this last, underlined statement from the Textron court that causes me to diverge from the majority's opinion. In short, although the majority is correct that Textron abrogates the reasoning of Rozay's Transfer , my view is that the majority errs when it ignores Textron 's clear guidance that section 301(a) extends subject matter jurisdiction to actions seeking declaratory relief from alleged violations of a CBA.
There are two relevant statements from Textron that lead me to conclude that the district court had subject matter jurisdiction over Nu Image's claims. First, Textron states that its holding "does not mean that a federal court can never adjudicate the validity of a contract under § 301(a)." Instead:
[ Section 301(a) ] simply erects a gateway through which parties may pass into federal court; once they have entered, it does not restrict the legal landscape they may traverse. Thus if, in the course of deciding whether a plaintiff is entitled to relief for the defendant's alleged violation of a contract, the defendant interposes the affirmative defense that the contract was invalid, the court may, consistent with § 301(a), adjudicate that defense. Similarly, a declaratory judgment plaintiff accused of violating a collective-bargaining agreement may ask a court to declare the agreement invalid. But in these cases, the federal court's power to adjudicate the contract's validity is ancillary to, and not independent of, its power to adjudicate "[s]uits for violation of contracts."
Id. (citations omitted) (emphasis added).
The Textron Court went on to note that:
[T]he Union neither allege[d] that Textron has violated the contract, nor [sought] declaratory relief from its own alleged violation . Indeed, as far as the Union's complaint disclose[d], both parties [were] in absolute compliance with the terms of the collective-bargaining agreement. Section 301(a) jurisdiction does not lie over such a case.
Id. (emphasis added).
When read in conjunction, these two statements imply that had the union in Textron sought "declaratory relief from its own alleged violation" of the CBA, the district court would have had jurisdiction under section 301(a). Because Nu Image seeks precisely that sort of relief in this case, these statements from Textron support the conclusion that the district court had jurisdiction over Nu Image's claims.
The majority makes much of the Textron court's statement regarding the "gateway" through which parties must pass into federal court. But the majority's reading of that passage is both strained and inconsistent with other portions of Textron . It is true that section 301(a) creates a "gateway" through which parties must pass before a district court may exercise jurisdiction over a claim that a CBA is invalid. But the Textron court provides two examples of cases that have passed through the jurisdictional gateway other than by alleging a violation of a contract as an element of a claim. First, a defendant in a section 301(a) suit who raises the invalidity of the CBA as a defense in a breach of contract action. Second, a plaintiff who brings a declaratory judgment action seeking relief from the plaintiff's alleged violation of a CBA.
The Textron court clearly meant both examples it gave to serve as illustrations of cases where the parties had passed through the gateway erected by section 301(a). That understanding is further confirmed by the Textron court's later statement that the district court lacked jurisdiction, in part, because the union did not seek "declaratory relief from its own alleged violation" of the CBA, implying that the district court would have had jurisdiction had the union sought declaratory relief from its alleged violation of the CBA. Seeking declaratory relief from an alleged violation of a CBA is sufficient to pass through section 301(a) 's gateway. If these two examples given by the Textron Court do not provide an illustration of situations in which federal courts have jurisdiction to hear disputes regarding CBAs, in addition to cases in which a plaintiff asserts a breach of contract action, what do the Textron Court's words mean? The majority opinion elides an answer.
In this case, because Nu Image seeks relief from its accused violation of the Overall CBA, it has passed through section 301(a) 's "gateway," and its claims should be allowed to proceed in federal court. This result makes sense. After all, a breach of contract claim and a claim seeking declaratory relief from an alleged violation of a contract are flip sides of the same coin. It would be strange indeed if a district court could exercise subject matter jurisdiction over one, but not the other. Instead, the Supreme Court correctly recognized that the power to hear declaratory judgment actions seeking relief from an accused violation of a contract is "ancillary" to, or part and parcel with, a court's power to hear the underlying breach of contract action.
Aside from its reference to the Textron court's "gateway," the majority provides no support for its decision to discard clear guidance from the Supreme Court. Ignoring the Supreme Court's direction, the majority insists that a violation of the CBA must be "an element of [Nu Image's] claim," a requirement found in neither the statute nor Textron . Such a formalistic approach defies the Textron court's reading of section 301(a) as providing jurisdiction over suits "filed because a contract has been violated." Simply put, a suit seeking declaratory relief from an alleged violation of a contract is a suit filed "because" of an accused violation of the contract.
Additionally, the majority's opinion means that parties in Nu Image's position cannot independently choose to present their arguments in a judicial forum. As discussed above, Nu Image could not raise its arguments regarding the validity of the CBA's residual contribution payment provision in the First or Second Plans-Nu Image Lawsuits because our precedent bars such arguments in certain ERISA cases. See discussion supra at 642-43. Thus, Nu Image was left to pay the Plans and seek compensation from IATSE after the fact. But while the majority's decision means that section 301(a) empowers IATSE to sue Nu Image in federal court for failure to make the residual contribution payments-a right the Plans also have under ERISA-it deprives Nu Image of the opportunity to press its claims or defenses in that same court unless IATSE chooses a judicial forum. This result is not only inefficient, it also gives one party-IATSE, in this case-the power to dictate whether another party-here, Nu Image-can raise its arguments in a judicial forum, or only in the grievance forum, which IATSE now prefers. The majority's opinion fails to justify this strange outcome.
To summarize, an examination of Textron in the context of this case would lead me to two holdings. First, I would hold that Textron has abrogated the reasoning of Rozay's Transfer . Not all suits asserting that a CBA is void invoke the district court's jurisdiction pursuant to section 301(a). Second, following Textron 's guidance, I would hold that a district court has jurisdiction to hear a declaratory judgment action brought by a plaintiff seeking relief from what a counterparty to the CBA has alleged is a violation of a CBA. Because Nu Image's Complaint seeks just this sort of relief, I would hold the district court had jurisdiction under section 301(a) to hear Nu Image's claims and erred in dismissing those claims for want of subject matter jurisdiction.
Textron did not directly address our opinion in Rozay's Transfer . Thus, any abrogation of our precedent would be implied, not direct.
In Textron , an employer and labor union negotiated a CBA. 523 U.S. at 654-55, 118 S.Ct. 1626. During negotiations, the labor union repeatedly asked the employer if it had any plans to shift its production to non-union channels; the employer stated that it had no such plans. Id. After the CBA had been signed, the employer announced plans to shift its production to non-union channels. Id. The union filed suit in federal court, seeking a declaration that the CBA was invalid due to the employer's misrepresentation. Id. The union claimed the district court had jurisdiction under section 301(a), but the district court dismissed the suit because it did not view it as a "suit for violation" of the CBA. Id. The third circuit reversed, holding that there was jurisdiction because the suit sought to invalidate the CBA. Id. The Supreme Court reversed the Third Circuit, finding that there was no jurisdiction under section 301. Id.
IATSE argues that these statements are mere dicta and should not overshadow Textron 's core holding. But IATSE's position is untenable in light of our repeated holding that we do "not treat considered dicta from the Supreme Court lightly. Rather, we accord it appropriate deference." United States v. Montero-Camargo , 208 F.3d 1122, 1132 n.17 (9th Cir. 2000). Indeed, "Supreme Court dicta 'have a weight that is greater than ordinary judicial dicta as prophecy of what that Court might hold'; accordingly, we do 'not blandly shrug them off because they were not a holding.' " Id. (quoting Zal v. Steppe , 968 F.2d 924, 935 (9th Cir.1992) (Noonan, J., concurring and dissenting)). This deference is particularly persuasive in light of our rule that well-reasoned dicta in panel opinions is the binding law of the circuit. See United States v. Johnson , 256 F.3d 895, 914 (9th Cir. 2001).
Notably, the Textron court does not require a declaratory judgment plaintiff to state in the complaint that it actually violated the CBA, merely that it has been "accused" of violating the CBA, as Nu Image has done here. 523 U.S. at 656, 118 S.Ct. 1626.
The parties vehemently disagree over what Justice Scalia expressed when he used the word "ancillary." IATSE argues that Justice Scalia was referring to the court's "ancillary jurisdiction," thereby implying that there had to be an independent basis for jurisdiction to allow the court to reach a declaratory judgment action. That interpretation is unpersuasive for a number of reasons. First, Justice Scalia did not specifically invoke the doctrine of "ancillary jurisdiction," which allowed federal courts to exercise jurisdiction over certain claims because they were closely related to claims over which the court had subject matter jurisdiction and was ultimately replaced by statute by the doctrine of supplemental jurisdiction. More importantly, by the time Textron was decided, the concept of "ancillary jurisdiction" had been replaced with "supplemental jurisdiction," which would make a reference to a legal doctrine that was defunct at the time odd at best. See 28 U.S.C. § 1367(a) (1990). It would be uncharacteristic of a punctilious wordsmith such as Justice Scalia to use a superseded term, without adding at least an "obs." (for obsolete) after "ancillary." Finally, Justice Scalia's statement regarding declaratory judgment plaintiffs came in the context of his examples of when a court could "adjudicate the validity of a contract under § 301(a)." 523 U.S. at 657-58, 118 S.Ct. 1626. This context indicates that these examples, including that of a declaratory judgment plaintiff, are examples where the court has jurisdiction under section 301(a). See A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts 180-82 (2012) (noting that the Harmonious-Reading Canon requires that "[t]he provisions of a text should be interpreted in a way that renders them compatible, not contradictory").
The majority contends that my reading of Textron would "expand section 301(a) beyond recognition" and grant any party access to federal court "merely by alleging that another party claimed, in any context , a contract violation." This characterization ignores Textron 's limiting guidance: a suit for violation of a contract is a suit "filed because a contract has been violated." This language demonstrates that there must be some causal link between the alleged contractual violation and the lawsuit. Thus, a plaintiff's mere allegation that another party had alleged a contract violation in a wholly unrelated context would be insufficient to invoke Section 301(a) 's jurisdictional grant. Here, however, Nu Image seeks declaratory relief from the very violation IATSE has alleged. There is a clear, definitive link between the alleged violation and Nu Image's claim, rendering this a suit "filed because a contract has been violated."
Finally, because I would hold that Textron did not here remove jurisdiction from the district court, it would be necessary to reach IATSE's alternative argument that Nu Image's claims are barred by the Supreme Court's opinion in Granite Rock Co. v. Int'l Bhd. of Teamsters , 561 U.S. 287, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010). I would hold that Granite Rock does not bar jurisdiction in this case. IATSE argues that Granite Rock stands for the proposition that no tort claim is cognizable under section 301(a) and, as a result, Nu Image's Complaint, which is based on tort-misrepresentation does not fall within section 301(a) 's grant of jurisdiction. There are at least two problems with this argument.
First, Nu Image's claims sound, at least partially, in contract. A suit for a declaratory judgment that a contract is unenforceable as a result of a fraudulent misrepresentation can be maintained as an action in contract. Picot v. Weston , 780 F.3d 1206, 1212 (9th Cir. 2015) ("A claim for declaratory judgment as to the existence of a contract is an action sounding in contract."); see generally 1A C.J.S. Actions § 126. Thus, at a minimum, Nu Image's request for a declaration that the residual contribution provisions of the CBA are unenforceable survives Granite Rock .
Second, Granite Rock 's holding is not as broad as IATSE contends. The Granite Rock court itself "emphasize[s]" that its holding is a narrow one. 561 U.S. at 312, 130 S.Ct. 2847. The Granite Rock court simply declined to recognize a new federal common law tort for tortious interference with a CBA. Id. at 312-13, 130 S.Ct. 2847. Granite Rock did not speak to the availability of misrepresentation actions under section 301(a). Because Nu Image does not bring a claim for tortious interference with a CBA, Granite Rock does not bar Nu Image's claims.

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