A plumbing union and joint industry board sued Delta Plumbing and its surety bond company (New York Surety) in federal court over a state law surety bond claim. The district court awarded $50,638.86 plus interest. On appeal, the Second Circuit reversed because federal courts don't have jurisdiction over state law surety bond claims unless they involve federal law or are preempted by labor laws like ERISA or LMRA. This matters to subcontractors because it clarifies where surety bond disputes must be filed—state court, not federal court.
Surety bond claims based on state law belong in state court, not federal court, unless federal law or labor statutes apply