Teamsters Local 350 v. Recology, Inc.

Filing 16

ORDER DENYING DEFENDANT'S MOTION TO DISMISS (SI, COURT STAFF) (Filed on 10/18/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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TEAMSTERS LOCAL 350,

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United States District Court
For the Northern District of California

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No. C 11-4089 SI

Plaintiff,

ORDER DENYING DEFENDANT’S
MOTION TO DISMISS

v.
RECOLOGY, INC.,
Defendant.

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Defendant’s motion to dismiss the complaint is scheduled for a hearing on October 28, 2011.

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Pursuant to Civil Local Rule 7-1(b), the Court finds that the matter is appropriate for resolution without

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oral argument, and VACATES the hearing. For the reasons set forth below, the Court DENIES

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defendant’s motion.

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BACKGROUND

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The complaint alleges that from October 24, 2003 until October 23, 2008, plaintiff Teamsters

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Local 350 was a party to a collective bargaining agreement (“CBA”) with Allied Waste Services of San

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Mateo County (“Allied Waste”). Compl. ¶¶ 9, 21. The CBA covered employees of Allied Waste who

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performed waste management and garbage collection obligations of the South Bayside Waste

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Management Authority (“Authority”). Id. Attendant to the expiration of the 2003-2008 agreement,

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plaintiff and Allied Waste negotiated and then entered into a successor agreement, the term of which

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was October 24, 2008 through October 23, 2013. Id. ¶ 22.

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In 2008, plaintiff filed a grievance against Allied Waste alleging that it had violated the CBA

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by failing to remit contributions to the Western Conference of Teamsters Pension Plan on behalf of

employees who were not working due to on-the-job injuries or industrial disability. Id. ¶ 24. The

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arbitrator held on hearing on August 13, 2008, and on February 13, 2009, the arbitrator issued a written

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opinion and award sustaining plaintiff’s grievance. Id. ¶¶ 28-29, Ex. A (arbitrator’s opinion and award).

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In the meantime, the Authority had put out to bid the collection and recycling operations

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contracted to Allied Waste. Id. ¶¶ 9, 32-35. After a lengthy bid process initiated in November, 2007,

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the Authority awarded the contract to defendant Recology, effective January 1, 2011. Id. ¶ 39. On

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August 28, 2008, in anticipation of final approval of acceptance of its bid by the Authority, plaintiff and

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defendant executed a Memorandum of Understanding (“MOU”) under which the parties agreed that,

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should defendant receive final approval of its bid by the Authority, defendant would assume and be

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United States District Court
For the Northern District of California

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bound by the CBA in effect at the time Recology was to assume the Authority’s waste management

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operations, and continuing for the remainder of its term. Id. ¶¶ 15-18. The MOU does not reference

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the then-pending grievance against Allied Waste. Arsenault Decl. Ex. A (MOU).1 However, the

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complaint alleges that during the negotiations with defendant over the MOU, plaintiff informed

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defendant of the pendency of the grievance and the arbitration. Id. ¶¶ 38, 41. The complaint also

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alleges that “Defendant had notice of Arbitrator Davis’ February 13, 2009 award.” Compl. ¶ 42.

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On January 1, 2011, defendant began servicing the contract that had previously been handled

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by Allied Waste. Compl. ¶ 39. Attendant to the final award of the contract and the assumption of its

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duties to perform the contract, and in accordance with its obligations under the MOU, effective January

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1, 2011, defendant adopted the CBA then in effect between plaintiff and Allied Waste for the duration

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of its term. Id. ¶ 40. On December 26, 2010, the parties executed an agreement that was identical in

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all respects to the 2008-2013 Allied Waste CBA. Id. The complaint alleges that “[b]y assuming and

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adopting the Collective Bargaining Agreement on December 26, 2010 as contemplated by the August

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28, 2008 MOU, Defendant agreed to be bound to the contract as interpreted and applied by arbitral

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decisions, including Arbitrator Davis’ February 13, 2009 decision.” Id. ¶ 43.

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The Court may consider the MOU when reviewing the sufficiency of the complaint. See
Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001).
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LEGAL STANDARD

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Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it

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fails to state a claim upon which relief can be granted. The question presented by a motion to dismiss

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is not whether the plaintiff will prevail in the action, but whether the plaintiff is entitled to offer

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evidence in support of the claim. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other

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grounds by Davis v. Scherer, 468 U.S. 183 (1984).
In answering this question, the Court must assume that the plaintiff’s allegations are true and

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must draw all reasonable inferences in the plaintiff’s favor. See Usher v. City of Los Angeles, 828 F.2d

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556, 561 (9th Cir. 1987). However, the Court is not required to accept as true “allegations that are

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United States District Court
For the Northern District of California

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merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” St. Clare v. Gilead

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Scis., Inc. (In re Gilead Scis. Sec. Litig.), 536 F.3d 1049, 1055 (9th Cir. 2008). To survive a Rule

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12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is

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plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974 (2007). While

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courts do not require “heightened fact pleading of specifics,” a plaintiff must provide “more than labels

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and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 1965.

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Plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” Id.

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If the Court dismisses the complaint, it must then decide whether to grant leave to amend. The

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Ninth Circuit has “repeatedly held that a district court should grant leave to amend even if no request

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to amend the pleading was made, unless it determines that the pleading could not possibly be cured by

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the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations and internal

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quotation marks omitted).

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DISCUSSION

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Defendant moves to dismiss the complaint for failure to state a claim, contending that there is

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no basis for confirming and enforcing the arbitration award against defendant. Defendant argues that

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the arbitration award cannot be enforced against it because Recology was not a named party to the

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arbitration and was never joined to those proceedings. Defendant also asserts that plaintiff could have

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added an express assumption of liability in the MOU or insisted that the CBA ultimately signed by
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Recology contain a provision expressly adopting the arbitration ruling, but that plaintiff did neither.

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Defendant argues that the complaint’s allegation that Recology knew about the arbitration is

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insufficient.

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if the successor employer assumed the CBA and had notice of the arbitration. Plaintiff focuses not just

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on the parties’ MOU, but also on the fact that Recology assumed the CBA in December 2010, after the

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arbitration award was issued.

Plaintiff contends that an arbitration award may be enforced against a successor employer

Although defendant asserts a number of persuasive arguments, the Court finds that plaintiff has

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stated a claim, and that the issues raised by defendant cannot be resolved at the pleadings stage.

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Plaintiff has alleged that “Defendant, prior to agreeing to be bound by the collective bargaining

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United States District Court
For the Northern District of California

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agreement and prior to adopting such agreement, was on notice and aware of the grievance and

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arbitration . . . .” Compl. ¶¶ 41-42. All of the cases relied on by both parties were decided at summary

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judgment on a full factual record, and involved an analysis of, inter alia, whether the employer had

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notice of the arbitration award at the time it assumed the CBA, and whether an employer was a

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“successor” employer. See, e.g., Int’l Union United Automobile, Aerospace and Agricultural Implement

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Workers of America v. Saga Foods, 407 F. Supp 1247, 1251-52 (N.D. Ill. 1976) (holding employer’s

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expressed assumption of contract between union and employer’s predecessor, plus notice of existence

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of an outstanding arbitration award, would form sufficient basis to impose liability; denying summary

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judgment because of factual disputes regarding notice); Dockery v. Coyote Cleaning, Inc., No.

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05-72542, 2006 WL 2729607, at *4 (E.D. Mich. Sept. 25, 2006) (granting summary judgment where

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“it is incontested that the arbitration award was handed down after Kimco assumed the collective

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bargaining agreement and therefore Kimco could not have had any knowledge of the award at the time

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it entered into the Assumption Agreement”).

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CONCLUSION

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For the foregoing reasons, defendant’s motion to dismiss the complaint is DENIED. Docket No.
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IT IS SO ORDERED.

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Dated: October 18, 2011
SUSAN ILLSTON
United States District Judge

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United States District Court
For the Northern District of California

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